Archive for the ‘Bankruptcy’ Category

Does Bankruptcy Stop Calls from Bill Collectors?

Ask what finally pushed a person into filing for bankruptcy and you’ll frequently hear that they simply could not tolerate the calls from bill collectors for one more day. These calls are designed to make debtors remit payment, and though the monies they seek are legitimately owed, their tactics are often less than ethical, and often border on intimidation and harassment. Though there are laws that protect debtors from being called earlier than 8 a.m., later than 9 p.m., or at work (if so requested), the one thing that is most effective at stopping the calls is filing for bankruptcy.

When you file for bankruptcy protection, it immediately enacts what is known as an automatic stay. This means that all of the creditors that you list in your filing are notified that you are seeking protection from creditors and that they are no longer permitted to write you, call you, or continue any other collection activity unless the court explicitly allows them to do so as an exception. Should you receive a call after your bankruptcy claim has been filed, there is a good chance that the debt collector’s system has not yet reflected the notification that the court sent out. Simply advise the company that you have filed for bankruptcy and they are required to enter that information into their systems immediately and to stop all calls. If they continue to contact you, notify your attorney. They will contact the company and advise them of sanctions that the Bankruptcy Court can take against them unless they desist from contacting you.

Without the bankruptcy filing, there are a few strategies that you can try to get collectors to stop calling If you ask for their mailing address and send them a letter in writing that asks them to stop contacting you, they are supposed to comply. To increase your chance of this being effective we suggest sending the letter by certified mail, return receipt required so that you can document that they received it.  Even if this is successful, you still owe them the money – they just are supposed to stop contacting you about it.

The advantage of filing for bankruptcy goes beyond stopping the collection calls. It will also fully discharge your debt and provide you with the opportunity to make a fresh start, without fear of your creditors calling about delinquent bills again. For more information about your options, contact our experienced bankruptcy attorneys today to set up a time for us to talk.

 

Does a Bankruptcy Stay on My Credit Report Forever?

One of the biggest concerns and reasons why people are hesitant about filing for bankruptcy is the long-term impact that filing has on their credit report. Though a bankruptcy filing does not remain on your credit history forever or create a permanent black mark, it can definitely feel as though it does. Here’s what you need to know about the real time frame for both Chapter 7 and Chapter 13 bankruptcies, as well as some tips for improving your credit score immediately.

The date that your bankruptcy gets removed from your credit score is dependent upon whether you file for a Chapter 7 bankruptcy – in which almost all of your debts can be discharged – or a Chapter 13 bankruptcy, which creates a payment plan for you to pay off your debts. Under Chapter 13, your bankruptcy will automatically be deleted seven years after your filing date, while under Chapter 7 the bankruptcy gets deleted ten years after the date you file.

The good news is that no matter which type of bankruptcy you file for, you don’t have to take any steps to remove the record of your filing from your public records or credit report. You also don’t need to delete unpaid accounts that were included in the bankruptcy. It all happens automatically.  In fact, some accounts will disappear more quickly than the record of the bankruptcy itself because they will get deleted seven years after their original delinquency date.

If you have decided to file for bankruptcy and you are concerned about the long-term effects on your credit score, the best thing that you can do is to work towards rebuilding your credit score. Some positive steps that you can take include:

  • Make sure that you are staying current on payments to any accounts that were not included in your bankruptcy filing, paying down balances on student debt and similar non-dischargeable loans as quickly as possible. Your goal is to lower your debt-to-income ratio.
  • Apply for credit cards and loans designed to rebuild your credit. Options include secured credit cards, retail and gas cards, and small installment loans.
  • Ask creditors to report your payments to the credit agencies. This does not automatically happen, but if you request it then they will do so.
  • Pay off balances in full on the cards and loans that you open.
  • Check your credit report frequently.

For legal help with debt and bankruptcy-related issues, contact our experienced bankruptcy attorneys today.

Will an Attorney Make the Bankruptcy Process Easier?

Making the decision to file for bankruptcy can be emotional and difficult. For some it is the culmination of a long struggle to get their financial feet under them, or the end result of a series of unpredictable events such as a job loss or medical emergency. No matter what the circumstances that led to your debt, once you’re ready to move forward you need to decide whether to file for yourself or to seek representation from an attorney. Though it is certainly possible to address the paperwork on your own, most people find that an attorney makes the process easier. Perhaps more importantly, bankruptcy claims that are filed by attorneys have a greater chance of resulting in debts being discharged.

There are several specific aspects of the divorce process where attorneys are particularly helpful:

  • Should my bankruptcy be filed under Chapter 7 or Chapter 13?

Though you may prefer to have all of your debts discharged under a Chapter 7 bankruptcy, not all debtors qualify. You will need to undergo a means test, which an experienced attorney can help you with. Your attorney will also explain the advantages and disadvantages of each type of bankruptcy. Under Chapter 13 you will typically pay off your debts in three to five years rather than having them discharged.

  • Accuracy in filings.

The paperwork that is required to file for bankruptcy can be extremely complex, and the court review process is rigorous. If mistakes are made then your application may be rejected out of hand, or you may need to start over or face significant delays. By engaging an attorney you avoid the risk of making a costly or time-consuming mistake.

  • Protection from harassment

One of the most stressful aspects of being in debt is the mountain of collection notices and harassing calls and emails in pursuit of the money you owe. From the moment that you file for bankruptcy, your attorney will issue an order that will protect you from these calls, and you will have someone you can refer your creditors to.

It is tempting to represent yourself — nobody wants to pay attorneys’ fees, especially not when they’re already in debt. But hiring an attorney will make the bankruptcy process easier and put you in a position where you will have an advocate working to protect your assets.

For information on how we can help you with your specific situation, contact us today to set up a time to chat.

 

How Many Times Can I File for Bankruptcy?

The goal of filing for bankruptcy is twofold: get out from under insurmountable debt and get a fresh start on financial stability. Unfortunately, not everybody succeeds in that second part. In fact, a study found that 8% of people who file for bankruptcy eventually file a second time around. Though you can file for bankruptcy protection as many times as you need to (and qualify), the Bankruptcy Code does impose a minimum amount of time that must pass between filings, with those thresholds dependent upon the type of bankruptcy you originally filed for and the type you want to file for next. These minimums are designed to prevent consumers from turning to bankruptcy as an invitation to take on dischargeable credit card debt.

The first thing you need to understand is that there are two different types of bankruptcy that individuals can file for — Chapter 7 and Chapter 13. A debtor only qualifies for Chapter 7 bankruptcy if they are able to show that they do not have enough income to be able to pay off their debts. Under Chapter 7 credit card debts, medical debts, and other dischargeable debts are eliminated entirely, with no further payment required.  Your assets may be liquidated in order to pay off some of your creditors.

By contrast, a Chapter 13 bankruptcy creates a repayment plan, modifying the terms of the original debt in terms of the amount owed, interest owed, or amount of time you can take to pay off the debt. You won’t lose any assets because you create a new plan under which you eventually pay your creditors back.

If your original bankruptcy was filed under Chapter 7 and you need to file for bankruptcy again, you have the option of filing for Chapter 13 bankruptcy four years after your Chapter 7 discharge or eight years for another Chapter 7 bankruptcy.  This second option is the longest period of time required between bankruptcy filings, in part because both filings lead to a discharge of debt rather than any significant repayment on the part of the debtor. In some cases, an individual who files for Chapter 7 bankruptcy can also file a Chapter 13 bankruptcy immediately after their filing if they need to create a payment plan in order to pay off debts that are not dischargeable.

If your original bankruptcy was filed under Chapter 13, you can file a Chapter 7 bankruptcy claim in six years. This period can be waived if you have already met your original payment plan obligation and have paid your debts back in full. If you want to file for a second Chapter 13 bankruptcy you can do so two years after your original filing as long as you received a discharge for the first one. This rarely happens, as Chapter 13 repayment plans have a minimum length of three years, The only circumstance where this would occur would be if you paid your plan off early o encounter an unexpected hardship that essentially voids the original plan.

For more information on filing for bankruptcy, contact our experienced attorneys to set up a time for a consultation.

What Happens to My Car During Bankruptcy?

Cars and trucks represent different things to different people. For some, it means freedom, while others have tied their identity to the car they drive. Still, others rightly view their vehicle as a tool they rely on to get their work done or to get them to or from their job, school, or other responsibilities. For all these reasons, their car is one of the top concerns among bankruptcy filers. Here’s what you need to know about how bankruptcy courts approach vehicles.

  • If you file for Chapter 7 bankruptcy, it will automatically stop collection calls about your car and put to rest your fears of repossession. An automatic stay makes the continuation of these activities illegal, though your lender can ask the court for permission to repossess the car if you are in default. You can oppose this request, giving you time to cure your default or renegotiate your debt if that is possible.
  • If you have equity in your vehicle you may be able to protect it through an exemption. This will depend upon the specific rules of your state, or on federal exemptions. If your equity in the vehicle is less than the exemption amount you’ll be able to keep that amount of value, though that may mean that the car has to be sold in order to pay off creditors and return the exemption amount to you.
  • If you do not qualify for Chapter 7 bankruptcy and file under Chapter 13’s rules, you will be able to keep your vehicle and will be provided a three-to-five-year repayment plan that adjusts either the time that you have to pay, the amount that you owe, the interest you are being charged, or a combination of these in order to allow you to pay in a way that is less financially taxing.
  • Some bankruptcy filers file a motion with the court to buy their vehicle back from the bankruptcy court for its fair market value. This requires a lump-sum payment but may provide a real benefit to those whose vehicle is worth less than their loan balance.

Filing for bankruptcy is a frightening proposition. There are so many elements to be considered that it is easy to get overwhelmed. For help with the process, contact our experienced bankruptcy firm today to get the guidance that you need.

Is Bankruptcy my Best Option for Credit Card Debt?

People rarely use cash to pay for anything these days. Credit cards make consumers’ lives easier, especially now that a wave of your smart phone or watch allows you to walk away with whatever your heart desires. Unfortunately, this ease of use can lead to trouble, especially if your income can’t keep up with your spending or your needs and your credit card debt has grown out of control. Beyond shopping, if you need to pay a medical bill or have your car repaired or pay for your child’s orthodontia and you don’t have cash in the bank, a credit card quickly takes care of the problem, until the bill appears. If what you can afford to pay falls short of what you owe, the interest rate or late fees only make things worse. Bankruptcy can provide a way out.

Whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy will be determined by your financial situation, but both can provide relief from credit card debt. Chapter 7 eliminates all unsecured, nonpriority debt, and this includes credit cards as well as medical bills and personal loans as long as no fraud was involved. If your income is too high for Chapter 7 and you qualify to file for a Chapter 13 bankruptcy then your debts will be reorganized, and this means that you will be provided with a repayment plan that usually both lowers the amount that you owe and gives you more time to pay it off.

One thing that you must keep in mind when considering a bankruptcy filing is that you can’t use it as an excuse to run up your credit card bills. Bankruptcy is a chance to start over but it is not a free pass. If you go into a single store and charge more than $725 on a purchase or service within 90 days of filing for bankruptcy, it will be viewed as fraud, and the same is true if you get a cash advance of more than $1,000 within 70 days of your filing. If you are thinking of filing for bankruptcy, you should stop using your credit card for anything other than necessities to avoid any suggestion of impropriety that would be viewed poorly by the bankruptcy court.

If you are considering a bankruptcy filing and need guidance, contact our experienced bankruptcy law firm today. We are here to help.

 

Will I Lose My Pet in a Bankruptcy?

Bankruptcy is an invaluable tool for those who are facing mounting debts, but the advantages of a fresh start have to be weighed against the loss of the assets that will need to be sacrificed to the bankruptcy trustee for sale. As hard as it is to consider giving up a home, a vehicle, cherished jewelry or heirlooms, those things pale in comparison to the idea of having to give up a family pet. Still, under bankruptcy rules any animals that are owned need to be listed as assets — even your beloved dog, cat, bird, or snake

The good news is that most animals have little value in a bankruptcy proceeding, and even if your animal has a value, it is exceedingly rare for a bankruptcy trustee to do anything but exempt what most Americans view as family members. One thing to keep in mind is that when trustees assume control of an asset, they do so with the idea of selling it – unless your animal is earning large sums of money, the cost and work involved in assuming ownership would far outweigh the value that would be realized by selling it. You still need to list them as an asset but are unlikely to have to give it up.

Though you are unlikely to have to give up your pet, there are a few elements that may complicate this issue. If, for example, you earn income from breeding your animal, through their talent or some other service, you need to include that income on your bankruptcy statements in addition to stating their value.  It is also important to remember that a pet can represent a significant expense, especially if they are older and begin needing constant medical care. These expenses will need to be listed on your filing as well, and it is conceivable that a trustee would look askance at offsetting those costs against what is owed to creditors.  Additionally, if you chose to finance the purchase of an expensive animal, the creditor likely has the legal right to use your pet as collateral and repossess it.

As scary as all of these considerations are, the reality is that bankruptcy is meant to give you and your family a fresh start – and your pet is part of your family. Trustees are aware of this and do not want to take pets away from their owners. Contact our team today to discuss this and other aspects of bankruptcy!

Are the Consequences of Bankruptcy Worth It?

If you’re thinking about filing for bankruptcy, there’s a good chance that you’ve heard all the cautionary tales about how bankruptcy will destroy your credit and economic reputation. The truth is that the naysayers who warn against the bankruptcy process have never been in deep debt themselves. They have no understanding of the impact of piles of unpayable bills and nonstop collection calls. They also fail to recognize that doing nothing and continuing to struggle with debt does nothing to rebuild credit – while filing for bankruptcy eventually does.

The truth is that those who are considering bankruptcy are already looking at credit scores that seem beyond hope, and on top of that their debt isn’t going away. This creates tremendous emotional harm: people facing insurmountable debt often suffer from depression, anxiety, insomnia, and severe stress. As much as filing for bankruptcy may feel like a surrender, it is relieves the sense of panic and despair that comes from not being able to meet existing financial obligations.

In addition to the emotional relief, studies have shown that filing for bankruptcy actually restores credit scores relatively quickly, especially when compared to those who continue to struggle with debt. The Federal Reserve Bank of Philadelphia conducted a study that showed that in the 18 months before filing for bankruptcy, consumers’ credit scores dropped precipitously, where once they filed for either Chapter 7 or Chapter 13 the decline in scores stopped and filers’ credit scores rebounded. Though scores still remained low, the filers effectively stopped digging themselves into deeper economic holes, and at the same time they put a stop the collection calls, wage garnishments, litigation, and other stress-inducing processes.

When you file for bankruptcy, you give yourself the chance to start over economically, wiping out credit card debt, medical debt, and other financial obligations committed to long ago. You also will find yourself eligible to take on small amounts of debt far sooner than most of the naysayers predict – in some cases as soon as 18 months after your debts have been discharged.

To get a better sense of how filing for Chapter 7 or Chapter 13 bankruptcy will change your life, contact our experienced bankruptcy attorneys to set up a time to discuss your situation.

Keeping Your Business During a Personal Bankruptcy

If you are filing for Chapter 7 personal bankruptcy and you are a business owner, there is a good chance that the filing will lead to your business being shuttered. The determining factor is whether you operate as a sole proprietorship, an LLC or partnership, or a corporation.

Individuals who operate sole proprietorships enjoy several advantages for being what is known as “pass through” entities, but when it comes to bankruptcy these benefits generally work against you. That is because there is little to no separation between the owner and the organization. At the very least the bankruptcy trustee will likely ask you to stop operations for a period of time so that they can assess the value of its assets for possible sale as part of the bankruptcy estate. This may not be the case for freelancers or other service providers whose businesses operate without assets, but the trustee will also want to put a stop to incurring liabilities, so that determination – and the determination about selling assets – will be specific to your business.

If you are part of a partnership or LLC with more than one owner, your business will be able to continue operating but your share will be added to your estate. In most cases, the business will be protected from the impact of your bankruptcy, unless you are the majority owner, but it is a good idea for you to seek legal guidance regarding your ownership interest and its role in the business before you file.

If you are the sole or majority owner in a corporation, your business will be at risk of the trustee assuming control of your shares or interest and then voting to sell or liquidate the business for distribution to your creditors.  That determination will be based on how much the assets can be sold for and whether or not they are exempt. If it makes financial sense to liquidate then the trustee will do so. If, however, the corporation has other members, then personal bankruptcy is unlikely to impact it.

Every bankruptcy situation is unique, but owning a business can complicate the process. For help navigating the challenges of filing for bankruptcy and understanding all of its potential outcomes, contact our experienced bankruptcy firm today to set up an appointment.

Can I Transfer Savings or Property to Family Members Before a Bankruptcy?

Filing for bankruptcy is an intimidating, scary process, and when you are anticipating doing so, it is natural to try to protect assets that are important to you and to provide for those who are closest to you. Before you do anything, it’s important to make sure that you know what you’re allowed and not allowed to do, as paying debts to friends or family members, or transferring savings or property out of your name and into a family member’s can lead to charges of fraud or preferential treatment. Your best bet is to seek advice from an experienced bankruptcy attorney before making any significant financial moves.

The first thing you need to know is that when you file for bankruptcy, you will be assigned a bankruptcy trustee who will oversee the process. That person will identify unprotected assets that can be sold and determine the value of the bankruptcy estate based on the paperwork that you provide. This “statement of financial affairs” generally lists your bank accounts and any property you own, have sold or transferred within approximately two years. This list needs to be complete and must reflect all details, including value of property and what was done with any proceeds.

If you made a decision to sell a piece of property to a family member for its fair market value, you should be safe – especially if you can show that you used the money to pay for basics like rent or food. You are also able to transfer something that would have been considered exempt. But if you transfer the property in order to try to keep it from being included as a salable asset, or process a sale that is far under fair market value either to get it out of your name or to satisfy a debt to somebody close to you, it can be considered fraudulent, and the sale can end up being voided by the trustee.

Selling property but retaining control over it is another questionable transaction that – at best – will require explanation. The most important thing to remember in approaching a bankruptcy is that you must be honest about everything that you do. If you try to conceal an activity or an asset it will be sure to come back to you and work against you.

For more information about what financial actions you should and should not pursue in a run-up to filing for bankruptcy, contact our experienced attorneys today to set up a time to meet.

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