Whether your mountain of bills is the result of bad luck, an injury or illness, or spending habits that got out of hand, the start of a new year offers the promise of a fresh start. If your debt is insurmountable, this may be the perfect time to break free and file for bankruptcy. But make sure that you do it the right way. Here are our top bankruptcy tips for the new year.

• Don’t purchase luxury items right before filing.

If you spent a ton on Christmas gifts with the idea that you’d be able to discharge all of that debt, you might want to wait a few more months. That’s because any purchases you make with your credit card within 90 days of filing for bankruptcy are unlikely to be included in your list of debts to be discharged. The only exception is purchases made for necessities like food.

• Don’t give assets away to family members or friends before filing.

Knowing that the bankruptcy courts can sell off assets to satisfy creditors, plenty of people make this mistake. When you have items of value and you owe people money, those assets are fair game. If you’re trying to keep them for yourself and think that putting them in other people’s hands will protect them, you’re wrong – and might be accused of fraud.

• Be honest about your assets.

It’s very tempting to be less than forthcoming about how much you earn or own, especially if you are trying to qualify for a Chapter 7 bankruptcy that will discharge all of your debts. Doing so is a mistake, as the means test that you have to pass requires give the bankruptcy trustee access to all of your financial records and most information is so accessible to creditors that it’s hard to hide.  If you don’t qualify for Chapter 7 and have to pay off your debts under Chapter 13, you’ll still be better off than you are today.

• Don’t try going it alone.

Plenty of debtors tell themselves that they can handle filing for bankruptcy without the help of a bankruptcy lawyer. Though it may feel like throwing good money after bad to pay attorneys’ fees, the laws surrounding bankruptcy are extremely complicated and the statistics on filing success make it clear: only about 5% of people who go it alone are successful in having their bankruptcy filings approved.

If you’d like knowledgeable guidance on getting yourself out of debt by filing for bankruptcy, we are here to help. Contact our team today! We wish you and yours a happy and healthy New Year.

If you’re considering a bankruptcy filing, you’re probably facing mounting bills and seemingly endless calls from creditors and collection agencies. Some debtors have already reached the point where their creditors have taken legal action and garnished their wages.

When your wages are garnished, it means that your employer withholds a portion of your salary and sends it directly to the entity that needs to be paid. Garnishment can take many forms. When a creditor such as a credit card or medical office exhausts its collection efforts they can go to court to get a judgment against you for the amount that you owe. If the judge grants the judgment it may be in the form of wage garnishment, where a portion of your income is paid directly to your creditor. Wage garnishment can also be ordered for other types of debts, including for child support payments, unpaid income taxes, and student loans.

Though both of these types of wage garnishment have the same effect on your take-home pay, they are not viewed in the same way by a bankruptcy court. Where your credit card bills or the amount you owe to a doctor is a dischargeable debt, child support and income taxes are not, and therefore the two different types of garnishment are handled differently.

When you file for bankruptcy under Chapter 7, one of the first things that happen is that the court issues an automatic stay on dischargeable debts. This is an injunction against collection actions for debts, and it not only stops creditors from calling you or sending you bills but also stops wage garnishment and allows you to return to receiving your full income.

Though the Chapter 7 automatic stay puts your credit card and other dischargeable debts on hold, it does not do so for domestic support obligations. These deductions will continue to be taken. However, if your bankruptcy is filed under Chapter 13, even wage garnishments for non-dischargeable debts are stopped – but only temporarily. Under Chapter 13 your debts are not canceled. Instead, they are reorganized so that you have more time to pay them off. One way or another, you will have to pay your obligations back over the next few years.

To get a better understanding of exactly how a bankruptcy filing will apply to your circumstances, contact us today to set up a time for a consultation.

Even people who know almost nothing about bankruptcy know that Chapter 7 bankruptcy wipes out their credit card debt. Once a person files and qualifies for bankruptcy they are assigned a trustee who analyzes their debts, separating out the non-dischargable obligations like child support and tax bills from dischargable claims such as medical bills and credit card bills. Creditors in the latter category are essentially last in line for compensation from the debtor’s remaining assets, and that means that you’re off the hook for charges that have been racked up on your Visa or Master Card. But that doesn’t mean that you’re free to go on a spending spree in the days before you file. Here’s why.

Credit card companies are well aware that some bankruptcy filers will try to game the system, making large purchases that their filing will allow them to skip paying. But those companies have the right to object to purchases that are disproportionate to previous spending habits. Though purchases for necessities like food or medical care are permissible, buying luxury items in the three months prior to your filing are going to set off alarm bills, and are likely to be disallowed from your discharge. In other words, you will be on the hook for paying for them.

People who are in debt are often in desperate straits, and if that is your situation it doesn’t mean that you shouldn’t use your credit card to pay for the things that you need like food, shelter, or medicine. You can even stop making your minimum credit card payments if you need the money for essentials. The credit card companies are likely to shut your card down but if you are close to filing, those accounts are going to be closed anyway. But using your credit card for large purchases on nonessential items like gifts, clothes, and especially luxury items in the three months before you file can lead to charges of fraud, and leave you footing the bill for things that you probably didn’t need in the first place.

Considering bankruptcy can be stressful and confusing. The best way to move forward is to work with an experienced bankruptcy attorney who can provide you with the answers to all of your questions. Contact us today to set up a time to talk.

When you’re deep in debt, every financial obligation becomes a pain point. Bankruptcy provides a way out, a chance to start fresh and escape the bills and debt collectors that keep popping up like mushrooms. Still, eliminating your debts doesn’t mean that you won’t have future expenses. Your living expenses will continue, including any rent that you’ve agreed to pay. Here is what you will need to know about how filing for bankruptcy will (and will not) impact your leased housing situation.

If you are currently renting an apartment or house, are current in your payments and plan to continue living there and paying for it, your bankruptcy will not have any impact on your lease or your ability to remain. That being said, because Schedule G of your bankruptcy petition asks you to list any “unexpired leases and executory contracts,” you will have to include your landlord’s name and contact information. The court will send your landlord notification of your filing, so it may be smart to let them know that you’ve filed but that it won’t impact your existing relationship with them.

If, on the other hand, you are behind on your lease and you want to get out of it, your rental obligation will need to be entered on both Schedule G and on Schedule E/F, where you list debts.  If you do this and you want to exit your apartment and lease, your bankruptcy filing will allow you to do so – but it will not allow you to continue living there rent-free after you’ve filed. If you stay in the apartment after filing you are incurring a post-petition obligation that is not included in your petition, and will not be discharged.

Many renters worry that their landlord will evict them once they hear about their bankruptcy out of fear that their rent will not be paid. If you are behind on your payments and included those debts on your petition, then the automatic stay will keep you from being evicted, but only for a while. You will have to catch up on your back pay if you want to stay or keep from being evicted. If you want to leave, you will have some time, as your landlord will need to petition the court for the automatic stay to be lifted so that they can evict you. Note that if the landlord had already filed an eviction notice against you before your filing, things get trickier.

If you need more information about how filing for bankruptcy will impact your ability to continue living in your leased housing, we can help. Contact us today to set up at time to chat.

If you own your own business, you probably view it as a piece of yourself. After all, you’ve invested a huge amount of your time and money into it, as well as intellectual and emotional capital. For many business owners, the idea of losing their business feels like a death, and if that’s the case for you, filing for personal bankruptcy may feel like a very scary proposition. Here’s what you need to know.

There are two ways to file for personal bankruptcy protection. Under Chapter 13 you are indicating that you can pay your bills but you need more time, better terms, or both. Your debts are reorganized in a way that makes it easier for you to meet your obligations. By contrast, Chapter 7 is filed when you cannot pay your debts at all and need them to be discharged. As a sole proprietor, there is no separation between you and your business. Your bills and the company’s bills are the same, and an automatic stay will be put in place for both. Though the bankruptcy trustee may pursue the sale of your assets, any equipment or tools that you use as “tools of your trade” can generally be exempted from being sold to repay your creditors.

Businesses that are established as partnerships, limited liability companies, or corporations are entirely separate and distinct from their owner. If you file for personal bankruptcy then your partners may need you to sell your interests back to them, and the same is true for members of a limited liability company. Corporations are entirely protected from the financial dealings of their owners. Because each of those types of business entities functions as separate legal beings from their owners when they face insurmountable debt their bankruptcy filings need to be filed separately from their owners.

When businesses file for bankruptcy, they can choose to do so under either Chapter 7 or Chapter 11. While a Chapter 11 bankruptcy allows the business to continue operating while completing a debt repayment plan, a business’ Chapter 7 bankruptcy operates in much the same way as a personal Chapter 7 bankruptcy filing: The business stops its operations entirely and all assets are liquidated and sold in order to help pay creditors.

For more information on how personal bankruptcy will impact your life, your career, and your business, contact us today to set up a time to meet.

Many people think that filing for bankruptcy is the equivalent of waving a magic wand that entirely eliminates their financial worries. But if you are in debt, there is a good chance that some of your financial obligations will remain with you, even after your credit card debts and other bills have been discharged. That’s because there are some debts that simply cannot be eliminated, even by a bankruptcy court.

What this means is that even if you have seen your credit card bills, medical bills, mortgage and auto loans, and other personal debts waived, you will still need to pay other, non-dischargeable debts. These include:

• Most types of taxes
• Fines or penalties that you owe to the government
• Child support
• Alimony
• Student loans
• Compensation owed to personal injury victims as a result of a drunk driving accident
• Condo fee debts
• Criminal or court fines and penalties
• Attorneys’ fees for child support or custody disputes
• Debts that you did not list on your bankruptcy filing (unless your creditor was aware that you were filing for bankruptcy

In addition to the types of debts listed above, your creditors will also have the right to argue against you being able to discharge your debt to them. This occurs at a hearing before the bankruptcy court, and both you and your creditor will have the opportunity to explain why you should or should not be required to pay. This is usually done when you have charged more than $675 in luxury goods from a single creditor in the 90 days prior to your bankruptcy filing, though it also applies to fraudulently obtained debts or debts that occurred as a result of your willful or negligent actions towards another person or their property.

Filing for bankruptcy is serious business, and the courts have little tolerance for those who try to abuse or play the system, so it is important that you comply with all of the rules and required procedures. This means making sure that you don’t lie, destroy records, or try to hide property in order to avoid having it sold to meet your obligations. Failure to conduct yourself appropriately can result in the court denying your discharge, and so too can availing yourself of the system too often. Once you’ve had your debts discharged under a bankruptcy filing, there will be a minimum amount of time that must pass before you can file again.

For more information on how the bankruptcy rules apply to you and your situation, contact our experienced attorneys today to set up a time to meet.

Though bankruptcy offers a fresh start and escape from the burden of debt, it also has several disadvantages, including a significant and long-lasting impact on your credit score. Many debtors hesitate about filing out of fear that they won’t qualify for a loan in the future. If you are concerned that filing for bankruptcy will forever crush your dreams of homeownership, we have good news for you. Things are not as bad as you think they are.

Though it’s true that your bankruptcy will remain on your credit history for several years and it will take some time for you to be able to qualify for a loan, the truth is that when you discharge your debts you clear the way to rebuild. In most cases, people file for bankruptcy because they have fallen so far behind on their bills that there is no way for them to catch up. They are caught in an endless cycle of unpaid bills, taking every cent that they have to pay out what little they can, leaving all of their creditors unsatisfied and themselves unable to afford anything.  Filing for bankruptcy means that you will be able to stop giving all of your money to your creditors, so you can start to save up for a down payment on a house.

Beyond building up your savings, there are several things that you can do after bankruptcy to hasten your ability to qualify for a mortgage. First, keep in mind that though a Chapter 7 bankruptcy will stay on your credit report for up to ten years (and seven years for a Chapter 13 bankruptcy), keeping up with post-bankruptcy bills will help you to rebuild your credit score and counteract the bankruptcy’s impact. There are also special types of loans available to people who don’t have a lot of money for a down payment. Applying for a Federal Housing Administration loan offered through the Department of Housing and Urban Development is possible just two years after your Chapter 7 discharge as long as you can show that during those two years you’ve kept up with your bills, and if you filed under Chapter 13 you only have to wait one year.

You can also apply for a VA loan if you are a veteran. These also require a two-year waiting period after a Chapter 7 discharge but have the advantage of not requiring a down payment. And conventional loans are also available to those who have rebuilt their credit after four years for Chapter 7 filers and after two years for Chapter 13 filers.

For more information about how filing for bankruptcy will impact your future plans, contact our bankruptcy attorneys today.

Your retirement years are supposed to be when you kick back, relax, and enjoy the fruits of your many years of labor. But life is unpredictable, and medical emergencies and other unexpected circumstances can lead to big bills that quickly deplete your available funds. If you’re being buried by bills and pursued by creditors, then bankruptcy may be the best answer for you. Here’s what you need to know about filing for bankruptcy during retirement.

No matter when you’re considering bankruptcy, one of the first steps is determining which Chapter is the right one for you. While Chapter 7 can discharge almost all of your debts, it is not automatically available. You have to pass a means test and establish that your income is insufficient to pay off your debts in order to qualify. If you have sufficient income to disqualify you for Chapter 7, then Chapter 13 is most appropriate, creating a payment plan designed to help the debtor meet their obligations. For retirees who are no longer receiving an income, there is a good chance that they will qualify for Chapter 7, as Social Security benefits are not included in the means test, though income from a pension or retirement savings account will be.

The thing that retirees fear most about bankruptcy is the possibility of having to sell off assets. Each state has its own rule for what belongings are exempted from being liquidated,  and if your state’s rules do not protect the assets most important to you, there is a chance that federal exemptions will. One way or another, retirement accounts (including 401(k) plans, 403(b) accounts, pensions, and profit-sharing plans are all fully exempt under federal law, and even traditional and Roth IRAs are protected up to more than a million dollars as long as you leave the funds in the plan. If, however, you take money out it can automatically be subject to being viewed as income for the Chapter 7 means test unless you can show that you withdrew the money in order to pay for basic necessities and can impact the repayment plan created for you if you’re filing under Chapter 13.

Filing for bankruptcy during retirement years may be the right answer for those facing insurmountable debt, but it is always a good idea to consult with an experienced bankruptcy attorney before moving forward. For help understanding your options, contact us today.