There are certain questions that loom large for people considering filing for bankruptcy, and one of the biggest is whether they will be able to keep their car. The reason for the question’s prevalence is obvious: people need their cars in order to continue going to work, to shop for food, to attend doctors’ appointments, and more. The loss of a vehicle is the loss of freedom, so getting the answer is important.  Unfortunately, there’s no one-size-fits-all response, and a lot of the determination will depend upon the specifics of your situation.  Here’s what you need to know:

• Filing for a Chapter 13 bankruptcy offers your best chance for keeping your car. That’s because under this type of bankruptcy filing you do not discharge your debts as much as reorganize them into a new repayment plan. Payments may be spread out over a longer period of time then what was initially agreed to, interest rates may be lowered or some of the debt discharged, but you are able to keep your property. You may even be able to lower the amount of your car loan if the loan has a greater value than the car.
• Filing for a Chapter 7 bankruptcy has the advantage of canceling all of your debts (with the exception of child support, student loans and other nondischargeable debts), but also puts you at risk of having to give up some of your property so that they can be sold to pay off your creditors. Your equity in your vehicle may be considered exempt up to a certain value, and if your equity exceeds that value there are often workarounds available, such as wildcard exemptions or trading other property that you’re willing to part with in return for keeping your vehicle. However, that does not always work and there are scenarios where your bankruptcy trustee may say that they have to take your car and sell it.

If you have fallen behind in your car loan obligations, then there’s a good chance that your car will be taken unless you can negotiate something with the lender. In some cases, this means paying what you owe, while in others you might arrange a new payment plan or pay the lender the car’s replacement value. This is only an option where the bankruptcy trustee has already indicated that your vehicle is exempt or they have decided not to sell it.

Finding a solution to the problems surrounding your car during a bankruptcy is just one of the ways that our bankruptcy attorneys can help you through this difficult situation. Contact us today to learn more.

When paying your mortgage debt is beyond your means and you are facing the possibility of foreclosure, there are a couple of options available to you. These include allowing the foreclosure to happen; proceeding with a short sale; and filing for bankruptcy. Deciding which is the best choice for you can be a challenge, especially if you are interested in maintaining or rebuilding your credit score.  Let’s look at the factors that you should consider.

There’s no doubt that choosing any of these options will hit your credit score hard. Most short sales and foreclosures will drop your credit score by between 85 to 160 points, while a bankruptcy filing will drop it by 130 to 240 points.  But consider this: allowing your lender to foreclose on your house is not necessarily the end of the story. They can still go after you for any difference between the outstanding loan and the price at which the house sold at public sale. By contrast, if you choose bankruptcy this difference would be discharged. Another thing to consider is that if you pursue a short sale you will be more likely to qualify for a mortgage loan in the future.

Lenders tend to look more kindly at those whose histories include a short sale, and generally allow those who’ve chosen this route and who have a 20% down payment two years after the short sale takes place. Similarly, those who file for bankruptcy can qualify for a mortgage four years after their date of discharge, but those who have chosen foreclosure are required to wait 7 years from the date of the judgment entered against them, and also have to pay off any deficiency judgment.

Though many people believe that a short sale is more beneficial than bankruptcy when it comes to preserving or rebuilding your credit score, there are other things to remember, including the fact that short sales are not easy and can take a long time. Additionally, banks don’t always approve them, and the borrower can still be left in the position of needing to make up for the deficiency. Bankruptcies can be accomplished quickly and without the fear of being pursued for any shortfall in the amount that you owe the bank. Best of all, without these issues haunting you, you can begin rebuilding your credit quickly.

Contact our experienced bankruptcy attorneys today! 

Most American adults carry some kind of debt, but if your debt has gotten away from you and your creditors are tired of waiting, they’ll first turn to debt collectors and then eventually to filing a collection lawsuit. If your first response to a collection lawsuit is fear, that’s perfectly normal. The best way to move forward is by educating yourself on your rights and what to do — as well as what not to do.

The first thing you need to know is that it’s a big mistake to ignore a collection lawsuit. The notification comes in the form of a summons and complaint. Failure to respond will lead to a default judgment in the form of wage garnishment or capture of money from your bank account, so doing nothing is a big mistake, especially because you could end up liable for additional fees and charges that could significantly increase the amount you end up paying. You need to respond but do so appropriately. That means filing an answer with the Clerk of the Court from which your summons was sent. You don’t need to say that you owe the money, but you do need to respond within the deadline stated in the summons. Make sure you ask the Clerk for a stamped copy of your answer and then send it via certified mail to your creditor so that they know you responded.

Once you’ve acknowledged the claim, you have a few options. You can challenge the creditor’s legal right to file the claim against you. There’s a good chance that the company that filed suit is not the same one you originally borrowed from. If that’s the case, they’ll need to show legal proof that they own the debt. Lots of companies don’t have access to this information (which might include a credit agreement signed by you or documentation of the chain of custody of the debt) and count on debtors not knowing to ask. They also need to prove that you’re responsible for the debt and the exact amount you owe. Many are unable to do so and the claim will be dismissed.

Another important point to remember is that there is a limit to how long creditors have to file a lawsuit over a debt. Check your state’s laws and the date that you were last active on the account because in many cases the statute of limitations will have passed. That date is very important, so make sure you don’t automatically send a payment, as it will start the clock again.

The most important thing to do when facing a collection debt is to get in touch with one of our knowledgeable attorneys, who are experienced in collection lawsuits. We can advise you on your best options, and save you time, stress and money, so contact us today!

Over the last several decades, medical science has made dramatic strides, and many injuries and illnesses that would once have represented a death sentence are now treated as a matter of course. Unfortunately, astronomical costs have gone hand-in-hand with the improvements in skills and technology, and as a result, many people have found themselves grateful for their lives but saddled with overwhelming debt.

If high medical bills have put you in a position where you are unable to pay any of your bills, you are not alone. Medical debt is among the most common reasons for people to file for bankruptcy. Though filing for bankruptcy may feel unfair if you’ve always paid your bills up until the time that you became sick, the good news is that by taking advantage of this legal process, your medical bills can be entirely wiped out.

No matter what the cause of your overwhelming debt, once you begin the process of filing for bankruptcy your debts will be separated into two separate pots: priority and nonpriority unsecured debt. Medical debt is unsecured, in much the same way that your credit card bills are, and they do not rank as a priority for payment. That category is reserved for things like child support and past-due tax obligations or legal settlements. The real question of how your medical bills will be addressed depends upon whether you file for Chapter 7 bankruptcy of Chapter 13. Though both can wipe out your medical debt, Chapter 7 will simply eliminate almost all of your unsecured debts while Chapter 13 would likely combine all of your debts into one lump sum, then reduce the total and provide you with a payment plan that you can pay off over a prescribed, limited period of time.

The determination of which Chapter you file under may not be up to you: in order to file under Chapter 7, you must meet certain qualifications regarding the amount of disposable income you have available while filing under Chapter 13 will generate a calculation based on income, fixed expenses and your nonexempt assets to determine how much you are able to pay.

Though it may feel uncomfortable to you to consider filing for bankruptcy, you may have little choice in the face of the bills from a catastrophic injury or illness. For information on how to go about determining whether bankruptcy is right for you, contact our office today.

Filing for bankruptcy offers you the opportunity to make a fresh start, so what better time to consider it than the New Year, which is well known as the time for making resolutions and improvements. The New Year is the perfect time to set yourself realistic financial goals that will put you on the path to a better financial future. Here are our top bankruptcy resolutions, for any time of year.

• Budget

Smart budgeting is key. Maybe you’ve never given yourself a budget, or maybe the budget that you worked with before was not well crafted. Either way, after filing for bankruptcy it is essential that you make a list of all of your monthly expenses broken down into whether they are fixed (like housing or car payments that are always the same and come every month), variable (like food, entertainment and clothing) and irregular (unexpected expenses like gifts you have to buy, or medical bills). The best way to do this is to go through your bank statements to see what you’ve spent in the past. After you’ve made your list, figure out how much you want to save each month. Saving is an important part of your new financial journey.

After you’ve figured all of these things out, look at your fixed expenses and see if you can lower or eliminate any of them, then do the same with your variable and irregular expenses. You can realize savings by cutting down on eating out, by not buying clothes unless you need them or only buying on sale, by cutting out paid channels on your cable bill, and by buying less expensive gifts. Figure out how much your take-home pay is for the month and then compare it to your expenses to make a budget. Make sure that you’re not spending more than you’re making, and if you are, cut more out of your budget.

• Save What You Can

Save extra money. The budget you set up must set aside money for savings. Once you have the amount figured out, set up an automatic deduction from your checking account to be put into your savings account without you having to do anything. Direct deposit is another smart way to achieve this goal. Having these savings build up will help you build up an emergency fund to prevent you from going into debt in case something unexpected comes up.

• Be Smart About Using Your Credit

There are great credit options for those who have gone through a bankruptcy. A secured credit card is a great example. this kind of credit option allows you to build your credit by using it to make purchases. The credit card is secured by a deposit, though. This limits your spending ability to what you actually have. You should limit credit usage as much as possible (if not completely) outside of credit and loan options strictly meant for building your credit. Use cash instead.

There are many more things you can do to rebuild your credit and put yourself on a solid financial footing, but these are important first steps and the New Year is the perfect time to introduce them to your life. For more assistance with dealing with bankruptcy, contact us today to set up a time for us to meet.