Consumer Bankruptcy

Bad things often happen to good people, and finances are no exception. We pride ourselves in our ability to provide personal and dedicated assistance on each of our cases.  One of the roles of a bankruptcy lawyer is to give clients the hope of a fresh start, which we do nearly every day.  Our experience allows us to act quickly on your matter if an emergency arises, and to stop the harassing calls, foreclosure, collections, lawsuits, and threats from overly aggressive creditors.  Our firm is a proud member of the National Association of Consumer Bankruptcy Attorneys.

What is Bankruptcy?

Bankruptcy is a legal way to either discharge or reorganize debt, including lawsuits, garnishments, foreclosures, and harassing phone calls from creditors. When a person’s debts are discharged in bankruptcy, he or she is relieved from liability for most debts incurred before the bankruptcy was filed and protected from future collection of those debts.  The purpose of bankruptcy is to give you a fresh start and the bankruptcy code is interpreted by the Courts to give effect to those words.

What Is a Chapter 7 Bankruptcy?

A chapter 7, or liquidation, bankruptcy is a major type of bankruptcy proceeding.  Individuals who file chapter 7 are able to free themselves of dischargeable debt quickly through a bankruptcy discharge.  A chapter 7 bankruptcy is often the quickest way to get out of a difficult financial situation and get the weight of endless debt off your shoulders. Chapter 7 bankruptcy allows an individual to discharge, or erase, all unsecured debt. Unsecured debt includes credit cards, medical bills, personal loans, payday loans, repossession costs, deficiencies from foreclosures, and some taxes. The entire process of chapter 7 bankruptcy usually takes only four months, and there is normally just one short hearing to attend, which we will attend with you. After the chapter 7 bankruptcy is closed, the individual’s unsecured debts are erased forever.

In 2005, The United States Congress enacted comprehensive reform of the bankruptcy laws through the Bankruptcy Abuse Prevention and Consumer Protection Act. (BAPCPA) This act created the “means test” which is an income-based analysis on whether an individual qualifies to file a chapter 7 bankruptcy. The means test can be extremely complicated but most of our clients are able to qualify for a chapter 7 bankruptcy if they want to file. Our firm will run a free no-obligation means test to evaluate whether you would qualify for chapter 7 bankruptcy.

What is a Chapter 13 Bankruptcy?

A chapter 13, or “reorganization”, bankruptcy is the a type of bankruptcy often used by individuals to discharge their unsecured debt (similar to a chapter 7), while also reorganizing their debt through a chapter 13 plan.  Individuals who file chapter 13 are able to keep all of their property by entering a repayment plan usually related to their disposable income.  A chapter 13 bankruptcy is completed in either three or five years. A chapter 13 case offers many advantages for a filer – often a chapter 13 bankruptcy can get rid of (“strip”) second and third mortgage liens on property, “cram down” car loans or rental properties to the value of the car or house, and increase the chances for a bank to modify a loan. All remaining unsecured debt is erased forever at the conclusion of the chapter 13 plan. A chapter 13 discharge is somewhat broader than a chapter 7 discharge, because taxes, student loans, and other debts may be dealt with through the plan. We will evaluate your situation for free to determine how a chapter 13 case might help you and provide you an estimate of the plan payments in a chapter 13 case.

What is a Personal Chapter 11 Bankruptcy?

A personal chapter 11 bankruptcy is a reorganization of debts that is typically used by individuals with debts too high to qualify for a chapter 13. Chapter 11 bankruptcy has many of the same benefits as a chapter 7 or chapter 13 bankruptcy, but there are often significant advantages to filing a chapter 11 bankruptcy. Chapter 11 bankruptcy can be an excellent way to save a home (or multiple properties) from foreclosure or to save a small business going through a difficult but temporary hardship. In chapter 11 bankruptcy, you can force banks to change your mortgage balances to the value of rental properties. We can discuss your individual circumstances and decide together which chapter of bankruptcy will be most beneficial in your situation.

What’s Involved in Filing for Bankruptcy?

Bankruptcy with our office follows an efficient, streamlined process to ensure success. We collect certain documents in order to do a full evaluation of all options. We then immediately call you to discuss how to proceed, and prepare a bankruptcy petition with the appropriate information. After you review the petition and ensure the information is correct, we file the bankruptcy case.

There is normally only one hearing that you must attend, this is called a 341 meeting of creditors, and is usually a quick and easy conversation with a bankruptcy trustee (not a judge), that lasts about 3-5 minutes. We handle all objections, court hearings, and any other issues that arise in a case. After the bankruptcy is complete, you receive your discharge and get a fresh start from debt.

Will I Lose Everything If I File?

No, you will probably lose nothing. A person who files for chapter 7 bankruptcy may exempt certain items from the bankruptcy.  In most cases, the trustee allows you to keep your home, your car, your furniture, your household items, your retirement accounts, and most other assets. This depends completely on the value and equity in these assets and the exemptions that are used – this area can be complex. The vast majority of our clients keep everything in a chapter 7 bankruptcy. We always discuss whether the individual is covered by the exemptions, so there will be no surprises. If a client would have any risk of losing assets in a chapter 7 filing, we always discuss chapter 13 as an alternative because there is never a risk of losing assets in a chapter 13 case, no matter what you might have.

In a chapter 11 or chapter 13 bankruptcy, the automatic stay immediately stops foreclosure, repossession, and any other creditor action. There is no risk of losing anything in a chapter 13 case, and you can always dismiss a chapter 13 case at any time.

What Happens to My Car?

This depends on several factors, but most people keep their cars (or other vehicles) through a chapter 7 bankruptcy filing. If you are financing your car(s) and owe more than they are worth, then you will be able to keep the car. If the car has equity, then it depends on your total assets and whether they are exempt. If you are far behind on payments, or if the car was purchased more than three years ago, then a chapter 13 might be a better option. Cars and bankruptcy can be a complicated mix. We can evaluate your situation in a free consultation and inform you whether you will be able to keep your vehicles.

What Happens to My House?

Most people keep their homes in a chapter 7 bankruptcy, but again this can be a complex issue. If a debtor is behind on mortgage payments, a chapter 13 or chapter 11 bankruptcy will allow them to stay in their home. If a debtor is current (or close), then they can still file chapter 7 bankruptcy and stay in their home, so long as there is not excessive equity. Many clients also use chapter 7 bankruptcy to walk away from an underwater house without the danger of the mortgages suing them for the deficiency. Our firm has extensive experience with foreclosure situations and will discuss all options with you, including bankruptcy, loan modification, short sale, and deed in lieu of foreclosure.

Will All My Debts Be Wiped Out?

Probably. All unsecured dischargeable debts are automatically wiped out in a chapter 7 bankruptcy. However, there are certain debts which cannot be discharged. Certain taxes, student loans (except where you can show “undue hardship”), child support, and alimony are non-dischargeable debts. If you have substantial amounts of these debts, you should consider the advantages of a chapter 13 plan. Call today for a free consultation and to discuss all legal options available to you.

Will Bankruptcy Destroy My Credit?

The short answer is no. You can recover from bankruptcy and I can provide general advice on how to do that. Bankruptcy does get reported on credit and often causes a temporary drop in credit scores. However, bankruptcy actually helps your credit in some ways, such as wiping out the debt and “stopping the bleeding” of constant late marks for credit card or mortgage payments. These delinquencies cause consistent long-term damage, whereas bankruptcy can give you an opportunity to fix your credit report and recover. Bankruptcy often improves credit scores within months of filing. Many clients are offered new credit cards almost immediately after their cases are over. Please email me anytime for more specific credit questions.

We are a debt relief agency. We help people file for relief under the Bankruptcy Code.