If you have lost your job, had domestic or health problems, or just overextended yourself, debt collectors and collection attorneys can make your life a nightmare. Contact the attorneys at Micheli, Baldwin, Mortimer, McLendon & Whitacre, LLP for efficient bankruptcy law services.
We represent individuals and businesses in Chapter 7 and 13 bankruptcies. Filing for bankruptcy will stop the harassing phone calls and letters.
It will stop a foreclosure on your home, lawsuits, garnishment of your wages, or attachments to your property. And in most cases, all of your property will be exempt from creditors. This will allow you to put your life back on track and get a fresh start.
To put it bluntly, bankruptcy is a legal way to avoid paying your creditors and collection agencies on debts you owe. In many situations, bankruptcy is the only way that you can keep your home from foreclosure, your car from repossession, your possessions from auction, and creditors from making your life miserable.
You are required by law to list all of your obligations. You cannot pick and choose who you list in your bankruptcy. The law does allow you to voluntarily pay back a discharged debt after you complete your bankruptcy. If you fail to list a creditor or they do not receive notice of your bankruptcy, their claim may survive your bankruptcy. If you are a "No Asset" chapter 7, pursuant to case law, you will receive a discharge of that debt even if that creditor did not receive notice of your bankruptcy. Exceptions to that rule include, student loans, child support obligations, spousal maintenance, and certain tax liabilities.
When a person is 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.
There are two main types of consumer bankruptcy called Chapter 7 and Chapter 13. (The other chapters, Chapter 11 and Chapter 12, apply to corporations, individuals and agricultural businesses for reorganization when they don't qualify for a Chapter 13. In February, 2020, Sub-Chapter 5 bankruptcies were created for individuals who might not otherwise qualify for a Chapter 7 or 13.)
Chapter 7 is what most people think of when they think of bankruptcy. All of the debtor's assets except for exempt items or assets with no equity can be sold, and proceeds are distributed among the creditors. A typical Chapter 7 bankruptcy will last about four or five months from filing to the entry of an order of discharge.
Chapter 13 provides a way for you to pay back your creditors, in whole or in part, for three to five years. You must have less than $419,275 in unsecured debt (such as credit cards and doctor's bills), i.e, liquidated debt, and you may not have more than $1,257,850 in non-contingent, liquidated, secured debts (such as home loans and car loans) to qualify to file a Chapter 13 bankruptcy.
Once the Bankruptcy Court confirms your Chapter 13 plan of reorganization, you would be making plan payments over 36 to 60 months. During the life of your plan your attorney will continue to represent you. As a rule, no interest is paid to your unsecured creditors and they would receive a pro-rata share of funds available for allowed unsecured creditors. In many cases, you may only be paying your unsecured creditors only pennies on the dollar, and you keep all of your assets.
Whether or not your plan length would be required to be 60 months depends on the Means Test Formula outlined in Form 22C in each Chapter 13 case. To determine whether your case is statutorily mandated to be a 60 month plan pivots on your income for the 6 months before you file your Chapter 13 bankruptcy.
A bankruptcy is commenced by filing a Petition with the U.S. Bankruptcy Court. The requirements for the petition and schedules vary depending on the Chapter you file. All bankruptcy schedules are detailed and comply with the Bankruptcy Code.
The filing package, including copies, averages about 50 pages for a typical Chapter 7 and 75 pages for a typical Chapter 13. Filing fees are $335 for a Chapter 7 and $310 for a Chapter 13 in addition to our legal fees. Those legal fees are reviewed and approved by the Court. If you meet certain requirements of the bankruptcy law, your filing fees may be waived or paid in installments over 120 days from your filing date.
A person who files for bankruptcy may exempt certain personal and real property. In most cases, this lets you keep your home, your car, your furniture, your household items, your retirement and most, if not all, of what you have.
Different states have different allowances for exemptions. You can also keep assets that have no equity, such as a car that's worth less than is owed, or a house where the mortgage is higher than the property value. Even if there is a small amount of equity, you can normally keep the asset. For example the $10,000 vehicle exemption stacks on top of your vehicle loan.
Follow the mantra...Good Money toward Good Debt. Your family is your number one priority. If you are filing a bankruptcy, as a rule, it is not recommended you pay your credit card debts or other unsecured obligations.
Certain debts can't be discharged. Federal and state taxes incurred less than three years before the date of filing (although you may get more time to pay them back), student loans (except where you can show "undue hardship" as defined by a string of case law), child support, and spousal maintenance are the big ones.
Once the Petition is filed, the Court issues an Automatic Stay, also referred to as an Injunction. This stops all legal proceedings (Civil/Collection) against you. Foreclosures, repossessions, and garnishments are stayed; creditors cannot call or write you, and lawsuits against you cannot be filed or pursued. Federal law is supreme to State collection actions.
The three main classes of creditors are the priority, secured, and unsecured. Priority creditors are those creditors who are given special (and priority) treatment under the law for the collection of the money owed to them. They are paid first. Some examples of priority creditors are the IRS and obligations owed for child support or spousal maintenance.
Secured Creditors are next in line. These creditors will have a security interest or lien in or on your property, such as a bank holding a mortgage on your home or a finance company holding a lien on your car. Most of the time, secured creditors will be paid.
Everyone else is an Unsecured Creditor. Credit cards, loans from banks and individuals, doctor's bills, some taxes that are old enough, and general claims for money are all unsecured debt. In most cases, unsecured creditors get nothing or only a portion of what they are owed. When you file a bankruptcy, you may also terminate or reject Executory Contracts, such as leases for an apartment, car or equipment.
If your secured payments are current, you may continue to pay them or surrender the collateral. If you're upside down in your auto loan, then it may be possible to cram down the value to the fair market value ("FMV") and pay the FMV with a lesser interest rate than the contract interest rate on the loan in a Chapter 13 or perhaps reaffirm on the loan with more favorable terms.
For example, 5% vs. 24% at which your auto loan may be financed. If you're behind on your auto loan and/or house loan and the creditor is seeking to foreclose on your house or repossess your car, you can pay the arrearages through a Chapter 13 Plan. You can re-start the payments after you file pursuant to a proposed Chapter 13 Plan of reorganization.
If your vehicle was purchased less than 910 days before the date you file your Chapter 13 bankruptcy, you will be required to honor your loan balance, but may be able to lower your interest rate. However, if your loan is more than 910 days old or you have refinanced your car loan more than 90 days prior to filing your Chapter 13, the terms of your loan agreement are subject to obtaining a lower interest rate and a reduction to the vehicle's Fair Market Value.
It is strongly recommended you consult with an experienced bankruptcy attorney, while exercising your legal rights, instead of sitting on them.
Bankruptcy is a complex and confusing area of the law. You need legal advice you can count on to guide you through the process. We have the experience to help you through your financial difficulties. If you have any questions, please give us a call. We also have a free on-line consultation form you may fill out and submit to our office.
We offer immediate legal help for those in need. Contact our team today for your legal needs and we setup a time to review your request.Schedule Consultation