INFORMATION ON BANKRUPTCY & FAQs
What is Chapter 7 bankruptcy and is it right for me?
The main goal under any filing in bankruptcy is to give one who is burdened with debt a Fresh Start. A Chapter 7 Bankruptcy is the most common form of bankruptcy filing, accounting for over 65% of all Consumer Bankruptcy filings. A filing under Chapter 7 bankruptcy is often called liquidation or a straight bankruptcy. Liquidation converts one's assets to money. This process involves the appointment of a trustee. A trustee collects all non-exempt property, sells the assets and then distributes the proceeds from the sale to the appropriate creditors. However, unlike other bankruptcy filings, a debtor does not make payments to the trustee. Does this mean that you will lose your assets? The answer depends on your particular situation…but in most bankruptcy cases you will not lose any of your belongings. If you feel that you may lose some of your possessions, discuss it with your Bankruptcy Lawyer at the Sumner Law Center.
The United States Bankruptcy Code may allow the debtor to keep some or all of the property. Often, a debtor will continue to make payments on a car loan or a mortgage on their home. This is done by signing a reaffirmation agreement. This agreement is as if the debtor did not file for bankruptcy on a particular loan. Another way a debtor may be eligible to keep a vehicle is to pay the creditor the value of the vehicle. This will release the debtor from the creditor's lien.
Unless one of the parties involved in the bankruptcy objects; the whole process is quite short. Typically some or all of the debts will be discharged within 3-4 months after the bankruptcy petition is filed by an attorney. While the process sounds simple it can be very complicated.
There are numerous reasons why one may file Chapter 7 bankruptcy. However, the most common reasons are loss of income (Job), divorce, high medical bills and large amounts of unsecured credit card debt. Sometimes these bills can be too high for a debtor to handle. And often they can be successfully discharged. As long as the individual lives, resides, is domiciled, or has a place of business in the United States they may file Chapter 7 bankruptcy.
If you have high credit card debt, medical bills, any other unsecured debt, and are tired of harassment from creditors Chapter 7 bankruptcy may be the answer.
What is Chapter 13 bankruptcy and is it right for me?
The purpose behind Chapter 13 Bankruptcy filing is rehabilitation of the debtor. Meaning you are given the opportunity to repay some or all of your debts…but under generally better terms (lower or no interest). Rather than having to liquidate assets to pay off debts, this process is designed to allow the debtor to use future income to pay off creditors. Chapter 13 Bankruptcy is basically an adjustment or reduction of debts for a debtor with regular income.
If you are behind in your house payments, generally you cannot save your house by filing a Ch. 7 Bankruptcy, but you usually CAN SAVE YOUR HOUSE if you file a Ch. 13 and have us prepare and file a Plan that is confirmed by the Court.
The United States Bankruptcy Code provides the debtor an opportunity to pay back their creditors over a period of time of up to five years (60 months), though most Plans are filed to last for no more than three years (36 months). This process is completely supervised by the court. Your attorney will ensure that your interests will be protected.
Chapter 13 Bankruptcy allows the debtor to keep all of their property. However, an interest-free plan for repayment must be developed and approved by the court. The debtor begins to make payments within thirty to forty five days after the case has begun. Unlike Chapter 7 Bankruptcy, the payments are made to the trustee who will then pay the appropriate creditors. Chapter 13 Bankruptcy prevents creditors from collecting from the debtor. The creditors are required by law to follow strictly the terms of the repayment plan. Your attorney will prepare this payment plan.
After the repayment plan is filed the debtor's creditors will have an opportunity to object to the proposed plan. This process is called a confirmation hearing which is heard before a judge. The attorney will appear before the judge on behalf of the debtor. The judge will confirm the plan if the debtor is current with their payments and if the trustee and any creditor problems are resolved. After the plan is confirmed, if the debtor simply makes all the required monthly payments, then they will receive their discharge.
This whole process is very complicated and recommended the debtor has the advice of a good attorney.
Contact the Sumner Law Center to have a Lawyer see if Chapter 13 Bankruptcy is right for you.
In order to file Chapter 13 the debtor must be able to pay monthly living expenses and pay the trustee to consolidate the debt. In order to make these payments the debtor must have a consistent source of income or at least reasonable prospects of future income. Just like in a Chapter 7 Bankruptcy, the individual must live, reside, be domicile, or have a place of business in the United States. Additional, the debtor must have a regular source of income and the amount of their debt may not exceed a certain amount.
What does it mean to have a regular source of income? According to the Bankruptcy Code, "any individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13 Bankruptcy…" is considered to have a regular source of income.
Although the limits of debt will not apply to most citizens, (the limits are extremely high), it is noteworthy to know the figures. The amounts of debt are different every year. The amount is based on and subject to the inflation adjustment provided in the Bankruptcy Code. Consulting an lawyer at the Sumner Law Center is the best way to know if you are eligible for Chapter 13 bankruptcy.
If you meet all of the requirements listed above and you are tired of the daily harassment from creditors Chapter 13 may be the answer.
Myths About Bankruptcy … They’re Wrong !
The average American knows very little about bankruptcy. Most people probably are aware of bankruptcy’s ability to dissolve debt and give the debtor a fresh start. Some of the information you might have heard is correct, but some is not. The purpose of this “Myth Buster” section, is to dispel some of the most common bankruptcy myths.
Even if I file for bankruptcy creditors will still harass me and my family.
This is absolutely false! Bankruptcy law provides for an automatic stay. Simply, as soon as you file for bankruptcy a hold is put on all your outstanding debts and any creditor attempts to collect those debts. The law prohibits a debtor to attempt to collect, possess, or even contact the debtor in regard to the debt. If a creditor does not follow the rules, the debtor may have an action in the form of punitive damages. Basically, punitive damages are meant to punish a creditor for not following the procedures set out in the bankruptcy code. Whether a debtor has a cause of action against a creditor should be left to an attorney to answer. However what you need to know is this; once you file for bankruptcy, creditors must leave you alone or suffer the consequences.
If I file for bankruptcy it may cause more family troubles than I already have, maybe even divorce.
This is also false! There are two ways a debtor can file for bankruptcy voluntary and involuntary. Voluntary filing is done by the debtor. The debtor talks to an attorney or files a petition pro se and gets the bankruptcy process started. In an involuntary bankruptcy, the creditor forces the debtor into bankruptcy often times unwanted by the debtor. Voluntary filing is the result of a family discussing their options with each other and possibly an attorney and making an informed decision on the merits. Divorce is often associated with a bankruptcy with the latter filing (NOTE: IF you are going through a divorce, and intend to file bankruptcy, in most cases, it is wise to file together, at the same time, before the divorce is finalized). Voluntarily filing for bankruptcy gives the debtor a chance to set his terms and allows the debtor a free choice for the bankruptcy.
If I file for bankruptcy the trustee will seize all of my assets and sell them to settle my debts with creditors.
Again this is false. While it is one of the duties of a trustee to sell assets in the estate, the trustee cannot necessarily reach all of your assets. There are many factors that must be examined before this happens. The type of bankruptcy as a lot to do with how much the trustee can seize. For example, a chapter 13 is a reorganization bankruptcy. Simply, the debtor keeps the majority if not all of his assets, and forms a repayment plan to satisfy interested creditors. Even in a chapter 7 filing the debtor gets to keep many assets. These are called non-exempt assets. The debtor’s house, car, clothing, furniture, life insurance, etc. are all non-exempt assets. These are just a few of the main assets. An attorney at the Sumner Law Center will be able to arm you with the information you need to keep even more personal property a debtor thought possible.
If I file for bankruptcy now, I will never be able to file again.
Surprise, this too is false. Filing for bankruptcy does not make you ineligible to file again. Without going into too much detail, just know the bankruptcy code allows a debtor to file for bankruptcy more than once. There are a few things different most importantly possibility of discharge, however you can file for bankruptcy again if you already have filed.
If I file for bankruptcy I will never get credit again.
This is simply false. I f this were true then nobody would file for bankruptcy. Americans depend on credit and this is no different than a debtor who has filed for bankruptcy. Several banks now offer credit on a secured basis to potentially risky customers. The debtor would put up a small amount of money so as to secure payment in the future. Once the debtor proves his ability to pay, credit limits get higher. As little as two years after a chapter 7, a debtor is eligible for mortgage loans on terms equal to someone who has not gone through bankruptcy. Creditors look more to a debtors stability, as opposed to the fact you filed for bankruptcy. (NOTE: there are currently programs available in the mortgage industry for people who have successfully completed at least 12 months under a Ch. 13 Plan, to secure financing and GET OUT of Bankruptcy!)
See a Lawyer at the Sumner Law Center to assist you with this difficult situation
Stopping Creditor Harassment
You have a couple of options to choose from in dealing with creditor harassment, though one will work better than the other. First, you can attempt to end creditor harassment by yourself. You can talk with creditors when they call and honestly explain why you are in default. You can try reason with creditors and ask for payment extensions or alternative payment arrangements. Unfortunately, debt collectors can be unreasonable and this method will often prove insufficient.
A second option is filing for bankruptcy. Under bankruptcy law, creditors and debt collectors must stop virtually all debt collection activities, including contacting you about a delinquent account. As soon as you file for bankruptcy, all creditors and bill collectors must immediately stop their collection efforts. Once you file the bankruptcy petition, both the Bankruptcy Court and your Lawyer at the Sumner Law Center will notify all of your creditors of your bankruptcy through the mail. While it might take a week or so for your creditors to receive this notice, creditors must also stop calling if you inform them that you filed a bankruptcy petition. In order to ensure creditors stop harassing you, the law provides penalties and fines for debt collectors that continue to contact you after you have filed for bankruptcy.
Will I loose all of what I Own?
The simple and straight answer is … NO. All of your possessions will not be repossessed if you file for bankruptcy. Though each case is unique, the typical bankruptcy debtor does not forfeit any property due to the generous property exemptions under the law. Exempted property is protected when you file for bankruptcy, throughout the duration of the bankruptcy process, and at the bankruptcy’s conclusion.
Exempted property not only protects property you own outright, but it also applies to any equity you have in exempted property. Equity can be defined at the difference between the value of the property minus the debt owed on the property. For example, a home with the value of $100,000 and outstanding debt of $60,000 has an equity value of $40,000 ($100,000 - $60,000 = $40,000). If you have equity in exempted property, typically you can elect to keep making payments on the loan throughout the course of the bankruptcy and keep the property.
Choosing a Bankruptcy Lawyer
How do find a bankruptcy lawyer?
What are the questions that you ask? What should you bring to your first appointment? These are some very common questions that you probably have. The following are answers to some of the most common questions about finding a Bankruptcy Lawyer. Choosing an experienced bankruptcy law firm to handle this very important matter is critical. The attorneys at the Sumner Law Center are experienced, ready and able to assist you.
How do I know if the Law Firm can handle my case?
When you visit a Law Firm to discuss bankruptcy and bankruptcy alternatives, make sure that the law firm has handled similar cases. Most small firms do not handle both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 13 Bankruptcy is more complicated and requires the attorney to represent you for up to 5 years. You want a Lawyer who will represent you in your best interests, not just what they are familiar. When you come in to see a Lawyer at the Sumner Law Center, we will have you fill out a Bankruptcy Information Packet that will help us evaluate your financial situation to determine how best we may help you.
What should I bring to the first appointment with the Lawyer at the Sumner Law Center?
On your first visit to our office, you should bring a list of everyone that you owe money to. This includes debts that you are not behind on. Examples include credit cards, medical bills, taxes, cars, houses, and personal loans. The better the information that you provide to your lawyer, the better her advice will be. You should also bring a list of your assets and income.
How soon can my Lawyer stop creditor harassment?
Almost immediately! Once you retain a Lawyer at the Sumner Law Center, to file your bankruptcy, he will start taking your creditor’s calls. You will be able to forward them to the Sumner Law Center that same day.
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