1. Bankruptcy Stops Creditors From Collection Actions Against You
Your Creditors must stop all collection activity immediately upon the filing of
your Bankruptcy case. A legally enforceable “stay” is triggered when you file for
Bankruptcy. The Bankruptcy Stay STOPS:
– Harassing telephone calls;
– Threatening letters;
– Repossession of automobile;
– Wage and Bank Garnishment
2. The Purpose of Bankruptcy
Bankruptcy is a legal process to enable the honest, but unfortunate, person relief
from crippling debt. Most debt is eliminated in Bankruptcy, such as:
– Credit Cards;
– Pay Day Loans;
– Deficiency Balances (repossessions and foreclosures);
– Medical Bills;
– Business Debt;
Debts that are secured by collateral, such as houses and cars, may be reduced,
eliminated, the interest rate may be lowered, and you may be provided the opportunity to
catch up on past due payments.
Some debts cannot be eliminated in Bankruptcy, such as:
– Support Payments;
– Taxes (some, but not all);
– Student Loans (almost all, but not all);
– Fraud Debt
– Criminal/Traffic Fines
*However, many of the above obligations may be paid over the course of time in
3. Do Not Liquidate Your Retirement to Pay Debts Prior to Getting
Many people have made the mistake of selling off property, depleted life savings
or liquidated retirement accounts trying to fight a losing battle. Before you make a
mistake, get some good legal advice. You may need a professional to analyze your
financial situation from an objective point of view.
You may protect most of your property under Bankruptcy law. The purpose of
Bankruptcy is to rehabilitate you, not take everything away from you. While there are
limitations to the type and amount of property you can protect, most people lose little or
nothing at all.
4. You Can Choose to Keep Your Home and Car in Bankruptcy
You may continue to pay on your house and/or car and keep it while in
Bankruptcy. And yes, if your house and/or vehicle is paid off, you may also keep it,
subject to restrictions.
Bankruptcy may help you on the debt owed on a house and/or car by possibly
reducing it, having the interest rate lowered and provide you the opportunity to catch up
on past due payments.
5. Bankruptcy Process
Your Bankruptcy case is initiated by the filing of the Bankruptcy Petition. The
Bankruptcy Schedules, Statements, Exhibits and Means Test/Disposable Income Test
must be filed to support your case.
Prior to filing the Bankruptcy Petition, you must complete a United States Trustee
approved Credit Counseling Course.
A Bankruptcy Trustee will be appointed to review your case and manage the
Bankruptcy Estate. The Bankruptcy Trustee will require you to produce third-party
documentation to support your case filing. You will meet and be examined under oath by
the Bankruptcy Trustee at the §341 Meeting of Creditors.
Prior to completing your Bankruptcy case, you must complete a United States
Trustee approved Financial Management Course.
Upon successfully completing all of the Bankruptcy requirements, you shall
receive a Discharge. The Discharge is your end goal. A Discharge is legal recognition
of the elimination of debt eligible for discharge and a permanent injunction against future
attempts of creditors to collect such debt, and your release from the Bankruptcy case.
6. Timing is Important in Bankruptcy
You control when to file your Bankruptcy case. Many events that transpire prior
to filing Bankruptcy may have significant effects on your Bankruptcy case. Many of
those events are in your control. Obviously, you want to make good decisions, not bad
ones prior to filing for Bankruptcy. Protect your property, qualify for the most favorable
Bankruptcy terms and save money and stress by hiring a quality Bankruptcy Lawyer to
handle your case.
7. Qualifying for Bankruptcy
The most common Bankruptcy case is one under Chapter 7. There is no payment
plan in a Chapter 7. In order to qualify, you must demonstrate that after legitimate living
expenses, you do not have the ability to pay your creditors. Therefore, you are given a
Discharge (elimination) of most all debt.
Chapter 13 has a payment Plan. The amount paid is based on your financial
ability to pay. Most debt is eliminated regardless of how much is paid to your creditors
so long as the amount paid is 100% of your ability. Your ability to pay is measured in
the Means Test/Disposable Income Test.
8. How to Choose a Bankruptcy Attorney
– Experience and Knowledge – Your Bankruptcy Attorney needs to be
able to understand your goals and find an effective legal solution to your
problem. Your Attorney should have years of Bankruptcy experience,
knowledge of other areas of law, and the willingness and ability to protect
you should problems arise.
– Fair and Honest – Your Bankruptcy Attorney should be fair in the legal
fees charged, fair with the amount of time devoted to your case and honest
about the representation made to you.
– Customized Legal Representation – It may be quite the disaster if
your Bankruptcy case is handled by a one-size fits all bargain-based
Bankruptcy Attorney. Bankruptcy is an important legal event. Proper
care should be taken to select an Attorney that knows how to maximize
– Value – Cheap does not always equal value. If it is cheap, your case
is probably being handled by some inexperienced non-attorney with
little input from a lawyer. Eliminating debt and protecting your assets
is important business. Most Bankruptcy Attorneys offer a free initial
consultation. You should use this opportunity to learn about the attorney
that will be handling your case.
9. Bankruptcy is Law of the United States
Bankruptcy is legal! Bankruptcy is a process that enables honest, but unfortunate,
debtors to eliminate or restructure debt that they can no longer pay. The United States
Constitution, under Article I, Section 8, provides the authority for Bankruptcy relief.
Congress enacted Title 11 of the United States Code to provide for our Bankruptcy law.
Since Bankruptcy is Federal law, it trumps any inconsistent state law, e.g. promissory
notes, contracts, judgments.
Bankruptcy law has consistently evolved since the overhaul of 2005 (BAPCPA).
Therefore, you need an attorney who has stayed on top of the current Bankruptcy laws.
10. Bankruptcy is Superior to Debt Consolidation
Debt Consolidation does not work for many people. There are sets of laws that
require your creditors to participate in a Debt Consolidation Program. This means that
you can still be harassed or even sued while in a Debt Consolidation Program.
Most Debt Consolidation programs require you to begin payments even before
there is any agreement with your creditors. Most of the first payments go to pay the Debt
Consolidation Program fees, so your creditors are still not getting paid. Some creditors
go years without payment or agreement, and therefore, may take legal action against you.
Before you enter into a Debt Consolidation Program, get some information about