Bankruptcy

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How Much Should I Pay for a Bankruptcy?

When you’re broke and you’re thinking about filing bankruptcy finding a good price is something that’s definitely on  your mind. In fact, cheaper looks good. If some lawyer is willing to do my bankruptcy for $500 why should I pay someone else $1,000 or $1,500? You may think you’re getting a deal but like answers to many questions in the law, what you’re getting may not always be best for you.

The Costs of Bankruptcy depends on your facts

Whether you need to file bankruptcy now, later or not at all depends on how your personal financial situation fits into the protections provided by the bankruptcy code. Our attorneys, during your free consultation, will gather these facts and analyze your situation so that we can figure out how to best help you using the existing bankruptcy laws. If your bankruptcy lawyer doesn’t look in the right places, know what rocks to turn over or isn’t completely familiar with the bankruptcy code, you’ll probably his some pretty big snags in your case. With the caveat that there is no direct and sure-fire connection between cost and quality, let’s talk about how much it should cost you to get back on the road to financial prosperity.

How to figure what you should pay

  1.  The person charging the least is probably not for you.  Chances are, they’re new or they are dabbling in a very complicated section of the code.  Maybe they’re trying to upsell you another product and they’re farming out the actual work of the bankruptcy to someone who knows even less than they do. Additionally, do you really want the cheapest guy in town advising you about your finances.  As with everything in life, you get what you pay for.

 

  1.  The more you’ve got, the more protection you’ll need.

If you have substantial assets, it more than likely that you’re going to have to pay more for a bankruptcy attorney.  If you’re filing to save your house or stop big money lawsuits, you need to call in the big guns. You don’t need to hire someone who occasionally files a bankruptcy for buddies or someone who is fresh out of law school. It’s one thing to just discharge old credit card debt, but when real money’s on the line, you don’t want to go cut rate.

  1.  If you’re involved financially with lots of people, you’re going to need a good lawyer.

Do you have business partners? Do you own property with someone else? Have you set aside a chunk of change for your kids? All of these situations can fall under specialized parts of the bankruptcy code that most people who only do bankruptcy part time don’t know about.

  1.  Who is coming after you for money?  

If you’re up against the big boys like the IRS, Child Support collections, wealthy ex business partners or investors or an angry, well funded ex spouse you better lawyer up in a big way. The stronger your opposition, the more money they have to investigate you and dig through your life for money they can recover.

What should you actually get for your money?

When you choose a bankruptcy lawyer you need to look for someone who is familiar with the law and has the skills to see how the law applies to your individual case. The more you pay, the more likely you are to feel entitled to access to the attorney and their responsiveness to you, no matter how crazy your question sounds or how frequently you need questions answered.   Price alone isn’t always indicative of good customer service. In fact, some of the most expensive lawyers in the area are the most likely to farm your work out to others. On the opposite end though, low fees don’t usually leave room for the attorney to develop interpersonal relationships and give you excellent customer service.

So, how much should I actually pay?

At the risk of sounding cliche, it all depends on your situation. It can depend on the cost of living where you are, legal fees just cost more in Atlanta than they do in Newnan.  It also depends on your individual circumstances. If you have easy debts like credit cards, if you’re a W-2 employee or if you don’t have a ton of assets, you’ll usually find that your bankruptcy will cost less.  Another thing to consider is the legal market where you are. Be prepared to meet with several lawyers. The best Bankruptcy attorneys in the area offer free consultations. You should meet with at least two bankruptcy attorneys before you decide which attorney should represent you.  Finally, be prepared to reject law firms that don’t speak with you candidly and offer you up front pricing and fees. You should also feel comfortable with your attorney and quiz them about their experience.

Finally, just because someone charges the most doesn’t mean they’re the best. It just means they charge the most.  

If you find yourself needing quality representation, I hope you’ll give our attorneys a chance to earn your business.  Contact us today to schedule a free, no pressure, consultation to determine how we can help get you back on the road to financial prosperity.  

Cleaning Up Finances Before Bankruptcy

There’s good reason to tidy up.  The popular show on a major streaming service has made tidying up a national sensation. Many people try to cleaning up finances before bankruptcy but that isn’t always a good idea. In fact, don’t waste your time cleaning up finances before bankruptcy and especially before you consult with a bankruptcy attorney.

Doing this could result in you wasting money or losing options under the bankruptcy code if you make any last minute changes to your financial situation. Your situation has the most options available to you if your attorney sees your financial picture in its totality.  What looks like a mess to you may look like major opportunities and significant advantages to your bankruptcy counsel.

There’s a potentially high cost to trying to tidy up.

The most sickening feeling I get when consulting with a client is when they tell me they just paid off a debt to a family member, borrowed against their retirement to satisfy debts, or paid off taxes in lieu of something else while cleaning up finances before bankruptcy. None of these things should be done without seeing a competent bankruptcy attorney.

Paying off debts to family

Paying off our family seems like the right thing to do.  We want to take care of our family, especially when they took a risk by loaning us money.  People do this for many different reasons. Some do it to hide the fact that they had to file bankruptcy while others do it to potentially protect assets from the bankruptcy process before you file.  

The most likely outcome of this situation is that paying off these people (friends, family, business partners) will actually hurt you and them more than it helps anyone. The Trustee can sue family members and friends you’ve paid off for during the preceding year to recover the money you paid them. These payments are often known as preferential payments and they are not legal under the bankruptcy code.  Under bankruptcy, there must be fair payments to ALL creditors, not just the ones you want to pay off.

Often, the exemptions allowed in Georgia will protect more of your money than you expect.  Once your case is concluded, you can pay off your family or friends without any kind of adverse consequences.  In other words, hold onto your money until AFTER you’ve consulted with an attorney.

Most settlements before bankruptcy are a waste

One of the most troubling scenarios I’ve seen in recent times involved an older couple who had spent more than 5 years trying to pay off credit card debt through a debt settlement agency.  They did this in lieu of meeting with a bankruptcy attorney. What they didn’t realize was that despite all the thousands of dollars they had spent, not all of their debts were being paid through the settlement. They had to file bankruptcy anyways and they got no credit from the money they spent trying to pay off their credit cards.  During this time they struggled to pay their property taxes and student loans and they ultimately fell into default as well.

The better option for that would have likely been to file bankruptcy and use the excess money they had to retire the tax debt or pay off their student loans as those two types of debts are not dischargeable under bankruptcy.

Generally speaking, your bankruptcy will be no simpler, less expensive or less damaging to your credit based on the number of creditors you have.  If you have to file bankruptcy, reducing the number of creditors you have isn’t going to matter to your case.

Tax debt can actually be useful

Generally speaking, people usually think owing the government is bad business.  However, in your bankruptcy case it could actually be an asset if your income is above the average in your state.  This helps with the means test that helps determine if you make too much money for a Chapter 7. You can deduct the tax debts you owe from your income in order to qualify for a Chapter 7 in certain cases. The same thing goes for mortgage arrearages and property taxes you owe on your home.  These types of debts can be useful in getting you into the type of bankruptcy you want to file. If you eliminate this type of debt before you consult with an attorney and it leaves us with fewer tools to adjust your income when working with the means test.

Stop trying to clean things up

Don’t make the mistake of cleaning up finances before bankruptcy if you haven’t consulted with an attorney.  We need to see all the pieces, broken or not. Don’t try to sweep debts under the carpet or pay them off before you consult with a competent bankruptcy attorney. The attorneys at Harmon and Gorove have decades of experience in helping people clean up their financial mess and get their life back.  Contact us today for a free consultation to see how we can help you.

 

2nd Mortgage Lien Stripping in Bankruptcy.

A 2nd mortgage or home equity line of credit (HELOC) can be a very tricky situation when it comes time to file bankruptcy.  Unfortunately, due to the housing collapse and the Great Recession of 2007, many people in this country have multiple mortgages or other types of loans attached to their homes, often a high rates of interest.  Despite what people may think, 2nd mortgages and HELOCs CAN be stripped and removed through the 2nd Mortgage Lien Stripping process in a bankruptcy if you have the right circumstances.   

Here’s how they’re treated by the bankruptcy court

A HELOC in Chapter 13 bankruptcy:

Chapter 13 bankruptcies require debtors to make payments to the holder of their primary mortgage holder as well as a Chapter 13 Trustee.  The Trustee’s job is to distribute these payments among the creditors who hold priority status. In a Chapter 13, your HELOC debt may ultimately be discharged as the lender will have likely gotten a percentage of the payments you made into your case through the trustee’s office.  

A HELOC in Chapter 7 bankruptcy:

In a Chapter 7 Bankruptcy, you can cancel the debt on your home equity line of credit.  The only problem with this is the fact that you can’t cancel the lien that the creditor has on the house.  As a matter of fact, the HELOC lender could possibly still foreclose on your house after the bankruptcy has concluded.  While it would only benefit them if there was equity in the house, there’s still technically no way to stop them from doing this.  The best way to avoid a foreclosure after a Chapter 7 has concluded is to sign a reaffirmation agreement with your HELOC lender during the bankruptcy.

Second mortgages in Chapter 13:

2nd Mortgage Lien Stripping is possible when a second mortgage isn’t secured by a home’s value and can potentially be eliminated in a Chapter 13.  Homes that are underwater may have second and third mortgages that aren’t secured by the value of the property anymore due to the fact that the amount of the loans total more than the current value of the property.  One thing to remember though is that discharging a second or third mortgage will have no effect on what you owe on your first mortgage and you will still have to pay that mortgage in full.

If you find yourself facing the reality of foreclosure due to a second or third mortgage on your home and you think that 2nd mortgage lien stripping may be right for you, come see one of our experienced attorneys at Harmon and Gorove today.  Our attorneys have decades of experience handling cases like this and they can advise you if you will benefit from this valuable tool under the bankruptcy code.  

Bankruptcy: How it Affects your Spouse

Marriage means much more than just living with someone, it means sharing a life together and that life includes your finances. Still, sometimes one spouse may need to declare bankruptcy to get out from under their debts, even if husband or wife does not. There are any number of reason why this may be the case.  The filing spouse may have racked up credit card debt as a college student or may have incurred medical expenses that the other spouse isn’t liable for. If you are married, you often can file for bankruptcy without your husband or wife. Even when you file and individual bankruptcy case, it may still have a profound effect on your non filing spouse.

How Bankruptcy can Affect your Spouse:

Generally speaking, if you are filing for an individual bankruptcy case, it will not have much of an effect on your spouse in many cases. One of the areas in which it may have an impact is If you have joint debts discharged in the bankruptcy. By doing this,  the bankruptcy may appear on your spouse’s credit regardless of whether they have filed.

Also, when you file for bankruptcy, it only eliminates your personal debt, but your husband or wife is still obligated to pay back their own debts and any joint debts that they may be on with you. Your creditors can pursue legal action against your spouse to collect your joint debts once you have filed for bankruptcy. While this past statement is true if don’t life in a community property state, if you do live in a community property state and discharge the debts you owe jointly with your spouse, the creditors cannot pursue collections against your marital community property after your bankruptcy. In this case, your spouse benefits from discharge of your joint debts.

Filing for Chapter 13 bankruptcy protection can protect your spouse from creditors with the Co-Debtor stay. A Co-Debtor protects the debtor against almost all types of debt collection activity by virtue of you having filed for protection yourself. A chapter 13 also prohibits creditors from pursuing your co-debtors during the course of your bankruptcy. However, in a chapter 7 bankruptcy, the co-debtor stay is not included. At that point a collector will not be able to collect the debt from you, but it can collect it from your spouse.

Finding Financial Freedom:

Filing for bankruptcy is a last resort for many and a challenging process for everyone, especially if affects your loved ones. Understanding what your options are helps you both make good decisions that can get you back on the road to financial prosperity and security. If you are considering filing bankruptcy, contact our experienced bankruptcy attorneys today so they may explain the different options you have available to you under the law. Harmon and Gorove has helped thousands of families recover from difficult financial situations over the course of the last 35 years.  Contact our office today for a free, no obligation consultation.

Savings Rate in America is Scary

The average American family is struggling with savings.  While as much as 70% of people agree that the economy is humming along at a record pace, many people often do not see the real benefit that Wall Street is reaping in their own bank accounts.  Here in the United States, the economy may be doing well but the savings rate reaches has reached a new low.

 

A recent study by the Federal Reserve says that the average American consumer is unable to cover a $400 emergency expense without tapping credit or having to sell some possessions. Many attribute this to the rising cost of living and the recent uptick in consumer debt and student loan debt which are both having a negative effect on the savings rate.  Student loan debt in America now tops 1.4 Trillion dollars and is causing many people to not be able to purchase homes and cars and is even blamed for delaying marriages and keeping people from starting families.

 

Another disturbing trend in the savings rate in America is the fact that more than 50% of people have less than 1,000 dollars in savings.  Despite the fact that more Americans are feeling confident in the economy, a full 57% of Americans don’t even have 1,000 dollars saved. This is disturbing because many people still expect to retire at or around 65.  The average social security check people receive in retirement is approximately 1,400 per month.  While that will continue to increase as time goes on, it is a sobering thought that many people who are late to get into the savings game may have to finance their retirement on just under 17,000 dollars per year.  


As we stated earlier, most people are feeling more financially secure but they are failing to save.  You can make that savings easier if you contribute to employer funded or matched retirement plans which save your money for you, keeping you from ever getting your hands on it.  If you work for an employer that does this, we highly recommend you using this. If you are having to save on your own and you keep finding it harder and harder to put money away you may be a good candidate for bankruptcy.  Bankruptcy can be a positive thing for your finances and it can help you eliminate may of the unnecessary debts that are holding you back from creating a savings plan. If you are struggling with creating a savings plan, give us a call.  The attorneys at Harmon and Gorove have decades of experience helping people out of debt and making meaningful financial changes in their lives.  

Presidents Who Have Filed Bankruptcy

If you’re feeling burdened by debt and you think that you’re alone, think again.  Some of history’s most well known people; celebrities, politicians and other world leaders have found themselves facing financial hardships. Even several Presidents have found themselves in serious financial trouble.  Below I’ll list several U.S. Presidents who have filed bankruptcy either before or after they left office.

Thomas Jefferson

Thomas Jefferson was a brilliant lawyer, a gifted writer and a wealthy landowner but Jefferson wasn’t the best at managing his finances. His main occupation was that of a farmer.  Due to this he suffered the ups and downs that often go with the unpredictable nature of agriculture. He also used his considerable wealth to lend out money and the payments made against those loans were often unreliable. He also inherited debt from his father-in-law and from a friend who did not pay off a debt that Jefferson had co-signed. Jefferson also had problems with his spending.  Jefferson’s love of luxury led to expensive spending habits as well and he died with more than $100,000 in debt (roughly 2-3 million dollars in today). However, unlike today, he didn’t have the option to file bankruptcy except during a brief window from 1800 to 1803, which he did utilize. Thomas Jefferson died broke and unable to pass along any assets to his heirs and was even unable to free his slaves at his death as they were considered property and were auctioned to settle his debts but Jefferson wasn’t the last of the Presidents who have filed bankruptcy.

Abraham Lincoln

Abraham Lincoln, one of our greatest presidents, found himself in the soup financially after the failure of a business venture. Lincoln even found himself having to assume more than half of the debt from this failed venture when his partner in the business died shortly after the business shut its doors. Lincoln, out of a sense of duty, assumed the debt and struggled for some time with it. Lincoln lost all of his assets and he spent several years trying to pay off the debts. Despite all this hardship, Lincoln was undaunted and didn’t allow the stigma of bankruptcy  to follow him for years on end. Just a mere 8 years later, Lincoln was elected to Congress and in 1860 became President of the United States. Lincoln had trouble with his finances for the rest of his life largely due to his wife’s extravagant spending habits which she carried over even after his death in 1865.  Lincoln was one of the first Presidents who have filed bankruptcy

Ulysses S. Grant

Grant was a Civil War hero who many credit with saving the Union, right along with Abraham Lincoln. As good as Grant was on the battlefield, he was an awful businessman. Grant, with his judgement often clouded by his alcoholism, made a series of bad investments. Grant invested heavily in Grant & Ward, a Wall-Street investment company set up by his son and his son’s friend Ferdinand Ward. Ward stole and embezzled the funds Grant invested, eventually going to jail for it. This didn’t change the fact that the President was still on the hook for hundreds of thousands of dollars of debt after Grant & Ward failed and he went bankrupt. Ulysses Grant worked nearly until his dying day writing his memoirs and only way he was able to repay any of his creditors was through selling his Civil War memoirs which were published posthumously.

William McKinley

William McKinley was a lawyer like Thomas Jefferson and like Jefferson, McKinley cosigned on a debt for a friend.  When this friend decided to bankrupt on the debt, McKinley was forced to take over the debt as a co-signer. All of this occurred shortly after his election as Governor and he was forced to declare bankruptcy while serving as the Governor of Ohio.  Bankruptcy wasn’t all bad for McKinley. Less than three years later, he was elected President of the United States.

Donald J. Trump

Donald Trump is a businessman who inherited the business his sons now manage called the Trump Organization in the 1970s when his father retired from the business.  While Trump did see a great deal of success as a real estate investor, perhaps his biggest failure was as the owner of several Atlantic City Casinos during the late 1980s and early 1990s.  Trump’s casino, the Trump Taj Mahal, found itself 3 billion dollars in debt with Trump personally guaranteeing nearly 1 billion dollars worth of the debt personally.  Trump was forced to sell off several pieces of personal property including a yacht and an investment in an airline to satisfy the debts and even then he was forced to make payments on the debt for several years after due to debts that weren’t discharged in the bankruptcy. While Donald Trump is the most recent of the Presidents who have filed bankruptcy, I’m sure he won’t be the last. 

 

Even great people find themselves overwhelmed by debt. Whether that’s due to failed businesses, a job loss, medical emergencies or illness, or just bad luck. Bankruptcy is a resource that can help you get back on your feet and give you a fresh start if you, like these Presidents, find yourself in over your head. Call us today to learn what your options are!