Tag: Chapter 13

Alternatives to Bankruptcy: Usually a Bad Idea

in Bankruptcy

Pardon my bluntness, but the alternatives to bankruptcy often just suck.

I’ve heard countless horror stories about alternatives to bankruptcy over the course of my career but the one that has stuck with me was one that happened about two years ago.

A client hired a debt settlement company thinking they’d get her out of a big mess she’s gotten into.  She didn’t want to file bankruptcy because she was worried about the “stigma.” Because she was worried about the “stigma” she ended up with 5 different judgments against her and three separate garnishments.  The cost of her bankruptcy was higher than it otherwise would have been and she’s still out the $2,000 she paid to the debt settlement company. (For the record, my fee in her case would have been less than that amount.).

Living Large on Fear

Stories like this one exist all over the country.  People get ripped off every day because they’re scared of bankruptcy.  Alternatives to bankruptcy are blasted all over the internet and TV.  They are a shining example of the way these firms profit from the fears of people who think bankruptcy makes them a bad person or will, “cost them everything.” Most people will do just about anything they can think of in order to avoid bankruptcy for one reason or another.  Maybe they’re ignorant of the process of bankruptcy or they have some moral obligation they need to fulfill by paying their debts.

If you’re one of those “debt relief” companies, feeding the fear of bankruptcy will make you very rich.

Appeal to the inherent desire to do right by creditors, and you get your money before it’s obvious the debt is simply too large to pay off.

When can Bankruptcy be the Best Choice?

I’ll be very honest, Bankruptcy isn’t for everyone.  In terms of my finances, that isn’t the best thing I can say, but that’s not why I’m here. Bankruptcy can vastly improve the lives of many more people than actually use it. I have several instances when bankruptcy is a good idea. Generally speaking, the following statements apply:

  1. The greater your debt to income ratio, the more it would benefit you to file bankruptcy.
  2. If you don’t have a substantial amount of money saved up for retirement, you should probably consider filing.
  3. If you’re older, you should look at filing.

ALWAYS do your Homework

Even though I’m married to a teacher, I don’t claim to be one myself. I can, however, tell you this.  If you’re going to pay money to someone who is PROMISING to get you out of debt, you should at least meet with a bankruptcy attorney.  Our firm offers free, no obligation consultations. A lawyer can tell you about how bankruptcy should work and the risks that come with working with a debt settlement firm.

Unlike debt settlement, a bankruptcy can usually wipe out debts, often with no payments necessary so you can obtain immediate relief without the chances that the creditor will send you a 1099-C.

Other people with higher incomes or significant assets that can’t be protected in a Chapter 7 Bankruptcy can often file a Chapter 13 case.  Chapter 13s are known as debt reorganization cases.  Depending on your circumstances, you’ll pay back anywhere from 1% to 100% of your unsecured debt.

The bottom line is, there are alternatives to bankruptcy, but a lot of them stink.  If you truly want to be debt free in the fastest, most pain free way, bankruptcy is the way to go.  However, you should always decide the course that’s best for you. Meeting with one of our attorneys is free of charge and we can tell you the best course of action.  In the end, we want to help you any way we can, even if it’s to tell you that bankruptcy isn’t the best option for you. If you feel you’ve reached the end of your financial chain, don’t wait until it’s too late. Contact us today for a free, no obligation consultation.

How Much Should I Pay for a Bankruptcy?

in 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

in 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.

Timing Bankruptcy: How Often Can I file?

in Bankruptcy

Timing Bankruptcy is very important and can have an impact on when and what types of cases you can file. The first thing you must realize is that there isn’t a set number of times a person can file for bankruptcy in their life, if you’re eligible to file, you can do it.  Just because you CAN file 5 or more times in your life, doesn’t mean you can actually get what is called a discharge of your debts. A discharge is the complete and total wipe out of your debt that comes upon completing a bankruptcy.

The biggest thing you must consider if you have to file for bankruptcy more than once in you life is timing bankruptcy correctly. If you completed a previous bankruptcy, whether it was a 7 or a 13, you have to wait a certain amount of time before you can receive a discharge in another bankruptcy. There are a number of factors that determine when and if you can file another bankruptcy and receive a discharge:

  • Which type of bankruptcy you file previously
  • When you filed the bankruptcy (ie. what date)
  • Whether your bankruptcy was completed (discharged), dismissed (voluntarily or involuntarily) or dismissed with prejudice (you can’t file bankruptcy again for a set period of time because of something you might have done.)

There are restrictions on timing bankruptcy as well.  When or whether you are eligible to discharge your debt again depends on whether you filed a 7 or a 13, when you filed that case, whether you received a discharge in that case and what kind of bankruptcy you want to file now.

  • If you file a Chapter 7 and want to file another Chapter 7: If you have filed a Chapter 7 Bankruptcy and received a discharge, you must wait 8 years to the day of the date you last filed for Chapter 7 Bankruptcy.  In other words, if you filed a Chapter 7 on May 1, 2010, you wouldn’t be eligible for another Chapter 7 until May 1, 2018.
  • If you file a Chapter 13 and want to file another Chapter 13: If you complete a Chapter 13 case and your debts are discharged you must wait 2 years from the date that your previous Chapter 13 was filed in order to file for and receive a discharge in a new Chapter 13.  This usually isn’t an issue though because it takes a minimum of 36 months to complete a Chapter 13 Plan. Generally speaking, you can file for a new Chapter 13 case pretty much immediately after your first Chapter 13 is closed.
  • If you file a Chapter 7 and want to file a Chapter 13: If you filed a Chapter 7 Bankruptcy and received a discharge, you can file a Chapter 13 case and be eligible for a discharge if the case is filed at least 4 years after the date you first filed your Chapter 7. One important thing to keep in mind is the fact that if you file a Chapter 13 after you complete a Chapter 7 and are discharged, you can still use a Chapter 13 to get caught up on debts that are of a high priority like mortgage deficiencies or missed auto loan payments even if you aren’t eligible for a discharge.
  • If you file a Chapter 13 and want to file a Chapter 7: If you completed your Chapter 13 case and received a discharge, you must wait 6 years from the date your Chapter 13 was filed before you may obtain a discharge in a Chapter 7 case.  There is an exception to this rule though. If your previous Chapter 13 was a 100% case, meaning that you paid your unsecured creditors back in full you may be eligible for a discharge in a Chapter 7.

The only way to know for sure which type of Bankruptcy you are eligible for and if timing bankruptcy correctly is in your interest is to speak with a competent and compassionate Newnan Georgia bankruptcy attorney. Our attorneys at Harmon & Gorove can offer you a completely free consultation in a judgement free and comfortable environment. We can review your current financial status and tell you exactly what would work best for your situation.  Whether it is a Chapter 7 Bankruptcy, Chapter 13 Bankruptcy or no bankruptcy at all.  We always look out of the best interest of our clients.  If you think Bankruptcy can help get your finances back on track, contact our office to schedule a free consultation today.

If You Need to File Bankruptcy, Don’t Wait

in Bankruptcy

If you are in financial trouble and you see no other way out, do not wait, speak to an attorney and if they recommend it, file bankruptcy immediately. The longer you put off the inevitable the more it will cost you. It will likely cost more in attorneys fees due to the increasing complexity of your case.  It will also cost you in terms of your credit score.  Yes, filing bankruptcy will have a negative impact on your credit, but it is just one factor in how they determine your overall creditworthiness. The longer you wait the lower you score will go, period. In some situations, it may be advisable to delay filing for a period of time. Most of the time though, once you know you need to file bankruptcy, don’t wait.

Matters of Importance

If you have been sent foreclosure paperwork and you have exhausted your other options, you are out of options and you must file to stave off the foreclosure. The same rings true with evictions, lawsuits, repossessions, and garnishments. Once you get the notice filing bankruptcy is the your last and best option. Filing bankruptcy immediately will mitigate the adverse actions of your creditors.

All of the aforementioned situations are matters of extreme importance. Competent bankruptcy lawyers will give you a breakdown of the bankruptcy timeline, including all the inflexible deadlines that must be met before and after you file. Your attorney is an expert in bankruptcy law; when they tell you that time is of the essence it is imperative to get them what they need so they may take action on your behalf as soon as possible.

Matters of Timing

In certain cases, it may benefit you if you wait to file until a certain date, your attorney would discuss this with you and explain why it is advantageous. An example of such a time would be, if your foreclosure is scheduled at a distant enough date, it may be financially savvy to delay your filing to include the coming months in your Chapter 13 plan.

In other instances, if you have taken on a large amount of debt recently or know that you will need to incur some debt in the coming weeks or months, it may be better to delay your filing until you can include those debts as well. You might also have recently made a significant transfer of property, which would affect the timeline of you filing for bankruptcy.

These situations are all less common issues. In the overwhelming majority of Chapter 7 bankruptcy cases, the sooner you file, the better.

If you’ve run out of options, don’t delay, file bankruptcy.

The faster your case gets filed the faster your credit will be able to heal. I simply can’t tell you how important credit can be in your life in today’s world. The sooner your debts are discharged, the sooner you can get back to focusing on the things in your life that actually matter. If you know bankruptcy is your only option, don’t procrastinate. Start the process immediately by calling the knowledgeable attorneys at Harmon and Gorove. They can start the process for you immediately.

Chapter 7 or 13: Which Bankruptcy is Right for Me

in Bankruptcy

For people who are considering filing for bankruptcy protection the advice of a competent attorney can help them decide which type of bankruptcy is right for them. There are significant differences between a Chapters 7 and 13 bankruptcies and only the expert advice of an attorney trained in bankruptcy can help you decide which route to follow.  

Generally, a Chapter 7 bankruptcyis known as a fresh start or straight bankruptcy. Chapter 7s allow for the discharge of unsecured debts like credit cards, utility bills, medical bills, personal loans or other debts that aren’t being guaranteed by secured collateral. In Georgia, most Chapter 7s last between four and six months and most debt will be eliminated. The only types of debt that can’t be discharged are student loans, some criminal penalties, child support arrearages, recent tax debts, Alimony, and other types of non-dischargeable debts that can be discussed with your attorney.

Chapter 13s are a debt reorganization plan which will last at a minimum 36 months to a maximum of 60 months. Each month, the debtor makes a payment to the Chapter 13 trustee that consists of all of your disposable income left over after paying reasonable living expenses each month. The Chapter 13 Trustee uses this money to pay your creditors and your attorney according to a plan which is filed with the bankruptcy court.

What can go wrong with a Chapter 7

The difference between a Chapter 7 Bankruptcy which provides near immediate relief, and Chapter 13 plan, which  lasts 3 to 5 years is a significant difference. When you come in to speak to one of our attorneys, you are relying on their significant experience to help guide you towards the best outcome for yourself and your family. There are significant ramifications for filing the wrong type of bankruptcy. One of the first major problems is filing a Chapter 7 bankruptcy when you’re not eligible.

There are income guidelines that vary from district to district and state to state which ultimately decide whether you can file a Chapter 7. In the bankruptcy reforms laid out by congress in 2005, they created a means test. The means test is a mathematical formula used to determine whether someone is able repay a portion of their debt over time. This complicated figure is based upon income, the size of your family, and certain IRS guidelines for everyday necessities such as housing, food, clothing, grooming, transportation and other odds and ends. There’s also the a second part in the test. This determines whether you have the available income per month to repay your creditors. If you fail either these tests, then you will be forced to convert to a Chapter 13 or your case will be dismissed.

What Can Go Wrong in a Chapter 13

There are also some issues that come up in filing a Chapter 13 Bankruptcy. If your income is too low to provide the necessary funding for a Chapter 13 plan your case will likely never be confirmed and you’ll be back to square one. Often people trying to save property such as a house or a car propose Chapter 13 plans that are completely beyond the scope of their ability to fund.

Knowledge is Key

A good attorney who is an experienced bankruptcy practitioner can advise you on when a Chapter 7 or a Chapter 13 is unfeasible. There are some attorneys out there who will try to push you into one type of bankruptcy or another for reasons ranging from the ability to make more money off your case to just trying to make the client happy.  The attorneys at Harmon and Gorove will ALWAYS advise you on the best course to take regardless of what our fees will be and we will do our best to explain to you why a case may or may not work out.

There are many variables that go into deciding whether a Chapter 7 or Chapter 13 is appropriate for you and your financial goals. This isn’t a simple issue that can be taken lightly. Attorneys must have the expertise and experience to know the intricacies of Chapter 7 and Chapter 13 bankruptcies. It is a massive disservice to clients to file under the inappropriate section of the bankruptcy code. Doing so is going to lead to a terrible result for the client that could end up causing the client significant financial loss. This is where the expertise of a competent attorney is invaluable. You should always be cautious about using an attorney who doesn’t have significant experience in both Chapter 7 and Chapter 13 bankruptcies. The attorneys at Harmon and Gorove have filed more than 6,000 successful bankruptcy cases and provide expert advice on how you can best secure your financial future. Contact us today for a free consultation with our caring and competent staff.