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Chapter 7 or 13: Which Bankruptcy is Right for Me

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.

 

The Automatic Stay: A Saving Grace in Bankruptcy

Tens of thousands of Americans struggle with credit card debt, medical expenses, mortgages and other bills each day. Many of those people have been contacted by creditors in increasingly predatory and harassing ways about late and delinquent payments. Many businesses have probably even turned your unpaid and deficient amounts over to a collections agency. Many of these collections agencies contact you at the most inconvenient times or in the most inconvenient places such as your work, or at dinner time after a long day away from your family.  They are often ruthless in hounding you and over time may become more and more aggressive towards you in an attempt to collect from you. The best way to stop all of these harassing collection attempts is to file for a Chapter 7 bankruptcy. Filing a Chapter 7 Bankruptcy will stop all collection attempts while your attorney works out the details of your debts with the trustee, this is called the automatic stay.

The best thing about a Chapter 7 Bankruptcy is the automatic stay.  The automatic stay is issued to your creditors once your bankruptcy case is filed in the courts. When meeting with your attorney it is extremely important to include a complete and total list of who your creditors are, their address and phone number and how much you owe them in your bankruptcy petition. Doing this will ensure that these agencies receive notice to stop attempting to collect on your debt and to leave you alone. Once the automatic stay is in place, collection agencies can’t contact you, they must stop garnishing your wages and can no longer initiate or pursue lawsuits. Many of our clients often feel a deep sense of relief their case is filed and the threatening collector calls stop.

During, before and after the automatic stay bill collectors are also banned from taking certain actions including making threats, calling you at extremely late or very early hours, using profane language, increasing debts beyond the terms of the contract and threatening to have you arrested if you don’t pay their balance. These are protections afforded to you by the Fair Debt Collection Practices Act. If you feel that your right have been violated or you are tired of receiving the harassing phone calls and letters, being served with lawsuits or having your hard earned wages garnished, call one of the experienced attorneys at Harmon and Gorove.  They can help you find the right debt relief options for your situation and customize a plan to help get you out of debt for good. We offer convenient appointments and our consultations are ALWAYS free.

Bankruptcy, Foreclosure and the American Dream

During times like this more and more Americans have found themselves to be faced with the prospect of foreclosure or bankruptcy. American society puts a high value on owning a home and for many people it is a source of personal wealth and pride. For the many people who have been through the foreclosure process or filed for bankruptcy protection, being able to purchase a new home and start over again seems like it is an unattainable dream.

There is good news though, recent interviews with people in the housing industry (builders, realtors and lenders) suggest that people who have been through the foreclosure process or have filed for bankruptcy protection are often able to return to homeownership sooner than previously thought.  There are steps to take though in order to attain the dream of homeownership again.

Getting back on track

Foreclosures and bankruptcies often stay on someone’s credit for 7 years or more.  Because of this you must take deliberate steps towards rebuilding your credit as soon as you possibly can.  Consistently making bill payments on time, paying down credit cards, lowering other debt, and avoiding going into additional debt can cause credit scores to be dramatically improved within months of being discharged from bankruptcy or completing the foreclosure process.

Many experts say that many people who work diligently at rebuilding their credit and are save money for down payments are able to buy another home within two to 3 years. Federal Housing Agency (FHA) loans are a frequently used way for previously foreclosed upon homeowners to be able to finance a new home purchase. Many former homeowners who have been through a foreclosure or bankruptcy cannot qualify for conventional mortgages and FHA loans have exploded in popularity amongst people with little credit or damaged credit

Generally speaking, conventional mortgages offer interest rates that are lower than FHA mortgages but conventional mortgages often require a downpayment of 20 percent of the price of the home, a credit score of at least 720 and a proof of income. Comparatively, FHA mortgages, only require credit scores of about 620 and a down payment of 3.5 percent of the home’s purchase price, which makes it much more attractive for lower income people or people with little savings.

FHA loans have drawbacks. In addition to higher interest rates, FHA mortgages are subject to a mandatory insurance premium of 1.75 percent of the loan. While this sounds like a lot more money up front, often, these costs can be rolled into the total amount of the loan. Additionally, payments of 1.25 percent of the outstanding balance are required of the homebuyer each year. Many Americans find that FHA loans are a more affordable option despite these drawbacks.

FHA mortgages are not the only available option for homebuyers. Many former homeowners eligible for first-time homebuyer programs and if you qualify for Veterans benefits, you might qualify for a mortgage under the VA. These different programs help buyers to make the down payment and handle the closing costs of the loans. Generally speaking, programs like this are available to homeowners who have not owned a home within the previous three years.

A competent Attorney can help

If filing for bankruptcy is something you’re considering or you find yourself  threatened with a foreclosure it can feel like your world is collapsing around you. We cannot state more emphatically that this is not the case. The experienced bankruptcy attorneys of Harmon and Gorove can explain the bankruptcy and/or foreclosure process and advise you on how it will affect your financial situation. Armed with facts, expert analysis and years of experience our team can recommend the best debt-relief option for your particular situation. With the planning, guidance and the expertise of our team your dream of owning a home again can once more become a reality.

 

Bankruptcy and Divorce: They often go hand in hand

Financial problems are often a source of major problems in a marriage. Many couples in Georgia have found themselves facing the prospect of divorce at least in part due to unsustainable debt or different spending habits. Many couples choose to file a Chapter 13 bankruptcy in an effort to save their marriages from divorce.  Unfortunately, this decision doesn’t always end up working out and leaves divorce as the only option. Divorce can leave the parties wondering how their bankruptcy will be impacted.

There are several factors that play into the options for people facing divorce in this situation. Bankrate states, some people may be able to convert their Chapter 13 case to a Chapter 7. Another important thing to consider when looking at your options is whether the case was filed as a joint case or a single case.

There is a different set of circumstances for those who did not begin their bankruptcy proceedings before deciding to get divorced.  Those people will need to look at which type of bankruptcy plan is best for them according to a blog called My Horizon Today. The types of debt, the new incomes of the divorcing parties and the expenses incurred by new living situations are just some of the factors that will contribute to this decision.

Another important thing to think about during this time is how well the divorcing couples are able to work together to achieve their financial goals. If the divorce is not amicable and the former spouses are unable to communicate, a Chapter 13 bankruptcy might not be the best idea. However, for divorced couples who can get along and communicate, this type of plan may be the best thing for them even though they would likely have to communicate and work together through the 3 to 5 year bankruptcy term.

If you find yourself facing debt problems that could potentially lead you to divorce or you are divorcing and find your new financial reality untenable, contact the compassionate attorneys at Harmon and Gorove. We offer same day appointments and free consultation so we can show you how we can help you achieve a new level of financial freedom and get your life back on track.

Living Paycheck to Paycheck? You’re not alone.

Despite the booming economy and record low unemployment, many Americans are unable to pay their bills and save for a rainy day.  In fact, only 29 percent of families have enough money saved to cover 6 months worth of bills in an emergency fund and a whopping 23 percent have no savings at all. A recent study noted that 78% of American families are living paycheck to paycheck.  It is among the highest number ever recorded.

There are many reasons to explain why this might be the case.  Despite a low unemployment rate, millions of people are underemployed.  Underemployment is when you have a job but are unable to work as much as you would like or work for wages that are too low to support your lifestyle.  Countless others work in the gig economy, driving for rideshare companies or doing contract work that pays intermittently and doesn’t provide benefits or a steady paycheck.  Still more people find themselves saddled with debt that is eating up their paychecks and stopping them from being able to save for the future and get ahead.

The average American household has $137,063 in debt with the average American earning just over $59,000 last year.  While much of this debt is due to a mortgage or student loan, the average American carries a balance of $6,379 on their credit cards.  The total outstanding credit card debt in America now exceeds 1 TRILLION dollars.  Cars are getting more expensive as well. The average American household owes more than $30,000 on car loans.  Suffice to say that millions of Americans are struggling to get ahead and and countless more are actively falling behind, struggling to handle untenable loads of debt.  

If you find yourself among the nearly 8 in 10 Americans living paycheck to paycheck and you feel like you are drowning in debt, you are not alone. The competent and compassionate attorneys at Harmon and Gorove are here to help you get your finances back on track.  We offer free consultations and have helped thousands of people achieve financial freedom. Call us today and let us help you!

Are unpaid medical bills keeping you up at night?

Medical bills are among the top reasons why people file bankruptcy. The Medical industry is rife with complaints about how charges are calculated and it has little transparency in how much each procedure will cost. Many Americans have no idea how much each visit to the doctor will ultimately cost and even less of an idea about how much a procedure or hospital stay will set them back.  This is especially true of people who do not have medical insurance. The nature of Medical care is that it’s something that often times can’t be put off, especially in emergency situations. With the average cost of an ambulance ride nearing $1,000 and the cost of an air ambulance being $50,000 or more, just getting to a hospital in an emergency situation can bankrupt even the most well off citizens. The choice to seek medical care stresses many Americans, including those with health insurance.

CBS News reports that nearly 25 percent of adults in the U. S. have an unpaid balance on a medical bill. Numerous factors may be involved in why this is the case and who the most indebted people are. Many imagine that the elderly are the group most likely to have unpaid medical bills but it’s actually  people between the ages of 20 and 50 that hold that distinction.

A recent study found that geography plays a role in who often incurs debt for medical care which they can’t afford. The Atlantic states that people who live in The South are more likely to find themselves with medical debt. In fact, of the top 10 states with the highest rates of medical debt, eight are Southern States. Some reasons may include an overall higher need for medical care as many people in the South lead less healthy lifestyles which often requires more medical attention.  Many of the states also did not expand Medicare coverage under the ACA.

Georgia is one of those states in the top 10, coming in squarely at number 10.  37 percent of people in Mississippi have unpaid medical bills while just under 30 percent of Georgians have unpaid medical bills.

Unpaid Medical bills can put a larger strain on the budgets of people who are already finding it hard to make ends meet.  Many doctors and hospitals routinely turn those bills over to unscrupulous and predatory debt collection agencies who constantly harass people, including at work, with threatening phone calls and nasty letters. Some debt collection agencies report negatively on your credit while others go so far as to sue you and garnish your wages.

If you find yourself being harassed, sued or garnished by debt collectors over unaffordable medical bills call the attorneys at Harmon and Gorove and allow us to schedule a free consultation so we can develop a plan to help relieve you of the stress that these unpaid medical bills cause.  We can help you get started on the path to financial freedom today!