How To Find The Right Bankruptcy Attorney

At the height of the Great Recession in 2009, more than 1.4 million people filed for bankruptcy protection. As the American economy struggled to regain its footing, that number actually increased the following year. Nearly 1.6 million citizens filed for protection in federal courts in 2010, according to statistics released by the Administrative Office of U.S. Courts.

Though filings have declined of late, tens of millions of Americans are in constant danger of being overwhelmed by their debts. Not surprisingly, lawyers who work in this field are in high demand. In this article, we will discuss exactly what these legal professionals do and how they can save you from losing everything.

But before we begin, nobody wants to file for bankruptcy. Although it is quite common, filing is an incredibly unpleasant process. It is also a public admission of failure, which is why few Americans do it willingly.

Why Contact An Attorney?

Because the U.S. Bankruptcy Code is incredibly complicated, people that are considering filing for protection should call a qualified bankruptcy attorney. Yes, a person can represent himself in court, but it is seldom a good idea. Attorneys spend years studying the dense language of the U.S. tax code before they stand up in court. A neophyte cannot possibly compete. It is also important to note that if you make a single mistake on your petition or you file it incorrectly, your case could be summarily dismissed.

What To Look For In A Bankruptcy Attorney

For starters, the lawyer should be considerate enough to offer a free consultation. After all, you are filing for protection because you can’t pay your bills. Paying consultation fees on top of what you will be charged for your case really is a waste. Fortunately, most of the top attorneys in the field offer initial meetings for free. It is also best to speak with more than one legal professional before you make your decision.

The single most important consideration when searching for a bankruptcy attorney is experience. In other words, he or she should specialize in bankruptcy law. As we mentioned, the code that governs this area of legal practice is extremely complicated and an attorney who does not specialize in it may not be able to compete with those that do. It is also important to contact a professional in your area, since different states and regions may have different laws.

An experienced legal advisor should also be a great negotiator. Since most of these cases are settled, it is important to ask about a prospective lawyer’s success in negotiating favorable terms with specific examples.

Last but not least, it is important to consider the hourly rate. Because most of the cases take time, clients can end up owing a fortune if the lawyer charges a high rate. Therefore, it is always a good idea to ask for a rough cost estimate before you agree to anything. If you can afford the fee and the lawyer seems to know his or her stuff, you may have found your match.

Cram Down a Car Loan With Bankruptcy

Many individuals who are considering filing for bankruptcy are interested in what is known as a car loan cram down. What is a car loan cram down, how does it work, and when may it be utilized for you? Here, learn all about this interesting mechanism of bankruptcy proceedings.

A car loan cram down is utilized for individuals who currently have a car loan in which they owe more on the loan than the car is currently valued at. In other words, your car is worth less than your remaining debt on it, which is certainly not a good position for you to be in.

This happens to many people, as vehicles can depreciate quickly, and this is particularly the case when loans were made for long periods, and little or no money was put down, meaning the loan carried the full sale price of the car when you purchased it.

With an auto loan cram down, you can then reduce the remaining principle balance of your debt to the actual value of the car. In certain instances, this can potentially save you thousands of dollars. Since you owe more than the car is worth, only the actual value of the vehicle is secured by your lender. This means that, they would only receive the actual value if they resold the car, and therefore, the remainder above that value represents unsecured debt.

It’s important to note that the option to cram down your car is not available with all types of bankruptcy cases. Specifically, it is available for those filing chapter 13 bankruptcy. After you cram down your car, the newly reduced and remaining balance will be paid according to the payment plans you establish during your bankruptcy case.

It’s also important to note that cramming down your car has another benefit to you as well. It can be utilized at the same time to reduce your auto loan interest rate. Now, you owe less on the car, you don’t have more debt than the car is valued at, and the remaining balance which you have to pay will be paid at a lower interest rate.

As always, be sure to consult with an experienced legal professional who will be able to guide you through this process. To maximize the benefits of bankruptcy and successfully utilize mechanisms such as car loan cram downs, you need the experienced hands of an attorney who is intimately familiar with the bankruptcy process and all of the many regulations in place.

What Is the Automatic Stay in Bankruptcy?

For many individuals filing bankruptcy, the automatic stay is one of its biggest appeals. Of course, it’s important to clearly understand what the automatic stay is, how it works, and depending on your specific circumstances, how it may be able to help you. Learn all about the automatic stay in this guide.

The automatic stay is a bankruptcy mechanism which kicks in as soon as you file bankruptcy. Therefore, you don’t have to wait for your case to be completed, the impact of the stay begins immediately. This is why it’s such a great benefit of deciding to file bankruptcy and then taking action.

With the automatic bankruptcy stay, lawsuits against you and other actions being taken by certain creditors are ceased or halted. This provides you with immediate relief in several key areas.

One of the huge upsides of this, for instance, is in temporarily stopping the foreclosure process. Therefore, when you file bankruptcy, the automatic stay kicks in, and your house cannot be foreclosed upon. The foreclosure process may be renewed later, and all of this will depend on your financial situation, and whether or not you are trying to save the home through bankruptcy in addition to getting that temporary pause.

Another one of the most frequently cited benefits of the automatic bankruptcy stay is that it immediately stops wage garnishments. As soon as you file bankruptcy, garnishments can no longer be taken from your income.

Now, you immediately go back to receiving your full paycheck, and this provides crucial relief in terms of being able to meet other debts and financial obligations. Additionally, bankruptcy may be able to help you recoup wage garnishments already taken for a designated period of time before you actually filed.

The automatic stay has numerous other impacts depending on the situation you’re in. If you are being threatened with eviction, or threatened with having your utilities turned off, the automatic stay also applies. Needless to say though, it’s not an instant fix for everything, and does not get applied to every single type of debt or obligation.

There are many considerations when you are thinking about filing bankruptcy. Certainly, the automatic stay is one of them, and it makes a strong case for why you may want to file. Be sure to consult with an experienced bankruptcy attorney who can help you determine the right path for you to take, as no two cases are the same.

The Impact of Bankruptcy on Alimony and Child Support

One common area of concern for individuals filing bankruptcy is that of child support and alimony obligations. This includes for people who owe child support and alimony, as well as those who receive child support or alimony. Here, this guide will explain the impact of bankruptcy on these legal and financial obligations.

These types of payments are considered a priority debt during bankruptcy proceedings. That means that you cannot discharge this debt, and you will need to get caught up on missed payments as well.

However, with a chapter 13 reorganization plan, you will see relief with your overall financial picture, how much you owe, to whom and when, with a payment plan. This payment plan will make it easier to get caught up on the support you still owe. The same goes for filing chapter 7 – you cannot discharge child support, but by eliminating other financial obligations, you should have an easier road to pay your child support moving ahead.

On the other side of things, many people who receive child support are concerned that if they file bankruptcy, they will not be able to protect those payments, which would of course be a major negative to going through with the bankruptcy proceedings. However, if you are receiving child support payments and are filing bankruptcy, the ongoing payments you receive will be protected during the proceedings. Further, if you have leftover money which was provided from child support payments, this can generally be protected as an exempt asset as well.

Moving onto alimony, this is also considered a domestic support obligation, just as support payments also are. Therefore, the same rules generally apply although there are certain exceptions. Typically, if you file bankruptcy and owe alimony, you cannot discharge this debt and must get caught up on missed payments or past obligations, and if you file bankruptcy and are receiving alimony, you should be able to protect this income as well.

Of course, child support and alimony are only one set of concerns for those filing bankruptcy. Further, each person’s case is always different, with a range of circumstances and factors affecting how bankruptcy proceedings play out, what the best options are, what type of bankruptcy to file, and whether you should even file bankruptcy or not.

Always consult with an experienced attorney who can guide you through this complex process. Having legal assistance to fight on your behalf and ensure you take advantage of every opportunity to successfully improve your own circumstances is crucial.

The Effects of Bankruptcy on Your Credit

One of the biggest concerns for anyone considering bankruptcy is how their credit will be affected by filing. Everyone knows there is some impact. Most disagree as to the size or the duration of the impact. That, and how to rebuild are two things I hope to shed some light on in this post.

What if I just grin and bear it?

A question you should ask yourself is, “What is going to happen to my credit score if I don’t file bankruptcy?” For many people contemplating bankruptcy, they are already at the point where they are not able to pay their ongoing debt obligations. If this is you, your credit score is taking a hit every month that goes by where you aren’t making your monthly payments. To give you an idea, once you go 30 or 60 days late, your credit score starts to take a hit. If you let a payment get to the point where it is 90 days late, it will stay on your credit report for up to 7 years and will have a significant impact on your score. Having just a couple of these occurrences could be as damaging or more damaging than filing a bankruptcy in the first place. Because of this, once you recognize that you aren’t going to be able to find a quick way out of the situation, it is probably best to get the bankruptcy wheels moving. The higher your score is before the filing of the case, the higher it is going to be after you file the case and get your discharge.

Debt Resolution Companies and Your Credit.

Many people try to do whatever they can to avoid bankruptcy, for some people this includes entering into agreements with companies that promise a lower payment by consolidating their debt. These companies come in a variety of flavors. That is a topic for another time though. What many of them will do is enter into an arrangement with you where you make a monthly payment to them, then they either hold the money until they have enough to make an offer on any one particular debt, or they make small monthly payments to all of the creditors at once. The problem is, this doesn’t stop those creditors from negatively reporting to the credit bureaus. It also doesn’t necessarily stop the creditors from suing you in state court, obtaining a judgment, and garnishing your wages. Another problem is that if they do settle, it will show up as settled for less than full amount which hurts your score. On top of that, if you settle, you will likely get a 1099 from the company and likely will have to claim the forgiven amount as income on your taxes. That will either mean you will have a smaller refund or will owe.

How long does it stay on your report and what does that mean to you?

First of all, if you are in a tough financial spot and are having trouble paying your rent or making your house payment, this should not be a factor in your decision to file. That said, how long it stays on your report and how long the bankruptcy notation negatively affect you are two very different things. If you file a Chapter 7 bankruptcy, it is generally going to stay on your report for 10 years. If you file a Chapter 13 bankruptcy, that will stay on your report for 7 years after the case is discharged. Seven to ten years seems like a long time. It is a long time, but within that seven to ten year period you can still buy cars, houses, and get credit. The general rule is about two years after a chapter 7 you can get a home loan (sometimes only one year), almost immediately after the case you can get car loan and credit cards. Not too bad right? You should tread lightly here. Look at the offers you are receiving and only accept the best, it isn’t going to help you if you start applying for many cards at once, limit it to one or two at the most. When you can get credit is going to be dependent on your income, and on your credit score. I have seen clients with scores in the 500s prior to filing a Chapter 7 have scores in the 700s one year after the case discharged. On the other hand, I have seen other clients with low scores come back a few years later and they still had low scores. So what is going on there?