Say what you will, money makes the world go round! Money woes affect us all.
It is not hard to get in over your head, with the past days of easy credit and the examples set by our Federal government. Unlike them, we cannot spend more than we make, and we cannot print money or just add zeroes to our debt and ignore it.
Sometimes bad things happen to good people, through no fault or choice of their own. People may live their entire lives working, raising families, paying taxes and otherwise being good citizens, without any contact with lawyers or the legal system.
Unanticipated disability, divorce or death of a spouse, unemployment, company downsizing and the overall global and regional economy have thrust many people into situations they never anticipated happening to them. Debt problems can and do profoundly affect all aspects of your life, from the way you interact with and perceive your spouse, children, friends and co workers, to sleepless nights, anxiety, and the hopeless feeling of despair which attends overwhelming debt.
Before you do things to compromise your financial or personal future, call our offices to arrange an appointment to discuss your financial situation and options. If you have any doubts, take our quiz at the end of this section.
We are a general practice law firm, in practice since 1986, and are proudly in our Twenty-ninth year assisting consumer debtors in seeking relief under Federal Bankruptcy laws. In my bankruptcy practice, I do not represent banks, credit card companies or their collection agencies or large corporations.
Rather, consistent with the philosophy of our firm, I have focused my practice primarily on consumer debtors, helping individuals and married couples and small business persons find their way out of the morass that attends debt problems. We strive to provide personal, compassionate, and non judgmental assistance to all our clients.
The Federal Bankruptcy Code and forms of organized debt forgiveness have been in place in one form or another in this country for over 125 years. I often tell my somewhat embarrassed Bankruptcy clients that the Federal Bankruptcy Code is a federal right and remedy, put in place and periodically adjusted by the U.S. Congress, and that like any Federal right, it is relief put in place for their use and benefit. My clients find it comforting to know, from the very beginning of my relationship with them, that they have nothing to explain, be ashamed of or feel guilty about unless they have done something contrary to the Bankruptcy Code Rules and Requirements, which fortunately is attempted by only a very small group of potential clients
Unlike some other Bankruptcy lawyers, I will take an hour to an hour and a half during my intake conference to carefully analyze your individual situation and explain your choices and the ins and outs of the Bankruptcy Code to you. It is not my goal to make you a Bankruptcy Lawyer during that time. I do think it is my duty to make you an informed client, so that you can make intelligent choices about your Bankruptcy, the debts that you elect to take from Bankruptcy and your consequences of your election to go forward with a Bankruptcy filing after meeting with me. The Bankruptcy laws required detailed and complete disclosure and expects that all Debtors and their attorneys will file accurate and complete schedules with their bankruptcy petitions.
I also spend a few moments during a Bankruptcy Intake to speak with my clients about how they got into debt difficulty, and how they need to cure whatever habits brought them to my door to avoid enduring the necessity of a Bankruptcy filing again. I spend some time talking about debt relief, and credit rebuilding, which is critical in a society as credit obsessed and as credit driven as ours.
As you may be aware, Congress drastically overhauled the Federal Bankruptcy Code, which revisions became effective as of October 17, 2005. The new law carries the rather ominous title of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Like most hysterical “reform” movements, several high profile manipulations of the prior bankruptcy process were exploited to present the impression of widespread abuse, which was simply not the case.
The law was the result of intense lobbying and spending by banks and credit card companies. Despite its noble sounding title, it appears that the goal of Congress was to make this process more difficult, more expensive and even more intimidating for someone contemplating bankruptcy relief. Although I do not have a great impression of many of our elected leaders, they certainly succeeded in this endeavor, on behalf of their constituents the credit card companies!
DO NOT BELIEVE THE RUMORS you may have heard about this law eliminating bankruptcy protection and relief. BANKRUPTCY PROTECTION AND RELIEF ARE STILL AVAILABLE. The new law merely provides more “hoops” for persons to jump through, and requires much more documentation. Most of the relief available under the “old” Code is still available today. However, the new law is at times convoluted and confusing, and there is now a presumption that debtors are abusing the system. Now, more than ever, people need the assistance of experienced competent bankruptcy attorneys to assist them through this process.
All bankruptcy attorneys are required by law to provide this notice:
WE ARE A FEDERAL DEBT RELIEF AGENCY.
WE ASSIST CLIENTS IN SEEKING BANKRUPTCY RELIEF.
Why is it always about the money? The 2005 Amendments to the Bankruptcy code were the result of intense lobbying by the credit card industry, which spent years and years and millions of dollars electing congressman who would do their bidding, which is unfortunately the sorry state of our current political system.
The 2005 Amendments impose a variety of new requirements upon persons seeking debt relief and the recent amendments seek to make a bankruptcy filing more difficult, more cumbersome and more expensive for debtors and create more work for their attorneys. Although I am not a fan of our Congress, and while they can’t seem to do much of anything right, they sure are good at hurting the little guy, and they did so in “reforming” the bankruptcy laws.
Perhaps the most significant change is that different types of bankruptcy relief are now income sensitive. Debt repayments plans are now mandatory if your combined household income exceeds the state median income as established by the U.S. Census Bureau for your household size. Household members include you and your spouse, children, family members residing with you, and even unrelated roommates, (including spousal income, whether they are filing or not) roommate income, some contributions from family members who reside in your home.
Debtors are also now required to attend a credit counseling seminar (at a cost of between $25.00 and $50.00 per debtor), and a certificate of completion must be obtain prior to filing. Debtors also have to complete an exit counseling course (again at a cost similar to the credit counseling course) within 45 days after the creditor’s meeting, and file that certificate with the Court, or their discharge will be denied by the Court. Most of these counseling agencies offer these courses by telephone or over the internet, so they can be completed at your leisure in the privacy of your home. If clients prefer, there are in person counseling sessions available.
Debtors are also required to provide their attorneys with 6 months of paystubs to calculate their filing eligibility, (known as current monthly income). Depending on your financial and earning situation, this period can be critical, as high wage earning months can “drop out” of this calculation in some situations if the filing is delayed (see options in the next section). Until the bankruptcy is actually filed, debtors must continue to provide our office with paystubs for the sixty days immediately preceding their filing, and provide two years of tax returns to the Trustee assigned to oversee their case, and their failure to do so can result in continuation of the creditors meeting, and occasionally bank statements, all at greater cost and aggravation for the debtors.
There are also new requirements for retaining (and paying for) personal property like cars and other items.
Debtors must also reside in the state in which they are filing for 720 days (two years) to take advantage of that state’s exemption schemes (which allow you to retain certain pre-determined dollar amounts of certain assets). This was designed to prevent debtors from “forum shopping” and relocating to a state with more favorable exemptions prior to filing for bankruptcy relief. If you have not resided here for two years, you will either be required to use your former state’s exemptions or the federal exemption scheme, and we will be happy to explain this and other new requirements during your initial conference.
In any Bankruptcy filing, the debtor receives two primary benefits. The first is one which most of you already know about; some if not all of your debts will be eliminated or forgiven. You may not know or understand how or why, or how much and what type of debt can be forgiven, and our detailed intake analysis will clarify that confusion for you.
The second but more subtle benefit is the protection of the Bankruptcy code afforded to all debtors when they file. At the time of a Bankruptcy filing, the Court issues an Order, known as an injunction, which prohibits creditors from contacting the debtor, either directly or through third party collection agencies or attorneys, and also serves to stop any law suit threatened, pending or concluded, and can serve to stop a foreclosure or repossession. The benefits of this order, known as the “automatic stay” can be particularly important if one is facing a foreclosure on their home, and potential relocation of children during a school year, winter season, or other less than ideal time.
In filing any Bankruptcy, a debtor is required to “put 52 cards face up on the table” and reveal virtually all of their financial affairs, assets, debts and transactions. Debtors are also required to fully cooperate with their trustee, and may be required to provide bank statements, checking account records, business records, and any other documentation the trustee may wish to see after reviewing your petition. Failure to cooperate with such requests can result in dismissal of your case and denial or your discharge.
I tell all of my clients that it may not be possible to make a Bankruptcy work out the way that you want it to, and as in other areas of practice I have to remind clients that I cannot change the nature of the relationship which they have created with their various creditors prior to my involvement, nor can I undo some prohibited acts which people often fall prey to as they are attempting to prevent their financial ship from sinking.
If your case does contain these sorts of problems or errors, we will work to maximize your position within the Bankruptcy with any affected creditor, while serving to minimize your costs during an already difficult financial time. Unlike many firms, our fees are generally “start to finish” in almost all Bankruptcies, and unlike some of our competitors, there is no “*plus costs” as we do not charge extra for things like photocopying, postage, contact with various creditors, etc.
Like all other matters, some exclusion do in fact apply to that statement and we would not be good lawyers if we did not put at least a short disclaimer on that point. We seek for forge a cooperative relationship with our clients, and failure to provide necessary information when requested, failure to update required information, and certain actions taken by creditors can serve to increase your costs with our firm.
If in your time of desperation you have engaged in prohibited financial dealings, asset shifting, or attempts to consolidate debt or otherwise run afoul of the Bankruptcy Code, our experience can be a beacon and comfort in an already difficult and chaotic time.
Call today to discuss your financial situation, and for a no cost analysis of that situation to see if you qualify for this relief. After speaking with me, most clients are relieved that they have found someone who understands their situation and cares about helping them though this difficult time. Do yourself (and your spouse) a favor by calling or dropping us a note, so that we may begin helping you rebuild your life, your credit and your future.
Contrary to public perception, there is indeed life after bankruptcy! You will not be forced to live in a cardboard box under a bridge, you will not have a large “B” branded on your forehead, you will not be sent to jail, and no one will know that you filed for debt relief, (unless they check court or public records or you elect to tell them). In fact, much to your surprise, many of your friends, neighbors, or co workers may have filed for Bankruptcy relief during their lives, and are in the process of rebuilding their futures and starting over.
You will have your exempt property, and may have decided to retain (and continue paying for, through a process known as reaffirmation) a house or car(s) or other items of property. After your discharge, you income is yours to keep, and you can begin the process of rebuilding your life and credit rating.
Paying on a reaffirmed debt after bankruptcy is one way to rebuild credit, at least with that particular lender. Also, you MUST learn to live within your means, pay all bills on time, avoid late payments, charge offs, and collection activity, or you will be deemed a credit “disaster”, having learned nothing from your bankruptcy filing. Such actions may make it impossible for you to rebuild your credit, so choose wisely.
Most of my bankruptcy clients are ready to swear off EVER using credit cards again. However, in our society where credit cards are almost a “necessary evil”, and must be available for internet shopping, booking reservations, and as an additional form of identification, some clients consider keeping at least one of their old cards for convenience or emergencies for use after their bankruptcy matter is concluded.
However, I advise most of my clients that there is no reason for you to retain any of your old credit cards (with high balances and interest rates) after your bankruptcy, and they will almost always be cancelled by the issuing banks, since they now run periodic credit checks of their account holders, and late payments, death of a debtor, or a bankruptcy filing all serve as defaults under most credit card agreements, causing your old cards to be canceled.
Many banks are now offering what are known as “secured” credit cards. In those programs, you pay a card issuer $100.00-$300.00 and they hold it in an account while issuing you a regular Visa or MasterCard with a modest limit ($300.00 or so).
I urge my clients to use such a card aggressively, buying groceries one month and paying off the entire balance, then car repairs while paying the balance in full, then the next month clothing while paying the balance in full, etc. After a few months, the issuer may see fit to raise your limit. However, beware of running such cards up to their limits, as that will do little for your improving credit history and such actions may have been the source of your original financial troubles! So use any secured or new credit options wisely, spend what you can afford to repay, and learn from any past mistakes. Type the phrase “secured credit cars” into an internet browser to learn more about these options.
Ironically, a person who has gone through bankruptcy is in many ways a more attractive credit risk to some lenders, since most of their earlier debts were eliminated in the bankruptcy and their income is now available to address new extensions of credit. Also, bankruptcy clients cannot file bankruptcy against newly issued credit cards for eight years. For most people, bankruptcy makes it easier, not harder, to get new credit cards.
As soon as you receive your bankruptcy discharge, you may be able to qualify for some basic consumer loans, although at a possibly higher interest rate or with higher down payment requirements. As a very general rule many lenders will be willing to extend credit within a year or two (subject to their internal lending requirements) after your discharge, provided you have paid all debts and other obligations regularly and have sufficient income to afford the new obligation. Subject to individual lender’s requirements, many people are able to purchase cars and homes with normal interest rates and terms within two to three years after receiving their Chapter 7 discharge.
With so many people filing for bankruptcy protection every year, an entire group of lenders has sprung up to service this group of potential customers and banks cannot ignore this large and ever growing market of potential customers.
As a result, some banks are more lenient toward people forced into bankruptcy, (subject of course to the overall economy) provided they have been careful with their finances after their bankruptcy.
While no one plans to file bankruptcy, the effect of filing today is not nearly as bad as the credit industry has tried so hard to make the public believe. While a bankruptcy filing is a serious and significant matter, I tell all my clients that there is life after bankruptcy, and with appropriate restraint and financial management, they can recover from this process and begin rebuilding their lives, and personal and economic futures immediately after their filing.
In order to file for bankruptcy within the State of New Hampshire, you must have resided here for at least 180 days (six months) and not filed for Bankruptcy within the past eight years, (changed from six years under the prior Code). You must also have resided in the State of New Hampshire for two years to take advantage of our State’s rather generous exemption scheme. The Office of the United States Trustee, under the supervision of the Justice Department, oversees all bankruptcy cases filed in New Hampshire, and has taken an increasingly hard line and closely scrutinizes and verifies all bankruptcy filings, with any eye toward eliminating the alleged misuse of the Bankruptcy Code which gave rise to the drastic reforms of the 2005 Act. Consumer debtors have primarily two options under the Federal Bankruptcy Code, being Chapter 7 and 13.
A Chapter 7 Bankruptcy, being the far more common and less “painful” form of bankruptcy, is a liquidation of sorts, in which the debtor is allowed to retain possession of certain identified items of property, up to pre-determined dollar amounts, (known as exemptions) which include things like equity in homes, household furnishings, furniture, jewelry, clothing, tools of trade, automobiles, pensions and 401K plans and other miscellaneous exemptions. Our experienced attorneys will analyze your property and values, and aggressively seek to maximize the amounts you can protect under the law.
If you have property that is not protected under the exemption scheme, or if your property values exceed the amounts allowed, the trustee can seize those assets, sell them and distribute the proceeds to your general unsecured creditors.
You are allowed to keep your collateralized property (i.e., home, cars, motorcycles, boat, camper, etc.) through a process known as reaffirmation, provided (1) the equity in the assets is not more than you are entitled to protect under the exemption scheme; (2) you are current on those obligations, and (3) you are willing to sign a formal detailed agreement reaffirming those debts. By doing so, you in effect revive them and remove them from your bankruptcy discharge. Should you later fail to make those reaffirmed obligations, the creditor can repossess its collateral, and proceed to collect from you the difference between the value of the collateral sold at auction and the contract price, (known as a deficiency) and also collect late fees, interest, attorneys’ fees, and other costs. You also have the option of surrendering (i.e., turning in) any such collateral and paying nothing on it, and we will discuss and analyze that option for you during our initial office conference.
A Chapter Seven does not require repayment of debts that are not reaffirmed, and those debts (on surrendered collateral, credit cards, medical bills, unsecured loans, etc.) are discharged at the conclusion of the Chapter Seven process.
If you feel that a Chapter 7 Bankruptcy might be an option for you, please contact us so that we can discuss and analyze your financial situation during our intake conference.
Chapter 13 is a debt reorganization, similar to the Chapter 11 Reorganizations that you may have heard about with large corporations. Chapter 13 Bankruptcy involves repayment of a portion of your debts, based upon a variety of considerations. Generally speaking, in a Chapter 13 bankruptcy the debtors retain most, if not all of their property and the exemption amounts do not generally apply to Chapter 13 debtors.
Chapter 13 is mandatory for Debtors whose household income exceeds the state median income as determined by the U.S. Census Bureau. While the median income figure increases with the size of your household, the income of all persons within that household are included for purposed of calculating total income and Chapter 7/13 filing eligibility.
There is an adjustment formula, known as a “means test” which allows debtors to back out of income certain federally established standards for housing, utilities, food, clothing, transportation, medical insurance, mandatory retirement, and various other expenses, in an effort to reduce income below the median figure and therefore become eligible for a Chapter Seven filing. If these second level of adjustment is not successful in reducing your income sufficiently, you would be required to file a Chapter 13 Plan.
The length of your repayment plan is based upon a variety of considerations. Unless your Chapter 13 plan proposes to pay 100% of your unsecured debt (and most do not) debtors whose adjusted incomes exceed the median income figure are required to enter and complete a 60 month repayment plan. Debtors whose adjusted incomes are below the median income figure are limited to a plan of 36 months, absent specific limited considerations, which we can discuss when we meet in person. The amount you will be required to pay is determined by application of federal (IRS) standards for things like housing, transportation, vehicle ownership costs, food, utilities clothing and insurance. Like a tax form, these items are deducted and adjusted, and the resulting number, known as “disposable income” is what you will be required to pay for the life of your plan.
Chapter 13 may also be a way for you to save a house that has fallen into arrears or if the debtor has some asset (second home, sailboat, or other items) that is not protected by the existing exemption amounts, or otherwise not eligible for that protection, (again something we can explain and analyze during an intake conference). Rather than risk losing such an asset the debtor is required to formulate a plan and is required to fund that plan with almost all his or their earnings for a period of between 36 and 60 months. The debtor in effect repays some of its unsecured debt (customarily not all of it) and also pays all of their secured collateralized debt, while retaining that collateral in situations when they might not otherwise be able to do so.