1. Can I get rid of credit card debt? Yes absolutely. There is a myth that the bankruptcy reform stopped you from filing on credit card debt. It is actually easier now than it was before the reform.
2. Does someone come and take all my belonging? Will I lose everything? No unless you used the property to secure a debt and now you can’t afford to pay this debt.
The courts allow you to own property – real and personal including cars. The idea is for the client to keep everything but if they can’t afford the debts against an item there is nothing that I can do. There are also times that what you own can require us to look at a chapter 13 rather than a chapter 7. This is something that I determine at the appointment and can’t answer before the appointment. I look at all the options and try to propose solutions, but at the end of the day the income has to be there to cover the debt that the client wishes to keep.
3. Do I get to keep my house and car? Same as above.
4. Can we stop garnishment? Once a case is filed we can stop garnishments and we will also look to see if there is a way to recoup garnished funds. This is addressed at your appointment.
5. Can we stop foreclosures? Yes, but only in a chapter 13 and I need to be sure that the client can afford the house payment before we attempt this. The client resumes making their regular mortgage payment as soon as their case is filed. The amounts that the client is behind on the mortgage is paid back over the length of the chapter 13 plan.
6. What are the different bankruptcies:
There are typically 2 types of bankruptcies that apply to most people: chapter 7 and chapter 13.
The chapter 7 gets rid of most debt and just leaves you with debt secured by property you want to keep i.e. house, car, and furniture. A few debts don’t go away, specifically student loans, most taxes, child support and alimony, there are a few others that I would go into in specific situations.
To file a chapter 7
1. you cannot have filed a chapter 7 in the past 8 years, I have a way of checking to make sure that a case hasn’t been filed within that time.
2. you income must qualify you for this, this is why I have to see the past 6 months of paystubs. (the documents needed for your appointment are set out in the information sheet we send you. )
3. you need to be current on home and or car if you are planning on keeping these items.
If any of these stop you from filing a chapter 7 then we look at the chapter 13. The chapter 13 consolidates your bills and you make payments over 3 to 5 years. The time and amount depends on the specific case. Interest is only paid on secured accounts and you only pay your unsecured creditor – credit cards, medical bills- based upon what you can afford to pay and within court set guidelines. This means that you many only pay 1cent on the dollar.
The difference between this and a credit counseling company is that the creditors have to accept the proposed plan if it falls within the Courts guidelines. In a credit counseling situation the creditors can chose not to accept your proposal.
Chapter 13s can stop foreclosures, repossessions, garnishments, tax penalties, and can also work to recoup repossessed vehicles if filed within a certain time period after the repossession.
To figure out the payment we take care of living expenses first and see what is left over to pay on the bills. This amount can be affected by secured accounts that the clients want to keep and debts that have to be paid.
At the end of the five years whatever debt isn’t paid off is discharged or wiped out, with certain exceptions- same as mentioned above taxes, student loans, child support, maintenance.
The idea is for me to pull your credit report and with the information that you provide me, I will come up with the best solution for you. Each client is completely different and so without actually meeting with you and having the complete information sheet and documents listed in the information sheet I can’t help you.
