If expenses exceed income, and creditor calls become harassment calls, you need help.
When it’s a choice of food on the table or paying late charges on credit card balances that never seem to get smaller, the thought of bankruptcy is worth considering. Many people still find themselves in this situation. Last year over 2 million people filed for personal bankruptcy.
Although it is becoming an increasingly common word, what exactly does bankruptcy mean? Simply put, bankruptcy can be defined as the legal process through which the Federal Government provides people in financial distress with a fresh start.
The two kinds of bankruptcy that you may qualify for. They are called Chapter 7 and Chapter 13. There are various factors that would determine eligibility for either Chapter 7 or Chapter 13. Chapter 7 Bankruptcy is a discharge of all unsecured debt. Chapter 13 is for people who may have significant non-exempt assets, and would be required to enter into a whole or partial repayment plan over a five year period.
Of course, there are intricate details to this legal process. Who qualifies? Which bankruptcy chapter would apply to you? Is all of your property exempt? There are many questions to resolve before deciding if bankruptcy is for you. Consult a competent bankruptcy attorney to advise you on all the options available in your particular situation.
This week’s FAQ’s.
Q: Creditors are harassing me – but I lost my job, and cannot pay. How do I stop them calling?
A: If you cannot pay your bills, creditors will take steps to collect. That’s natural, but continued harassment can be emotionally depressing. If you have lost your job, or simply cannot cope, because debts have grown to the point where you have to choose who gets paid this month, and who doesn’t, then you need to consider the benefits of filing a bankruptcy.
Q: Will a bankruptcy stop collection agencies from calling me?
A: Yes, filing a bankruptcy protects you from creditor harassment, and provides peace of mind. Creditors will not contact you if you filed bankruptcy and have an attorney representing you. Otherwise they risk being cited for contempt of federal court, something they will not risk. Another reason to consider a bankruptcy now, even if you do not have assets to protect, is that after a bankruptcy, you can immediately begin the process of repairing your credit. This usually takes between 6 to 12 months, so an early start will get you there faster.
Q: I have just received a summons from a creditor. Is it too late to file a bankruptcy?
A: No. When you file for bankruptcy, an automatic stay goes into effect immediately stopping any lawsuit filed against you and any action against your property by a creditor, collection agency or government entity. This can be very important, Especially if you are at risk of being evicted or foreclosed on, being found in contempt for failure to pay child support or losing such basic resources as utility services, welfare or unemployment
Here is how the bankruptcy filing affects some common emergencies:
Utility disconnections. If you’re behind on a utility bill and the company is threatening to disconnect your water, electric, gas or telephone service, the automatic stay will prevent the disconnection for at least 20 days. Bankruptcy will also discharge the past due debts for utility service. Although the amount of a utility bill itself rarely justifies a bankruptcy filing, preventing electrical service cutoff might be justification enough.
Q: Will filing a bankruptcy stop the foreclosure on my home?
A:If your home mortgage is being foreclosed on, the automatic stay temporarily stops the proceedings, but the creditor will often be able to proceed with the foreclosure sooner or later. If you are facing foreclosure and wish to save your home, Chapter 13 bankruptcy is the appropriate remedy because it provides for a repayment plan on the arrears.
Q: Can a bankruptcy stop an eviction?
A: No, under the new rules, a bankruptcy will not stop a court ordered eviction, but it will prevent a landlord from seeking to evict you, at least for a while, perhaps just enough time to find somewhere else to live. However, don’t file for bankruptcy solely because you’re being evicted. You’ll probably be better off looking for a new place to live or fighting the eviction in Municipal court instead. Remember, the main idea behind bankruptcy is to discharge debt.
Q: Will bankruptcy protect me; I’m behind in my child support payments?
A: If you owe child support or alimony, bankruptcy will not interrupt your obligation to make current payments. And while the automatic stay will temporarily stop proceedings to collect back support you owe, usually the bankruptcy court will permit collection to go forward if the creditor requests it. In any event, these debts will survive bankruptcy intact and will have to be paid once the case is closed. Chapter 13, however, lets you pay the back support as part of the repayment plan.
Q: A creditor is garnishing my wages. Will bankruptcy help me?
A: Yes. Although no more than 25% of your wages may be taken to satisfy a court judgment (up to 65% for child support and alimony), many people file for bankruptcy to protect their income. For some people, any loss of income is devastating. Your employer may also get angry at the expense and hassle of facilitating a succession of garnishments and take it out on their employees. Although federal law prohibits you from being fired for one garnishment, an employer can fire you for multiple garnishments. Filing for bankruptcy stops garnishments dead in their tracks. Not only will you take home a full salary, but you also can discharge the debt in bankruptcy.
So if you have too many debts, and want to know your options, call the Law offices of Paul M. Allen for an appointment. Consultations are free, but by appointment only. We turn complex problems into simple solutions, and get you the fresh start you deserve. Call today: Glendale Office: 818-334-5445, 818-552-4500 or Cerritos Office 562-356-9931 – 562-865-4480.
(This article is for information purposes only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.)