How Did I Get Into This Mess?
Here is a true story of Bill and Jodie (not their real names). This young couple seemed to have it all. They both worked, Bill at the local plant, and Jodi was able to stay at home with the kids by baby-sitting for the children of other working couples. They were doing well, bought pretty much whatever they wanted, and kept their payments current. They weren’t really putting anything away for a rainy day, but they were not having any problems either. Besides, they had a little money in the bank.
Then one day Bill was told that he would be laid off. He expected that it would only be for a month or so, and that he would be able to draw unemployment. After three months had gone by without returning to work, money began to tighten. But, he thought, it was not as bad as the AK layoff, where many of his friends sought a bankruptcy attorney in Middletown.
After going through their small savings account, they began to use the cash advances on their credit cards to buy groceries and get them through to the next check. Eventually they realized that this living situation could only last so long.
Bill and Jodi got a check in the mail one day, as part of a PRE-APPROVED LOAN. They both went down to a local finance company, signed lots of papers, and came out with about $1,500, although they actually borrowed over $2,000. The difference was pre-paid fees, insurance, and other charges. The interest rate was high, about 24%, but they both hoped that this would get them through, and help make all the payments until Bill got back to work. They did not realize that debt consolidation, paying bills with borrowed money, rarely works.
Finally, about 8 months after Bill’s last unemployment check, they were both at their wit’s end. The abusive creditors were hounding them day and night, threatening them and using terrible language. Several bills had already been turned over to collection and attorneys. One creditor even came to their house! Neither wanted to answer the phone, and it made them sick to hear it ring. Jody didn’t want to go the mailbox anymore, knowing what she would find there. When she did get the mail, she no longer bothered to open it. Neither could sleep, and they had started to argue and fight with each other.
Bill had picked up a fill-in job, making about half of what he was making at the plant. Jodie couldn’t afford to work outside the home because it would take nearly all of her minimum wage pay to hire a sitter for the kids. They were stuck.
Bill had some money in his retirement plan at work. He thought about taking that out, but knew that he would have to pay a stiff penalty and tax on the withdrawal if he did. He called his employer’s office about it, but was told he could not touch it unless there was some kind of financial emergency or hardship, like a foreclosure. Unfortunately, Bill did not have long to wait until he became eligible to take the money out.
Then came the day that the certified mail arrived with the foreclosure notice on their house. They had no money to pay it, and garnishment was about to take Bill’s small paycheck. The utilities were going to be shut off. Bill and Jodi needed relief, but didn’t know what to do.
They thought about bankruptcy, but were afraid they would lose everything they had worked so hard to get. They had heard horror stories about never being able to buy a car or get credit of any kind. They didn’t know which way to turn. They did not have an attorney, and did not want to use a lawyer who did divorces, accident cases, and other kinds of law. They wanted an attorney who devoted 100% of his time to their particular problem.
They called and made an appointment to discuss the matter with me. Bill, Jodi, and I went over their entire financial picture. I explained their RIGHTS under bankruptcy law, and told them how to turn the situation around.
Immediately, I told them which debts to pay, and which they could safely ignore. The utility shut-off was stopped instantly, and the phone immediately stopped ringing with creditor calls. Soon, we were working on a compromise plan to keep all of the furniture, the stereo, and all of Bill’s tools that they had unknowingly pledged as security collateral for the finance company loan they had, and at a much lower interest rate.
Four months later, Bill and Jodi were freed of all of their credit card debt, had their house out of foreclosure, and were rebuilding their credit. Financial ruin had been avoided and their property saved. They never had to appear before a judge. Their bankruptcy was not published in the newspaper, and none of their friends even knew they had filed.
I Know What Creditors Really Want
With over a decade of experience in bankruptcy law, I can analyze your financial situation and recommend the best bankruptcy choice for you. Knowing the law and what really matters to the creditors, I can negotiate a new rate and terms on some of your debt, while avoiding the rest entirely. All of this, while keeping your car, household furnishings, and home.
In fact, most of my clients NEVER LOSE ANY PROPERTY AT ALL.
Each case requires a careful analysis in order to determine the best course of action. Sometimes planning is required before a bankruptcy can be filed, to take maximum advantage of all the laws in your situation. There are times when hard decisions need to be made. I will tell you from the very beginning if such a decision will be necessary.
Entirely Legal, A New Financial Beginning
You might be interested to know that Congress passed the first bankruptcy act in the 1800’s to help people out of situations that had no other solution. In many cases, it is the only solution. Unfortunately, I see many people today misinformed about the bankruptcy laws and process. Following are some common questions and answers about bankruptcy.
Some Questions & Answers About Bankruptcy
Q. What is the difference between a straight bankruptcy and a Chapter 13?
A. A straight bankruptcy, also known as a Chapter 7 bankruptcy, is a person’s most powerful weapon. It makes most debts disappear without paying them back at all. Straight bankruptcy is a good idea if someone realistically cannot expect to pay a significant portion of his or her debts within a reasonable period of time.
A chapter 13 bankruptcy involves payment of all or a portion of your debt over a period of time, from three to five years. Each week or month, a payment is made to a chapter 13 trustee, who then pays the creditors. Chapter 13 can be an extremely flexible and useful way to deal with debt problems.
Q. How can I stop bill collectors and garnishments instantly? What do I say?
A. The filing of a bankruptcy, either 7 or 13, instantly stops creditors with an “automatic stay.” If bill collectors violate this stay, they can be in serious trouble. They know, but won’t tell you, that they have to stop all collection activities, including phone calls, sending you bills, garnishing your wages, etc., upon the filing of any bankruptcy. When you tell them “I have filed for bankruptcy protection, please call my attorney, Mr. West, for further information,” they will call me to verify your filing with my office and stop calling you.
Q. Will my employer be notified of the bankruptcy?
A. In a straight bankruptcy the employer is not notified, because there is no repayment plan. In a Chapter 13, the preferred method of plan payment is by wage deduction. It is possible to have the payments taken directly out of your bank account ONLY if certain circumstances are involved.
Q. What will the effect be on my credit rating?
A. If you are a candidate for bankruptcy, your credit rating is probably already damaged, although this is not always the case. I have seen many cases where no payments have been missed, although the people are borrowing on one credit card to pay on the other cards. The problem in these cases is that it can’t go on like this forever, and eventually the “perfect payment record” will come to an end as payments start to be missed.
Credit reporting companies are able to keep a notation of the bankruptcy for up to ten years, but today, unlike even a few years ago, filing a bankruptcy is NOT the end of your ability to get credit. I tell all of my clients how to rebuild credit quickly and easily. These steps are so successful that many times each year clients call to tell me that they have rebuilt their credit and, four or five years after bankruptcy, they are buying a house. I have even had loan officers come in for my help after approving my clients for mortgages with their company.
Q. Will my bankruptcy be reported in the paper?
A. No. It is a public record, but you have to read the legal newspapers to see it, and the only people I know that read these papers are lawyers. Anyone who wants to can go to the federal court in Dayton and see who has filed bankruptcy.
I have actually filed bankruptcy for neighbors living on the same street, at the same time, and neither knew that the other was filing. Unless you tell them, your friends, neighbors, family or anyone else is not likely to know you filed.
Q. Can I keep my car in a bankruptcy?
A. Yes. You can keep your house, your car, your stereo and other property. If you owe on any of it, you can choose to keep the debt, and the result is just as if you had not filed on that particular debt.
Q. Can I keep any of my credit cards?
A. Yes. Some credit card companies have special programs for people who want to keep their credit card. Sometimes the limits are lowered, sometimes not. However, I will tell you a better way to restore your credit, and it doesn’t involve paying any of the cards you have to keep them.
Q. What if I want to pay back my debts, I just need some time to catch up, and the creditors are unreasonable, demanding payments I can not make, and refusing to work with me?
A. In this case, a Chapter 13 plan will probably be your best bet. You can stretch out your payments for three to five years, and the creditors cannot do anything to stop you.
Q. I think a Chapter 13 is for me. Do I have to pay back 100% of all of my debts?
A. No. Some Chapter 13 plans pay less than 100% on some or all of your bills. This will depend on your living expenses, how much you earn, and what types of debts you owe. Then, if you successfully make all of the plan payments, your debts will disappear at the end of the plan, even if you have not paid them back in full.
Q. Will a Chapter 13 be better for my credit rating than a Chapter 7?
A. Not really. Although you might think that a person would be rewarded with a kinder view of their credit rating when they pay back at least some of their debt, it does not appear to work that way. In fact, creditors know that when a person files a Chapter 7, they don’t owe any other debt, so their income is free to spend on new debt. Also, creditors know that you can only file a Chapter 7 once every 6 years, so they are sure that you will not be able to discharge their debt in another Chapter 7 bankruptcy. For this reason, Chapter 7 actually cleans up your credit rating in some respects, faster than a Chapter 13. However, even in Chapter 13 I will tell you how to begin rebuilding your credit while you are still in Chapter 13!
What You Do Next
Call for a free consultation. At no cost to you, I will review your financial situation, and tell you up front what you need to do, and whether a bankruptcy would be a good idea. You are under no obligation, there is no pressure. You do not have to bring any documentation with you, but I will be happy to review any documents you bring in. If you have received a lawsuit or garnishment notice and would like me to review it and answer questions, please bring it with you.
If you are married, both husband and wife should meet with me. If this is impossible, then the person who is most familiar with the finances of the household should come in. It is very helpful to have a list prepared with all of the bills you owe, and your last paycheck stub so we can prepare a rough outline of your income and expenses. Believe it or not, some people have told me that they never had actually looked at their income and expenses on paper before I did it for them. It can be a real eye-opener.
The Worst Thing You Can Do
The worst thing in the world to do is what too many people do, until they can’t do it anymore — nothing! Don’t ignore the situation. Don’t ignore the certified mail notices from the post office. Don’t pay one credit card by borrowing money on another. Don’t continue to re-write loans to make current monthly payments. If, when you realistically look at your finances and find that no matter what, you are still short at the end of the month, you should probably come in and discuss your situation.
If bankruptcy is an option, I will tell you how you can get the most benefit from it. If there is something short of bankruptcy that will solve your problems, I’ll tell you this too. It never hurts to find out the truth about bankruptcy, and what your options really are from a professional who has helped hundreds of people with situations probably worse than yours.
Call for your free consultation. I’ll be happy to answer your questions, give you the benefit of my years of experience in solving problems just like yours, and then it’s up to you to decide what you want to do. Remember, you can’t make the best decision for your situation if you don’t have all the facts.
You will be treated with courtesy and respect by me and my staff. We are here to help you. It costs nothing to schedule a free consultation, and it could change your life.