NOW IS THE TIME TO MODIFY YOUR MORTGAGE I attended a conference a couple of weeks ago and listened to a discussion of the current state of mortgages, mortgage modifications, and the end of the Covid forbearance program. I thought this was very important and helpful information that people need to know. If this information does not apply to you, it may be helpful to a family member or friend, so please pass it on to anyone who needs it.
Here is what I learned. For anyone who, since the start of the Covid pandemic, has had issues with making their mortgage payment and/or used the forbearance program and have several payments now about to come due, now is the time to contact your mortgage company and request a modification. The foreclosure moratorium under the CARES Act has ended; however, The Consumer Financial Protection Bureau (CFPB) issued a rule which provides additional temporary safeguards for borrowers such that the foreclosure process cannot begin on most loans before January 1, 2022. These additional safeguards will expire on January 1, 2022. Until January 1, 2022, mortgage servicers cannot commence foreclosure on a mortgage in default unless one of the following three safeguards has been met: 1. The property has been abandoned; 2. A loss mitigation evaluation has been completed. This includes the following:
These temporary safeguards are not required currently if the borrower was more than 120 days delinquent prior to March 1, 2020, or if the applicable statute of limitations for the foreclosure action will expire prior to January 1, 2022. The rule does not apply to reverse mortgages. Lastly, the rule only applies to a mortgage on the borrower’s principal residence. Mortgage modifications will be much easier to obtain under the rule that will last to January 1, 2022. So, if a person was denied a modification in the past, he or she may still be able to obtain a modification under the current rule and in less time and with less paperwork required. The current rule allows mortgage servicers to review a loan for a loan modification even if the borrower’s application is incomplete. To qualify for a review of an incomplete loan application, the following criteria must be met:
The temporary safeguards also require “reasonable diligence” by mortgage servicers in their efforts to help borrowers currently in a forbearance plan. Mortgage servicers must now contact borrowers prior to the end of a forbearance plan to see if they want to complete an application for a loan modification. Mortgage servicers are required to comply with one aspect of the temporary safeguards until October 1, 2022 which is the live contact requirement under the early intervention rule. Mortgage servicers now have additional information that must be provided to the borrower at the time of live contact. The additional information required to be provided is different based on whether the borrower is currently in a forbearance plan at the time of contact. Most mortgage servicers have an annual holiday moratorium period on foreclosure sales during the months of November and December. Many borrowers are still in forbearance plans which can still be extended under the CARES Act. The bottom line is that there is that based on the information above, there is still time to apply for a modification under the simplified and more lenient rules. However, time is running out. You must act now and either contact your mortgage company or respond to any communications from your mortgage company to get that modification process started before the end of the year. If you are unable to modify your mortgage and are continuing to have issues with past due mortgage payments, a Chapter 13 Bankruptcy may be the answer to take care of those past due payments and save your home from foreclosure. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
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5/28/2021 5 Things You Should Know About A Reaffirmation Agreement in Chapter 7 Bankruptcy in AlabamaRead Now5 Things You Should Know About A Reaffirmation Agreement in Chapter 7 Bankruptcy in AlabamaA reaffirmation agreement is an agreement in which the debtor (the person who owes money and is filing the bankruptcy) agrees to continue repaying an existing debt despite having filed a Chapter 7 Bankruptcy. Reaffirmation of a debt normally involves a secured debt which is a debt that is secured by collateral, usually a house (mortgage), auto loan, or other loan secured by creditor.
With regards to secured debts in a Chapter 7 Bankruptcy most debtors have two (2) options -- one is to surrender the collateral and completely wipeout (discharge) the debt. The second option is to keep the collateral and continue paying on that debt normally under the same terms as in the original contract. Most secured creditors request and/or require that in order for the debtor to keep the collateral and continue paying that debt, that the debtor sign a reaffirmation agreement and reaffirm that prior contract. Here are five (5) things you should know before reaffirming a debt. 1. Reaffirming A Debt Can Help You Rebuild Your Credit Some bankruptcy filers may think "I have just filed for bankruptcy. Why would I want to reaffirm a debt I could get rid of." This could be true in some circumstances; however, in other situations, signing a reaffirmation agreement may be beneficial. When a debtor reaffirms their debt, they are agreeing to make the same monthly payments on the contract as before bankruptcy. This will help rebuild their credit score with the credit reporting agencies over time and show lenders that this person is responsible enough to handle additional loans or credit cards. If a person continues to make on-time payments after their Chapter 7 bankruptcy is completed (discharged), a person's credit score can increase quickly and substantially. Some people can have a credit score in the 700's with the credit reporting agencies shortly after a year in bankruptcy if they have worked on it. However, this should not be the sole reason to reaffirm the debt. You should only reaffirm the debt if you need the collateral and are sure you can afford the monthly payments. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. 2. Reaffirmation Can Provide Certainty Against Repossession of a Vehicle and Foreclosure of a House Some creditors will allow debtors in a Chapter 7 bankruptcy to maintain possession of the collateral (normally a vehicle or real estate / house) by just continuing to make regular on time monthly payments. This is often called "Stay and Pay". It is normally easier to "Stay and Pay" with a mortgage (i.e. a loan secured by a house and real estate). This is due to the laws governing foreclosure. If you are current on the mortgage payments, it is difficult for the mortgage company to meet the requirements to foreclose on the house, even if you did not reaffirm the debt. However, some creditors require entering into a reaffirmation for the debt in order for debtor to keep the collateral. Most car loan companies do require reaffirmation agreements and will threaten to repossess the vehicle collateral if reaffirmation agreements are not signed. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. 3. Reaffirmation Agreements Put You Back On the Hook An individual normally files a bankruptcy case to get debt relief. If you reaffirm a debt you will not get debt relief from that debt. Once you enter the agreement you are once again have personal liability for that debt. If you default on a debt after reaffirmation, you are subject to the same negative consequences as if you had not filed a bankruptcy case. Your collateral can be repossessed or foreclosed upon. You can be subject to a lawsuit and therefore liens and garnishments for any deficiency owed after the collateral is sold. Defaulting after reaffirmation can be doubly complicated because at that point you have already used up your Chapter 7 Bankruptcy protection and cannot file another Chapter 7 for 8 years. So, you will not be able to discharge the deficiency balance. You may, however, be able to make the debt manageable through the use of a Chapter 13 Bankruptcy. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. 4. A Reaffirmation Agreement Can Be Rescinded If Done Prior to Discharge or Within 60 Days of the Reaffirmation. The bankruptcy laws state that a person may rescind a reaffirmation agreement at any time before the bankruptcy court enters a discharge order or before the expiration of the sixty-day period that begins on the date the reaffirmation agreement is filed with the court, whichever occurs later. To rescind a reaffirmation agreement, a person must file notice of rescission with the court and notify the creditor that the reaffirmation agreement is rescinded. As long as it is done within the time frame set out above, you can rescind your reaffirmation of the debt for any reason or no reason. You If you do change your mind and want to rescind the reaffirmation agreement, you will need to give the appropriate notice to the creditor and file the notice with the court. We, as your Cullman Bankruptcy Attorney, will do this for you. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. 5. The Requirements Secured Creditors Have for Reaffirmation If you want to sign a reaffirmation agreement and keep the property you have as collateral, the creditor normally requires two (2) things: 1. You must be current on your payments when you file your bankruptcy case. Creditors will require you to be current on your payments or at least very close to current. It is a waste of the creditor's time to reaffirm a debt with you only to have to repossess or foreclose on it shortly thereafter. This also protects you as the debtor. If you want to keep the property you need to have the means to pay for it. If you are in substantial arrears it is probably a sign that you cannot afford to keep the property and, as set out above, you do not default after reaffirmation. There are severe consequences. 2. You must have proper insurance on the property. Creditors will require you to have the collateral properly insured before they allow you to sign a reaffirmation agreement. This is already part of your original contract with the car lender or mortgage company. Not having insurance is a form of default on the contract just like not making your monthly payment. Insurance also protects the creditor from losing its collateral to some type of catastrophic damage. For vehicles you must have full coverage insurance on the car or truck or other vehicle. For vehicles and houses you must have coverage in an amount high enough to cover the value of the property, and the lienholder and/or mortgage company must be named as a loss payee on the insurance policy. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. WHAT DOCUMENTS DO I NEED TO FILE BANKRUPTCY IN CULLMAN, ALABAMA?Consumer bankruptcy is a necessary process for those who have found themselves in financial difficulty and are having issues repaying their debt and need debt relief. Bankruptcies can occur as the result of job loss, natural disasters, medical expenses, or other life events. Regardless of the reason behind your bankruptcy filing, it is important to understand what documents are needed and why they are needed. At our office in Cullman County, Alabama, as your attorney we do not request you bring us these documents for our sake, but for yours. We would like to have as many of these documents at the time of your free consultation if possible. We wish filing for bankruptcy in Alabama was simpler, but it is not. The bankruptcy laws require us to answer an exhaustive amount of questions regarding your financial circumstances and to do so using due diligence, which means we cannot just take what you write down or provide us and put it in a form. We must take our own steps to try our best to be sure the information is complete and accurate.  In order to declare an Alabama bankruptcy, an individual must file a document detailing their current financial status that typically runs at least 50 pages long. This is the case for either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. In order to complete this document your bankruptcy lawyer will need to have a lot of information regarding your financial situation; including, but not limited to your assets, debts, income, expenses, business information, and information over the past 2 to 4 years regarding sales or transfers of assets, inheritances, and current or past claims against others. We may not be able to get all of this information during your free consultation, and that is okay, but it is best to have as much of this bankruptcy information as possible.
Click here for a Free Consultation, no obligation and no pressure. Find out whether or not you should file for bankruptcy. Cullman Bankruptcy Attorney Questionnaire Your Cullman Bankruptcy Attorney will have a form for you to fill out once retained. We call it the Bankruptcy Questionnaire. Filling it out is much more efficient than telling your bankruptcy lawyer about all the details verbally and may be necessary if there are emergencies in between meetings with them. You should complete the form as thorough as possible. But, do not worry. The Bankruptcy Questionnaire is just the starting point of filing a bankruptcy for you. Your bankruptcy lawyer will not take that information and blindly fill out your petition. The bankruptcy attorney will review it, ask follow up questions, correct any mistakes, look for any possible issues that could arise, and, finally, the bankruptcy lawyer will go over the forms with you before you sign them to make sure you understand them and agree with them. Once we have the information needed and discuss your situation during your free consultation, we should be able to determine whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for you. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. Documents Needed for Your Cullman Bankruptcy: Income Information and Verification Your Cullman Bankruptcy Attorney will need information and proof of your income to use for a couple of purposes. First, to file for bankruptcy the bankruptcy lawyer must complete a detailed current budget which sets out your current or projected income (if your income is about to change) and your current expenses other than those to be handled through your bankruptcy. If you are married and not separated, your bankruptcy lawyer must include your spouse’s income and expenses as well, even if he or she is not filing bankruptcy with you. If your spouse is not filing, his or her name will not be listed on the bankruptcy as filing, but their income and expenses must be shown as spouse’s income and spouse’s expenses. Proof of income requires paystubs, or if you do not receive paystubs, then another form of proof of income such as a printout from the employer, SSA benefits letter, or, in special circumstances, bank statements, or, if you have no income or proof of income, an affidavit swearing to that affect. The second reason the bankruptcy attorney needs your income information is that you’ll need to pass the Means Test for a Chapter 7 or determine your minimum payment if you file a Chapter 13. The Means Test compares your average income over the past 6 months to the average income of the same size family in Alabama. If your income is under that amount, it is a short form, and you can file either a Chapter 7 or Chapter 13. If your income exceeds a certain number, your bankruptcy lawyer must complete a longer form that allows certain deductions from your income. The majority of the time, this will bring your income down enough to qualify for a Chapter 7, but, if not, you may still file start the bankruptcy process. Even though you might not qualify for Chapter 7, we will use this information to determine the minimum plan payments for a Chapter 13. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in North Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 is right for your situation. Documents Needed for Your Cullman Bankruptcy: Personal Identification The bankruptcy court requires you to verify your identification. For a bankruptcy in Alabama we request a copy of your drivers license and social security card. If you have lost either of these or if your license has expired, now is the time to get replacements. We can use the temporary license you are provided when you seek a new license. In addition, the Social Security Office will give you a letter that can be used as a temporary Social Security Card when you request a replacement card. This temporary card can be used as well. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman, Alabama or by telephone if you prefer or are located elsewhere in North Alabama. Meet with our bankruptcy attorneys and find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. Documents Needed for Your Cullman Bankruptcy: Tax Returns The bankruptcy Trustees for bankruptcies filed near Cullman, Alabama; all of North Alabama, require us to send them a copy of your last 2 years federal tax returns if you were required to file. In addition, a requirement to qualify for bankruptcy is that you must have filed your last 4 years tax returns if you had income that required you to file. So, if you have not filed your tax returns, get them filed as soon as possible. You can owe the IRS or the State of Alabama taxes based on these returns, but the returns must be filed. Your case will be promptly dismissed if your returns are not filed. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman, Alabama or by telephone if you prefer or are located elsewhere in North Alabama. Meet with our bankruptcy attorneys and find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. Documents Needed for Your Cullman Bankruptcy: Bank Statements The bankruptcy Trustee for your Alabama bankruptcy case will require at least the most recent month of your bank statement. However, they can request more. Be sure to review the statement(s) to see if there have been any large withdrawals or unusual transactions and explain those to your bankruptcy attorney. If we do not provide an explanation for these transactions to the bankruptcy Trustee, they can raise suspicions. Remember: It's also imperative not to make any large purchases, payments, or transfers through your bank account or credit cards leading up to a bankruptcy proceeding as this can prompt the bankruptcy Trustee to attempt to recover these funds from the individuals or companies the funds were transferred to and cause many issues. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman, Alabama or by telephone if you prefer or are located elsewhere in North Alabama. Meet with our bankruptcy attorneys and find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. Documents Needed for Your Cullman Bankruptcy: Credit Counseling Certificate We, as your bankruptcy lawyers in Cullman, Alabama will require you obtain your pre-filing credit counseling certificate. This is a requirement of the bankruptcy law prior to filing your case. As your bankruptcy lawyers for your Cullman, AL bankruptcy we will assist you in obtaining this certificate. When you meet with one of our bankruptcy lawyers during your free consultation, the application to obtain the certificate will be reviewed with you. Once you complete it, we will add the necessary documentation and send it in to obtain the certificate for the bankruptcy court. Once you obtain the certificate, it is valid for up to 180 days. We, as your bankruptcy lawyers, will then file it with the bankruptcy court on your behalf when we file your bankruptcy case. For your Cullman, AL bankruptcy case in you will also need a post-filing personal financial management certificate. Again, we, as your bankruptcy lawyers in Cullman, AL, will assist you in obtaining this certificate. To obtain this certificate your bankruptcy lawyers will provide you with a DVD to watch and a short form to fill out while you are watching it. As your bankruptcy attorney in Cullman, AL, we will make the process as simple as possible. Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Meet with our bankruptcy attorneys and find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation. Documents Needed for Your Cullman Bankruptcy: Bills and Statements for All Debts When you file for bankruptcy you want to list all of your debts in order to obtain a fresh start. If you need to file, in order to start this bankruptcy process our law firm would like to have bills and statements for all of your debts. This includes debts for real estate or car loans that you would like to keep. You can almost always keep these debts, but we must disclose them to the court. We also want all credit card statements, bank loans, medical bills, collection letters, and any other documents you have received from a creditor. This is where bankruptcy can help you get debt relief and a fresh start. As your bankruptcy attorneys we will obtain your credit report from all three credit bureaus, but sometimes some debts do not show up on your credit report. A credit card will normally show up on your credit report; however, if the debt has been sold or sent for collections, that may not show on your credit report. Also, if you want a fresh start or debt relief from your doctor bills, our law firm would request you find as many of these bills as possible, because often these bills do not show up on your credit report. Documents Needed for Your Cullman Bankruptcy: Investment Account Statements Investment Accounts can be a tricky area in bankruptcy. If you have any type of pension or retirement account, these will most likely remain untouched and safe during the process. There is a federal exemption that applies to these accounts which protects them one hundred percent (100%). However this is not the same for non-retirement investment accounts. For other individually held accounts like stocks or bonds this is not always true so it's important to make your lawyer aware if you hold anything else outside of an IRA-type account with money invested into them. Documents Needed for Your Cullman Bankruptcy: Lawsuits, Judgments, and Garnishments If you have been sued by a credit card company, car loan company, or any other creditors, your attorney needs any paperwork you may have received. This includes the lawsuit itself, a judgment, if the court has already ruled on the case, and/or any garnishment papers if the creditor has filed those. Get Started Now - Get a Fresh Start - Get Debt Relief Click Above to Schedule Appointment and Complete the Questionnaire Online WHY WAIT? GET THE ANSWERS YOU NEED NOW WITH NO OBLIGATION OR STRINGS ATTACHED Serving Cullman, Hartselle, Decatur, Arab, Warrior, Gardendale, Hanceville, Priceville, Falkville, Jasper, Double Springs and the surrounding counties of Cullman, Morgan, Blount, Marshall, Jefferson, Walker, Winston, and Lawrence The processes, theories, and inner workings of a Chapter 13 Bankruptcy can sometimes be hard to explain. Recently, the United States Court of Appeals for the Eleventh Circuit, which covers Alabama, Georgia, and Florida, released an opinion in In Re: Paul L. Cumbess, Debtor; Microf LLC vs. Paul L. Cumbess, et al, Case No. 19-12088; which gave a really good explanation of the overall Chapter 13 Bankruptcy process.
As you will see from the opinion below, Chapter 13 Bankruptcy’s, even when explained as straight forward as possible, can be complicated. This is why you should see a qualified bankruptcy attorney. At Collins Law Offices, your Cullman Bankruptcy Attorney, we offer Free In-Depth No Obligation Consultations. We will answer any questions you may have and provide you with the best options possible, whether it is Chapter 13 or Chapter 7 Bankruptcy or debt settlement or debt defense. And, we will do so with No Strings Attached. We will not add any more pressure to your life. Here is the pertinent part of the 11th Circuit’s opinion: Before we dive into the details of this case, a bit of Chapter 13 background is in order. First, let’s talk mechanics. A Chapter 13 bankruptcy—sometimes called a “wage earners plan”—enables a debtor with a regular income to repay all or part of his debts, typically over a three- to five-year period. After the debtor initiates a Chapter 13 case by filing a petition, he must then—within 14 days—file a proposed plan of reorganization, which provides that he will make certain fixed payments over time. The bankruptcy court then determines whether the proposed plan conforms to the Bankruptcy Code. If it does, the court confirms the plan, which then becomes binding on the debtor, the creditors, and the Chapter 13 trustee, whose job it is to assist with the plan’s administration. In a Chapter 13 proceeding, the bankruptcy estate—the pool of property from which the debtor’s creditors are paid—comprises all of the debtor’s legal and equitable interests in property at the time of the filing of the case, as well as those that he acquires after the filing. See 11 U.S.C. §§ 541, 1306(a). Unlike in a Chapter 7 “liquidation” proceeding, however, a Chapter 13 debtor can maintain possession of some or all of his assets throughout the bankruptcy; the debtor’s plan payments (and thus the payments to his creditors) typically come from his future earnings. Generally speaking, there are two types of claims in a Chapter 13 case: secured and unsecured. Importantly for our purposes, the Bankruptcy Code treats different kinds of unsecured claims, well, differently. A typical unsecured claim— also called a “general unsecured claim”—needn’t be paid in full. The Code requires only that creditors holding general unsecured claims receive what they would under a Chapter 7 liquidation. 11 U.S.C. § 1325(a)(4). The Code also provides, though, that some unsecured claims are entitled to “priority,” such that they have to be paid in full unless the creditor agrees otherwise. 11 U.S.C. § 1322(a)(2). Examples of claims entitled to priority include domestic-support obligations, certain taxes, and—as particularly relevant here—“administrative expenses” associated with the proceeding, including the “actual, necessary costs and expenses of preserving the estate.” 11 U.S.C. §§ 503(b)(1)(A), 507. Now, the players. First, of course, there’s the debtor—he initiates the Chapter 13 proceeding, proposes the reorganization plan, and (if all goes well) makes payments in accordance with it. Within the Chapter 13 process, the debtor’s objective is to “obtain court approval . . . of a plan that provides for the payment of as little as possible to creditors and to emerge at the end of the process with as much property and as little debt as possible.” Hon. W. Homer Drake, Jr., et al., Chapter 13 Practice and Procedure § 1:1 (2019). Then, there are the creditors—the people or entities who have claims against the debtor. Predictably, the creditors’ incentives run counter to the debtor’s: Their aim is to “maximize their recoveries by having the debtor pay as much as possible.” Id. Finally, there’s the trustee, who is appointed by the bankruptcy court after the debtor files a Chapter 13 petition to assist with the case’s administration. The Chapter 13 trustee is a “representative of the bankruptcy estate,” id. at § 17:1, and her “primary purpose . . . is . . . to serve the interests of all the creditors,” Hope v. Acorn Fin., Inc., 731 F.3d 1189, 1193 (11th Cir. 2013). Although a Chapter 13 trustee has many statutory rights and responsibilities, see 11 U.S.C. § 1302(b), she plays a particularly important role in connection with the debtor’s plan: She must appear and be heard at any hearing regarding plan confirmation or modification, advise and assist the debtor in his performance under the plan, ensure that the debtor makes timely payments under the plan, and disburse those payments to creditors in accordance with the plan. See Drake, et al., supra, at § 17:3. There’s one last piece of introductory ground we need to cover: executory contracts. At the time a debtor files a Chapter 13 petition, he may be subject to the ongoing benefits and burdens of an unexpired executory contract—such as, in this case, a lease. When this happens, the debtor has three choices going forward: he can “assume” the contract (i.e., commit to performing its obligations), “reject” the contract (i.e., commit to breaching its obligations), or “assign” the contract (i.e., provide that a third party will perform its obligations). 11 U.S.C. § 1322(b). Less clear, however—and the issue at the center of this appeal—is the effect that the debtor’s assumption-rejection-assignment election has on the bankruptcy estate and whether, for instance, the debtor’s decision to assume a lease obligates the bankruptcy estate independent of any action by the Chapter 13 trustee. (for the full text of the opinion click HERE) Chapter 13 Bankruptcies and Bankruptcy in general is a complex area of the law; however, with the right bankruptcy lawyer it can be an excellent tool to solve your financial problems. This is why it would benefit you to consult with a qualified bankruptcy attorney instead of continuing to worry about the situation. At Collins Law Offices we offer Free In-Depth No Obligation Consultations with a bankruptcy attorney that are designed for just this reason. We can help you stop worrying, because you will have a plan and the support of an expert bankruptcy lawyer to get you back on your feet. We have years of experience working in bankruptcy and will be at your disposal should questions arise during your bankruptcy -- our goal is to provide peace of mind while also providing expert advice on what course of action may work best for your situation. If you are having problems with debt, there is no reason not to at least learn about possible solutions that are out there even if you are not ready to take that step at this time. There will not be any added pressure or obligation placed on you, only relief and understanding. For a Free In-Depth No Obligation Consultation click here. Many people are surprised when they find out they can keep their car after filing for bankruptcy in Alabama. There is a myth about bankruptcy that you have to surrender or give up your vehicle(s) when you file. However, this is not the case!
There are two types of bankruptcy that are commonly filed by individual consumers (i.e. not businesses or farmers) -- one type of bankruptcy is a Chapter 7 or the other type is a Chapter 13. The good news is that in either a Chapter 7 or a Chapter 13 you can almost always keep your cars and/or trucks. It is normally not if you can keep your car, because you normally can, it is which methods and terms we can use under the bankruptcy laws to keep the vehicle. If you want more information about how this works, then read on below! What Happens to Your Car in Chapter 7 Bankruptcy? Most people can keep their cars in a Chapter 7. Why? Because most people either owe a significant amount on their vehicle, thereby eating up all or most of the equity or when they have had their vehicle long enough to pay it off, it has depreciated enough to fall under the exemption amount. Therefore, it is no longer an asset to the bankruptcy court valuable enough to make it worthwhile for the bankruptcy trustee to pursue. To keep your vehicle you need you need to meet the following criteria:
These are the first things we, as your bankruptcy attorney, will look for to be sure that you can keep your car in a Chapter 7. The good news is that all of these, other than number 2, maintaining car insurance, can be fixed through a Chapter 13 as described below. So, if you do not owe on your car and it does not have to much equity to exempt, you can file a Chapter 7 and keep your car. You will not have to do anything extra after filing bankruptcy. If you owe on your car, you can file a Chapter 7 as long as you are current on your payments, have insurance as required by your vehicle creditor, not have too much equity in the vehicle, and can show the Bankruptcy Court that you can afford your monthly payments per your budget. If you meet these requirements, you will be able to sign a reaffirmation agreement with your car creditor; and thereby, reaffirm your prior loan agreement for your car. You will continue to make your payments direct to your car lender under the same terms for interest rate, payment, amount owed, etc. For this loan, once you reaffirm it, it will be like you never filed bankruptcy with regards to it. So, based on the above, almost all people looking at filing a Chapter 7 bankruptcy in Alabama can file and keep their car or truck or other vehicle. What Happens to Your Car in Chapter 13 Bankruptcy? Like in a Chapter 7, you can also almost always file a Chapter 13 bankruptcy case and keep your car as well. In fact, unlike a Chapter 7, we, as your bankruptcy attorney, can use a Chapter 13 bankruptcy to actually save your vehicle from repossession if you are behind on your payments. There are a couple of instances where filing a Chapter 13 can help you keep your car where a Chapter 7 cannot. When you file a Chapter 13 you take the amount owed on the vehicle and put it in a Chapter 13 plan and pay it and any other debt you want or need to pay through a payment plan and through the Chapter 13 bankruptcy trustee. A Chapter 13 plan can be between 36 and 60 months long. In addition, a Chapter 13 bankruptcy allows you to drop the interest rate on your vehicle loan to prime plus 2% (which is 5.25% as of today). This normally lowers your monthly outgo regarding the vehicle by reducing the interest rate and spreading the payments back out over a 60 month time period. Another way a Chapter 13 bankruptcy can be very helpful is by taking care of any missed payments. In this way the question is not whether people can keep his/her vehicle in a Chapter 13, but how a Chapter 13 can actually make it easier for persons keep their vehicles. When you put the amount owed in your Chapter 13 plan it is the total amount owed, including any back payments owed. This really comes in handy if you are behind on your payments and your car lender is threatening repossession. Once you file your Chapter 13 your vehicle loan will be treated as current, no matter how far behind you were prior to the bankruptcy being filed. Chapter 13 Cramdown on Vehicle Loan Another benefit to filing a Chapter 13 with a auto loan is the possibility of performing a cramdown. A Chapter 13 cramdown on a vehicle loan is when a consumer has the option to pay back the fair market value of their car, truck or other motorized vehicle instead of the total amount owed or principal balance of the loan. In order to qualify for a cramdown of the vehicle loan the loan must have been made more than 910 days prior to the bankruptcy filing. In these cases, you can pay back less than what you owe on the vehicle, reduce the interest rate, and spread the amount owed out over 60 months. The remainder of the balance owed is paid the same as you are paying your unsecured creditors, which can be 0%. Chapter 13 and a Car with Too Much Equity A Chapter 13 can also help in another situation where a Chapter 7 cannot. This is the situation where you have too much equity in your vehicle. This is a rare situation, but sometimes happens when you have obtained or financed your vehicle in a less common way; such as, inheritance, paying cash for an expensive vehicle, using a 401K withdrawal to pay for a vehicle, etc. Alabama does not have a motor vehicle exemption. Instead of a motor vehicle exemption, Alabama has a Wildcard exemption that applies to all types of personal property, including your vehicle. If the value the equity of your vehicle along with the value of the equity in your other personal property substantially exceeds your bankruptcy exemption there can be an issue. If you have too much equity in your vehicle, this can be a problem in a Chapter 7; however, in a Chapter 13 you can just pay that "extra equity" off through your Chapter 13 plan, over a 60 month period, normally with a very affordable payment amount. Conclusion: As you can see from the information above, there are many ways that people might be able to keep their car after filing for bankruptcy. Both a Chapter 7 and a Chapter 13 will allow you to keep your vehicle as long as you meet a few criteria. Do not be afraid to file because of this "issue". Call 256-739-1962 or click here to speak with or schedule an appointment for a free consultation with a Chapter 7 and Chapter 13 Bankruptcy lawyer at Collins Law Offices, PC. We know filing a Chapter 7 or a Chapter 13 is not an easy decision. We want you to have all the information you need to make that decision before you pay us anything. Below I am linking an article by Amy Fontinelle with a good summary of what debt collectors are not supposed to be doing. If you are having these issues with a debt collector, you may have a Fair Debt Collection Practices Act violation case. You may also need to look into filing bankruptcy. Contact an attorney immediately. These types of cases can have short time limits on when you can file a case.
We offer free consultations for both FDCPA cases and bankruptcies. You have nothing to lose. Call (256)739-1962 or click here to contact us electronically. . . . . 5 Things Debt Collectors Are Forbidden To Do By Amy Fontinelle | Updated December 18, 2014 Debt collectors have a reputation – in some cases, a well-deserved one – for being obnoxious, rude and even scary when trying to get borrowers to pay up. The federal Fair Debt Collection Practices Act (FDCPA) is supposed to curb these annoying and abusive behaviors, but some debt collectors flout the law. Here’s what you should know about what debt collectors are forbidden from doing so you can stand up for yourself with confidence. Read more: 5 Things Debt Collectors Are Forbidden To Do Investopedia - http://www.investopedia.com/articles/personal-finance/121614/5-things-debt-collectors-are-forbidden-do.asp#ixzz40FYiQ0ja Many of the clients I meet with believe that if they file bankruptcy, they will lose all their stuff, i.e. cars, house, etc. About the same number of clients believe that if they file bankruptcy they can keep the stuff they owe on without paying for it. Neither of these beliefs are true.
First, the great majority of people who file bankruptcy can keep the stuff they want to keep. If you file a Chapter 7 bankruptcy, you must continue to pay for the stuff as per your original agreement with the lender. If you file a Chapter 13, you can pay for the stuff through a plan and many times reduce your interest rate, payments, and sometimes even the balance to be paid back. A Chapter 13 will also take care of payments you have missed prior to filing. Even though a bankruptcy can sometimes help with payments, you still must pay for most property for which you owe. The most common exception to this rule is for what the bankruptcy law call "non-purchase money security interest in household goods." These are debts where when you borrow money, normally from a finance company, the lender asks you about appliances, furniture, electronics, or tools you already own and lists these items as collateral for the loan. The bankruptcy law allows you to avoid these liens in many circumstances, and thereby keep this type of stuff without having to pay the debt on it. Yes. All collection attempts by creditors are to stop as soon as your bankruptcy is filed. When your bankruptcy is filed the "automatic stay" goes into place. This prohibits debt collectors from making any effort to collect any debt against you. It stops phone calls, letters, lawsuits, garnishments, foreclosures, and repossessions.
The automatic stay remains in effect during the pendency of your bankruptcy. It can be lifted by secured creditors to whom you are collateral to or to secured creditors to whom you were supposed to make payments to during the bankruptcy, but have not. Although the automatic stay goes into effect immediately when your bankruptcy is filed, in reality creditors will not receive notice from the bankruptcy court for 7 - 10 days. For this reason you or your attorney should inform creditors who are threatening to take actions such as foreclosure or garnishment that you have filed bankruptcy and provide the creditor with a case number. Creditors who knowingly violate the automatic stay will be required to reverse any adverse action they took after the automatic stay went into effect (such as foreclosure or repossession) and may be subject to paying fines and debtor's attorney's fees. If you are being harassed by collections efforts of creditors and debt collectors, contact me by clicking here or another qualified bankruptcy attorney in Alabama. The initial bankruptcy consultation is free. 3/5/2020 I am upside down on my car loan and am struggling to make the payment, but I really need my vehicle. Can an Alabama bankruptcy help me?Read NowPossibly. In a Chapter 13 bankruptcy you can, under certain circumstances, do what is called a cramdown. If you meet the criteria for a cramdown, you are allowed to only pay back the current fair market value of the vehicle, not the total amount owed.
For example, let’s assume you bought a car 2 ½ years ago, financed $25,000.00 and because your credit was not the best, you have a 12% interest rate. Your payments would be about $556.00 per month. You would still owe $14,352.00. Let’s say, per the NADA Used Car Guide you, the vehicle is now worth $8,000.00. By putting the vehicle in your Chapter 13 plan you could (1) extend the loan to 5 years, (2) reduce your interest rate tremendously (plan rates are currently at 5 to 5.25%, (3) in effect reduce your car payment to $152.00 (less than 1/3 the previous payment). So, what’s the catch? First, you must have had your car loan for at least 910 days, basically 2 ½ years in order to qualify for a cramdown. If you have not had your car for 910 days, you can still lower the interest rate, but not secured principal. Second, by extending the loan through the length of the plan, you may not be able to obtain the title on the vehicle until the end of the 5 year plan. Third, to maintain the benefit of the cramdown, you normally must complete your Chapter 13 plan. If your case is dismissed or you convert to a Chapter 7, some issues may arise. Fourth, your car must be worth less than the amount owed. If your car is worth the amount owed or more, then there is nothing to cramdown; however, you may still be able to lower the interest rate on the remaining amount owed on the loan. A Chapter 13 bankruptcy may be able to fix many of your cash flow problems. Please educate yourself and do not let yourself continue to struggle for no reason. Order my book by clicking here and/or contact me or another experienced bankruptcy lawyer immediately. 3/5/2020 I am being sued on a debt that the bank had previously charged off. Can they do that?Read NowIt is a common misconception that once a debt has been charged off by a creditor that the creditor can no longer collect on the debt and the debt just kind of goes away. Unfortunately, that is not the case.
A charge off is actually merely an accounting procedure by the creditor, whether it is a bank, credit card lender, mortgage company, auto loan company, or any other type of creditor. The creditor has at that point decided the account is no longer an asset to the company. Although the debt being charged off by the creditor is not a defense to having to pay the debt, there may be another defense. Whether the creditor or a collection company for the creditor can collect on the account depends on the statute of limitations. In Alabama the statute of limitations for most debts is either 3 years or 6 years, depending on the type of debt, from the last payment made on the debt. Be careful here, a payment of any type toward the debt could make a debt which has passed the statute of limitations or is about to pass the statute of limitations collectible again for another 3 or 6 years. Many times you may not hear anything about the debt for years, but out of the blue you are sued or begin receiving collection phone calls or letters regarding the debt. This often happens when a debt has been sold or transferred to different collection companies or debt buyers. If you have been sued on a charged off debt or are being harassed by a creditor or a collection company, a bankruptcy may be your best way to stop it. There may also be other ways to defend against the debt or settle the debt. Please educate yourself and do not let yourself be bullied by these companies. Order my book by clicking here and/or contact an experienced bankruptcy lawyer immediately. 3/5/2020 I have seen and heard lots of advertising by companies saying they can settle my debts for very little and help me avoid filing bankruptcy. Does this work?Read NowUnfortunately, debt settlement falls under the “if it sounds too good to be true, it is” category. While I am sure there may be a few success stories from people using these companies, I have yet to personally hear of one. Instead I have heard many complaints from clients who have wasted thousands of dollars on these “settlement” plans before having to turn to bankruptcy because of lawsuits and garnishments. Read the Federal Trade Commision's report on the subject here.
The problem is most people cannot afford to pay enough monthly to settle each credit card debt before at least one of the credit card companies file suit, obtains a judgment, and attempts garnishment. Also, if you can afford to save enough to do this, you could settle your credit card debt on your own without paying the high fees these debt settlement companies charge. Speaking of the fees, remember that even though these companies may call themselves “non-profit” and a few may technically qualify under the tax laws (this is apparently being questioned by the IRS), it does not mean they are a charity. These companies are clearly making lots of money. Why else would they be multiplying like rabbits and how else could they be buying all of that advertising? Many people think they are saving their credit by using these debt settlement companies. If your credit score has not already been significantly lowered before you use one of these companies, it will be by time you finish (which I have yet to see) or drop out. Settling for less than the amount owed is a negative on your credit report in itself. Add to that charge offs and judgments from the card companies that are not settled early and your credit score will show tremendous damage. A bankruptcy’s effect on your credit would be very similar and allow a quicker recovery. A bankruptcy may or may not be the answer for you, but do not buy the hype of these debt settlement companies and fall for their anti-bankruptcy propaganda. Do your research on these companies by checking with the Better Business Bureau and educate yourself about bankruptcy by getting your free copy of my The Alabama Bankruptcy Book by clicking here.
3/5/2020 Will a bankruptcy in Alabama stop a garnishment that is already being deducted from my paycheck?Read NowYES. I have been getting a lot of questions about garnishments lately. Both Chapter 7 and Chapter 13 bankruptcy filings in Alabama will stop garnishments. This is accomplished in a two step process. First, we must file your bankruptcy with the bankruptcy court and thereby obtain a case number for your bankruptcy.
Second, in the Court which issued the garnishment (normally your county’s Small Claims Court, District Court, or Circuit Court) we file a Motion to Quash Writ of Garnishment. In this motion we ask the Court that issued the garnishment to enter an order stopping the garnishment and to return to you any money the Court is holding or receives in the future from the garnishment. This means that if we can catch it in time, we may be able to get some of your money back. Having said this, I would strongly recommend filing a bankruptcy prior to a garnishment going into effect. I say this only because I know a garnishment taking 25% of your wages is not going to leave much to live on, much less enough to save to pay for a bankruptcy. Please note that a bankruptcy will not stop a garnishment or income withholding order related to child support. 3/5/2020 Do I qualify to file a Chapter 7 bankruptcy in Alabama under the “new” bankruptcy laws?Read NowMany people have been convinced that the bankruptcy reforms that went into effect in October of 2005 have made it impossible for most people to file Chapter 7 bankruptcies. Nothing could be further from the truth. Yes, there is now a “Means Test” which was intended to screen out people with “too much income.” But, in my experience almost everyone whom I have counseled with regarding filing a Chapter 7 bankruptcy who could have filed for Chapter 7 bankruptcy before the 2005 reforms still qualify to file a Chapter 7 bankruptcy in Alabama after the reforms. Nationwide studies have confirmed this -- Porter Study Finds Bankruptcy Law Reform Has Hurt the Poor Most and Bankruptcy Reform’s Impact: Where Are All the “Deadbeats”?
How does the “Means Test” work? First you see if you are over or under the median income for a family of your size in Alabama. For a quick check click here. If your household income is under the median income for the same size household in Alabama, then you have passed the “Means Test” and qualify to file a Chapter 7. If you are over the median income, it DOES NOT mean you are disqualified from filing a Chapter 7 bankruptcy. Most people can still file. There is just more paperwork to do. With the additional paperwork you are allowed to deduct taxes, housing costs, transportation costs, secured debt payments, medical costs, and many other costs. After deducting these costs, most people have very little income that could be used to pay unsecured creditors; and therefore, can file a Chapter 7 bankruptcy. The bottom line is, if you are having financial problems, do not let the “Means Test” scare you away from seeking good legal advice from a qualified bankruptcy attorney. The qualifications to file a Chapter 7 bankruptcy in Alabama are still fairly low. Despite anything you may have heard, there is a very high chance you can still file a Chapter 7 bankruptcy. And, if you are one of the few who cannot file a Chapter 7, you can probably file a Chapter 13 bankruptcy and still be protected from creditors. 3/5/2020 I have been using a Payday Loan company or Check Cashing store and can no longer pay the fee and I know the check(s) will bounce. Can I file bankruptcy on payday loans or check cashing loans? Can I be charged with a crime or go to jail?Read NowI continue to see more and more clients come in to see me about filing a Chapter 7 or Chapter 13 bankruptcy after being caught up in the payday loan or check cashing trap. It’s an easy lure – quick easy money with no credit check. It is easy for consumers to rationalize that they can pay the money back out of their next paycheck and be caught up. However, far too often the next paycheck is “already spent” as well and you have to “renew” the loan and pay the fee.
The cycle of renewing these loans becomes extremely draining on a person’s finances which were assumedly already teetering on the edge. All it takes is one look at the interest rate on these types of loans to see why. The average “fees” paid on these loans amount to normally between 400% to 720% annual interest rate. The cycle also often leads to obtaining these loans at multiple companies in an effort to “borrow from Peter to pay Paul.” The FTC has issued a Consumer Alert regarding these loans Payday Loans Equal Very Costly Cash. You can file bankruptcy in Alabama on payday and check cashing loans and these loans are dischargeable. Do not let these companies convince you otherwise. I have had clients who have been told “You cannot file bankruptcy because you signed a form saying you wouldn’t.” This is NOT true (wouldn’t every lender do this if it was). In addition I have had clients who have been told they would be charged with a crime for writing a bad check. This again is NOT true. The crime of writing a bad check is a form of fraud, i.e. saying you have enough money in the bank to cover the check at the time of writing it. This fraud has to be relied on by the person receiving the check. In the payday and check cashing loan situation, these companies know the check is not good at the time they accept it; therefore, there is no fraud and there is no crime. Do not let these predatory loans continue to financially and mentally drain you. Obtaining these types of loans is often a sign of other debt problems as well. Make an appointment with an experienced and knowledgeable bankruptcy attorney and see about obtaining a fresh start. Yes. You may be able to save your house from foreclosure by filing a Chapter 13 bankruptcy in Alabama. A Chapter 13 bankruptcy allows you to put your arrearage (the payments you have missed) in your Chapter 13 plan and pay them back over the term of your plan (usually 5 years). You will have to pay the entire amount of your arrearage back over this period of time. This in effect “catches up” your mortgage payments, keeping the mortgage company from foreclosing.
Other than allowing you to catch up your back payments the bankruptcy court cannot affect the terms of your mortgage. Therefore, beginning the month after you file for bankruptcy you will have to begin making your regular monthly mortgage payments. This can be difficult since you were already missing payments and now you are to begin making your mortgage payments again plus a payment to the bankruptcy court. This will require some serious budgeting and discipline, but it will be very important for you to make both of these payments. While there may be some ways to prevent foreclosure if you miss payments post-petition (i.e. after your bankruptcy has been filed), it will be difficult. You will also have to maintain your homeowner’s insurance coverage. To stop the foreclosure your bankruptcy will need to be filed prior to the foreclosure sale. The 2005 amendments to the bankruptcy laws have made the preparation of bankruptcy petitions much more time consuming. I would recommend you see an attorney immediately and not later than 1 week prior to the foreclosure sale. The bottom line is while it may take some cutting back on other expenses, a Chapter 13 bankruptcy in Alabama can save your house from foreclosure. Do you have questions or comments regarding this topic? Please email me. 3/5/2020 Why can’t I just put my house, car or other property in someone else’s name before I file for bankruptcy?Read NowBecause it would be a huge mistake. The bankruptcy court trustee has the power to avoid such transfers he or she feels were made with the intent to hinder, delay, or defraud creditors. Under the amended bankruptcy laws the trustee can “look back” at least two years, but may “look back” even longer in some circumstances. The trustees for the Northern District of Alabama routinely ask about real property transfers in the past ten years. Do not worry if you have legitimately (that is transferred to a third party and receipt of fair market value) sold a house or vehicle; however, be prepared to present the paperwork for the transaction.
The consequences of getting caught attempting a “fraudulent transfer” can be severe. The trustee’s avoidance of the transfer itself may cause a debtor many new legal problems; including, but not limited to, issues with the person(s) or entity to which the property was transferred and/or possible criminal charges. In addition such a transfer may result in a debtor not receiving a discharge in his or her bankruptcy which means no protection from creditors. So, what do you do if you have too much equity in your real or personal property? You probably will be able to file a Chapter 13 Bankruptcy. In a Chapter 13 Bankruptcy in Alabama you may pay some or all of this equity into the bankruptcy court in affordable monthly payments over a period of time. While you may have to pay some money into the court, you will still avoid lawsuits, garnishments, repossessions, foreclosures, and have the other protections provided by the bankruptcy laws. If you have any questions regarding this or Alabama Chapter 13 Bankruptcy filings or other bankruptcy or debt related issues please email me. 3/5/2020 A debt collector called me and said “We will garnish your next paycheck.” Can they do this?Read Now I am continuously amazed at the depths some debt collectors will go to in order to scare unwary debtors into making payments they cannot afford at the time. The statement “We will garnish your next paycheck” is probably a lie.
In Alabama in order for a creditor to obtain a writ of garnishment against your employer to withhold money from your paycheck, that creditor must have a judgment against you. In order to have a judgment against you, that creditor must have filed a lawsuit against you and won either after a trial or by default, that is, because you did not file a response. Normally when this threat is being made, a lawsuit has yet to be filed. How do you know if you have been sued? First, if suit has been filed against you, you should have been served with a Summons and Complaint by either the sheriff’s department of your county or by certified mail. However, if you cannot be found by the creditor, the creditor may have you served by publication, that is, by running a notice in the newspaper in the county of your last known address. If you are still unsure, you may call the clerk of court of your county. What if I have been sued? See a lawyer immediately. Depending on which court, Small Claims/District or Circuit, you have either 14 or 30 days respectively from the day you were served to file an answer. Filing an answer generally denying the allegations in the lawsuit will prevent the creditor from obtaining a default judgment against you and will lead to your case being set for court after a few months. This will give you time to save money and/or get your bankruptcy filed. What if I already have a judgment and/or garnishment against me? If you already have a judgment and/or garnishment against you, I would again suggest you see an attorney immediately. You may be able to have the judgment set aside or appealed, but only if you act very quickly. This may also be a good time to take a strong and hard look at bankruptcy. With a bankruptcy you should be able to discharge the judgment prior to garnishment and stop any garnishment that is already in place. Upon filing a bankruptcy, you may even be able to have a portion of any money garnished from your check returned to you. The bottom line is do not let harassing calls from creditors or debt collectors scare you into giving them money you cannot afford to give them. Many will say anything they think will frighten you. If a debt collector says anything that worries you, make an appointment with an attorney and see what your rights are. It’s probably a good time to take a look at your financial situation anyway. Please email me with any questions regarding the topic of garnisments or any other bankruptcy or debt related topic. Filing for bankruptcy is a heart wrenching decision. On the one hand you want to do what you promised your creditors you would do, but on the other hand you have to house, feed, and clothe your family and yourself. There is no question that bankruptcy should be the last resort, but as to whether you should file or not, my classic lawyer answer is “It depends.”
First, we need to look at why you are considering filing bankruptcy. The most common reasons are the following:
If your answer to any of these questions is “Yes”, then it may be a good time to see an Alabama bankruptcy attorney. This does not necessarily mean you should file bankruptcy, but it does mean you may need some legal advice. The attorney may suggest some of the following alternatives to bankruptcy:
If any of these alternatives allow the possibility of a LONG TERM solution, then they should be greatly considered even though it may call for tough decisions and hard work. Why? Although bankruptcy can be a “quick fix”, it comes with some serious long term consequences to your financial future. The bottom line is I and many other Alabama bankruptcy attorneys offer free initial consultations, so it will not cost you anything to see what your options are. If after talking to an attorney, you think you can dig yourself out of the hole you are in without bankruptcy then definitely try that. But, if it does not work out you will be prepared and should have a plan. If you have further questions regarding this or other Alabama bankruptcy, debt, or budgeting questions please email me. 3/5/2020 What happens if I have a claim or lawsuit that I may get some money from in the future, but I need to file bankruptcy now?Read NowWhen “Jane” came to me about filing bankruptcy she was in dire straits. She had been sued by at least one creditor and was about to have her wages garnished. If her wages were garnished, the loss of 25% of her wages not have left her enough income to keep her mortgage and utilities paid and meet her other necessities.
Jane met all the qualifications to be able to file a Chapter 7 bankruptcy, but there was an issue. Jane’s father had died about one year earlier and his estate had a lawsuit against the nursing home where he died. A person having a claim of some type, but currently being in poor financial shape is fairly common. Often times an on the job injury (Worker’s Comp) or a car wreck (Personal Injury) results in a loss of income and an inability to pay debt. Jane had been told by the estate attorney that her father’s type of case, a wrongful death due to alleged malpractice by the nursing home, rarely settle and it could be years before the case went to trial. Even then there was no assurance they would win. So, what do you do? First, I explained to Jane that if she wanted to file bankruptcy, it is absolutely required that the lawsuit/claim be listed as an asset. This is very important and there has been a lot of litigation over this issue in the past few years. Lawsuits and estates are public records and are impossible to hide, do not try. Failing to list a claim or lawsuit on your bankruptcy petition may damage your chances of recovering any money from that lawsuit or claim. Second, I informed Jane that if and when she becomes entitled to any money from the lawsuit, the money would have to be paid to the bankruptcy trustee of her bankruptcy case and she may receive very little of the proceeds. The amount she would receive would depend on her remaining personal property exemption, the amount of the proceeds, and the amount of claims filed by creditors. With knowledge of the possible outcome, Jane decided she still needed to file bankruptcy immediately. Although Jane’s situation was different, it is normally required that the attorney representing the debtor in their lawsuit or claim file a motion with the bankruptcy court to be approved as the attorney and to have their fee contract approved as well. About a year after filing, her father’s wrongful death case settled. Jane’s share was about $20,000. What happened to the money? The $20,000 was paid by the estate’s attorney to the bankruptcy trustee. Jane still had $1,000 of her $3,000 personal property exemption available, so she was allowed the first $1,000. The trustee received a fee out of the proceeds, normally 10%. Then creditor claims were paid. In Jane’s case only $12,000 of creditor claims were filed which was much less than her debt at the time she filed. After all creditor’s claims were paid, Jane received the remainder. So, all in all Jane received about $6,000 from the settlement. I am sure Jane would have rather had the entire $20,000 share of the settlement, but her actual outcome really was not that bad. If she had had the $20,000 immediately before she filed, she would have had to have paid all or almost all of it to creditors. At least she was able to eat and pay her bills during the year before the case settled and was even able keep a good portion of the settlement after bankruptcy. Remember, this is not always the case. If all her creditors had filed claims, she would have only received the $1,000 exempt portion. If you are having financial difficulties, find out the truth about how bankruptcy may be able to help. Request my free book and/or call attorney Richard L. Collins or another experienced bankruptcy attorney. Here is a brief overview of a bankruptcy.
There may come a point in a person's life, whether its due to health problems, spending problems, employments problems, etc., where a person owes more money than even the tightest budget will allow him to pay. When this happens and monthly payments begin to be missed, the people and businesses who are owed the money (the creditors) start calling and sending letters. Eventually, if the creditors are not satisfied, there are foreclosures and repossessions of vehicles and/or lawsuits getting filed which will then lead to judgments, garnishments and liens. A bankruptcy can stop most of these bad things from happening. A bankruptcy can immediately stop the phone calls, letters, lawsuits, garnishments, foreclosures, and repossessions. This is called the Automatic Stay and it "stays" all collection efforts. A Chapter 7 bankruptcy will wipe out almost all unsecured debt, like credit cards and medical bills. Most of the time under a Chapter 7 you will be able to keep your house and vehicles if you are current or almost current on those payments and continue to make your payments to those creditors as agreed to in your contract. A Chapter 13 allows you to create a plan to pay some or all your debt back to the creditors. A Chapter 13 can stop your house from being foreclosed on or your car from being repossessed by allowing you to pay back your arrearage over time. It will also protect a house or vehicle in which you may have too much equity under the State of Alabama's exemption laws. Alabama's exemptions are very low, so this comes in handy frequently. The amount you pay back is based on your income and expenses and the amount of debt you need or want to pay back over the length of the plan. Most plans last for five (5) years which is the maximum length of the plan. So, the bottom line is a bankruptcy can stop collections of debt by creditors, wipe out all or part of your debt, and/or create a plan to pay back some or all of your debt while normally letting you keep the real and personal property you want to keep. It is not all rosy though. There are issues that can make filing bankruptcy very tough. Bankruptcy also has long term effects on your credit. I will deal with these issues in later posts. If you are having financial difficulties, find out the truth about how bankruptcy may be able to help. Request my free book and/or call attorney Richard L. Collins or another experienced bankruptcy attorney. |
AuthorI am an attorney located in Cullman, AL. I practice extensively in the area of consumer bankruptcy law, that is, I file Chapter 7 and Chapter 13 bankruptcies for individuals. I handle cases all over North Alabama and have helped hundreds of clients through the bankruptcy process., I receive many referrals from former clients and their families and other attorneys. Why? Unlike other firms, I have a local office. If you are from out of town, we have the technology available to keep your traveling to a minimum. Also, unlike many firms, you will meet personally with an attorney, not a paralegal. An attorney will handle your case from start to finish. , Archives
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