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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.
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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 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. 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. 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 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. |
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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