CULLMAN BANKRUPTCY ATTORNEY
COLLINS LAW OFFICES, P.C.  (256)739-1962


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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?

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Because 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.
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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?

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When “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.


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3/5/2020

What does a bankruptcy do?

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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.

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    I 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. ,

    You will be taken care of throughout the process. We will obtain your credit reports to ensure all your creditors are listed. We will assist you in preparing the forms and then obtain your credit counseling certificate which is required prior to filing bankruptcy for you. We will explain the pros and cons of filing for bankruptcy and the different types of bankruptcy. We will not pressure you into entering into a bankruptcy process that you do not understand. We will be with you side by side through the bankruptcy process. , We represent individuals and work hard to lead them out of the debt traps, through the maze of bankruptcy laws, and to the relief of a bankruptcy discharge.

    ​I am a member of the National Association of Consumer Bankruptcy Attorneys, the American Bar Association, the American Association for Justice, the Alabama Bar Association, and the Alabama Association for Justice. I am a 1996 graduate of the University of Alabama School of Law. I also have a BA degree from the University of Alabama. The Law Office of Richard L. Collins is a federally designated Debt Relief Agency. Richard L. Collins helps clients file for bankruptcy protection under the laws of the United States. Alabama State Bar Disclaimer: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

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Collins Law Offices, PC  helps clients file for bankruptcy protection under the laws of the United States.
​Alabama State Bar Disclaimer: No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.
  • Cullman Bankruptcy Attorney
  • Bankruptcy Info
    • Chapter 7
    • Chapter 13
    • Stop Foreclosure
    • FAQ'S re: Bankruptcy
    • Bankruptcy Attorney Services
    • Alabama Bankruptcy Blog
    • Credit Rebuild Education
  • Contact
    • Get Started
    • Free Bankruptcy Book
    • Free Rebuild Life Book
    • Contact Us
    • Make a Payment
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  • About Bankruptcy Lawyer