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Struggling with Debt? What You Should Know to Avoid Making Things Worse…

Good people find themselves deep in debt for a lot of reasons:  Job loss, health issues, and divorce are common reasons for debt problems.  We see people try all kinds of ways to try to stay ahead.  Here are some things that you should NEVER do:

Do not take out a second home mortgage to pay debts.  This transfers unsecured debts to secured debt attached to your home. If you cannot make payments your creditor will foreclose on your home. It is possible to protect your home in bankruptcy.

Do not pay debts using your retirement savings account.  Retirement accounts are protected through a bankruptcy filing.

Do not max out your credit cards to stay afloat.  Recently incurred charges may not be able to be discharged through a bankruptcy filing.

Do not transfer your home to another person to avoid having a lien placed on your property.  Call us first to discuss any such transfers.

Bankruptcy is not the end of the world.  There are hundreds of thousands of bankruptcy filings in the United States each and every year.

Here are some thoughts of things to do when filing for bankruptcy.

Do consider this decision very carefully.  Under Chapter 7 you will only be able to receive a discharge every 8 years.  There are other options if you have filed within the last 8 years and are struggling.  Contact us for a free consultation.

Do follow the advice of your attorney.  At our office we have over 55 years of combined experience and will be able to guide you to make sure your bankruptcy is as painless as possible.

Do be honest in all of your answers on the petition.  Be sure to list all assets and not leave anything out. We can usually protect your assets with full disclosure and some pre-planning.

Do be sure to list all of your creditors on your petition.

Do close any bank accounts with which you have credit lines or credit cards.  This will prevent the account from being seized by the creditor.

Bankruptcy is a serious decision and should not be taken lightly.  Contact our office for your free consultation to discuss your individual situation to see if bankruptcy is the right decision for you.

 

 

BANKRUPTCY AND DIVORCE

 

It’s not uncommon for someone to file bankruptcy after a divorce. You or your ex-spouse may not be able to keep up with payments on a single salary. It happens, it’s a legitimate reason to look for relief through bankruptcy.

Money is a big stress factor in many relationships. Sometimes a couple that has money problems will think that the answer to their problems is divorce. Each spouse is likely to believe that the other is mostly responsible for the couple’s money problems. This belief may or may not be true. One thing is true, you can divorce your spouse, but you can’t divorce the debts incurred during your marriage.

When either party contemplates bankruptcy, one consideration is the timing of the filing and whether the parties should file a joint bankruptcy before or during the divorce, or an individual bankruptcy before, during, or after the divorce. Your creditors are not part of the divorce, and the family court cannot alter, modify or revise the contract between debtors and creditors.  Any joint debt discharged by one party will leave the other party solely liable, exposed to collection efforts and law suits, and will often force the other spouse to repay or file bankruptcy.

Both spouses are responsible for the debts incurred during the time of the marriage. Your divorce settlement will divide up the debts, assigning responsibility for some to one spouse and some to the other. But that divorce settlement is between you and your ex-spouse. It doesn’t bind your creditors, who can collect the debt from either of you. This means if your ex-spouse doesn’t pay his or her share of the debts, the creditor can come after you for payment.

HOW CAN I GET STARTED?

Call our office today and set up your free consultation with an attorney. We will discuss which chapter of bankruptcy is best for you.

Bankruptcy can mean different things to different debtors. There are several types of bankruptcy chapters provided under the U.S. Bankruptcy Code, each with its own rules and procedures.

The most common filings for bankruptcy are Chapter 7 and Chapter 13. Chapter 7 will wipe out all your unsecured debt (credit cards, medical bills, utilities, etc.). You can also keep your house and vehicle in Chapter 7, as long as you are or can get current on payments. Chapter 7 is a straight bankruptcy. This will stop all collection proceedings including phone calls, mailings, garnishments and court proceedings. Most bankruptcy filings in the U.S. are Chapter 7. Under a Chapter 7, any debt incurred to a spouse or former spouse that is incurred during a divorce by agreement, decree or court order is not dischargeable.

Chapter 13 is a repayment plan. It is referred to as a wage earner plan. You must have a reliable source of income to repay all or a portion of your debt. Chapter 13 will stop a foreclosure or repossession as well. It is designed to help you retain your home or vehicle if you are behind in payments. You will repay 1% to 100% of your unsecured debt, depending on your individual situation. Repayment will  last a minimum of three and maximum of five years. During this time it will be up to the creditors to file claim in order to be paid during the case.  Under a Chapter 13, the debtor may receive a discharge from obligations incurred as part of the divorce if certain conditions are met.

HOW CAN I GET BACK ON TRACK?

Once you have fully discharged, rebuilding credit can sometimes seem like an overwhelming task. But it’s important to realize that there is life after bankruptcy. Repaying your existing bills as agreed will be one of the single most powerful things you can do to restore your finances and your credit.

FREE CONSULTATION

Contact our office at 513-752-3900 to schedule your free consultation to see if bankruptcy will give you the financial relief you are looking for.

STRUGGLING WITH DEBT? BANKRUPTCY MAY BE AN OPTION.

STRUGGLING WITH DEBT?

You have tried but the struggle is never ending.  It seems as soon as you start to get ahead something else comes up and gets you behind.  Bankruptcy may be the answer to your financial troubles. Bankruptcy gets rid of debts and sets you on the path to a fresh financial start.

Chapter 7 and Chapter 13 are the most common cases.  Each chapter has its own rules.  To find out more,  meet with one of our attorneys who will advise which path is best for you.

CHAPTER 7 BANKRUPTCY

Chapter 7 Bankruptcy is also referred to as straight bankruptcy.  This chapter is available for most consumers.  Under Chapter 7 Bankruptcy protection you discharge all unsecured debts.  A discharge is a document issued by the federal court which deems your debt satisfied and non-collectable by creditors.  Once you file Chapter 7 all collection practices by creditors must stop by court order.  This includes, but is not limited to phone calls, mail harassment, court proceedings and garnishments.

Chapter 7 is sometimes referred to as a liquidation bankruptcy because the Chapter 7 Trustee may take some of your assets and sell them to pay your debts.  However, our clients can protect and keep most assets (usually all) through exemptions provided by the bankruptcy code and careful pre-planning.  Call our office today for your free consultation to discuss your individual situation.

In Chapter 7 Bankruptcy you are able to keep your home and vehicle.  You must however, be current or able to catch up on your payments if you wish to keep the asset.  The creditor will have a reaffirmation agreement for you to sign and this will deem the debt non-discharged through the bankruptcy.  This reaffirmation agreement also ensures that the creditor will continue to report your payment history to the credit reporting agencies, thus rebuilding your credit after the bankruptcy filing.

CHAPTER 13 BANKRUPTCY

Chapter 13 bankruptcy is designed for those who are over the income limit for Chapter 7 or are behind on their home or vehicle and want to keep these assets. Chapter 13 is a re-payment plan in which you pay between 1% to 100% of your debts (depending on your individual circumstances).  An unsecured creditor cannot charge you interest during a Chapter 13. Once you complete your case all of your debts will be discharged.

Chapter 13 bankruptcy, also referred to as “a wage earner plan”, allows you to retain ownership and possession of assets that you wish to keep.  You may also choose to surrender assets through Chapter 13.  To qualify for a Chapter 13 Bankruptcy you must have income to support the case as you will be making monthly payments to the Chapter 13 Trustee who will then disburse these funds to pay your creditors.

Chapter 13 can stop a foreclosure. If you are in foreclosure and want to save your home you can file a Chapter 13 to stop the foreclosure.  Your mortgage holder cannot object to your bankruptcy filing.  Chapter 13 generally lasts for a three to five year period.  During this time you make up all your missed payments and the Trustee will disburse your regular house payment.   At the end of your case the Trustee will file a notice with the Court that all payments are current and deem that your mortgage holder cannot come back on you for additional fees incurred while you were under bankruptcy protection.

If you are behind on your vehicle, Chapter 13 can also stop repossession and give you time to make up the missed payments over a three to five year period.

AFTER DISCHARGE  AND ON THE PATH TO A FRESH FINANCIAL START

Once you receive your discharge creditors can no longer collect on these old debts. They cannot send you a bill, they cannot call you, they cannot take you to court, they cannot garnish your wages.  You will be free and clear from these debts and on the road to a fresh financial start!  As a result, you can re-build your credit and move forward.  Most importantly, you should make all payments for debts on which you reaffirmed on time and seriously consider your budget before taking on future debt.  Your credit rating will improve in no time.

BANKRUPTCY AND YOUR RETIREMENT ACCOUNT

SHOULD I CASH IN MY RETIREMENT TO PAY MY DEBT?

The answer is NO!  Almost always s bad idea!  You have worked hard and saved for retirement.  Your retirement is just for that, your retirement.  Most likely your current employer provides funds for retirement.  If you are already retired then you need these funds now, do not cash them in to pay debts.

Bankruptcy may be available for you.   Under  Bankruptcy  law your retirement funds are protected.  You can file bankruptcy and keep your retirement accounts for when they will be needed – when you retire.

WHAT IS BANKRUPTCY?

A federal law set up which will allow you to discharge all of your unsecured debts.  Once a discharge is issued creditors can no longer collect on debts included in the bankruptcy.  You do not have to pay any of these debts and you do not need to report the filing to the IRS as income.  There are two main chapters filed by most consumers – Chapter 7 and Chapter 13.

CHAPTER 7 

Chapter 7 is the most common bankruptcy filing.  It goes by many names, Chapter 7, straight bankruptcy, simple bankruptcy, liquidation bankruptcy and so forth.  In a Chapter 7 you wipe-out all of your unsecured debts.  If you have secured items you would like to keep such as a home or vehicle you will be able to reaffirm on these debts through your case.

CHAPTER 13

Chapter 13 is designed for those who are over income for Chapter 7 or who are behind on their homes or vehicles.  Chapter 13 is a repayment plan.  Under Chapter 13 you will have 3 to 5 years to make up payments on your home or vehicle.   You will pay back a percentage of your debts to your unsecured creditors.  You will receive a discharge at the end of your case.

MORE INFORMATION

For more information call us at 513-752-3900 to schedule a no obligation, free consultation with an experienced attorney.  Since 1992,  Keegan and Company Attorneys has helped thousands of people of the Cincinnati area get well deserved financial relief and asset protection. We are here and available to help you!