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BANKRUPTCY & THE SENIOR CITIZEN

Bankruptcy is designed to help people overly burdened with debt gain a fresh start. Often the person needing relief is a senior citizen. We have a rapidly growing senior population and while many have been able to plan for the future with quality pensions and health insurance plans, many rely solely on social security.  Problems develop when these individuals are hit with demands from creditors on debts they have co-signed on, often for their children and grandchildren.

In most cases, if you are senior citizen collecting social security, you will likely travel through the bankruptcy process problem free. Even if you own your home or car outright the asset exemptions for Ohio residents is high enough that it will likely protect your home and your vehicle.  If you are elderly, you may qualify to have the filing fee waived by the court.

Social security and pension plan payments are exempt in bankruptcy. In other words, they will not be touched by the bankruptcy court.

Many seniors place undue pressure on themselves to pay debts when they are struggling to pay for food and medication. Many were raised with the view that bankruptcy is not an option and see it as indicator of failure. In reality bankruptcy is a legal option that allows seniors to focus on their own needs and not their creditors.

Contact our office today to see if bankruptcy will be able to help you or your aging parents get a fresh financial start.

Call 513-752-3900 to schedule your free consultation with an experienced attorney.  We offer a free consultation, fair fees and monthly payment plans. We are caring and knowledgeable attorneys.

BANKRUPTCY- SHOULD YOU FILE BEFORE OR AFTER DIVORCE?

We are attorneys located in Eastgate and Middletown, Ohio. Since 1992, Bankruptcy has been the main focus of our practice.

If you are considering bankruptcy contact our office for a free consultation.  At this consultation our attorneys will analyze your individual situation.

Your spouse does not have to file bankruptcy.  You can file bankruptcy without your spouse, but whether they should file with you depends on the circumstances. Here are some of the most common situations in determining whether to file with your spouse.

All (or Most) Debts are in One Spouse’s Name

This happens often either in a relatively new marriage, or one in which one of the spouses had operated a failing business. The person with little or no debt doesn’t want to participate in filing bankruptcy if it’s not necessary to do so.

In a newer marriage, the couple may realize that the debts of one spouse is hurting their joint financial lives. Possibly the financial stress is jeopardizing the marriage itself. That is especially true if the spouse with the debts either was not candid about the amount of debts he or she was bringing into the marriage, or has continued to use credit within the marriage without the full knowledge of the other spouse.

Whatever the context, determining whether to file bankruptcy for just one spouse requires a thorough analysis as to who is liable on each of the debts.  If there is joint liability, the creditor can pursue the non-filing spouse for the full amount.

It takes some analyses to determine whether a spouse is or is not liable on a debt.  Being an authorized user sometimes creates liability, and sometimes doesn’t. You can discuss this at your free consultation.

Preserving the Other Spouse’s Credit Record

A common reason given for one spouse not wanting to file is to protect his or her credit record. That’s a sensible enough goal. And not only for the non-filing spouse. The couple could benefit from the non-filing spouse’s access to credit on behalf of their household. That non-filing spouse may help the filing spouse re-establish his or her good credit through co-signing of new debts , for example.  Many times when one spouse has a small amount of debt, we may advise not to join the bankruptcy.

But be careful with assumptions about keeping the fling spouse’s case out of the non-filer’s credit record. This is especially if you have a joint debt or two, including ones that you intend to continue to pay and keep “outside the bankruptcy” case, such as a home mortgage or vehicle loan. Although credit reporting agencies are not supposed to refer to a co-debtor’s bankruptcy filing in the non-filer’s credit reports, don’t simply assume that will happen appropriately.

So it’s all the more important for the non-filing spouse to review his or her credit report before the other spouse’s bankruptcy is filed and then very regularly thereafter to make sure there’s no reference, directly or indirectly, to the bankruptcy case.

THINKING OF DIVORCE

Bankruptcy can be good financial planning when anticipating divorce.  If it’s clear, both that you will be getting divorced, and that you need the financial relief of a bankruptcy, then which should come first?  If the bankruptcy is first, should you file with your spouse or not?  Most of the you should file together.  You save on filing and attorney fees, and you have less to argue about (so you spend less on legal fees) in the divorce.  But, this isn’t always true.

The overly simplified answer is as follows:

  • Do not file a joint Chapter 7 “straight bankruptcy” case with your spouse in anticipation of a divorce without BOTH of you getting independent legal advice from separate attorneys.
  • In some situations, it is not in one or the other’s interests to file jointly.
  • In virtually NO circumstances would it make sense to file a joint Chapter 13 case in contemplation of a divorce—a Chapter 13 take three to five years to complete, and at the time of your divorce we would have to turn that case into two separate Chapter 13 cases, or into two Chapter 7 cases.

MORE INFORMATION

Contact Keegan & Co Attorneys today for your free consultation 513-752-3900 at one of our office closest to you: Eastgate or Middletown. Free parking. Convienent appointment times. Fair fees. Our office has been helping the people of Greater Cincinnati since 1992. Caring and knowledgeable lawyers.

Is Bankruptcy the Answer?

We are bankruptcy attorneys located in Eastgate and Middletown, Ohio. For over 30 years, we have have helped people of greater Cincinnati solve their debt issues, protect assets and move on toward a healthy financial future.

WHAT IS BANKRUPTCY?

It is a legal procedure which gives debtors federal protection from creditors.  Under the federal code your debts will be discharged and give you a fresh financial start.

HOW CAN BANKRUPTCY HELP ME?

Filing bankruptcy could wipe out credit card debt and other unsecured debts. Once filed, no creditor can collect of those debts.

Filing will stop creditor phone calls and harassing letters and will stop repossession of your car or foreclosure of your home. You may still retain your home even if a foreclosure has already been filed.

Medical debt is discharged through bankruptcy. Overall, medical debt is the main reason in the U.S. for filing for bankruptcy. Hospitals and ER services cannot refuse you service in the future, if you were to file.

You will not lose everything you own! Sometimes in a chapter 7, the trustee may take assets and sell them to pay on your debts, however, our clients are relieved to learn they will keep most, usually all,  of their assets through bankruptcy exemptions. We can also help you pre-plan making the most of your bankruptcy exemptions.

WHICH BANKRUPTCY OPTION BEST FITS MY SITUATION?

The most common filings for bankruptcy are chapter 7 and chapter 13. Chapter 7 will wipe out all your unsecured debt (credit cards, medical debts, utilities, etc.). You can also keep your house and vehicle in chapter 7, as long as your current on payments. Chapter 7 is a straight bankruptcy, referred to as a liquidation bankruptcy. This will stop all collection proceedings including phone calls, mailings, garnishments and court proceedings. Over 65% of consumer bankruptcy filings in the U.S. are chapter 7.

Chapter 13 is a repayment plan. It is referred to as a wage earner plan. You must have a reliable source of income so that you can 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 your behind. You will repay from 1% to 100% of your debt, depending on your individual situation. This will last a minimum of three years and max of five years. During this time it will be up to the creditors to file their claim in order to be paid during the case. Many do not and their debt is wiped out regardless.

WHAT DEBTS WILL NOT BE DISCHARGED?

Most of your debts can be discharged. Some debts cannot be discharged.

Student Loans – Most student loan debt is not dischargeable. In some situations a debtor can claim that student loan debt causes an extreme hardship and obtain a discharge, but it is very difficult to persuade a Bankruptcy Court to discharge a student loan debt. But we have done it successfully a number of times in the right circumstances.

Taxes – Some income tax debt can be discharged in bankruptcy, but this varies, and you should make an appointment for your free consultation to discuss your individual situation. A lot of tax debt is dischargeable and it takes a thorough analysis to determine.

Alimony and Child Support – Back payments or arrearages for child support and for alimony are non-dischargeable. Orders to pay attorney fees in child support and child custody cases are usually non-dischargeable.

Fines and Penalties – Most fines that are imposed by a court and most penalties that are assessed by a government agency are non-dischargeable. License reinstatement fee are dischargeable.

WHAT HAPPENS AFTER BANKRUPTCY?

 You can improve your credit after filing and the close of your case. Continue making your payments on assets that you keep.  Make all of your payments on time with no slow pays and keep your     accounts out of collection.  Follow these rules and your credit will rebuild rapidly.

Bankruptcy Chapter 7 v. Chapter 13

For most once they decide to file bankruptcy the decision comes down to which Chapter they will be filing.  Both chapters are beneficial in their own way.  Many factors play into which chapter you will file.  Your income and assets are the main considerations.  Your attorney will discuss with you the process and your best option.

BANKRUPTCY TIMELINE

In Ohio a typical Chapter 7 bankruptcy lasts about six months from the day you see us until you receive your discharge.  Your  meeting date which is called a “341 Meeting” will be four to five weeks from your filing date. These are currently held by phone at our office.  In Chapter 13 expect to be in the case for a period of three to five years as this time period is mandated by federal law.  Once your complete your Chapter 13 you will receive your discharge.

PAYMENT OF DEBTS

In bankruptcy debts are classified into basically two groups – unsecured debts (credit cards, medical debts, loans) and secured debts (houses, cars, anything secured by collateral). There is also a sub-category of unsecured loans which are called priority debts. Student loans and tax debts fall into this category.  In Chapter 7 you will be able to discharge all of your unsecured debts and not have to pay anything back. Student loans and most taxes will likely survive the case.  As to secured debts that you want to keep (such as your home or vehicle) you continue to make your payments and sign a reaffirmation agreement within the case.

Chapter 13 is a re-payment plan.  Under this re-payment plan you will pay all of your debts with a single payment to the Chapter 13 Trustee once a month.  Out of this monthly payment the trustee may make your regular house payment.  Home payments in arrears are caught up through your Chapter 13 payment.  Vehicle payments will also be paid through the trustee. You will pay back a percentage of your unsecured debts.  This percentage is based on several factors and can range from 1 percent to 100 percent.  The debts will be paid in order of priority.  So basically in a Chapter 13 you have one payment a month to the Chapter 13 office.

ASSETS

In Chapter 7 if you are not current on your home the lien holder will require that you get current or they may file for Relief from Stay which, once granted, will allow them to foreclosure.   However, if you are current on your home Chapter 7 is not a problem, just continue to make your payments and you may reaffirm the debt. An single individual has a home equity exemption from creditors and the bankruptcy court of $145,425 ($290,650 for a married couple).

Chapter 13 is designed to help you save your home if you are behind on your payments.  Under Chapter 13 you will have three years to make up your missed payments.  Delinquent car payments may also be made up in a Chapter 13.

MORE INFORMATION

Call today to set up your free consultation to find out which bankruptcy chapter is best for you. We have represented 1000’s of clients over 30 years. We’ll make the bankruptcy law work for you!