Archives for August 2012

What is a reaffirmation agreement?

Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the court. Reaffirmation agreements are under special rules and are voluntary. They tend to be automatically generated and send to the attorney’s office; if not, one can be requested. They are not required by bankruptcy law or any other law. Reaffirmation agreements—

  • must be voluntary;
  • must not place too heavy a burden on your or your family;
  • must be in your best interest; and
  • can be canceled any time before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.

Reaffirmation agreements usually contain the same terms you agreed to when you first signed the mortgage or car loan and in most cases you do not have to pay more than you are already paying – unless you have fallen behind in the payments.

If you are in individual and you are not represented by an attorney, the court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the court approves it.

If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. Which means if you signed a reaffirmation agreement on a car then did not continue paying for the car, the finance company would then be allowed to repossess the car. The creditor can also take legal action to recover a judgment against you.

Bankruptcy Law is Federal law.  This sheet provides you with general information about what happens in a bankruptcy case.  The information is not complete.  For more information please feel free to contact us at 1-844-ERASE-BILLS.

This information is provided to all debtors by the US Trustee


free hit counter

Bankruptcy Information

Bankruptcy Information

You can choose the kind of bankruptcy that best meets your needs (provided you meet certain qualifications):

Chapter 7 – A trustee is appointed to take over your property – you can think of them as protecting the best interest of the creditors. Any property of value will be sold or turned into money to pay your creditors. Usually the bankruptcy protects your property and it will not be sold. You may be able to keep some personal items and possibly real estate depending on the law of the State where you live and applicable federal laws.

Chapter 13 Bankruptcy – You can usually keep your property, but you must earn wages or have some other source of regular income such as social security, pension, etc. and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.

Chapter 12 Bankruptcy – Like chapter 13, but it is only for family farmers or family fishermen.

Chapter 11 Bankruptcy– This is used mostly by businesses. In chapter 11, you may continue to operate your business, but your creditors and the court must approve a plan to repay your debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appoints, the trustee takes control if your business and property.

If you have already filed bankruptcy under chapter 7, you may be able to change your case to another chapter.

Your bankruptcy may be reported on your credit report for as long as ten years. It can affect your ability to receive credit in the future but in most cases it ends up raising your credit score.

WHAT IS BANKRUPTCY DISCHARGE AND HOW DOES IT OPERATE?

One of the reasons people file bankruptcy is to get a “discharge”. A discharge is a court order which states that you do not have to pay most of your debts. Some debts cannot be discharged. For example, you cannot discharge debts for—

  • most taxes;
  • child support;
  • alimony;
  • most student loans;
  • court fines and criminal restitution and;
  • personal injury caused by drunk driving or under the influence of drugs.

The discharge only applies to debts that arose before the date you filed. Also, if the judge finds that you received money or property by fraud, that debt may not be discharged.

It is important to list all your property and debts in your bankruptcy schedules. If you do not list a debt, for example, it is possible the debt will not be discharged. The judge can also deny your discharge if you do something dishonest in connection with your bankruptcy case, such as destroy or hide property, falsify records, or lie, or if you disobey a court order.

You can only receive a chapter 7 discharge every eight years. Other rules may apply if you previously received a discharge in a chapter 13 case. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not have to sign a reaffirmation agreement (see below) or any kind of document to do this.

Some creditors hold a secured claim (for example, the bank that holds the mortgage on your house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, but the creditor can still take the property. In most cases you can continue to voluntarily pay the debt and keep the property.

WHAT IS A REAFFIRMATION AGREEMENT?

Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the court. Reaffirmation agreements are under special rules and are voluntary. They tend to be automatically generated and send to the attorney’s office; if not, one can be requested. They are not required by bankruptcy law or any other law. Reaffirmation agreements—

  • must be voluntary;
  • must not place too heavy a burden on your or your family;
  • must be in your best interest; and
  • can be canceled any time before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.

Reaffirmation agreements usually contain the same terms you agreed to when you first signed the mortgage or car loan and in most cases you do not have to pay more than you are already paying – unless you have fallen behind in the payments.

If you are in individual and you are not represented by an attorney, the court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the court approves it.

If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. Which means if you signed a reaffirmation agreement on a car then did not continue paying for the car, the finance company would then be allowed to repossess the car. The creditor can also take legal action to recover a judgment against you.

Bankruptcy Law is Federal law.  This sheet provides you with general information about what happens in a bankruptcy case.  The information is not complete.  For more information please feel free to contact us at 248-559-9529.

This information is provided to all debtors by the US Trustee



website statistics


Why Hire An Attorney

An Attorney Can Only Show You The Right Track 

 

The rules governing bankruptcy are complex.  There are many documents which need to be filed and numerous deadlines to be met.  Many debtors who start their cases without legal representation soon find themselves in a position where they need legal advice.

Hire Bankruptcy Attorney

Bankruptcy Attorney -Abetterwaybankruptcy.com

From the attorney’s standpoint, it is much easier to review a potential client’s case prior to filing than to rework a case which has already been filed with the court.  If the case is filed correctly the first time, the case will move more smoothly through the bankruptcy process than if multiple corrections need to be completed.

Furthermore, there are requirements to produce a volume of documents to the Trustee’s office which support the claims made in the petition and schedules.  Experienced lawyers will know what is required prior to filing a case, and will have provided these documents to the appropriate parties prior to any hearings.

An experienced attorney will also know how to list and protect the debtor’s assets.  These exemptions can be confusing if you are not familiar with the bankruptcy code.  Those of us who practice in this area of law can all recall at least one instance when a debtor chose to represent themselves, didn’t protect a piece of property, and had the Trustee’s office attempt to collect the property to sell it for the benefit of creditors.  This does NOT have to be the case.

At A Better Way Bankruptcy, we have over 40 years of professional experience having filed thousands of cases with the Bankruptcy court.  Why hire an attorney?  We know what the courts are looking for, we know the deadline schedules, and we know at the end of our consultations what will work best for you to get you the relief you need.  Let our experience make the process easier for you.  We will take away your headaches so you can sleep at night knowing your case is in good hands.  We are with you every step of the case, and we will show you there is A Better Way.

1-844-Erase-Bills Call NOW for FREE CONSULTATION 1-844-ERASE-BILLS 


The Difference Between Chapter 7 & 13

Making the decision to file for bankruptcy is often a difficult choice.  It is never a goal set on your life’s “bucket list.”  That is why there are procedures in place that help individuals who find themselves stuck in a financial trap looking for a means to escape.  So now that you have committed to asking for relief that only the bankruptcy court can provide, the next decision is which chapter is right for you.

Chapter 7 bankruptcy is basically a straight “wipe out” of debt with some exclusions.  Exclusions tend to be areas where you may owe the government money in some fashion, such as child support, income tax liabilities, or student loans.  Also, if you have any asset valued over and above what the Bankruptcy Code will allow you to protect, the trustee will liquidate the asset and use the proceeds to divide evenly among your creditors according to some basic guidelines.  Debtors in Chapter 7 bankruptcy may keep certain obligations, such as homes and cars, as long as they are current on the payments, have full coverage insurance on the asset, and can afford the monthly payments.

Chapter 13 bankruptcies, on the other hand, are repayment plans where you are paying pennies on the dollar depending on what you can afford.  Chapter 13 bankruptcy is most frequently used to save homes from going into foreclosure or to restructure vehicle payments where the vehicle is now in danger of repossession.  These repayment plans can go anywhere from three to five years, depending on the nature of the debt and how much money it will take to remedy the situation.  Sometimes Chapter 13 bankruptcies are used for debtors who have some money to pay creditors, but not enough to pay all the creditors everything the creditor wants.  Each Chapter 13 bankruptcy plan is drafted on a case by case basis, as every repayment plan is unique to the debtor.

If you have filed for bankruptcy under Chapter 7 in the past, you may not be eligible to file another Chapter 7 petition just yet.  Currently, you may file a subsequent Chapter 7 petition eight years after the filing date of the previous Chapter 7.  If you start struggling with your creditors again during this period, a Chapter 13 repayment plan may be the best option for help.  Chapter 13 plans may also be used to help you keep and protect an asset that you may have lost had you filed a Chapter 7 petition.  Lastly, while you cannot discharge certain liabilities, such as child support or student loans, in a Chapter 7, you may find an easier payment method through the Chapter 13 Plan of Reorganization.

Chapter 13 plans are not set in stone, though.  As attorneys, we realize that life happens, and sometimes the repayment plans we draft to save our clients homes do not account for the same homes being blown away in a tornado or having the basement fill with eight feet of water.  In these situations, if the debtor has decided to walk away from their homestead, or what’s left of it, the Chapter 13 Plan may be converted to a Chapter 7 with a little additional paperwork and a hearing.

The best way to figure out which chapter is right for you given your circumstances is to make an appointment for a free consultation with A Better Way Bankruptcy.  We can help you determine what the plan payment would be in a Chapter 13, or if Chapter 7 and it’s almost immediate “fresh start” are right for you.  As your personal bankruptcy attorneys, we care about you as an individual.  As long as you keep us informed of your situation, we will counsel you on how best to proceed in the future.  Let our over 25 years of experience guide you through these tough times to find that light at the end of your tunnel.

How Bankruptcy can help you build wealth.

Give a fresh start for financial freedom through bankruptcy 

Bankruptcy is a new beginning, not the end of the world.

In days long past the word “bankruptcy” had such a stigma attached to it that the average person or family could run the risk of being thought of as a pariah, ostracized by family and friends, excommunicated by their places of worship, even attacked by the very creditors that they needed protection from.

Thankfully, today the perception of bankruptcy is very different. Our modern society is so dependent on the availability of credit to make both major and minor purchases that bankruptcy has become an everyday occurrence, with filings being from every rung of the social and economic ladder. Whether your personal perception of someone or some business entity filing for a bankruptcy is a positive one or a negative one, the reality is that for the foreseeable future, bankruptcy is here to stay.

Bankruptcy has been a facet of the United States government as far back as 1800 under President Thomas Jefferson. While many changes have been made from the earliest days, the core ideal of bankruptcy remains unchanged; Provide protection to an individual or business that no longer had the ability to repay debt that they incurred legally. Sounds simple enough, however more than 200 years ago, you simply could not be the one that took advantage of that protection because the personal consequences you would suffer, would in most cases be far more severe than anything a creditor could do to you.

However, in the United States today, everyone is filing for bankruptcy. Ok, maybe not everyone, but the list of famous people that have had to file for bankruptcy is a veritable who’s who of Hollywood and the professional sports world.
Toni Braxton, Walt Disney, Sherman Hemsley (George Jefferson), Don Johnson, Larry King, Willie Nelson, Wayne Newton, Burt Reynolds, Donald Trump, Mike Tyson and Michael Vick have all filed for bankruptcy, and many have made the best out of a bad situation and have become as, if not more wealthy than they were before filing bankruptcy.

Now of course, as a reader of this article it is very likely that you are not a movie star, professional athlete, or business mogul but the principal of bankruptcy still stands as it did when Milton Hershey (founder of Hershey Chocolate Company) filed in 1882, that a fresh start financially can give you the opportunity to regain control of your finances and let you start to rebuild wealth without dragging along excess baggage.

Now of course when you do finally transform your current situation of excess debt and a mountain of bills into one of being debt free and building toward a brighter financial future, it is doubtful that they will put your picture on the fifty dollar bill, but every time you see one, keep in mind that even Ulysses S. Grant, the 18th President of the United States, filed for bankruptcy in 1884.

Alright, enough of the history lesson, well sort of. How many times have you said to yourself, “If only I would have been able to do (insert random mistake here) again and do it differently”? Well, I personally could write a book on my “do-over” list, but it might take some of the luster off of your opinion of me and I don’t want that. But I assume that your story contains just as many moments that you would like to do differently as mine does. While you may not be able to reconsider who you chose for a wife/husband, choose a different college degree to pursue, or which career path you chose, how poorly you handled your finances and credit, or if it was a one-time event that caused you to be overwhelmed by debt is one area where you can get a fresh start and truly begin anew.

Just imagine how much easier your life could be if only you could obtain credit, whether for a credit card, automobile, or home mortgage loan at the same interest rates that the banks offer to their highly desirable “very good credit” borrowers. As an example if you had a mortgage loan for $100,000 and your interest rate is 8.75% (poor credit), your monthly payment for the principal and interest would be $786.00 per month, conversely if you had the same $100,000 mortgage at 3.5% (very good credit) you would be paying only $449.00 per month. That is a savings of $337.00 per month and the only difference is your credit score. So how does bankruptcy fit into your boosting your credit score from poor credit to very good credit? The answer is actually quite simple. When you have a fresh start financially you begin to rebuild your credit rating almost immediately. Think of it as ripping a bandage off quickly, sure your credit score is going to be affected by the bankruptcy filing, but if your credit is already poor, this is the least of your worries. With simple regular maintenance and repaying your bills on-time going forward, your credit rating will begin to rise almost overnight. It is not unusual for someone that filed a Chapter 7 Bankruptcy to add one hundred or more points to their credit score within the first year without doing anything but paying their ongoing bills on time.

Want to purchase a new home or refinance the one you are currently living in? The popular misconception is that since bankruptcy remains on your credit for ten years that buying a home or refinancing your mortgage is impossible. However, the reality is that a homeowner or someone looking to buy a home can do so in
three years after a bankruptcy. Mortgage financing is usually the most difficult credit to obtain, automobile financing and credit cards are available much sooner.

If you are truly looking for a fresh start to your financial life, bankruptcy can be the first step toward total financial restoration and open doors to previously unavailable credit, savings and wealth.

Now is the time to maximize your potential by erasing your debt and moving forward.

1-844-Erase-Bills

Call NOW to ERASE your BILLS 1-844-ERASE-BILLS