Are You in Need of Bankruptcy Relief? Acting Soon is Important
Whether to file for bankruptcy relief may be the most important financial decision you ever make – don’t make it alone. The Law Firm of Fenters Ward is here to help. Do any of these scenarios describe you?
- Has a collection lawsuit been filed against you?
- Have you recently lost your job?
- Do you have a job, yet still find it difficult to make ends meet?
- Are you suffering from substantial medical bills?
- Have you received a foreclosure notice?
- Are you concerned about property repossession?
If you answered ‘yes’ to any of these questions, you may be a candidate for bankruptcy relief. For many, the only thing more overwhelming than struggling with debt is the notion of filing for bankruptcy. Although it may seem overwhelming, there is hope – you have options. You simply need the right information. For many individuals, the advantages of bankruptcy far outweigh the negatives.
While bankruptcy relief is not the right solution for everyone, you must take action now to learn about your debt relief options. That means getting the appropriate information from a trusted source. Contact the offices of Fenters Ward today to speak with a knowledgeable attorney and together we will determine the best course of action for you. Make today the day that you reclaim your financial peace of mind.
Your Fresh Start Begins Today
Bankruptcy no longer carries the same stigma that it once did. Hundreds of thousands of Americans seek bankruptcy relief each year, and for good reason. Bankruptcy offers debtors an opportunity for a financial fresh start by discharging eligible debts that may otherwise be insurmountable. Generally, debts eligible for discharge in bankruptcy include unsecured, consumer debts such as medical bills, credit cards, car accident claims and others not secured by collateral.
When a discharge is granted, the specific debts are extinguished, therefore creditors are prohibited from collecting those debts now, and into the future. As the United States Supreme Court stated, the bankruptcy fresh start affords debtors “a new opportunity in life, unhampered by the pressure and discouragement of pre-existing debt.” Thus, individuals are free to move forward in life unencumbered by the stress and anxiety often associated with debt. If you feel like your debts are weighing you down, consider speaking with a knowledgeable attorney today to review your options.
Chapter 7 Bankruptcy
Chapter 7, also referred to as a ‘liquidation’ bankruptcy, is the most common type of bankruptcy filing throughout the country. In a Chapter 7 case, the trustee will liquidate (sell for cash) the nonexempt property of the debtor in order to repay creditors. In exchange, most or all of your debts will be discharged. As far as timing is concerned, although each case is unique, most Chapter 7 cases typically last 4 to 6 months from start to finish.
The timeline of a run-of-the-mill Chapter 7 case is as follows:
- Completion of credit counseling course (1st certificate) within 180 days prior to filing the bankruptcy petition;
- Once the petition and schedules are filed, creditors are notified, all collection efforts must stop and a meeting of the creditors hearing is scheduled;
- Approximately 30-45 days after filing of petition: § 341 meeting of the creditors takes place (you must attend with your attorney);
- Approximately 60-90 days after filing of petition: completion of financial management course (2nd certificate), any trustee objections to exemptions, creditor objections to discharge, trustee collection of nonexempt assets and liquidation;
- Approximately 120 days after filing of petition: proceeds are distributed to creditors and eligible debts are discharged;
- After discharge (over 120 days after filing of petition): pull credit reports, ensure all creditors are listed and that reporting has halted.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, compared to Chapter 7, is a lesser-known form of debt relief. A Chapter 13 bankruptcy functions like a repayment plan wherein creditors are repaid over a period of time no shorter than 36 months, but no longer than 60 months. This chapter requires that payments be made to a Trustee appointed by the bankruptcy court who then distributes those payments to creditors based upon the repayment plan.
Chapter 13 can be a useful tool for high income individuals and households that are ineligible for relief under Chapter 7. Additionally, Chapter 13 may be the right form of relief for those who have equity in property that exceeds the amount allowable under Chapter 7.
Chapter 13 relief also affords individuals the opportunity to catch up on previously missed payments for loans that are secured by collateral, such as a car or home. Throughout the course of a repayment plan, Chapter 13 debtors are able to catch up on missed payments while avoiding foreclosure or repossession.
Whether an individual may utilize Chapter 13 relief rather than Chapter 7 depends on various factors, such as income and monthly expenses. Knowing which chapter of bankruptcy relief best suits your needs is why speaking with a knowledgeable attorney is essential.
Automatic Stay Protection
One unique aspect of bankruptcy relief is known as the automatic stay. The automatic stay is a statutory legal measure contained within the Bankruptcy Code that temporarily stops all creditors’ collection attempts, including wage garnishment, collection letters, phone calls, actions related to a pending foreclosure or repossession and even initiating a lawsuit.
In essence, the automatic stay acts as a metaphorical “pause button” on collection attempts. As soon as a bankruptcy petition is filed, the “pause button” has been pressed – your property is protected, and the harassment must stop.
This protective measure offers the debtor time and space to breathe as the bankruptcy case proceeds. The policy behind the automatic stay is not only protection for the debtor, but also to preserve the bankruptcy estate (your assets that will be available to creditors) in order to ensure that creditors are treated fairly as well.
Will I Lose My Property?
Often times people who are otherwise eligible for bankruptcy refuse to consider it. Typically, this is out of fear that they will lose their home, car or other property necessary for everyday life. For the most part, that notion is completely untrue. Bankruptcy is not meant to punish debtors who are seeking relief, but to help those debtors start anew. After all, if filing for bankruptcy required surrendering all of one’s property, starting over financially would be even more difficult than enduring the debts themselves.
Thankfully, the Bankruptcy Code and state law allow for exemptions of certain property up to a specified amount in order to protect the debtor’s equity in that property. This means that filing for bankruptcy doesn’t mean all of your property will be Such eligible exemptions protect an interest in the following:
- The debtor’s residence;
- The debtor’s automobile;
- Particular household goods/furnishings;
- Tools of the debtor’s trade;
- An unmatured life insurance contract owned by the debtor;
- Debtor’s right to receive social security, unemployment, public assistance, disability, alimony, or other such compensation;
- Certain retirement fund accounts.
In addition to this list above, there are other exemptions available to debtors as well, although those listed are most commonly used. The amounts available for exemption under each category of property varies. Disclosing to your attorney any and all of your past, current and/or future interests in any such property is vital. This is true not only to allow for proper planning by your attorney, but also for complete transparency and honesty with the bankruptcy court. After all of your assets and interests in property have been disclosed and analyzed, your attorney will then be able to advise you how to most effectively use these exemptions.
Rebuild Your Credit Score Over Time
Believe it or not, bankruptcy may actually enable you to rebuild your credit over the long run. Your credit score is determined by a number of factors including:
- Outstanding debt;
- Length of credit history;
- Amount of credit for which you’ve applied; and
- Your payment history.
Moreover, your credit score affects your ability to receive a loan (and if the loan is granted, the applicable interest rate), your ability to receive a credit card, your ability to receive insurance and even your ability to rent. Therefore, if you would like to purchase a home or car in the future, it is important that you take steps to repair your credit score today.
Using data collected from Equifax, researchers from the Federal Reserve Bank of Philadelphia conducted a study to determine the impacts of bankruptcy filings on consumer credit scores. The 2010 study concluded that the average credit score for Chapter 7 filers increased by the time of discharge, which is normally within six months.
Specifically, the average consumer filing for Chapter 7 in 2010 had a pre-bankruptcy credit score of approximately 538 (for reference, a score below 600 is categorized as “poor”). However, at the time the case was discharged the average score had already risen to 620. Moreover, the study demonstrated that a good score of 720 was possible within one or two years of discharge.
Yes, it is true that immediately after filing for bankruptcy, your credit score will go down significantly, but just how much depends upon the health of your credit score before filing. If your credit score is already low, then the decline will be more modest.
If you have a good credit score before filing, then the decline will be more severe (with that in mind, a good credit score is not very useful if all of your monthly income is used to keep you current on your liabilities).
If you find yourself consistently taking on more debts, missing payments and even defaulting on debts owed, then your ability to improve your credit outside of bankruptcy will likely be a constant struggle with nothing to show for it.
Bankruptcy, on the other hand, may serve as a more realistic means of rebuilding credit for some individuals. As debts are discharged in bankruptcy, your debt-to-income ratio will be reduced. After the bankruptcy proceeding is over, it is important to stay up to date with any debts that may have passed through the bankruptcy, such as student loans or alimony. Likewise, it is important to apply for new credit, such as a secured credit card. This allows you to demonstrate to lenders that you are creditworthy.
Credit Report Auditing
Prior to the conclusion of a bankruptcy case, Fenters Ward will request that clients remit a copy of their credit report from at least one of the three major credit reporting agencies (Experian, Equifax and TransUnion) for review by the law firm at no additional fee. As part of the bankruptcy services provided, this audit ensures that all creditors are accounted for and that all tradelines are reported correctly. If further action is required with regard to a client’s credit report, the client will be notified about any remedial options.
Let Us Help Get Your Credit Back on Track
While bankruptcy relief is not a one-size-fits-all solution, in order to learn about your debt relief options, you must take action now. That means getting the appropriate information from a trusted source. Contact The Law Firm of Fenters Ward today to speak with a knowledgeable attorney and together we will determine the best course of action for you. To set up a consultation and explore your options, fill out this contact form, or call 877-259-WARD.
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We are a debt relief agency. We help individuals file bankruptcies under the Bankruptcy Code.