Always Ask Questions Before you Retain a Bankruptcy Attorney Deciding to file bankruptcy is a stressful time. You're about to turn your life upside down in order to eliminate debt that you can't pay. Because bankruptcy is such a complicated legal matter, you're going to need a Bankruptcy Attorney to help you from start to finish. It's essential to have a lawyer in order to make sure that the court is satisfied with your petition and the reason why you are filing. However, before you retain a lawyer, you need to take the time to ask questions during a consultation in order to feel comfortable with the person who is going to see the full extent of your financial situation. Here are some questions to ask before moving forward: How much time has been spent practicing bankruptcy law? A good starting point is three to five years as the laws don't change that frequently for bankruptcy. It's enough time to gain familiarity with the federal laws while being able to adjust for the differences in each client's case. Is bankruptcy the best option for me at this time? A lakeland bankruptcy attorney should give you an honest answer if it is or isn't. It may just be that your situation is still salvageable and you don't need to file. A responsible attorney will steer you towards credit counseling instead of bankruptcy in this situation. What are the benefits of filing a bankruptcy? You want to know the upsides to filing for insolvency as they do exist. The answer depends on your financial situation, what your goals are and what options are open to you. What are the negatives that are involved with filing? A bankruptcy lawyer should explain to you what is going to happen to your credit and assets after the petition is filed. It may be that you have to give up some assets in order to pay your creditors if the bankruptcy trustee deems it necessary, and the lawyer should explain why. How does the bankruptcy lawyer charge? Some lawyers do an hourly fee, others do a flat fee. You need to get the cost up front so you can budget for the retainer. The idea is to get out of debt, not incur it further because the lawyer was not up front with the fees. What services are included in the lawyer's fee? Many times, a bankruptcy is straight forward and the lawyer's work consists of elements that are dealt with on a regular basis. The lawyer should tell you what services are and are not provided in the event something uncommon crops up. Can I keep my home in bankruptcy? The answer from a attorney should be one of "it depends". There is no guarantee that you can keep your home, but you can also stop a foreclosure and make the bank work with you after you have filed for bankruptcy. Page 1
15 Bankruptcy questions you should ask your attorney 1. What are the advantages of bankruptcy? Once discharged through bankruptcy your debts are erased; in other words you are no longer responsible for paying them. 2. What about my credit? The fact is that when lenders or other creditors review your credit report they rank bankruptcy as the worst. 3. How long do I have to wait to rebuild my credit? You can rebuild your credit immediately with a secured loan or credit card. In fact you can even obtain these items while going through the bankruptcy process. 4. How long does it take before my debt is discharged? Chapter 7 takes between 3 to 8 months; Chapter 11 can take from just under a year to many years; Chapter 13 can take several months while trying to get your repayment plan approved. However, the actual discharge is not final until you've met the payment plan requirements which take from 36 to 60 months to complete. 5. How long until my credit gets back to the point where I might hope to get a regular credit card or mortgage? Rebuilding credit depends on how aggressively you try to get back on track, but don't figure less than 1-3 years. Remember, you can always get a secured credit card or a mortgage with a low loan to value (LTV) and high interest rate, sometimes even still in the middle of a bankruptcy. 6. How would I know if Chapter 7 is right for my situation? If you have very few assets with no property and your assets can be exempted then Chapter 7 may be right for you as long as you have no other obligations such as court ordered alimony, child support payments, criminal restitution, non-dischargeable taxes, or student loans. (list of non- Page 2
dischargeable items) Many national creditors prefer that you file Chapter 7 if they cannot recover at least 50 cents on the dollar. 7. Which bankruptcy chapter is the least expensive? Chapter 7 is the least expensive because you do not have to pay off the debts. The next least expensive is Chapter 13 where you repay about 10 cents on the dollar, followed by Chapter 11. 8. Can I pick and choose which assets to put into a personal bankruptcy? No. Every asset you own must be included in the filing. After filing you may choose to exempt some of your assets. 9. So I exempted my vehicle, what happens to it? You didn't actually exempt the vehicle (or any asset) you really only exempted the equity (if any) in the asset. So, if you have a loan for $17,000 on a vehicle worth $20,000 then you exempt $3,000. However this does not mean you get to keep the car free. You only keep the vehicle if you make payments on it. On the other hand, if the situation was reversed and you owed $20,000 on a vehicle worth only $17,000 then you could choose to simply give the vehicle back and owe nothing. This is one of the advantages to filing bankruptcy. 10. I thought bankruptcy stopped foreclosure? Can they still take my house? When you file Bankruptcy, you receive an "automatic stay" on court actions such as foreclosures and sheriff's sales. A creditor can still go into court and ask the bankruptcy judge for a "relief from stay", and if granted the creditor can proceed with court action to foreclose. What exactly can I exempt? It depends on which state you live in. Most states allow the Federal exemptions but also have state exemptions that may be more favorable. 11. Does my personal bankruptcy affect my corporation? No! But your shares go to the trustee and may restrict your voting and transferring privileges. Page 3
12. Can I keep my house, cars or pets? 1804 S. Florida Ave, Lakeland, FL 33803 After filing you can exempt certain items such as a house or pedigree dog. However, in order to keep these items you'll need to stay current on payments such as a mortgage or car payment. 13. Do I have to appear before a bankruptcy judge? No, you will meet with a trustee and your creditors at a meeting called 341. 14. What is chapter 7, 11, 12, and 13? Chapter 7 is the most frequently used chapter because it involves the complete liquidation of a debtor's property, with the proceeds used to pay off the debts. However, the debtor can retain certain exempt property under Federal law and/or State law, such as tools of one's trade, limited equity in a car and house, and some personal effects. If you use Chapter 7 you may lose your home (depending on your state) but it does enable you to get out from under the burden of debt more quickly. Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees. Chapter 12 allows farmers with real estate debts to pay off the debts from the profits generated by future crops. Chapter 13, which has also been known as a wage earner's plan, is used by about 25% of consumers. In Chapter 13, consumers work out a periodic payment plan with their creditors to pay off their debts, or at least substantial portions of the debt. Generally the creditors expect to get more than they would have received from the debtor's estate if the debtor had sought a complete liquidation under Chapter 7. One of the important benefits of Chapter 13 is that debtors generally continue to live in their home so long as they comply with the terms of the Chapter 13 arrangement. If the debtor fails to comply, the Court treats the matter as a Chapter 7 liquidation. The disadvantage of Chapter 13 to the debtor is that the debts can linger for years, burdening future income. Page 4
15. Bankruptcy and Creditor Harassment 1804 S. Florida Ave, Lakeland, FL 33803 Debt collectors are privately contracted by creditors to persuade people to pay consumer debts. A reputable debt collector serves the legitimate purpose of helping creditors remain focused on their business of providing credit and selling goods or services. Disreputable debt collectors are motivated by profit to harass and cajole consumers to pay money under duress. Disreputable debt collectors are often in violation of the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) when they go too far and use deception, coercion and embarrassment. In addition, the US Congress has explicitly found that these violations "competitively disadvantage" reputable debt collectors through their illegal collection methods. Wage Garneshment and Judgements or Repossessions: Consult with a qualified bankruptcy attorney to determine the best approach to handle these situations during a bankruptcy. Call for a Consultation A consultation at our law firm is free of charge for Bankruptcy. You can be confident that Mr. Merritt is a lawyer who is willing to sit down with you and take the time to discuss your situation. Please come with all questions and concerns you have. Your success is our goal. We are a law firm that may be considered a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code. Call Today (863) 606-8843 Page 5