Tuesday, January 19, 2010

Do I have to list every debt I owe in my Chapter 7 bankruptcy case?

Yes, you must list every debt that you owe when you file a Chapter 7 bankruptcy case.  The law requires that you list all of your debts and all of your assets.  As a debtor, you have a duty to provide a full and complete picture of your financial situation.  You cannot pick and choose which creditors to list. 

Your petition is signed under penalty of perjury.  Intentionally failing to list a debt can result in criminal charges.  While this is rare, it is certainly a reason to make sure that you list every creditor that you know you owe.  In addition, failure to list a creditor can be used against you in a creditor’s effort to deny you a discharge. 

After you file your case, you can choose to repay any debt that you list in your case.  For example, you can continue paying for your house or car or other secured debt.  Generally, you will sign an agreement with the secured creditor to continue paying their debt.  You can also pay an unsecured debt after you file your case.  However, we generally advise against signing any paperwork requiring you to repay an unsecured debt. 

Our Birmingham and Tuscaloosa Bankruptcy lawyers will run a credit check to make sure that all debt being reported is scheduled in your case.  It is important for you to bring all of your bills into the office so that we can cross check them against the credit report.  You should also bring a copy of any lawsuits or collection letters.  Please remember that you will not receive a discharge for any debt you fail to list.

Monday, January 18, 2010

Who is the Chapter 7 Trustee?

Every Chapter 7 bankruptcy case has a trustee.  In Chapter 7 cases in Alabama, the Chapter 7 trustee is an attorney who serves on a panel.  Each member of the panel is assigned cases on a rotational basis.  Some divisions rotate trustees on a weekly basis while others rotate based on the number of cases assigned. 

It is the job of the Chapter 7 trustee to represent the interests of the unsecured creditors.  The Chapter 7 trustee does not represent you.  You have an attorney to represent your interests.  It is your job as a debtor to provide the trustee with honest and complete answers to his or her questions.  You may also be asked to supply documents to the Chapter 7 trustee.   Many people are very nervous about appearing before the trustee.  I tell my clients that they should relax and keep the following in mind when preparing for their meeting:

1.       Trustees will not harass you nor will they allow anyone else to do so. 

2.       The trustee is not the judge.  You will probably never meet the judge in a Chapter 7 case.

3.       Creditors rarely appear at your meeting with the trustee.  This meeting is called the 341 meeting or the first meeting of creditors.

4.       Your nerves will not have time to settle before the trustee is telling you “Thank You, and Good Luck.”  You will then look at me like a deer dazed by headlights asking “What do I do now?”  The answer to that question is usually “Nothing, you are done and all we have to do now is to wait for your discharge date.”

5.       You may have to wait an hour or more for your case to be called but the time you will actually sit before the trustee will be measured in minutes.  In most cases, you will be before the trustee for 2 to 3 minutes.

6.       You do not need to bring anything with you to the meeting unless I have previously told you to bring documents.

7.       The trustee will not ask you anything that I have not already talked to you about.  In fact, I will tell you the questions the trustee usually asks.

8.       I will be with you when you go to your meeting of creditors.  I will make sure that your interests are protected.  I will get you through this difficult time.

9.       I have never had a client who, after the meeting of creditors, did not look at me with this “You mean that’s it look.”  In fact, most people ask me that very question.

10.   You will feel like the weight of the world is off your shoulders when you leave your meeting.

Monday, January 18, 2010

What is a Chapter 7 Bankruptcy Case?

Most people talk about Chapter 7 as a “total liquidation.”  People believe that they will lose all their property in exchange for wiping out all their debt.  Very few people actually lose any property when they file a Chapter 7 case.  In fact, almost 99% of Chapter 7 cases are deemed “no asset” which means that the trustee found no property to sell for the creditors.  In making his determination, a trustee has to subtract any money owed on property and a debtor’s exemptions.  Next, he looks at the value of the property and how much he could sell it for after payment of any costs of sale.  If the value of the property is insufficient to pay the liens, costs of sale, and exemptions, the trustee reports the case as “no asset.”

To file a Chapter 7 case you must pass a means test (more on this in future posts). In simple terms, you may be denied Chapter 7 relief if you earn too much money. Our experienced Birmingham and Tuscaloosa bankruptcy lawyers can analyze your facts and tell you whether you qualify to file a Chapter 7. There are numerous ways to qualify a person for Chapter 7 and the means test does not apply to everyone. This is an area of bankruptcy where the experience of your attorney is extremely important. Make sure you hire an experienced attorney to handle your bankruptcy case.

Most people who file Chapter 7 are able to keep their property and wipe out their debts. In a Chapter 7 bankruptcy case you can choose to keep your home and cars by entering into an agreement with specific creditors to continuing paying on secured debt.

The filing fee for a Chapter 7 bankruptcy case is $299.00. There are other expenses in Chapter 7 that total around $100. Most experienced attorneys charge around $1200.00 for a simple Chapter 7 bankruptcy case.

If you are struggling with crushing debt you need to call Don and Melinda Dionne for a confidential, free, no obligation, consultation. Don and Melinda will show you how to get out of debt and start living again. Call now at 205-349-5911 (Tuscaloosa) or 205-453-1012 (Birmingham). Take the first step and let Don and Melinda show you how much better your life can be.

Monday, September 15, 2008

Who are Debtors -- People Just Like You and Me

The Hype

I have practiced bankruptcy law for 22 years.  In that time, I have been called upon many times to defend the actions of “irresponsible debtors” who run up debt and then run to the bankruptcy court for protection.  You know the type of person I am talking about.  The debtors who run up their credit cards, who sign car loans at 25% interest, who take out payday loans at 400% interest.  Those debtors who should have known better, who should have understood the terms of their loans, the ones who shouldn’t have borrowed the money if they couldn’t afford to pay it back.  Yes, you know the kind of person I am talking about--the deadbeats, the failures, those people who are out to take advantage of the system.  Those are the faces of your average debtor, right?

The Reality

Daily, I look into the faces of people torn apart by debt they always intended to repay.  People just like you and me --doctors, lawyers, dentists, teachers, builders, grandmothers, our neighbors, friends, and family members.  Despite what the credit card industry would have you believe, my clients aren’t deadbeats or people out to take advantage of the system.  My clients are hard working people who come to see me as their last resort.  My clients don’t want to file bankruptcy and often refuse to even consider options which would give them greater relief but require them to repay less of what they owe.   If you want to know what your average debtor looks like, look in the mirror.  The average debtor in America is you hit by a job loss, an illness, a business failure, rising gas prices, rising food prices, or just plain bad luck.  When you think about who the average debtor in America is remember the adage “there but for the grace of God go I.”  In today’s economy, people who never thought they would find themselves in financial trouble are struggling to make ends meet.  My clients are your neighbors, your friends, your family members, your co-workers, people you know and respect.  People just like you.  People just like me.

Tuesday, August 05, 2008

Bankruptcy Price Shopping

Although it may be strange to think of it this way, when you are looking for financial advice you are shopping.  You are shopping for the best advice, the most knowledgeable lawyer, someone who makes you comfortable and understands you and your finances, and yes, you are shopping for the best price.  What is the best price?  Is it the lowest fee you are quoted?  The answer to the question of what is the best price depends on many factors.  When comparing fees you should know:

• whether the amount you are quoted is the total you will pay or do you have to pay other charges like court costs, or other expenses

• whether you will meet with a lawyer to discuss your case and how long will your meeting will last (avoid any firm that passes you off to a secretary or paralegal)

• whether you will be able to call your lawyer after your first meeting and get answers to your questions from your lawyer as opposed to his staff

• how many years has the attorney been practicing bankruptcy law

• what percentage of the lawyer’s practice is devoted to bankruptcy work

You should take all of these factors into account to determine where your money is best spent.  Hiring an inexperienced lawyer because he charges a smaller fee may leave you without the help you need.  Bankruptcy has become a very complicated area of the law and you need an attorney who knows what he or she is doing if you want your case to run smoothly.  The bankruptcy courts monitor the fees attorneys charge.  In addition, most lawyers in an area charge very similar fees.  The fees charged by our Birmingham and Tuscaloosa Bankruptcy lawyers are similar to the fees charged by other lawyers in Birmingham and Tuscaloosa. 

What Makes Us Unique

While our fees are similar, our Birmingham and Tuscaloosa lawyers’ approach to their bankruptcy practice differs from that of many other lawyers.  First, you will always meet with one of our lawyers.  When you have questions are concerns, they will always be handled by a lawyer.  Our Birmingham and Tuscaloosa lawyers are committed to providing you excellent service.  Second, our lawyers are available to speak with you by phone 7 days a week from 8 a.m. to 11 p.m. Third, our lawyers will schedule appointments at times convenient to you.  Fourth, almost 100% of our lawyers’ practice is devoted to helping people solve debt problems.  Finally, our Birmingham and Tuscaloosa lawyers will spend the time needed to get to know you and your financial situation.  As a general rule, you should expect your first meeting to last between 1 1/2 hours to 2 hours.  

Friday, August 01, 2008

No Botox Needed-The Bankruptcy Facelift

No Botox Needed-The Bankruptcy Facelift

Financial problems are no laughing matter, but sometimes humor helps us get through our darkest days. I want to share with you the story of a client who had to file a Chapter 7 case for himself and his business.  In a matter of just a year, his once thriving business had died.  He couldn't make his business work, and he was personally liable for much of the business debt.  Filing a Chapter 7 case was the only real option for him, but he struggled with the decision.  The stress of his finances was killing him.  He looked tired, pale, and he carried himself as if he had the weight of the world on his shoulders. 

Recently that same client came into my office to ask when he might receive his discharge.  We were coming to the end of his case and he was just stopping by to say hello.  He was doing well in his new job, was about to get married, and he looked like a million bucks.  He was tan and probably 20 pounds lighter than when I had seen him a few months earlier.  I promise you, he even looked taller!   I was so amazed by the change in his appearance that I couldn't help but comment on it.  It was rewarding to see how much his life had changed since he filed his Chapter 7 case.  I jokingly told him that "If bankruptcy could make you look that much better and 20 years younger I wanted one of those bankruptcy facelifts."  We all laughed and he went on his way. 

Throughout the rest of the day, I keep thinking back on how amazing his transformation had been.  I thought if I could only show people the "before" and "after" shots, I could make people understand how powerful a tool bankruptcy can be.  Anyone who has ever struggled with financial problems understands how debilitating it can be.  You get warn down by the constant worry, the harassing phone calls, the fear that you aren't going to make it.  As much as you fear not being able to pay your bills, you fear the filing of a bankruptcy case even more.  Yet, few people who have ever filed a bankruptcy case would tell you they regret their decision.  We should all work hard to pay our debts.  Sometimes the reality of life is that we can't.  When you find yourself in this situation you have two choices- do nothing and keep struggling, or do something to fix the problem. 

Are you ready to take charge of your finances?  Our bankruptcy lawyers can show you how to solve your problems, stop your worries, and get back to living your life.  If you are ready to change your life and your look, without Botox, call to schedule your free consultation.  Find out for free how different your life could be.

Thursday, July 31, 2008

Mortgage Relief or More Empty Promises

The President has now signed a bill designed to help homeowners struggling with mortgage debt that they cannot pay.  Some people will benefit from the new legislation, which is set to take effect October 1, 2008.  Others who are struggling with overwhelming debt and multiple mortgages may find no relief.  To qualify for help under the new legislation you must meet the following requirements:

• You  must live in the home;
• Your mortgage loan must have been issued between January 2005 and June 2007;
• Your mortgage payment must equal at least 31% of your gross monthly income;
• You must prove that you are unable to continue paying your monthly mortgage payment without your payments being reduced (you do not have to be current on your mortgage payment to qualify);
• You must pay off all other debt including home equity loans or lines of credit owed on your home before you can get a mortgage backed by FHA;
• You cannot get another home equity loan for 5 years unless the home equity loan is for upkeep on the house;
• Any new home equity loan must be approved by the FHA and cannot exceed 95% of the appraised value of the home;
• The value of your home, your income, job history, and credit scores will all be considered by your lender;
• You must pay the FHA, who is guaranteeing the loan, a yearly insurance premium equal to 1.5% of the principal;
• You must pay the FHA a fee of 3% of the mortgage principal when you sell or  refinance your mortgage;
• If you sell your home within one year of taking out a program loan you will be required to pay the FHA 100% of any profits you realize from higher home values;
• After the first year, the percentage of profit you will have to pay to pay to the FHA drops by 10% per year until the 5^th year; and
• The profit that must be paid to the FHA on resale never drops below 50%.

If a debtor’s main financial problem is increasing interest rates on an adjustable rate mortgage, the new legislation will provide relief in the form of lower, fixed interest rate mortgages.  The requirement that any other debt owed on the house be paid before a debtor can qualify for a new loan will leave many people without the help they need.  If you are struggling with debt, call our bankruptcy lawyers for a free consultation.  We will discuss with you all of your options including those that may be available to you under the new law.