Q. I hear you can no longer file for bankruptcy. Is that true?
A. Yes, you can still file for bankruptcy! The laws have changed, and there are more hoops to go through, but most people who could file for Chapter 7 under the old laws can also do it under the new laws. And for all others, Chapter 13 can be an excellent alternative.
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Q. I just don't seem to be getting anywhere--I'm
robbing Peter to pay Paul. How can bankruptcy
help?
A. You are getting buried by interest rates that can
run up to 22%, and more! There are a number of
possible solutions. A straight bankruptcy under Chapter 7 is one, and a reorganization
under one of the other chapters, Chapter 13 or Chapter 11, is another. See the pages about Chapter 7, Chapter 13 and Chapter 11 of our site for more information.
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Q. I have enough money to pay some of my bills, but
not all of them. How can I handle my creditors?
A. Relax! Straight Bankruptcy
under Chapter 7 or a reorganizations under Chapter
13 or Chapter 11 are certainly possibilities. In any bankruptcy
chapter, the creditors are forbidden to contact
you one the bankruptcy petition is filed. See
those areas of our site.
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Q. I can't pay my bills now, but I'll be able to do
it soon, if I could just get the creditors to
wait a bit longer. Can a bankruptcy help?
A. Yes! Under reorganization
provisions of the Bankruptcy Code, we can often
prepare a plan that will defer some, most, or
even all of your payments (under limited
circumstances) if you have an event that is to
occur in the future. Some examples: a house
closing, a personal injury case, a worker's
compensation case, an inheritance, a new job that
will be starting. See Chapter 11 and Chapter 13
of our site.
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Q. I just can't take the phone calls any longer!
What can a bankruptcy do?
A. We'll stop those calls! The
filing of any kind of bankruptcy acts as a
"stay", or hold, on any kind of
collection activities by creditors, even tax
creditors! Let us take the calls for you! That's
our job!
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Q. How does bankruptcy give me protection from my
creditors?
A. As indicated above, the
filing of the bankruptcy acts as an automatic
stay on the collection efforts of your creditors.
In a Chapter 7 bankruptcy case, the unsecured
creditors (those who do not have security for
their debts, unlike a mortgage creditor or the
holder of the title to your car, who do have
security) will usually have their claims
eliminated, or discharged. Under the
reorganization bankruptcies, such as Chapter 12, or Chapter 13, the creditors will
generally have to wait so see how you are going
to treat them under the Plan of Reorganization.
There are always exceptions, so consult with your
bankruptcy attorney for more information, and
keep on reading!
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Q. What are the different kinds of bankruptcy?
A. For most people, Chapters 7,
11, 12 (for farmers only), and 13. See our site
under each chapter for explanations of each, or
better yet, come see us in our office.
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Q. Will I lose my existing credit cards?
A. Not in all cases, but in
most. But this shouldn't be a big surprise: this
is bankruptcy, after all.
Still, in many Chapter 7 cases, some creditors
will ask you if you want to reaffirm their debt. That means that you would continue to
pay part or all of the debt in exchange for a
chance to keep your credit. These offers should
be considered carefully, with the advice of your
attorney. You may wish to keep their credit, but
you don't want to get yourself in financial
difficulty again!
In Chapter 13 cases, you will not have use of
your credit cards, except in the rare
circumstance when you have kept a card with a
balance of zero at the time of filing of the
bankruptcy, and you absolutely need the card for
business purposes. Even under this circumstance, the creditor may still learn of your bankruptcy through a normal credit check and may still cancel your card.
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Q. Can I use my credit cards now to get money or buy
things, and then file bankruptcy?
A. I hope you're kidding. This
is fraud, pure and simple. It is also against the
law, if the moral issue isn't enough of a
deterrent. If any attorney tells you differently, go somewhere else!
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Q. How long does a bankruptcy stay on my credit
report?
A. In a Chapter 7 case, ten
years. In a Chapter 13 case, seven years. Compare
this with "slow pay" without filing a
bankruptcy, which can be on your credit report
for seven years also.
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Q. Does that mean I won't have credit for all those
years?
A. Not at all. You may be
surprised to know that most of our clients have
been able to obtain credit again within a year or
so after their Chapter 7 bankruptcy filing, and
within a year after the completion of their
Chapter 13 Plan, assuming they have good
employment and they are otherwise credit worthy.
This is by no means a guarantee. It is, however,
been the experience of most of the clients who
have reported back to us.
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Q. Will I be able to get my credit back?
A. In most cases, yes. There
are several ways, most revolving around the
continued payment of a car or truck, or a
mortgage payment, or another type of secured
creditor such as one that has an interest in
furniture or an appliance. We'll be glad to
explain this to you at our office visit.
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Q. I owe the IRS money. What can a bankruptcy do for
me?
A. In some cases, particularly
with older income tax debt, the tax debt may be
able to be discharged in the bankruptcy. In other
cases, the bankruptcy laws may be able to help
you reorganize in such a way that your payments
would be much lower in the bankruptcy than they
might ever be from the IRS or other taxing
authorities, particularly in business cases.
We'll be able to discuss this with you in more
detail at our office visit.
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Q. What about my business? Can it file bankruptcy
too?
A. Yes. Whether you have
decided to keep the business open or close the
business, bankruptcy should be considered as one
alternative to allowing others to control if or
when your business closes. If, for example, the
business has tax problems and you are living in
fear that the tax authority or landlord is going
to close you down, consider the filing of one of
the different types of bankruptcy so that you can
catch your breath and decide on the correct
course. Of course, the filing of a bankruptcy
itself is a serious business decision which must
be carefully thought out before you file. Let's
talk about it.
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Q. Are there alternatives that do not involve
bankruptcy?
A. Of course. One alternative
is to continue on your current course, or to wait
a bit to see if things change. How long you wish
to do this will depend on just who is threatening
you, and what kind of hammer they are holding
over your head.
For consumer debt, you might wish to consider
Consumer Credit Counseling. They have been
successful in a number of cases in working with
creditors to reduce their monthly payments.
But be careful! There are a lot of scam operators out there who call themselves non-profit organizations, but who are not. Some of these places sound great. Almost like us in fact. But several months after they taken your money, you, like many of our clients, may find yourself facing lawsuits and calling us to help (which we will of course).
So beware! And call us - we'll give you the straight scoop.
There also may be more alternatives in your case.
We'll be glad to speak with you about them in our
office.
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