Stop foreclosure of your home

Without bankruptcy protection you have nothing to help you stop your mortgage lender from repossessing and foreclosing on your property if you’re behind on payments. Bankruptcy law can stop the foreclosure process at anytime before the sale occurs, typically you’d want to file bankruptcy chapter 13 since this chapter will allow you to reach a new agreement for paying the arrears on the mortgage. Chapter 13 makes more sense for filers who want to keep possession of a particular asset such as home. No part of your loan balance or past due payments will be discharged, this will only allow you catch up on payments.

Discharge credit card debt and other unsecured debts

When settling credit card debt with your creditors proves to be impossible because of the terms they impose, consumers have the option of filing for chapter 7 bankruptcy in which typically all unsecured debts may be discharged. Discharging unsecured debt is a way to get a fresh start, if the debt can not be discharged because the means test does not back up the level of financial hardship, the debt can be reorganized under chapter 13 bankruptcy instead with a new repayment plan that normally let’s you, the filer, come up with the repayment plan.

Stop Wage Garnishment

When judgments are brought against you by your creditors or collections agencies, one of the many weapons they use to collect payments from you is wage garnishment. This typically means that a percentage of your salary is legally withheld by your employer to send to the collectors. This percentage is not usually something that you determine but it is decided by the collectors and this often creates serious financial complications for the debtor. Filing personal bankruptcy will end of all of this, restoring the full transfer of your earnings directly to you. Early in the process of filing bankruptcy it will be determined whether you’ll benefit from either chapter 7 or chapter 13 bankruptcy, then ultimately the outcome will be that either you get a discharge of your unsecured debts or a rearrangement of your total debts under a new repayment plan, but either way the collectors no longer have the right to garnish your wages again.

Filing for divorce

When you or your spouse file for divorce the marriage may end up with a pile of assets and debts, usually more debts than assets for the average American family. Filing for divorce and dividing up the assets and debts may leave one of you with more than your fair share of debt and not enough assets. Normally you would want to file for divorce first and then file bankruptcy, however it’s best to get a bankruptcy attorney’s opinion on this. Depending on which state you are in, all assets may be considered community property and used in the bankruptcy estate, otherwise only jointly held assets can be used, then individually held assets may be used to pay for the debts inherited after the separation. Bankruptcy law and divorce law are not under the same federal code, so it’s important that you seek professional help to accurately file for both.

Being the victim of identity theft

This is perhaps the worse situation to be in, having your identity stolen, not having the adequate protection to restore your identity and clear your name, bankruptcy can be an option. However, this is only if your disputes are rejected by your creditors and you have no way of proving that the fraudulent charges were not made by you. Depending on how long and how much was charged with your accounts you could end up with a huge collection bill. As a victim of identity theft you have rights and you should contact the Federal Trade Commission, should you become a victim of identity theft and find yourself in a situation where no creditor will entertain your dispute. In this case you should only file bankruptcy if you have no other way to stop creditors from collecting from you and you have no way of proving that your identity was stolen and used by someone else.

There are many other reasons to file bankruptcy and they’re typically very unique to each individual, but the most common reason is still large amounts of credit card and unsecured debt. There are also other reasons that can be beyond your control like the divorce, a death in the family where the primary provider passes on leaving a single parent to provide for children, having your identity stolen and not being able to resolve the fraudulent charges. These are special circumstances but are not that rare.

As always remember that bankruptcy should be your last resort, if you have already exhausted every option and have found no real alternative and no feasible way to come out of debt, then begin your research phase and understand what chapter 7 and chapter 13 are all about and how they can help you. Also take advantage of a free bankruptcy evaluation by simply contacting bankruptcy attorneys in your area or filling out an online bankruptcy evaluation form to get connected with an attorney in your area.

Exempt vs non-exempt assets

One of the most common doubts for bankruptcy filers is in determining what assets are exempt when filing bankruptcy, this is not always clear especially if there are versified assets involved. As always it is best to consult a bankruptcy attorney to determine this with precision, but this post should give you an idea.

Exempt assets are those that can not be included in the bankruptcy estate, for example your retirement account. 401K, IRA accounts and other retirement accounts are in most states exempt from liquidation, however some states do consider these types of assets non-exempt so it’s important that you check with your attorney to make sure that yours will be safe.

Non-exempt assets are those that will be included in the bankruptcy estate and you must surrender in order to process your bankruptcy discharge. The bankruptcy trustee will use these assets to liquidate them and use the cash proceedings to pay your creditors before any debt can be discharged.

The law currently states that $16,500 of your home’s equity is exempt or double that amount if you’re married. Also you may exempt up to $2,500 of your vehicles total value. Home items like your furniture, items in your wardrobe and home collectibles may be exempt up to a value that can be determined by your attorney since this also varies per state. Any health or medical aids that you need for treatment or life support that are of high value are also exempt.

Any personal injury compensation, and disability payments that you’re receiving may also be exempt depending on which state you’re in.

Other assets like pension plans in which employees contribute to ERISA qualified plans, or deferred compensation plans, health insurance plans and certain annuities can be considered bankruptcy exempt assets.

Education funds to your child’s college education, or state tuition programs that were started at least one year prior to filing for bankruptcy, can be excluded from the bankruptcy estate. These funds educational funds however must clearly have as a beneficiary a child or grandchild of the debtor.

Can I exempt my house entirely?

Typically no, but in today’s crashing real estate market it is difficult to find a home with a significant amount of equity worth liquidating for the bankruptcy trustee. So presently you may be able to keep your house if the trustee is not interested in selling it, but you must continue to pay the mortgage on it even after you get a discharge since this is a secured debt.

If there’s more equity in the home than the allowed exempt amount of $16,500 or double if you’re married, then it is likely that the trustee will move forward with including the property in the estate and sell it. However if the equity is below the allowed amount then you should be fine just make sure you pay the mortgage. Also remember that the lender is not interested in the house, they’d rather you got caught up on payments and will only proceed with foreclosure as a last resort since this is typically an expensive and time consuming effort for the lender.

Can I exempt my vehicle?

Vehicles normally depreciate in value rather quickly, so unless you own luxury or vintage vehicles that hold good value and are above the allowed exemption value of $2500, the trustee will also probably choose to overlook this asset. Most people own vehicles that they’re either leasing or still paying for and because of the depreciation value of most vehicles it is difficult to consider them in the bankruptcy estate as worthy assets. So if your vehicle is a couple of years old with moderate to high mileage you probably have little to worry about.

When can I exempt everything?

If you’re filing chapter 7, more than likely you won’t have to try too hard to exempt certain things you own since most people who file chapter 7 bankruptcy have already exhausted their own resources to get caught up and failed. Including selling some of those assets. In most cases there were never really any assets to begin with. This is why often chapter 7 bankruptcy cases are no-asset-cases, in which the largest if any assets at all are the individual retirement accounts the filers have through their employers. Even if there are assets that can be liquidated they’re often overlooked due to the exempt assets rules.

There will be cases in which the filer has a significant amount of non-exempt assets and there are legal ways of converting non-exempt assets into exempt assets, these circumstances are unique and this will not apply to everyone who has a lot of assets. This can only be done by a seasoned bankruptcy attorney so do not make any assumptions on your own, this can be very serious if it is determined that you tried to purposely defraud or hinder the proceedings. If this is the case for you, then take this very seriously and talk with a bankruptcy attorney because bankrutpcy excemptions are a very important part of the process and most people simply do not have the knowledge to do this correctly.

Your initial bankruptcy consultation

If you haven’t yet contacted a bankruptcy attorney to talk about your case, read our bankruptcy services review, and fill out the online evaluation form and be contacted by a bankruptcy attorney in your local area to discuss your case for free.

This initial consultation with your attorney is a very important step in your process of filing for bankruptcy, this is an opportunity to really understand the process and get a very good feel for what you can expect. You need to be well prepared for your initial bankruptcy consultation in order to get the most out of it. If you leave your attorney’s office still feeling doubtful about the whole process, then either you did not ask the right questions or your attorney failed to educate you and put you at ease about your doubts.

Bankruptcy consultations should be free, if you decide to contact local attorneys in your area and you find that they charge a consultation fee, just keep going down the list of numbers in the phone book. Many and perhaps most bankruptcy law firms offer free consultations.

How you can prepare for your bankruptcy consultation

More than likely you’ll get anywhere from 30 minutes to an hour to talk with your attorney, there will not be enough time to have a long conversation, so you need to prepare your questions carefully making sure that your questions are concise and direct. You should have no more than 5 questions for your attorney, the attorney will need the rest of the time to explain the process of filing bankruptcy and to run the means test, which will determine if you even qualify for bankruptcy and if you do, which bankruptcy chapter will fit your situation best.

Identify the key elements of your case and be sure to bring them up to your attorney during the consultation. These are situations like, if you’re married and prefer to file alone, if you’re in a divorce process or if you have been the victim of identity theft. Do you own a business? And is the business the reason for you needing to file? These situations may complicate your case so it’s important you bring them up now so that a better strategy can be planned for your bankruptcy petition paperwork.

You also need to make sure you express your intentions to your attorney as far as the outcome of the process. What do you really want out of this? Do you simply want to get your unsecured debts discharged? Do you want to keep your home or surrender it? It’s important that you bring this up, because often people get the wrong idea about filing bankruptcy and think that it’s the be all end all for discharging debt and that’s almost never going to be the case, since not all debts can be discharged.

As mentioned above, your attorney will more than likely want to run the bankruptcy means test to determine under which bankruptcy chapter your situation can be best handled, so you need to bring some information with you. You need to prepare this in advance, do not try to keep it all in your head.

Make a spreadsheet of all your debts and liabilities, this should include credit card bills, department store accounts, unsecured loans, car payments, tax bills, student loan payments etc. Then make a separate sheet for your living expenses. Your living expenses are things like your rent, utility bills, medical insurance premiums and life insurance premiums, food costs, clothing and other personal necessities that your family requires to live comfortably. Finally, you need a separate sheet that lists all your sources of income, to include disability benefits, social security, VA benefits etc and all your assets like stocks, bank accounts, retirement accounts etc.

Do not try to cheat by hiding anything here, you need to disclose everything accurately, for if you fail to do so your bankruptcy file may be found fraudulent and you could end up paying a fine and lose your right to file again. Bankruptcy law is specific and like any other law it makes no exceptions when mistakes are made, it’s easier for you to make a mistake if you file bankruptcy alone, whereas hiring a bankruptcy law firm or attorney will prove to be more effective, particularly when listing and designating your assets as either exempt or non-exempt.

How you should proceed after your consultation

After your initial consultation, your attorney will give you some paperwork to fill out should you decide to file with their firm. This paperwork will have questions which will ask you to describe in detail everything you listed in the spreadsheets you made about your debts, liabilities, expenses, income and assets. That’s why it’s important to prepare these spreadsheets in advance and keep them handy.

You also should take a day or two to think about what you just discussed with the attorney and if you don’t feel comfortable about the outlook of your case, you may want to consider consulting with a second attorney or even a third one. Bankruptcy attorneys are typically very good at what they do and know the law well, but often you’ll find attorneys who don’t really care about the stress you’re going through and do not take the time to offer any comfort or offer alternative solutions. Find one that can be more sympathetic and is genuinely interested in your case and of course one that can give you a free bankruptcy evaluation, again you should never pay for a consultation.

if you’re married, discuss things with your spouse, even if you’re filing alone. Be absolutely sure that this is the right move and if you have not yet considered any alternatives to bankruptcy then you might want to read through the post on bankruptcy alternatives and it may just present some options that you had not thought of or thought were possible.

If other alternatives do not appear feasible, once you’ve decided to file your petition, start filling out your paperwork, and again, make sure that your information is accurate and you have not mistakenly or purposely entered the wrong information on these documents.

Should you include your spouse in your bankruptcy petition?

Situations like this are very common, typically one spouse for one reason or another ends up accumulating a mountain of debt or by other circumstances one spouse simply takes on the responsibility of debt alone. Whatever the reason may be for you, it’s probably puzzling you how to go about being married filing bankruptcy alone. It all really depends on who owes what, who owns what and what state you’re in.

Either spouse can file bankruptcy alone in any state, however you have to understand what the laws are in your state as far as how jointly held property is seen. For example California and Nevada are considered community property states. Meaning that in these states whether a married person files alone or with their spouse all community property is considered to be part of the bankruptcy estate, which is liquidated by the bankruptcy trustee to pay creditors before a bankruptcy discharge can be granted.

Typically the filing spouse’s own individual properties or assets will be liquidated first to repay creditors then the non-exempt assets within the community estate will follow. These are properties such as real estate, vehicles and other tangible assets like jewelry and furniture, savings accounts, stocks, and any other assets or earnings that were acquired during the marriage.

States that do not follow community property laws are known as common law states, where only property that is held jointly can be liquidated to pay creditors, if the non-filing spouse holds individual assets he/she does not need to worry about losing anything. Needless to say, community property states certainly complicate the process for any married person needing to file bankruptcy as an individual.

Common mistakes made by individual bankruptcy filers

Once bankruptcy filers become aware of how community property and common law work, they often believe they can get around the system by transferring property to the non-filing spouse or someone else in the family. This is a big mistake and it’s not worth attempting. Should the bankruptcy trustee suspect that to be the case, your bankruptcy file can be seen as fraudulent and all assets may be included in the estate or in other cases the case could be thrown out and the filers may end up paying a fine. Under the new laws, jail sentences are also given if deliberate falsification or fraud is proven. These mistakes are mostly common among pro-se filers, or people who file without a bankruptcy attorney.

Often the non-filing spouse will worry about the effects that bankruptcy will have on their credit. The law states that each individual has a separate credit record and the filing of one spouse should not effect the other. Although it’s also important to consider that debt that is held together, such as mortgages and joint credit card accounts can be an issue. For the non-filing spouse, this could result in negative credit entries if the accounts are in default. This can also mean that the non-filing spouse can now be seen as the person responsible for the debt since the other is under bankruptcy protection.

This is an issue best explained by a bankruptcy attorney, if your case resembles what’s explained here, you should consult a professional at once and get a good and clear picture about how your case will be seen by the bankruptcy court.

You should not pay for a Bankruptcy Consultation, most law offices will give you 30 minutes to an hour of time to explain the process and what you can expect. You can begin your free bankruptcy evaluation here.

Filing bankruptcy alone can cost you more.

It’s not secret that legal services are often expensive, and when it comes to bankruptcy cases it’s also no secret that the laws are complicated and hard to grasp for the average citizen. You can save money by filing bankruptcy alone vs hiring an attorney, but you must remember that without representation it’s you and only you who’s responsible for the accuracy of your bankruptcy petition.

Since the laws changed over two years ago, it has become more difficult for filing bankruptcy yourself. It is now required for filers to take credit counseling courses before filing bankruptcy and also the income requirements have changed making it tougher to discharge all your debts, in some cases it is necessary to repay some of the debts under chapter 13 bankruptcy, depending on your yearly income.

The changes also made it more difficult for bankruptcy attorneys to determine eligibility and more paperwork now needs to be filed increasing the time and effort it takes to produce and accurate bankruptcy petition, therefore raising the overall costs of bankruptcy services across the country. Filing “pro se” (on your own), saves you the legal fees, however the risks you take by filing bankruptcy yourself are too great to spare the professional help.

The new provisions make it much easier to make mistakes if you are not throughly familiar with the new laws, so that if you file your case alone and are denied because of inaccuracies you may be penalized and may not be able to file again for some time. If you’re asking yourself “should I file bankruptcy alone?” consider first if you’re willing to take the time to learn the applicable laws and prepare your petition correctly. Knowing whether to file bankruptcy alone is as important as when to file bankruptcy.

The consequences of making mistakes can range from losing the “automatic stay” protection to getting your case dismissed, which can often result in losing property or other collateral possessions like a car, furniture etc. If you’ve got your mind made up or know what you’re doing then you can proceed with filing your own bankruptcy case, starting with the chapter 7 bankruptcy forms and chapter 13 bankruptcy forms, which you need to download.

Hiring a bankruptcy attorney

Courts frown upon having to process pro se filers since the denial rates are so high. When you have representation your chances of being denied minimize significantly. Why? That is what bankruptcy attorneys do and nothing else. This is a very specialized field of law and requires extensive knowledge of specific laws in the bankruptcy code. If you are willing to pay thousands of dollars for a root canal operation why would you not pay for representation on something that will effect your entire life?

When you file bankruptcy with legal representation, you can have piece of mind that your case will be handled properly. Bankruptcy forms include several pages for reporting income, assets, taking into account past tax years and overall debts that must be reported accurately to the court when your petition is filed. It is possible to fill out the paperwork on your own but the legal jargon on the forms often leaves the average citizen guessing.

When you do hire a bankruptcy attorney, you should always be selective in the process. Do they offer free bankruptcy evaluation to determine if filing bankruptcy is the most appropriate step for you to take to eliminate your debts? Your attorney should take the time to answer your questions and put you at ease, he should be compassionate and understanding of your situation. Find a bankruptcy attorney with experience in an established firm.

Some law offices charge a fee for giving you your initial consultation, but if you are strapped for cash then free consultations are a must. You do not want to pay for the initial consultation unless the lawyer you visit was highly recommended to you by someone you trust. There are too many law offices, however, that offer free bankruptcy consultations so don’t settle for the first office you call. Search for an experienced attorney, ask for a free consultation and learn the process. With legal representation you will stand the best chance of getting your petition prepared accurately and your case successfully processed.