Bankruptcy and Debt Management
How you manage and maintain your finances is essential to meeting the basic needs of you and your family, as well as keeping you from experiencing the stress of overwhelming debt. Proper management can also protect your personal assets from creditors’ claims. Unfortunate circumstances — such as a catastrophic illness or injury, loss of a job, divorce, a gambling problem, a poor business decision or investment, or other circumstances — can force you into a situation where you need legal assistance.
If you are facing debt problems and are having difficulty in meeting your credit card, medical or other debt obligations, there are options available to you besides dealing with lawsuits and collection agencies. Having an experienced negotiator on your side can certainly relieve the stress of creditor phone calls and letters and the threat of wage garnishment or seizure of assets.
For a reasonable fee, an experienced attorney at Access Lawyers Group can, for instance, identify conduct by a creditor that violates the Fair Debt Collection Act and even file a claim for you that can compensate you for violations. Typical violations include calls to your place of business despite your advising the creditor to refrain from doing so, calling you at all hours of the night, threatening you with criminal prosecution or lying about what you owe. Pointing out this conduct can also persuade the creditor to enter into negotiating on very favorable terms.
In other cases, most creditors will consider negotiating a debt if you threaten bankruptcy or can convince them that reducing the interest rate or the principal will result in paying off a debt that may otherwise never be satisfied.
Filing for bankruptcy protection is an option under certain circumstances; our attorneys can advise you on which chapter is best for your particular situation. For consumers, you have two options: Chapter 7 or Chapter 13.
Any time you file for bankruptcy, an automatic stay goes into effect that stops any lawsuits from proceeding against you or the continuing of any collection activities, including phone calls from creditors and lawsuits. A Chapter 7 is a liquidation proceeding. If you have substantial unsecured debt, such as credit cards or medical expenses, these can be discharged in a Chapter 7 while exempting most if not all of your personal assets from being seized by the bankruptcy trustee for distribution to your creditors.
We recommend Chapter 7 if other options for resolving your debt are unsatisfactory. You do have to qualify under a means test that we can assess for you. Essentially, your disposable income must be at or under the median income for your state, though we may be able to qualify you if you meet other conditions. Otherwise, you might be able to proceed under a Chapter 13.
A Chapter 13 is also referred to as a debt reorganization or repayment plan. Depending on the amount of your disposable income, you pay back your creditors over a 3- or 5-year period. This option is for debtors who do not qualify for a Chapter 7 or who may have assets that are not exempt, such as real estate other than your home or homestead. You do not lose or give up any assets while making a single payment to the trustee who distributes it among your creditors in order of their priority. This proceeding can save your home from foreclosure so long as you keep your monthly mortgage payments current while arrearages are paid over the life of the repayment period. You do need a steady source of income to qualify.
At the end of the 3- or 5-year repayment period, any creditor obligations not paid are discharged; this includes second mortgages on your home.
Talk to an attorney from Access Lawyers Group about financial management and what options are available to you if you are experiencing a fiscal crisis or have questions about how your finances can be more adequately maintained.