I have to eat. I have to pay utilities. I need bankruptcy relief. Will recent credit card charges prevent me from filing a Chapter 7 case?

Posted on by

There is never a perfect time to file a bankruptcy case.  When people come to talk to me about a filing for Chapter 7 or Chapter 13 at my Asheville, North Carolina bankruptcy law office, we almost always talk about their budget and how they are paying their bills right now.

Ideally, clients should wait to file a bankruptcy case until their credit cards have not been used for several months.  But that does not always work, and our challenge is to find a real life solution for people in serious trouble.  Here’s what the law says:

Section 523 of the Bankruptcy Code describes circumstances where credit card debt will not be discharged.  Section 523(a)(2)(c) makes non-dischargeable consumer debt totaling more than $500 for luxury goods and services owed to any one creditor that are incurred within 90 days of filing, or cash advances totaling $750 or more owed to any one creditor made within 70 days of filing.  Section 523(a)(2) makes non-dischargeable debt owed to a creditor that was incurred by false pretenses or by fraud.

The bottom line is that you may never use a credit card fraudulently.  More practically, a presumption of abuse arises if you have charged more than $500 on ANY ONE CARD (over $500 spread out over several cards may not trigger an objection by a creditor) within 90 days of a filing.  If you have spent over $500 within 90 days on a credit card for non-luxury items (food, utilities, etc.), we have an argument that can rebut a presumption of abuse which would probably lead to a discharge of those debts in addition to your other debts.

Your situation is different than what your friends and neighbors have told you about bankruptcy.  Scheduling a free consultation is easy, and taking the time to become informed may be the best 30 minutes you ever spent.  Contact me if you are wondering about your relief options.

Student Loan Debt: What is the difference between a forbearance and deferment?

Posted on by

As a bankruptcy lawyer in Asheville, NC, I am troubled by the rising student loan debt our country is facing.  Bankruptcy laws seem insufficient in many cases because most of the time a student loan debt cannot be discharged in a Chapter 7 or Chapter 13 bankruptcy.

My best advice for someone to struggling with student loan debt is to look into their options for solving all their debt problems.  Frequently, we can combine a bankruptcy case with a plan to seek a forbearance or deferment on their student loans.

The terms forbearance and deferment are usually used interchangeably.  In fact, your loan servicer probably uses them in the same manner.  However, if you have a subsidized Stafford loan (the most popular type of student loan), the US government will pay the interest charges during a deferment but not for a forbearance.  On a $50,000 loan, the interest charges in a forbearance for two or three years grows exponentially until the loan is paid off, making a difference of over $10,000.  Moreover, a forbearance can be granted over the phone, whereas you need to seek a deferment in writing.

The bottom line is that it matters if you have a subsidized stafford loan.  If you can’t pay your student loan debt, and in live in Western North Carolina, contact me for a free, initial consultation.  We can come up with a financial plan which works for you by exploring your best legal options.

Recession Effectively Wipes Out Safety Net For Many Families

Posted on by

Many potential bankruptcy clients near Asheville come to see me about hiring me as their bankruptcy attorney as a last resort.  They thought financial difficulty would never happen to them, and they have tried just about everything to avoid seeing a lawyer.

This USA Today article explains how the recession is the culprit for many hard working families.  Because of the nation’s economy the past few years, families have less of a safety net, and can get into trouble more quickly.  Before, when a medical emergency or unexpected cost crept up, there was a buffer either in savings or in accessible home equity which no longer exists.

You do still have options, and the sooner you talk to a professional, the better.  Don’t let fear paralyze you because the options may be better than you imagine.  For those of you in Western North Carolina, I would be pleased to speak with you in a free, initial consultation.

Why does it cost money for a bankruptcy filing?

Posted on by

As an Asheville bankruptcy lawyer, when I tell people about the costs of a bankruptcy filing, I get some strange looks.  Most people who need a bankruptcy filing do not have extra money lying around ready to be spent on paying a bankruptcy attorney.

Here is a great article about a recent bankruptcy study which explains the costs.

Part of my job is to create a financial plan which provides a fresh start.  Before we do anything, we’ll talk about how you will be able to pay the fees associated with a bankruptcy case.  Sometimes, I’ll advise a potential client that extra money they have is better spent elsewhere, like catching up on a car payment.  Most times, however, finding the proper source for fees (not paying unsecured creditors anymore, borrowing from a family member, or saving up money each month) can be a simple matter of putting a plan together and executing it.

The result is a fresh start financially, and an end to the constant stress or worry.  If you are ready to get started, and live in Western North Carolina, I would be pleased to speak with you during a free initial consultation.

Debt Collector Harrassment? A Bankruptcy Case Stops the Abuse

Posted on by

I often hear from clients around Asheville, NC during a bankruptcy consultation for Chapter 7 or Chapter 13 that the worst part of their financial difficulties is not job loss, indecision about living paycheck to paycheck, or budgeting problems.  The worst part about not being to pay bills is often abusive debt collectors who will call at all hours, hound family members not a part of the problem, and contact employers.  The debt collectors strategy is to inflict pain in order to intimidate you into giving them your last dime.

Here is a story about one of the worst cases, where someone fought back and won a 10 million dollar judgment against the collection agency.

You probably will not be able to win 10 million dollars.  But you can demand respect.  A bankruptcy case will cease all collection actions (phone calls, letters, lawsuits, foreclosures) from debt collectors through the Court’s automatic stay.  If debt collectors violate the automatic stay, you have a right to sue the collection agency and be paid for that injustice.

Bankruptcy Means Test: What Type of Relief do I Qualify For?

Posted on by

Many potential bankruptcy clients come to my Asheville office wondering whether they qualify for a Chapter 7 or Chapter 13 case (sometimes Chapter 11, but that type of case is generally for big companies with many employees or assets).  The key qualifier for determining the proper type of bankruptcy relief is called the Means Test.

The Means Test looks backward in time at your gross income for the previous 6 months prior to filing your petition.  So, if you filed in April, the test would cover October 2011 through March 2012.  If you filed on May 1, the test would cover November 2011 through April 2012.  Many times, I will recommend filing earlier or later for folks whose income fluctuates (commission based jobs, etc.).

If your gross income is below the median level for your household size, you qualify for both Chapter 7 and Chapter 13 relief.  If your income is above the median, you still may qualify for either chapter, but we would need to look at your household expenses to determine if Chapter 7 is still a possibility for you.  Generally, if you have kids, your chances are still pretty good.  Kids cost a lot of money to raise, and the Means Test allows for that fact.

If you fail the Means Test, after looking at your expenses, you almost certainly still qualify for Chapter 13 relief.  The Means Test is very important in Chapter 13 cases because it determines your “disposable income.”  Disposable income is a key factor in determining how much you have to pay in a Chapter 13 payback plan (the other key factor is the assets you own).

Sound complicated?  It is a bit tricky for those of you not familiar with the system.  However, you can learn what a bankruptcy case would look like for you during a free, initial consultation.  Contact me today to get on my calendar.

Filed Your Tax Return? Refunds Can Pay Costs Of Bankruptcy

Posted on by

If you have gotten your 2011 tax returns filed today, many of you have realized that lower income in 2011 might mean a higher tax refund as well.  The average refund is around $3,000 for 2011, which generally speaking would more than pay the costs of a Chapter 7 filing.  If this refund money funded a bankruptcy case (instead of going toward a minimum payments or lump sum settlement to pay just one debt), you and your family could become completely debt free.

More and more people near Asheville NC are using refunds to file a Chapter 7 case, and completely rid themselves of debt.  Each individual case is unique but planning wisely for your family is critical if you are struggling financially.  It doesn’t cost a dime to learn your rights in a free bankruptcy consultation.  For those of you in Western North Carolina, I would be pleased to speak with you about your best options.

New Job? Now may be the time to consider a bankruptcy filing

Posted on by

Many people I meet with for a bankruptcy consultation in my Asheville NC office think filing a case is as low as you can get financially.  On the contrary, the most difficult people for me to help are the ones who do not have secure employment.  Sure, we could file a case for them, but doing so would not be a good idea if the client is going to end up back in the same position they started in.  The key to a successful bankruptcy case is for a client to be able to make ends meet when granted the opportunity to start fresh, without their old debts weighing them down.

This article from the Citizen-Times explains that the job outlook for the four counties surrounding the Asheville area is improving.  If you are working a steady job, and are still struggling to make ends meet, you are the perfect candidate for a free, no-obligation consultation with a bankruptcy lawyer.  For those of you in Western North Carolina, I would be pleased to meet to determine your options.

How Do I Stop Collection Calls?

Posted on by

As a bankruptcy attorney in Asheville NC, I frequently meet with potential clients who are worried about collection companies calling their family members and employers in an attempt to collect an old debt.  Its difficult, stressful and annoying.  Since the collection companies are paid on commission, their strategy is frequently to intimidate you into writing them a check for any amount.

Fortunately, there is help through our bankruptcy laws.  Upon filing a bankruptcy case, the Court automatically orders a “stay” against all collection attempts by your creditors.  This means they cannot call, write, or try to collect in any other way (lawsuits are halted, foreclosures put on hold).  If they do violate our bankruptcy court’s automatic stay, they can be fined by our Courts as illustrated here:  Bank of America Contacts Client After Bankruptcy Filed.  In that case, Bank of America ended up paying $12,500 as a fine for contacting a client repeatedly after a bankruptcy case had been filed.

Most cases do not go that far.  We can stop many of your creditors  from contacting you while we are preparing your bankruptcy case.  After you have hired me to help, I ask that you tell any creditor who writes or calls that you have retained me to help with your financial situation, and to only contact me going forward.  This generally stops 90 percent of the calls.

When we file your case, all contact should stop immediately.

If you have any questions or concerns, I would be pleased to speak with you during a free, no-obligation initial consultation.

Can I Keep My Car in a Chapter 7 Bankruptcy?

Posted on by

As an Asheville bankruptcy lawyer, I speak with people everyday who worry they will lose their belongings if they eliminate their credit card and medical debts with a bankruptcy case.

In over 90 percent of the cases filed, Chapter 7 bankruptcy clients keep all of their property.

For cars, bankruptcy clients have four different options.  First, they can choose to ‘reaffirm’ the debt.  This means the same terms will apply to the car loan as before they filed a case (occasionally we can negotiate better terms).  Second, bankruptcy clients can ‘redeem.’  This option is basically a refinance of a car loan for the amount the car is worth, not the amount still owed.  This works great for underwater cars.  Third, bankruptcy clients can ‘retain and pay’ which means they just keep paying on their car loans without reaffirming the debt.  While the lender must agree for this choice to work, almost all car loan companies do (Ford Motor Credit and Credit Unions generally do not).  Lastly, a bankruptcy client can surrender their car and eliminate their liability on the loan.

For more bankruptcy information about your car or otherwise, please contact me for a free, initial consultation.