I have written about this before, but it bears repeating. I am not offering smoke and mirrors here, but just straight up information. There is a competitor’s ad campaign that has garnered considerable attention and it promises to get a bankruptcy started for $78.00. The ad goes on to note that certain restrictions and qualifications apply to this offer. And, I am sure they do explain those once your come in to meet with them. I have not interviewed my competitors on this issue, so I cannot say with certainty, but I can only contemplate one way that they can actually get a bankruptcy started for $78.00 and that is in a Chapter 13. It just so happens that you can pay the $310.00 filing fee that the court charges for a Chapter 13 (or the $335.00 for a Chapter 7) in four monthly installments. Each installment for the Chapter 13 would be $77.50 and thus we have you entering into a Chapter 13 paying only that first installment (and rounding it up gives you the $78).
I can do this for you also. However, I would need to figure out how much of a plan payment you would be able to afford because paying payments each month makes up a Chapter 13 in contrast to a Chapter 7. That would be the restriction. The Chapter 13 can run as short as 36 months or as long as 60 months depending on your household income. Attorney fees run higher in a 13 than a 7 but those higher fees can be paid through the plan itself. I only recommend going this route if it is the only way you can get into a bankruptcy and get the relief you need. You must qualify for a Chapter 13 which includes having a regular source of income and that income must be sufficient to pay enough in a plan payment to cover the attorney fees, trustee commission, certain tax debts, and certain secured debt arrears. The hitch with going this route is that the less your pay up front on attorney fees, the higher the plan payment has to be after filing. That may be perfectly fine and work well, I just want you to know that in advance rather than when I have you already in my office. There is also a credit counseling course that must be done through a third party prior to filing and this can run anywhere from $10 to $25 directly to that company. This a legal requirement of the law and not something that can be circumvented.
How would I be able to go beyond a firm that can get you into a bankruptcy for $78.00? Well, I do all the work myself. From the initial phone call to the initial meeting all the way through to the discharge order being issued at the end of the bankruptcy – it is all with me personally. That is to say, you will not be interacting with secretaries, paralegals or other attorneys (unless there is a true emergency); you will be interacting with me. I will be the familiar face that shows up with you at the meeting of creditors and the same voice on the phone who helps explain things along the way. That is simply how I chose to practice law, by keeping overhead low and doing it myself rather than shooting for high volume. That competitor does a fine job from what I can tell; it just done using lots of staff. If my individualized and personal approach appeals to you, then come in to see me and I will see if I can match any competitors’ offer for a bankruptcy or even go beyond what they have to offer. There is no charge for that initial consultation and I do NOT limit it to 1/2 an hour.
First of all, I want to clearly state that bankruptcy is not something to aspire to achieve. Almost no one wants to file a Chapter 7 or a Chapter 13 and get a discharge of debts. Nearly everyone I talk to would rather have the means with which to pay their creditors. So, if you are reading this post, you have likely already tried everything you can think of to make things work and you are considering bankruptcy as a last resort. I can appreciate that. And I know that also means many of you have already gone past the point where wisdom would have you go. And that is why I hope to lay out some general principles as to when one should file bankruptcy. Everyone’s situation has its own unique twists and turns, so you should find a lawyer who will provide a free consultation to see if it is time for you to file.
If a creditor has filed a lawsuit against you to collect a debt because you have not had the means to pay it, then you likely should file.
If the only way you can pay all your bills next month is to take a loan out from your retirement account, you likely should file.
If your house has been sold at a foreclosure auction, you likely should file.
If your car has been repossessed and sold at auction for less than you owed on it, you likely should file.
If you are seriously considering utilizing a payday loan provider in order to stay afloat, you likely should file.
If you feel crushed by debt and you do not see an end in sight unless you win the lottery, you likely should file.
If your employer notified you that they just received a wage garnishment order, you likely should file.
The main thing is to not wait until you are right up against the wall. It takes time to properly assess a persons financial situation and make sure that a petition and schedules are accurately completed. This means that you have to pull together a lot of documents in a very short period of time. It is far better to seek counsel when the crisis is still off in the future a bit.
This is by far the most prevalent question I am asked by debtors considering bankruptcy. The answer is “no”. This myth comes from the fact that the filing of a bankruptcy will show up as an event on one’s credit report for ten years. However, the existence of that even does not affect one’s credit score for ten years. If a debtor successfully completes a bankruptcy, Chapter 7 or Chapter 13, then all the pre-filing debts get re-characterized on the credit report. So, the clients of mine who have checked tell me their score is much better after the bankruptcy than it was when they filed the bankruptcy. It is then up to them to keep that new, healthier credit score.
In keeping with this, if a debtor has steady employment with a decent level of income, they are able to obtain financing for a home or vehicles soon after the bankruptcy is closed with only a small increase in the interest rate (around 1.0% more).
My main response, though, is, “Why would it matter if your credit score takes a hit?” This shows my bias against living in the revolving credit cycle. Those who go through a bankruptcy and then only buy what they can afford never come back to my office – at least not for another bankruptcy. However, I have counseled a number of folks who have settled into a pattern of serial bankruptcies because they never kick the credit addiction. So, my best advice is to live as though your credit score does not matter and it will not matter. I confess, I have not had any idea what my credit score is for several years now.
In order to file a personal bankruptcy, either Chapter 7 or Chapter 13, you have to complete a course in Credit Counseling. This was meant to prevent people who really did not need to file from doing so, but it has just created a booming industry where you must usually pay $50.00 in order to get the required certificate. It is essentially an additional filing fee except that it goes to private companies. This certificate is the “ticket in”.
There is also a “ticket out”. Within thirty days of your meeting of creditors, you will have to complete a Debtor Education (a.k.a. Financial Management) course. You have to pay another fee (often another $50.00) in order to obtain this certificate. No certificate and no discharge in the bankruptcy. I was excited for five distinct reasons to discover, though, that Dave Ramsey’s group has begun to offer the “ticket out” – the Debtor Education course online. First, I know they will come at the issue from a biblical perspective. Second, Dave Ramsey had to file bankruptcy at one point and so he can relate to what you are going through. Third, they have designed the course to hold your interest. Fourth, it is less expensive than most of the other places. Fifth, and most importantly, they have a real message of hope in the material that will bless you.
- CAUTION: Tax Refund
- When Business Owners Should File Bankruptcy
- To File or Not to File: Attorney decision making
- Deadlines for Filing Prepetition Tax Returns in Chapter 13 Cases
- Delinquent Property Tax Claims in Chapter 13 Cases
- Lessons Learned the Hard Way
- Miscellaneous Hot Topics in the EDKY
- ‘Tis the Season
- How to Choose a Bankruptcy Lawyer
- The Entrepreneurship – Bankruptcy Intersection
- Making Chapter 13 Plan Payments in the E.D. Ky. – New Online Payment Option
- “I’ve Changed My Mind – I Want to Surrender My House”: What Effect Does Post-Confirmation Surrender Have on the Debtor’s Discharge?
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