|
Commonly Asked Questions
WHEN SHOULD I SEE AN ATTORNEY
For years, most creditors would try very hard to collect and if you did not pay, they would simply turn you over to some collection agency, either in-house or a third party collector.
They would not be very willing to try to make special arrangements or be very understanding of your situation.
However, in the last few years, we have noticed that creditors have become a bit more sensitive to the plight of people and they are at least trying to be a little more helpful.
Credit card companies will lower interest rates temporarily or extend payment periods.
Health care providers are keeping accounts longer before turning them over to collections.
Sometimes these kinds of things could be helpful, or they could be harmful.
If the debt never goes down, you are not being helped.
But if you can obtain some reduction of the debt, then use them.
But ask your self if it is going to be enough.
Will it address the entire problem.
Therefore, it is generally best to see an attorney at the first sign of trouble.
Don't sign anything with your creditors until you have spoken with a competent, experienced professional who can evaluate your whole situation and offer advice to solve the problem.
At Rulon T. Burton & Associates, we have offered a FREE (yes, really free) 20 minute initial consultation for over 20 years.
This means that we will sit down with you in the privacy of our office, listen to what you have to say and suggest alternatives that will provide for your needs.
If you decide that you don't like us, bankruptcy is not for you, you walk out the door, OWING US NOTHING.
There is no risk.
[ Index ]
WHAT IS THE MEANS TEST
Under the new bankruptcy law, you are required to provide income information for the last six months to determine either your eligibility to file a Chapter 7 or how long you will be required to make payments in a Chapter 13. Your average income for the six months immediately preceding the filing of your case is compared to the median income for the county you reside in from the United States Census Bureau. If your income is below the median, you may be able to file a Chapter 7 with no presumption of abuse. If your income is over the median, you may still qualify for Chapter 7 relief after deducting certain expenses, which we will help you with when you come for your appointment. If, after deducting your allowable expenses, your income is still above the median, you may be required to file a Chapter 13. The “Means Test” is one of the most complicated aspects of the new law. Our description here is only a simplification to give you an idea of how it works. We strongly recommend that you see us for a more detailed analysis of your situation and how the “Means Test” will effect you.
[ Index ]
WHAT DO I NEED TO DO TO FILE A BANKRUPTCY
Under the old law, a bankruptcy case could be filed in a matter of hours. Now, things are much different. Much more must be done to get your case filed, including: Paystubs for the last 7 months, pre-bankruptcy credit counseling, your last filed tax return, copies of all of the contracts for secured debts (cars, house, furniture, etc.), bank statements for the last three months, divorce decree, a statement of all contributions made to religious and/or charitable organizations in the last 60 days, a credit report, etc.. While this may seem like a lot of information, there are other items we may need before you can file. When you come for your first free consultation, or if you click here for free worksheet packet, we will give you a detailed list of all of the information required to file your case.
[ Index ]
WHAT IS PRE-BANKRUPTCY CREDIT COUNSELING
Before you can file either a Chapter 7 or Chapter 13, you are required to receive up to 90 minutes of pre-bankruptcy counseling to see if you have any other alternative to filing bankruptcy. Only certain agencies can provide this counseling. Click here to see the list of approved providers for this counseling. Keep in mind that you ARE NOT required to participate in a repayment plan before you file your case.
HOW WILL MY CREDIT BE EFFECTED
This is probably the most commonly asked question.
A high consumer credit rating is one of the most difficult things to get and keep.
The least thing can adversely effect what you have spent years and thousands of dollars trying to build and maintain.
Being 30, 60, or 90 days past due is going to cause problems.
Any collection agency that reports negatively, any repossession (voluntary or involuntary), foreclosure, judgments, etc. are going to reduce your ability to borrow money.
You may have already experienced this.
What people don't realize is that by the time most people need to file, their credit rating has fallen to the point that it would be difficult to impossible for them to obtain traditional, low cost, credit.
They already have bad credit.
"Bad credit" is generally the worst thing that will happen when you file bankruptcy.
But ask yourself, if too much credit is what has caused problems for you in the past, is lack of credit now such a bad thing?
Federal law prohibits your employer from terminating you from your job just because you filed some form of bankruptcy.
(There might be some limitations to certain jobs, we will discuss this with you when you come in.)
The important thing to remember is that there is life after bankruptcy.
You may not have access to all of the credit you once had, but then you are not always afraid to answer the phone now either.
You are now free from most, if not all of your debts.
The more you can learn to live without credit, the more free you will stay.
If credit is something that you will need in the future, you can rebuild.
When you come in, we can discuss some strategies that you can employ to rebuild your credit.
[ Index ]
WHAT IS A CHAPTER 7
When most people think of bankruptcy, they think of Chapter 7.
In a Chapter 7, the person or married couple that files receives a discharge or cancellation of their dischargeable debts.
This means that you are no longer responsible to pay the debts and that creditors can no longer collect on those debts.
There are some debts that are not dischargeable including, alimony, child support, student loans, fraudulent debts and most taxes.
(But chapter 13 may help with those.)
Chapter 7 is quite simple, in most cases you will not even have to see a judge.
It is possible in Chapter 7 to keep your house or car or furniture if there is little or no equity in those items and you can afford to continue making the payments.
This is called reaffirmation of your debts.
It is also possible to "pick and choose" what debts to pay and what debts to discharge (although all debts must be listed or included on the list that is filed with the court).
[ Index ]
WILL I LOSE PROPERTY
In a Chapter 7 there is a trustee appointed by the court to administer the assets of your estate.
This means that he will look over the list of your personal and real property to determine if there are things that can be taken and sold to raise money to pay your debts.
Things that are taken are generally luxury items, tax refunds, vehicles (with equity over $2,500.00), homes with significant equity, expensive furnishings, jewelry and so on.
Under Utah Law, most, if not all, necessary items, (home with little equity, clothing, food, beds/bedding, major appliances, basic furnishings, tools for your job, etc.) are generally protected and will not be taken.
[ Index ]
WHAT IS THE MEETING OF CREDITORS
About one month after the filing of your case, you are ordered to attend the Meeting of Creditors.
Most people are fearful of attending this meeting.
You do not need to be scared.
We will prepare you and your file so that the meeting comes off without a problem.
There is no judge present, the meeting is conducted by the Trustee of your case and he or she is interested only in information in your paperwork.
They will ask you questions that you already know the answer to.
You will be with many other people that have filed and are in your same position.
Because of the number of people scheduled for the hour, the Trustee will not spend very much time talking to you.
AS LONG AS YOU ATTEND THIS HEARING, WE CAN DEAL WITH ANYTHING THAT MAY OCCUR AT THE HEARING.
Not all of your creditors will attend (although they are all invited).
Generally, only secured creditors that are local, such as RC Willey, Zions Bank, Wells Fargo Bank will attend.
The general reason they attend is only to update their records (address and phone numbers) and confirm what you are going to do with the collateral (reaffirm or surrender).
In most cases, the whole time you will be in front of the Trustee will be about 10 minutes.
[ Index ]
HOW MUCH WILL IT COST TO FILE CHAPTER 7
The filing fee for the court is $299.00.
The attorney fees start at $570.00. (However, because of changes in the law, the attorney fee when you come may be higher depending upon the application of the law. We will review this with you thoroughly when you come in for your free consultation) Due to rulings in Bankruptcy Courts and the Circuit Courts, all fees (attorney and filing) for Chapter 7 cases must be paid before the case can be filed.
If you need some time to raise the attorney fee, simply retain us with the filing fee and we will handle your collection calls until the attorney fee is paid and you are able to file your case. Business cases and very complex Chapter 7 cases will be quoted on a case by case basis. Call us today at 288-0202 ext. 0 to schedule your appointment. We will see you today.
[ Index ]
WHAT IS A CHAPTER 13
Chapter 13 is a procedure in which you repay your debts according to a plan that changes the contractual terms of your debts by extending the time to pay, reducing or elimination the interest or eliminating most of the debt. Chapter 13 is generally a way for you to keep most of your assets while paying something to your creditors. The plan created in Chapter 13 instructs the Trustee how to pay your creditors. This repayment plan can last up to five years. At the end of the payment term, all dischargeable debts you have not paid are discharged (canceled).
Just like Chapter 7, all activity to collect debts is stopped with the filing of a Chapter 13.
[ Index ]
WHEN IS A CHAPTER 13 PREFERABLE TO A CHAPTER 7
A Chapter 13 is preferable to a Chapter 7 when you have assets that have large equities (the difference between what an asset is worth and what you owe on the asset is the equity) because you keep all of your assets in Chapter 13 because you are paying your debts.
Chapter 13 also works better when there are non-dischargable debts such as taxes, past due support and debts incurred by fraud.
You can pay those debts back through your Chapter 13 plan.
Chapter 13 will help you keep your car or furniture or tools, especially if you owe money on those items.
You will pay the debts back through your Chapter 13 plan enabling you to keep those items.
Chapter 13 provides some limited protection for a cosigner of a consumer debt.
Perhaps the strongest reason for Chapter 13 over Chapter 7 is how your home is dealt with in each chapter.
Chapter 13 provides a way for you to bring your delinquent house payments current.
It will instantly stop any kind of sale (Trustee, Judicial, Tax, etc.) and allow you to stay in the home while you pay your debts.
Therefore, as long as you make the payments that come due on your mortgage after the filing of your Chapter 13 case, you will not lose your home.
[ Index ]
WHAT IF I OWN A SMALL BUSINESS
Unfortunately, today's business climate can be rough on small business owners. Chapter 13 may provide a way to adjust the debts of your small business and KEEP YOU IN BUSINESS. The relief is limited to Sole Proprietors, whose debts are less than approximately $318,000.00 in unsecured debts and $1,000,000.00 in secured debts (as indexed by inflation). For more information, call our office or set an appointment to review your business needs and see if a Chapter 13 can help your business.
[ Index ]
WHAT IS A CREDITOR
A creditor is any person or entity (corporation, partnership, trust, etc.) that claims you owe them money. You may have entered into the contract voluntarily such as the purchase of a car or home. A creditor may have rendered services for you such as a doctor or the electric company. A creditor can be someone who thinks that you have done something wrong to them and the start a lawsuit against you. You may also be liable for the debts of others if you cosign or the debts are defined as “Household Debts” under Utah Law. You may dispute that you owe the debt, but ALL CREDITORS MUST BE INCLUDED ON THE LIST OF CREDITORS FILED WITH THE COURT.
[ Index ]
DO BOTH HUSBAND AND WIFE HAVE TO FILE BANKRUPTCY
Under federal bankruptcy law, husbands and wives can file together or separately.
Sometimes it is better for one spouse to file, sometimes it is better for both to file.
To determine what will give you the most relief, call our office for your free "First Consultation."
Federal Bankruptcy law requires that couples be legally married before filing together.
Utah law only recognizes "common law" marriage if they have been previously solemnized by a court of competent jurisdiction.
[ Index ]
HOW DOES BANKRUPTCY STOP FORECLOSURE, REPOSSESSION AND GARNISHMENTS
The instant that you file your case, Section 362 of the Bankruptcy code imposes the "automatic stay" that prevents all creditors from commencing or continuing ANY action to collect debts. What this means for you is that there is now a wall around you protecting you from creditors. If they are garnishing your paycheck, they must stop. If they are going to repossess your car, they cannot (if they take it right after you file, they must give it back). If your home is due to be sold at a foreclosure or tax sale, the sale is canceled. You now have time to address your needs without the pressure of creditors trying to collect. However, if you have been in a bankruptcy case during the last year the Automatic Stay may be severely restricted or not imposed at all, decreasing your protection. We will review this situation with you in depth when you come in for your initial consultation.
[ Index ]
|
