- The cost of filing a Bankruptcy
- Can I stop the phone calls from bill collectors?
- Can I stop a wage garnishment or wage assignment?
- What kind of debt can I include in bankruptcy?
- Will Bankruptcy allow me to save my house from foreclosure?
- Will Bankruptcy allow me to save my car from repossession?
- Can I reduce my car payment or my house note after filing for bankruptcy?
- Do I qualify for bankruptcy?
- After bankruptcy will I ever qualify for credit again?
- How will this affect me in the future?
Chapter 7
Lawyer's Fee
Heller & Richmond, Ltd. offers our clients a low cost, affordable way to clear up their credit difficulties. Our fees for complete representation in a Chapter 7 Bankruptcy are as low as $350.00. This includes all consultations and analysis of your situation; the preparation and filing of your petition, as well as representation at all court related matters. Secured debts, wage garnishments, law suits, tax problems and other complexities are some reasons for a slightly higher charge. Many other lawyers charge well over $1,000.00 and some as much as $3,500.00 for the same service! Feel free to compare prices at other law firms and you will find why most of our clients are thrilled with the substantial savings they find at Heller & Richmond, Ltd.
Chapter 13
Lawyers Fee
A Chapter 13 can be filed for as little as no money down for a qualified wage earner. This means that with a good work history and a sufficient amount of income Heller & Richmond, Ltd. will wait to collect any payment for their services until an affordable Chapter 13 plan to consolidate and repay a portion of your debts has been approved by the Bankruptcy Court. Even then our fee will usually be paid directly from your payments to the Bankruptcy Court (trustee). So one affordable payment will cover not only your debts, but also your attorney's fees. Even those without a strong work record can sometimes proceed with a Chapter 13, although we may require a small advance payment towards our fees. In those cases the fee deposit can be as low as $350.00.
Other Expenses
The cost of filing a Chapter 7 Bankruptcy at all law firms also requires a payment to the U.S. Bankruptcy Court in the amount of $299.00. The cost of filing a Chapter 13 Bankruptcy requires a Bankruptcy Court payment of $274.00. There is also a charge of $35.00 to obtain a credit report from all 3 major credit bureaus. Finally, the Bankruptcy law requires every filer to obtain a pre-filing credit counseling and a post-filing debtor education certificate. Those certificates can not be provided by your lawyer. There are many credit counseling and debtor education companies whose charges generally range from $15.00 to $50 for each certificate. Your attorneys at Heller & Richmond, Ltd. can help you find the least expensive option. All in all these non-lawyer expenses will add a total of about $375.00 to your cost of filing a Chapter 7 Bankruptcy and a total of about $334.00 to your cost of filing a Chapter 13 Bankruptcy.
Can I stop the phone calls from bill collectors?
In most cases the moment Heller & Richmond, Ltd. files your petition with the US Bankruptcy Court, we obtain an Automatic Stay on your behalf. An Automatic Stay is a legal requirement that any and all collection tactics must come to an immediate halt. It is directed against all creditors, their attorneys, agents and employees. This means bill collectors! They are then prohibited from proceeding with any act or action of any nature whatsoever for the purpose of enforcing any right against or collecting any debt from a party in bankruptcy. This includes the repossession of property, the garnishment of wages and the enforcement of any lien against your property. It also includes any collection effort including phone calls!
Many of our clients report that after filing bankruptcy they can finally answer their phone again without concern about harassment from a bill collector on the other end. Chapter 7 is often referred to as the Peace of Mind Law with good reason. Yes, you can stop those late night and weekend calls, not to mention the worry that comes with them.
Contact Heller & Richmond, Ltd to see if filing bankruptcy is the best choice for you.
Can I stop a wage garnishment or wage assignment?
A wage garnishment or wage assignment is a legal claim enabling a creditor to receive a certain portion of your pay check. A valid wage garnishment or wage assignment can be the result of either a successful lawsuit against you or your voluntary authorization. The successful lawsuit against you is known as a judgment. Your voluntary authorization is sometimes required in exchange for being given credit such as with the purchase of goods or a payday type loan. The amount of the wage deduction can be as much as 15% of your after tax dollars. Your employer must honor a valid wage garnishment or wage assignment or be held personally responsible for failing to deduct the money from your hard earned wages. This unexpected loss of income can be a tremendous hardship for a person or family that may have already been struggling to keep a roof over their heads and food on their table.
In most cases the moment Heller & Richmond, Ltd. files your petition with the US Bankruptcy Court, we obtain a Court Order that requires the wage garnishment or wage assignment to come to an immediate halt. It must be honored by not only bill collectors, but also their lawyers, as well as judges in any lawsuit resulting in a judgment against you.
Heller & Richmond, Ltd is prepared to file your case with the US Bankruptcy Court within one day of our first meeting. If you find yourself on the wrong end of a wage garnishment or wage assignment please contact the experienced lawyers at Heller & Richmond, Ltd. to learn about your bankruptcy options. Your initial consultation is not only confidential but free of charge.
What kind of debt can I include in bankruptcy?
Most of your bills can be eliminated in a Chapter 7 Bankruptcy or included in a Chapter 13 repayment plan. Certain types of debt; however, are treated differently. Debts are classified in 3 distinct categories when filing for bankruptcy. These are 1. Priority Debt, 2. Secured Debt and 3. Unsecured debt.
Priority Debt
Most government debt such as back taxes, student loans and parking ticket fines, as well as child support obligations are considered to be Priority Debt. Filing Chapter 7 Bankruptcy will generally have no affect on Priority Debt, so that even after the successful conclusion of your case, that type of debt will still be collectible. Priority Debt can be included in a Chapter 13 repayment plan, but you must repay 100% of it. The benefit of a Chapter 13 simply allows you to pay it at a rate you can afford during the Bankruptcy process. There are exceptions to these rules, particularly when it comes to back taxes. For instance, income taxes that are due from at least 3 tax years prior may sometimes be wiped out in a Chapter 7 or a Chapter 13. Please consult with a lawyer at Heller & Richmond, Ltd. to learn if your income tax debt qualifies for elimination in a Bankruptcy.
Secured Debt
In the event that you put up some collateral in exchange for a loan then that debt becomes secured. Collateral can come in many forms. A house, car, jewelry, furniture, television, sound system or camcorder are just a few examples of property that is sometimes used as collateral. The money owed on a secured debt may be eliminated in a Chapter 7; however, the creditor will then have a right to claim the collateral. You may be permitted to keep the collateral, if you agree to continue paying that particular debt. That process is called a reaffirmation. The bankruptcy court will approve a reaffirmation only if the loan is up to date and you can demonstrate that you can afford to continue making the payments. This is how many people file for bankruptcy and are able to keep their home and car. Collateral may also be protected under a Chapter 13. This may be a good choice, if you are behind on your payments. In fact all late payments on a secured debt, such as a house mortgage or a car loan, may be included in the Chapter 13 plan. This means that you may pay off the late payments over the life of the Chapter 13 plan, which can run for as long as the next 5 years. So you are given that extra time to catch up on your house mortgage payment, car loan, etc. During that time the creditor will not be permitted to foreclose on your house or repossess your car, provided you continue to make all on-going payments.
Unsecured Debt
The best way to define an unsecured debt is to describe what it is not. A debt without any collateral is unsecured debt. The most common examples might be most credit card debt, medical bills and personal or payday loans. Generally, unsecured debt can be totally wiped out in a successful Chapter 7 Bankruptcy. This means those debts will be permanently excused from repayment. Chapter 13 requires only a portion of unsecured debt to be repaid, but it can be as little as 10% of the total owed. Upon completion of the Chapter 13 plan the unpaid portion of the unsecured debt will be eliminated just like in a Chapter 7. Please consult with a lawyer at Heller & Richmond, Ltd. to determine just what benefit you might expect from either a Chapter 7 or a Chapter 13.
Will Bankruptcy allow me to save my house from foreclosure?
If you have fallen behind on your house payments, Chapter 13 may be a good choice to prevent a bank foreclosure. Chapter 13 can stop all foreclosure proceedings by giving you a chance to catch up on the late payments over a 3 to 5 year period of time. The late payments, also known as the arrearage, will be allocated into equal monthly payments. For example, let's say your late payments total $6,000.00 and your Chapter 13 plan runs for the full 5 years. There are 60 months in 5 years, so that means you would pay $100.00 per month for 60 months or 5 years after which time the full $6,000.00 ($100.00 x 60 payments) would be paid in full. There are other costs associated with a Chapter 13, which would increase your monthly payment, but in this example $100.00 per month will be used to catch up on your house note. Of course, you will also be required to make your usual mortgage payment in addition to the Chapter 13 payment. As long as you pay the regular mortgage payment along with your Chapter 13 payment the bank will be legally prohibited from foreclosing on your home.
Chapter 7 will have a very different impact on an attempt to foreclose your home. Although the filing of Chapter 7 may delay the foreclosure process, it will not prevent the loss of your home, if you are behind on your payments. In the event that you are just not able to afford your mortgage payment, plus the amount required to catch up on your payments within the 5 years permitted under a Chapter 13, then the loss of your home to foreclosure may be inevitable. A foreclosure, however, does not necessarily erase the money debt owed to the bank. In that case a successful Chapter 7 will eliminate all money owed on the mortgage, so that after taking your home the bank is not ever allowed to collect money from you on this loan.
Also, many people do not realize that a foreclosure can sometime create tax problems for the home owner. When the bank does not recover the full amount owed on the loan they may "forgive" the remaining debt and take a tax write-off instead. Under IRS regulations that "forgiveness of debt" actually becomes income to the home owner, who just lost their home to foreclosure. That income is taxable to the homeowner, the same as if they received a paycheck for the same amount. Of course, that means the homeowner not only lost their house, but then owes taxes to the IRS as a result. In many cases filing a Chapter 7 will avoid the tax, as the debt is discharged in bankruptcy instead of being "forgiven" by the bank.
When facing the loss of your home to foreclosure, consult the lawyers at Heller & Richmond, Ltd. to learn how bankruptcy may either save your home or save you from the further financial hardships that may come with the loss of your home. Know your rights and protect your future.
Will Bankruptcy allow me to save my car from repossession?
If you have fallen behind on your car payments, Chapter 13 may be a good choice to prevent repossession. Chapter 13 can stop repossession by giving you a chance to catch up on the late payments over a 3 to 5 year period of time. The late payments, also known as the arrearage, will be allocated into equal monthly payments. For example, let's say your late payments total $3,000.00 and your Chapter 13 plan runs for the full 5 years. There are 60 months in 5 years, so that means you would pay $50.00 per month for 60 months or 5 years after which time the full $3,000.00 ($50.00 x 60 payments) would be paid in full. There are other costs associated with a Chapter 13, which would increase your monthly payment, but in this example $50.00 per month will be used to catch up on your car note. Of course, you will also be required to make your usual car payment in addition to the Chapter 13 payment. As long as you pay the regular car payment along with your Chapter 13 payment the bank or finance company will be legally prohibited from repossessing your car.
Chapter 7 will have a very different impact on an attempt to repossess your car. Although the filing of Chapter 7 may delay the repossession, it will not prevent the loss of your car, if you are behind on your payments. In the event that you are just not able to afford your car payment, plus the amount required to catch up on your payments within the 5 years permitted under a Chapter 13, then the loss of your car may be inevitable. Repossession, however, does not necessarily erase the money debt owed to the bank. In that case a successful Chapter 7 will eliminate all money owed on the car loan, so that after taking your back your car the bank is not ever allowed to collect money from you on this loan.
Can I reduce my car payment or my house note after filing for bankruptcy?
Car...maybe. House...no.
You may be able to reduce you monthly car payment by including the balance of your car note into a Chapter 13 plan and then paying it off over the term of the plan, which can be from 3 to 5 years. If your car loan was scheduled to be paid off sooner, you will end up paying for a longer period of time, but at a more affordable monthly amount.
Chapter 13 might also provide another option to help lower your car payment. If you owe more than the car is worth and have owned your car for at least 910 days or approximately 2 ½ years, you may be able to "cram down" your auto loan balance by offering to pay the current value of the vehicle at a low interest rate, rather than the actual balance owed and the contract rate of interest.
The current bankruptcy laws do not allow for a reduction of your mortgage payment. This was taken under consideration during the last overhaul of the bankruptcy code in 2005. In light of the economic crisis in the housing industry this could have been an important tool to help homeowners deal with the plummeting home values and their financial struggles. Contact your congressman/congresswoman and senator to let them know how you feel about this issue. Perhaps the next time they review the bankruptcy laws they will include this much needed avenue of relief.
Do I qualify for bankruptcy?
Chapter 7
There are many misconceptions regarding who may or may not be a successful candidate to file a Chapter 7 bankruptcy. In 2005 the United States Congress passed a major overhaul to the Bankruptcy Code. It is called the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). This new law added two significant changes to the bankruptcy process.
Means Test
First the law essentially imposed a ceiling on household income in order to file a Chapter 7 bankruptcy. This consideration is known as the Means Test. The Means Test sets a limit on household income in order to qualify for Chapter 7 relief from your debts. The limit varies based on one's household size. The current limit for a one person household in the Chicagoland area is $46,355. A two person household is $60,073. A three person household is $69,910. The amount continues to increase along with the number of people residing in a household. Those people may include family members, such as children, spouses, siblings, etc. It also includes non-relatives such as friends and roommates. The Means Test requires the inclusion of income brought into the household by any and all household members, whether the others are filing bankruptcy or not. The more wage earners sharing a single household, the more difficult it becomes to qualify for a Chapter 7 bankruptcy, as all of their income is added together to determine whether that household exceeds the limit set by the Means Test. On the other hand unemployed household members including children, retired individuals on social security or simply unemployed adults will make it easier to file by increasing the household size, without adding to household income. It may still be possible to qualify for Chapter 7, even if your household income exceeds the income ceiling. This is a much more complicated calculation. Consult with an attorney at Heller & Richmond, Ltd. to see if you meet the requirements of the Means Test and qualify for a Chapter 7 bankruptcy.
Pre-filing and Post-filing Certifications
Second, BAPCPA requires all those filing bankruptcy to obtain a pre-filing credit counseling certificate. This can be obtained by taking a simple class with an approved company. The class is usually offered online or by telephone. It usually takes less than one hour to complete. The cost of this class usually ranges from $25.00 to $50.00 per person. A post-filing debtor education certificate is also required in order to successfully complete a bankruptcy. This class offers information regarding how to manage your finances in the hopes of avoiding similar problems in the future. It generally takes about 2 hours to complete online. This requirement can sometimes be satisfied by attending a lecture conducted by the bankruptcy trustee assigned to your case. The cost of this second class usually ranges from $15.00 to $50.00 per person. An attorney at Heller & Richmond, Ltd. can provide you with more specific information regarding how to obtain these necessary certificates.
Chapter 13
Chapter 13 involves the repayment of some or all of your debt. The payments are spread out over a 3 to 5 year period of time. The amount required to pay under a Chapter 13 will vary depending upon the circumstances of your particular situation. That amount may change based upon the amount of your income, the amount of back payments owed on a house or car, or the value of your assets that you wish to protect from the reach of your bill collectors just to name a few considerations. The important point here is to know that a successful Chapter 13 requires enough income to make the necessary payments over the length of your repayment plan. For example, if your Chapter 13 plan calls for a payment of $200 per month you must demonstrate that you earn enough money to pay all of your necessary living expense such as food, clothing, shelter, transportation, insurance and personal items and still have at least $200 per month left over in your budget to make the Chapter 13 payment. If your plan requires a payment of $1,000 per month, again you must show the bankruptcy court how you will be able to make that payment. If your proof of income supports that you earn enough to make the required monthly payment, then you may be a good candidate for Chapter 13. Consult an attorney at Heller & Richmond, Ltd. to determine whether or not Chapter 13 makes sense for you.
After bankruptcy will I ever qualify for credit again?
Contrary to popular belief, filing bankruptcy does not mean the end of your credit worthiness. Often times, just the opposite is true. The fact is that a successful bankruptcy usually eliminates some if not all of your debt. A new creditor will not have to stand in line behind others to collect any new debt, as there is no other debt, thanks to your bankruptcy. Futhermore, under the current Bankruptcy Code, you can not file another bankruptcy until 8 years after the first. Therefore, a future creditor will not run the risk of losing out on collecting back the new debt due to another bankruptcy. All in all this can make you a better credit risk than had you never filed bankruptcy in the first place. The major creditors such as banks that issue credit cards and mortgage companies understand this concept. Typically our clients find that it is not that difficult to get a new credit card shortly after their bankruptcy is concluded. The mortgage companies generally require a two year waiting period after a bankruptcy before considering a new application. Bankruptcy is often referred to as "The Fresh Start Law" with good reason. By eliminating your debt, you can rid yourself of unwanted financial pressures, wipe the slate clean and rebuild your credit reputation (and credit score) in a relatively short period of time. Many of the clients at Heller & Richmond, Ltd. have used this opportunity at a second chance to reestablish their credit portfolio and rebuild their financial lives with responsibility, security and great success. Contact a lawyer at Heller & Richmond, Ltd. to obtain tips as to how to improve your credit score after filing bankruptcy.
How will this affect me in the future?
The word "bankruptcy" carries a powerful message. That message, however, means different things to different people. The fact is that filing bankruptcy no longer carries the same stigma of financial failure, as it did 20 or 30 years ago. Bankruptcy filings are at all-time highs across America. Over one million individuals file for bankruptcy protection every year. The entire US population is approximately 311 million. This means that roughly one of every 311 people in the United States files for bankruptcy every year. These are difficult financial times for many of our family, friends and neighbors. These times have stricken all walks of life including professional people and hard working, responsible citizens. Unemployment continues at a significant rate and the housing crisis continues to impact us all. Illness plays no favorites. When it strikes it can send not only your physical health, but also your financial health into a tailspin. Bankruptcy, either Chapter 7 or Chapter 13, is a tool that may be available to offer relief to those of us attempting to get back on their feet, often times through no fault of their own.
Filing bankruptcy will remain on your credit report for 10 years. This does not mean that you must wait 10 years to qualify for credit again. In fact the mortgage companies typically require only a 2 year wait before consideration of a mortgage application. Credit cards can be available only months after filing. Car loans can be obtained after an equally short period of time to a qualified wage earner. The question that needs to be asked is "Will I qualify for credit without filing for bankruptcy?" Often times the answer is no. This is particularly true for those with judgments, repossessions, foreclosure, collection accounts or slow pay histories on their credit report. In these cases filing for bankruptcy will only improve your opportunity to obtain new credit, by eliminating these negative financial obligations and allowing you a fresh start.
Consult with a lawyer at Heller & Richmond, Ltd. to determine how filing bankruptcy can get you back on the road to financial freedom.
