Using bankruptcy to get rid of debt
Debt is one of our "three Ds" and the way we help people get rid of debt is by helping them file for bankruptcy. There are many different kinds of bankruptcy out there, but the kind we use is the Chapter 7 Bankruptcy. This kind of bankruptcy involves getting rid of debts entirely in exchange for giving up any unprotected ("non-exempt") property.
The goal of any bankruptcy case is to help the "honest but unfortunate" debtor get a "fresh start." Basically, the federal government understands that sometimes people have bad luck or run into bad circumstances beyond their control, and that they might need extra help to bring their life back on track. If you feel like you are being buried under your debts and can't ever repay them, you should call us so we can tell you whether filing for bankruptcy would help!
Tell me more about unprotected property...
Many people worry that filing for bankruptcy means they will lose their home, their car, and more... but that simply isn't true. In a Chapter 7 Bankruptcy, certain property is exempt (protected) up to a certain dollar value. Property is protected up to that dollar value because the government wants you to get a fresh start and understands you can't do that if you have nothing left but the clothes on your back.
So, what happens if you own a piece of property that isn't protected? It depends on what that property is worth. If that property is worth enough money to yield a worthwhile payment to your creditors if sold, the trustee will likely take that property from you, sell it, and pay off some of the debts you owe. If, on the other hand, that property is not protected but it largely worthless, the trustee might not even bother. If you are worried you might lose property, call us so we can discuss it with you!
Our thoughts on losing property:
When you come in to talk to us about filing for bankruptcy, we will discuss the property you own and whether it is protected or not. It might turn out that you own some unprotected property, but don't worry - that isn't the end of the world!
You are probably thinking about filing for bankruptcy because your debts are out of control. You might owe tens of thousands or hundreds of thousands of dollars.
Suppose you have a thousand dollars in unprotected (non-exempt) property. Isn't it worth spending a thousand dollars to get rid of tens of thousands, or hundreds of thousands, of dollars of debt? Nobody likes to lose property, but it is important to keep your eyes on the "big picture" of your total assets and debts.
Do i make too much money to file for bankruptcy?
You might have heard that people who make too much money can't file for bankruptcy. The truth is a little more complicated than that! People who make too much money to file a Chapter 7 Bankruptcy might still be able to file another type of bankruptcy (like a Chapter 13, or a Chapter 11). Don't worry though - this is something we can figure out before your case is filed!
We will look at your income, your expenses, and your family size to determine whether you are eligible to file a Chapter 7 Bankruptcy. You might make a decent amount of money, but you might also have a lot of expenses that don't leave you enough breathing room to pay your debts, and you might still be eligible to file as a result. If you are worried that you make too much to file, call us and we will be happy to analyze your finances to let you know where you stand.
Does bankruptcy get rid of all of my debts?
Bankruptcy should get rid of most of your debts. Near the end of most bankruptcy cases you get a special court order called a discharge that prevents your creditors from ever collecting most debts from you. There are some exceptions to this rule, but those exceptions are pretty limited and most of them are "common sense" exceptions. For example, your discharge won't get rid of child support you owe.
We will go over your debts when you meet with us and will let you know if you have any debts that won't go away (non-dischargeable debts). The other thing you need to know is that, while your personal liability for a debt goes away after you get a discharge, that debt will still be attached to your property. The bank will still come take your car if you don't make your car payment, but you won't be on the hook for whatever is left owing. Feel free to call us if you have questions about your debts!
Our thoughts on going bankrupt:
A lot of people feel uncomfortable about filing for bankruptcy at first. Most of us were raised to believe that paying our debts is important, and that we are bad people if we can't do that.
That kind of mindset is understandable, but flawed. Good people can still get laid off and miss house payments. Nice people can still have car accidents and huge medical bills. Honorable people can still get divorced and struggle to make ends meet on half their previous income. The best of us can fall a little behind on payments, through no fault of our own, and find our wages garnished as a result.
Bankruptcy is not the end; it is a new beginning with a fresh start. Bankruptcy doesn't mean you failed, it means you tried your best but you know your limits.