Rubin & Associates
Learn About Bankruptcy Protection At the Rubin & Asociates Law Firm, we represent people and businesses with financial problems. We provide our clients with the information needed to make an informed decision about their financial situation. An understanding of your legal rights relating to your financial obligations can help you deal effectively with the crisis. Financial difficulty impacts every aspect of one's life. Your job may be suffering because of harassing creditors and their unrealistic demands. Many individuals are surprised to learn that our federal bankruptcy laws offer dignified solutions to stressful financial problems. Our bankruptcy system provides for legal debt protection and relief for individuals primarily under Chapter 7 and 13. Businesses may also file for bankruptcy. Legal debt protection allows individuals and businesses to regain control of their finances without additional borrowing or losing their home, car, and other valued possessions. You may be able to eliminate your debt altogether or reduce it considerably by filing bankruptcy. Once you have recognized that you need help with your finances, the next step is selecting an attorney to help you through the process. At the Rubin & Associates Law Firm, filing bankruptcy is a positive experience that will provide you with a fresh financial start. Our level of experience is such that we have seen a great variety of situations and helped many individuals, families, and businesses solve their financial problems. To learn more, click on any of the terms below or contact us: Chapter 7 and 13 Debt Solutions The two most common types of bankruptcy filed by consumers are Chapter 7 and Chapter 13. A bankruptcy attorney can help you determine which is best for you based on your financial situation: your income status, how much debt you have, and whether you want to keep your house or cars. Chapter 7 A Chapter 7 Bankruptcy does not involve any court protected repayment plan and will legally eliminate your unsecured dischargeable debt such as credit cards, medical bills, most judgments and garnishments, repossession debt, eviction or broken lease debt, some taxes, and past due utilities. The debt is eliminated through a legal discharge. A Chapter 7 discharge is not an absolute right, but most individuals experiencing financial difficulty will qualify. In Chapter 7 you will be required to continue making payments on your secured debt, such as house and car payments, in order to keep the collateral securing the loan (the house or car). Your agreement to continue making these payments is called a reaffirmation agreement. In Chapter 7, you do not have a right to modify your car payments. (Chapter 13 does provide this right through a debt adjustment. For those with high car payments a Chapter 13 may be more helpful.) Chapter 13 Chapter 13 is a court protected repayment plan where individuals are allowed to modify loan agreements and even eliminate significant portions of their unsecured debt. Many people mistakenly believe that Chapter 13 requires that all creditors be paid in full with interest. Our clients are relieved to learn that Chapter 13 allows for the repayment of only the percentage of credit cards and other unsecured debt that an individual or family can reasonably afford. Additionally, Chapter 13 allows for the modification of personal property loans, such as cars. As a result, an individual can actually end up paying less per month in Chapter 13 than in Chapter 7 because of the ability to modify certain secured loans in Chapter 13. For instance, the interest rate on vehicles can often be lowered and the amount paid back through the payment plan is based on the current Blue Book value of the car or the amount owed on the loan, whichever is lower. If you owe more than your car is worth ("upside-down"), Chapter 13 can be helpful. If you are facing financial difficulty and are considering bankruptcy, consult a competent bankruptcy attorney to find out what works best in your situation. Business Bankruptcy Federal bankruptcy laws determine how companies go out of business or recover from crippling debt. Businesses can file for bankruptcy under Chapter 7, 11, or 13, depending on the way the business is structured and other factors. An attorney who practices bankruptcy law can help you determine which is the best method of dealing with overwhelming business debt. Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors. Most publicly held companies will file under Chapter 11 rather than Chapter 7 because they can still run their business and better control the bankruptcy process. Chapter 11 provides a process for rehabilitating the company's faltering business. Sometimes the company successfully works out a plan to return to profitability; sometimes, in the end, it liquidates. A bankrupt company, the "debtor," might use Chapter 11 of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but a bankruptcy court must approve all significant business decisions. Under Chapter 11 reorganization, a company usually keeps doing business and its stock and bonds may continue to trade in our securities markets. Businesses run as a sole proprietorship or as a corporation, can use Chapter 13 to stay in business and pay off its debts. Chapter 13 is the proper option for most businesses experiencing debt problems that want to continue operations. It can also provide a solution for business owners who have personal debt related to the business. If your business is experiencing financial difficulty, you should contact a bankruptcy attorney to consider your options. Each financial situation is different. Foreclosure If your home is scheduled for Foreclosure, a Chapter 13 court protected repayment plan will stop the foreclosure dead in its tracks. In Chapter 13, you will be provided the opportunity to get caught up on your mortgage payments over a three to five year period, with reasonable monthly payments. As soon as you file for Chapter 13, the automatic stay serves to put an end to the foreclosure lawsuit. However, you must file your Chapter 13 before your home is sold at a foreclosure sale. Contact us immediately if you have received notice that your home is approaching a foreclosure sale. If you are dealing with the foreclosure of your home, consult a competent bankruptcy attorney to find out what works best in your situation. Repossession If you are behind on your car payments, your car lender may repossess your car at any time. Chapter 13 provides a solution. In Chapter 13, your car will be protected and you may modify your car loan down to the fair market value of the vehicle. This will reduce the amount, and usually the interest rate, that you must pay for the vehicle. Even if your car has already been repossessed, if you file for Chapter 13 protection, your car lender must return the vehicle to you as long as you contact us immediately after the repossession takes place. If your car has already been sold at auction, you may not be able to demand the return of your vehicle. Wage Garnishments Filing bankruptcy, either Chapter 7 or Chapter 13, can protect your paycheck and stop wage garnishments by the IRS, for back child support, and student loans. If you are dealing with wage garnishments, consult a competent bankruptcy attorney to find out what works best in your situation. Back Taxes If you are having trouble with the IRS due to back taxes, bankruptcy may be a solution. The taxes you owe may be reduced or even eliminated by filing for bankruptcy. A Chapter 13 bankruptcy will allow you to pay off the IRS and back taxes over a three to five year period, frequently without incurring interest or penalties. Back property taxes, such as county or school district taxes, can often be paid back over three to five years in a Chapter 13 bankruptcy. If you are facing financial difficulty and are dealing with back taxes, consult a competent bankruptcy attorney to find out what works best in your situation. Stop Creditor Calls As soon as you file for bankruptcy, your creditors may no longer contact you. Credit Counseling Not Working? If you are considering credit counseling Many consumers seek help from credit counseling organizations in managing their debt or "repairing" damaged credit. But as the demand for credit counseling has increased, the nature of these agencies has changed, and many credit counseling agencies do not have your best interests at heart. Federal regulation of the credit counseling business is fairly loose and state regulation is generally ineffective. That means that you must be very cautious when contracting with a credit-counseling agency. Many consumers seek assistance to educate themselves and do the right thing by addressing their debt problems only to be taken advantage of by consumer credit counseling services that promise credit repair, reduced payments, and miraculous results in an impossibly short time frame. As the saying goes, if it seems too good to be true, it probably is. Not only might these counseling services not help, they can actually increase your indebtedness. Many people trying to avoid bankruptcy are unaware that credit counseling also reflects negatively on your credit report. Which is the better choice, credit counseling or bankruptcy? To use a credit-counseling agency to help you pay your debts, you must have the income to do so. You must make a payment each month to the agency, which will then pay your creditors. However, if you miss a payment any one creditor can refuse to continue in your plan and all your creditors may not agree to participate in the plan to begin with. Also, the plan usually requires that all debts be paid in full. In comparison, in a Chapter 13 bankruptcy, depending on your income and expense you may pay only a small fraction of certain debts (non-priority unsecured debts). If you need information so you can choose between credit counseling and bankruptcy protection, contact us today at 1-800-518-DEBT (3328) for a free, no obligation consultation. You can also send us an email, submit an online Case Evaluation, or schedule an appointment online. If credit counseling is not working You are not alone if you tried credit counseling only to find out that it is not working or has turned out to be different than advertised. Consumers nationwide have been misled into credit counseling programs that are expensive, unenforceable under state and federal law, and damaging to credit ratings. If you believe that you may be a victim of credit improvement fraud, you should immediately file a complaint with the FTC by calling toll free: 1-877-FTC-HELP, or online at www.ftc.gov. If your credit counseling program is simply not working or if you need information so you can choose between credit counseling and bankruptcy protection, contact us today Stop Credit Card Payments Filing Chapter 7 or Chapter 13 can put an end to those never ending credit card payments. You may qualify for a complete discharge of your credit card debt in Chapter 7 which provides complete relief from these debts. If you file Chapter 13, then you will be required to pay a portion or all of your credit card debt through a court protected repayment plan. The percentage of your credit card debt that is paid through your Chapter 13 repayment plan depends upon your monthly budget and ability to pay: it could be as low as zero percent! Even if you pay all of your credit card debt, it will almost always be interest free. Divorce and Bankruptcy Unfortunately divorce and bankruptcy often go hand in hand. According to marriage and family therapists, money is the number one stress factor in many relationships. Each spouse is likely to believe that the other is mostly responsible for the couple's financial situation. Money problems can cause a marriage to fall apart and bankruptcy will impact a divorce as well. If you are in the process of divorce and you or your spouse files for bankruptcy, the divorce proceedings will come to a screeching halt until the bankruptcy court grants approval. Ideally, you and your spouse should cooperate and file jointly before divorce. However, a divorce that occurs during an ongoing bankruptcy can be accomplished. In most cases both spouses are responsible for the debts incurred during the marriage. A divorce settlement will divide up the debts, assigning responsibility for some debts to one spouse and some to the other. But that divorce settlement is between you and your ex-spouse; it doesn't bind the creditor, who can collect the debt from either one of you. This means if your ex-spouse doesn't pay his or her share of the debts, the creditor can come after you for payment. If youre ex files for bankruptcy after the divorce, the creditors will look to you to repay those debts. If you were barely making ends meet before that happens, your spouse's bankruptcy could send you into bankruptcy as well. If your spouse files for bankruptcy after a divorce has been filed but before it has concluded, the divorce court will have to wait until the bankruptcy court approval is finished to divide marital property, but the court can still award custody, visitation, child support, alimony and even grant your divorce. If bankruptcy is filed after the final divorce judgment, the former spouse still has to pay child support and alimony if awarded. For those reasons, it may make more sense for you and your spouse to file for bankruptcy before getting divorced. At least that way you will know where you really stand when it is time to divide the property. You and your spouse need to be able to work together on a certain level to accomplish this. If your relationship has deteriorated to the point where you can't communicate with each other, this obviously makes things more difficult. Each situation is different. Consult a competent bankruptcy attorney to find out what works best in your situation. Frequently Asked Questions What is bankruptcy? Bankruptcy is a proceeding under federal law that grants partial or complete relief from the payment of your debts. Upon filing the bankruptcy petition all creditor collection activities are stopped. The Bankruptcy Court enters an order relieving you from responsibility for paying certain debts. What are some situations that might be helped by bankruptcy? If you are experiencing financial difficulty, our firm may be able to help you. We can help if you are: oHarassed day after day by creditor calls oBehind on mortgage payments or facing foreclosure oBehind on car payments or facing repossession oOverwhelmed with credit card debts and never ending minimum payments that barely make a dent in the total balance oHaving your pay check or bank accounts garnished by judgment creditors oIn debt because of a failed marriage or co-signed loans oOverwhelmed with high interest rates on finance company or personal loans oStuck in the "pay check advance" cycle oHave back taxes that require a payment plan What are the different types of bankruptcy? For individual consumers and most businesses, the two types of bankruptcy proceedings available are Chapter 7 and Chapter 13. Chapter 11 is filed by businesses; normally larger corporations that are seeking to reorganize debts and continue operations. What does it cost to file bankruptcy? The filing fees paid to the U.S. Bankruptcy Court are $194.00 for a Chapter 13 filing and $209.00 for a Chapter 7 filing. It is very difficult to determine the amount of attorney fees until we meet with you to go over your specific information, but our fees are competitive with other attorneys in the area. The Court caps Chapter 13 fees and most of the fees can be placed into your three to five year payment plan. With Chapter 7 fees, a convenient payment plan can be set up to meet your needs. Do I have to go to court? Yes. All filers must attend a hearing that occurs approximately 30 to 45 days after the case is filed. However, it is nothing to be nervous about. It does not take place in a traditional "courtroom" and there is no judge present. The hearings normally are held in office building cubicles or other offices. In virtually all Chapter 7 cases this is the only appearance that must be attended and in many Chapter 13 cases there are also no other appearances needed. Will bankruptcy wipe out all my debts? While it is true that most debts are wiped out in a bankruptcy, there are some debts that are not. Examples of debts that are not wiped out are student loans, child support, some back income taxes, property taxes, and traffic tickets or government fines. Secured debts such as cars and homes are not wiped out if you want to keep the property. Will I lose my personal belongings? In the vast majority of consumer bankruptcy cases, debtors keep all of their personal and household belongings. Therefore, it is very unlikely that any of these items will be lost. Will I lose my home equity or retirement funds? No. All home equity and retirement plans such as 401ks, IRAs, and pension plans are considered exempt property and fully protected. Can I keep my house if I file bankruptcy? In a Chapter 7, if you are current on the mortgage payment you will continue making your payments as usual. If you are behind on your mortgage payments, filing Chapter 13 will allow you to keep your home. You will resume making the regular payment and you will be able to catch up the mortgage payments by placing the past due amount in your Chapter 13 payment plan. Can I keep my car if I file bankruptcy? In a Chapter 7 case, if you are current on the vehicle, you will continue making your payments as usual if you sign a "reaffirmation agreement" stating that you want to keep the vehicle and continue making payments. In a Chapter 13 case it may be possible to reduce the payments to a more affordable amount. This is because in some situations the interest rate can be lowered, and also the amount paid back can be either the current Blue Book value of the vehicle or the amount owed on the vehicle, whichever is lower. This is very helpful for someone who owes more on the car than it is worth ("upside-down"). How will I reestablish credit? The first step is to make sure that your credit report is as clean as it is supposed to be. This may take writing the three major credit card bureaus to dispute or provide documentation (such as all of the debts that were discharged in the bankruptcy) to include on your credit report. The second step is to establish a good payment record and have that properly documented on your credit report. A good payment record can be accomplished by making on time payments on your house and cars and by obtaining one or more secured or unsecured credit cards. Even though a major part of bankruptcy is to wipe out credit card debt and keep it that way, it can help reestablish credit to charge small amounts and pay the balance in full each month. When is bankruptcy necessary? If you are burdened with debts you will never be realistically able to repay, ignoring the problem won't make it go away and bankruptcy may be the only way to turn your life around and get a fresh start. Bankruptcy will stop creditor harassment and lawsuits and is often the only way to stop foreclosure on your home or repossession of your automobile. Can I file bankruptcy if I am going through a divorce? Yes. The divorce court can still award custody, visitation, child support and alimony, but the divorce court must wait to divide marital property until the bankruptcy court gives approval. Can bankruptcy help if I owe back income taxes? In a Chapter 13 case, you can pay off your taxes in your payment plan, normally without interest or penalties. There are also instances where the back taxes can be discharged. There are numerous tests that must be met in order for back taxes to be discharged, and they begin with the requirement that the taxes must be at least three years old. What can I do to stop foreclosure? The filing of a Chapter 13 case will stop a foreclosure proceeding immediately. The amount you are behind on your mortgage payments will be placed in your payment plan and paid back over a manageable three to five year period. What can I do to stop my car from being repossessed? The filing of a Chapter 13 case will stop a vehicle from being repossessed and can return a vehicle that has already been repossessed if the case is filed quickly (normally 10 days, but the sooner the better). The vehicle payment will then be paid through your monthly Chapter 13 payment. The payment allocated for the vehicle is often more manageable because the interest rate can often be lowered and if you owe more on the car than it is worth, the car can be paid back based on the current Blue Book value. Does bankruptcy eliminate student loans? There are rare exceptions, but in most cases filing either a Chapter 7 or Chapter 13 bankruptcy case will not eliminate student loans. Many debtors have their student loans deferred during their bankruptcy, but they are not eliminated. What is a Chapter 7 bankruptcy? Chapter 7 bankruptcy can discharge (get rid of) most unsecured debts, for example, credit cards, repossession debt, eviction or broken lease debt, some taxes, past due utilities, and medical bills. Chapter 7 stops garnishments, liens, levies, and lawsuits. Most individuals experiencing financial difficulty will qualify. You will be required to continue making payments on your secured debt (house and car payments, for example). What is a Chapter 11 bankruptcy? Corporations, partnerships, and sole proprietors that want to remain in business and reorganize their finances can file a Chapter 11. A Chapter 11 restructures the debt, either by reducing the debt or by extending the time to repay. A liquidation of all or a portion of the debtor's assets may occur. What is a Chapter 13 bankruptcy? In Chapter 13, some debts may be repaid in an affordable manner. Chapter 13 allows you to modify some loan agreements and even eliminate significant portions of unsecured debt. Chapter 13 allows for the repayment of only what an individual or family can reasonably afford. If your home is in foreclosure a Chapter 13 will stop the foreclosure immediately. You will be provided the opportunity to get caught up on your mortgage payments over a three to five-year period, with reasonable monthly payments. Chapter 13 protects your car from repossession and may also reduce the amount you owe. Even if your car has already been repossessed, your car lender may be ordered to return the car to you if you act quickly. Chapter 13 also stops garnishments, tax levies, and lawsuits. Back income taxes can be paid through Chapter 13 without further interest or penalty and in many cases less than the full amount of the taxes must be repaid. Some back property taxes can also be put into your payment plan. What about credit counseling? Many of our clients find themselves in a worse financial situation after trying credit counseling. There are reports on a regular basis in the media of unscrupulous people entering this unregulated industry. Recently there have been hearings in Congress about this potential consumer fraud. Will creditors continue to call even after filing bankruptcy? Filing of the bankruptcy petition serves as an automatic order to all creditors to stop all collection activity. If your creditors are calling day and night, you may want to consider bankruptcy. Rebuilding Your Credit Your ability to reestablish credit after filing bankruptcy is better than it has ever been. After you get your discharge, you may receive many solicitations from lenders offering to finance homes, vehicles and credit cards. Rebuilding your credit can be similar to starting over from scratch, and starting small may be the easiest option. Remember, you didn't get into financial trouble overnight and reestablishing a positive financial standing takes time. Each situation is different, but we have many clients who receive home and vehicle loans as soon as a few days after they receive their Chapter 7 discharge. Following a Chapter 7 discharge, you do not need anyone's permission to take out loans or make your financial decisions as you wish. While in a Chapter 13 plan, you can sell a vehicle or home or take out a loan for a new vehicle or loan. This does require court permission, but that is rarely a problem. Here are some tips on responsibly and successfully reestablishing your credit: 1.Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle money. 2.Apply for store and gas credit cards where you would normally pay cash. 3.Apply for a secured card where you deposit cash and charge against it. Pay these balances on time and in full each month. The cards offer the purchasing power of a major credit card. Verify that the company issuing the card reports payment histories to one of the three major credit bureaus so you are building a positive payment history. 4.Pay your utility bills and rent on time for at least a year. 5.Take out a small loan (such as a car loan) or credit card and pay it on time. If you can stay current on a major credit card account or small auto loan, this will speed up the process of re-establishing good credit on your own. 6.Look for car dealers and mortgage brokers that advertise as "bankruptcy friendly." Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase. It is important that you make your car payments on time. 7.Stay away from payday loans that are at high interest rates and are a "bad credit" trap. 8.Write a letter to each credit reporting agency explaining the circumstances that lead to filing bankruptcy. 9.Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you do not need. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle. 10.Pay your reaffirmed, pre-bankruptcy debts on time. Use your new accounts in moderation. If you are facing financial difficulty and are considering bankruptcy, consult a competent bankruptcy attorney to find out what works best in your situation.
Rubin & Associates
Copyright © 2006. Rubin & Associates. All rights reserved. Website by Optimized, Inc.
- Homepage
- Why choose
- Resources
- Protection
- Contact Us
- Disclaimer