Entries by Atlanta Bankruptcy Expert and Attorney Lorena Saedi

Georgia Workers Compensation Claims During the COVID-19 Crisis: What You Need to Know

This past Friday I had the chance to catch up and interview, via video chat, my friend and colleague Atlanta workers compensation attorney Julie Poirier about workers compensation claims during the COVID-19 crisis. As a bankruptcy attorney, I have many clients with workers compensation issues that either started before or after they start their case with me. Julie has been an amazing resource for my clients and has helped many of them through the complicated process of seeking workers compensation when they are injured on the job. Julie is a superb litgator and negotiator and always puts her clients needs first. With courts temporarily closing in many practice areas due to this crisis I also wondered how this would affect Georgia consumers who either needed to file a claim or were in the middle of the process.

Watch this clip and Julie will explain in detail how Georgia courts are stepping up to assist workers throught the claims and litigation process. If you have any questions about workers compensation law in Georgia or bankruptcy watch this interview and feel free to reach out to Julie or myself. Below is our contact information and some useful links.

 

Julie Poirer

[email protected]

Phone: (404) 730-2000

 

Lorena Saedi

[email protected]

Saedi Law Group, LLC

Phone: (404) 919-7296

 

HELPFUL LINKS:

Small Business Administration: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Georgia Department of Labor: https://dol.georgia.gov/blog/new-information-filing-unemployment-partial-claims-and-reemployment-services

Mortgage Relief: https://www.forbes.com/sites/advisor/2020/03/20/mortgage-relief-tracker-covid-19-relief-for-homeowners-and-renters/#7c85a7dd2f19

Credit Card Relief: https://www.bankrate.com/finance/credit-cards/issuer-assistance-programs-amid-coronavirus-fears/

Car Payment Relief: https://www.jdpower.com/cars/shopping-guides/automakers-create-coronavirus-car-payment-plans

Student Loan Relief: https://www.ed.gov/news/press-releases/delivering-president-trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Worried About Your Financial Future During this COVID-19 Crisis? Resouces to Help You Plan

As a bankruptcy attorney, I am getting flooded with paniced calls from Georgia consumers who are getting laid off, having their hours reduced, or just plain losing their jobs. While we all keep waiting to see when we can get to “normal” it appears that we are all looking at least another month or two of living with this uncertainty and finanical disruption. For some people, losing their job or even being laid off temporarily is enough to push them into the inability to even cover living expenses. For others, they may be able to weather a month or two before they are unable to to pay their basic bills. No what situation you find yourself, before you panic, sit down and write out your 30, 60, and 90 day financial plan.

TIME FOR YOUR REALITY CHECK:

Prioritize bills – Whether your job has been affected or not, look at all your bills and identify which ones are critical and those that you may not need to pay immediately. Many companies are offering to allow consumer to skip payments for at least 30 days.

Reduce spending– You should start reducing nonessential and discretionary spending in the event things get worse. These expenses can include entertainment, certain food items, and luxuries. Those savings should be stuffed away in a savings account as an emergency fund in the event you lose income in the next few weeks or months.

Reach out to credit card companies – If you’re already losing income and having difficulty paying your debts, reach out to your credit cards providers immediately. Generally, credit card providers offer hardship programs, and some will even provide a small period for nonpayment. Many have now issued statements regarding their willingness to work with card holders who are facing financial strain due to the coronavirus. Please check the links at the bottom of our page for some links to some of the major banks.

Change how you pay student loans – The Department of Education has announced that it will waive interest accrual for deferments and forbearances for the foreseeable future. This will be very helpful for those who have no other option but to suspend their payments temporarily. Private student loans will have different policies so make sure you check.

Small Business Administration: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Georgia Department of Labor: https://dol.georgia.gov/blog/new-information-filing-unemployment-partial-claims-and-reemployment-services

Mortgage Relief: https://www.forbes.com/sites/advisor/2020/03/20/mortgage-relief-tracker-covid-19-relief-for-homeowners-and-renters/#7c85a7dd2f19

Credit Card Relief: https://www.bankrate.com/finance/credit-cards/issuer-assistance-programs-amid-coronavirus-fears/

Car Payment Relief: https://www.jdpower.com/cars/shopping-guides/automakers-create-coronavirus-car-payment-plans

Student Loan Relief: https://www.ed.gov/news/press-releases/delivering-president-trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Update on Tax Deadline Changes and What You Need to Know

This weekend I had the chance to catch up and interview (via video chat of course!) my friend and colleague Atlanta tax attorney Alyssa Maloof Whatley about the recent tax law updates that have been implemented due to the recent COVID-19 crisis. If you are a small business owner or individual that has questions about filing deadlines, how to handle payroll taxes, unemployments claims, and tips on how to proceed during this crisis, Alyssa has some great tips.

Many of my current bankruptcy clients have been reaching out about the recent tax updates as well as questions about the best source of information in regards to unemployment claims, reduction of hours issues, and temporary closure of their small businesss. While it seems like the news changes every day as to when we should expect to get back to a normal life, I am counseling my clients to have a 30, 60, and 90 day plan.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected].

For tax advice and counsel please feel free to go to https://atltaxlawyers.com or email Alyssa at [email protected]

Since tax law and regulations can change constantly, make sure to check out this link for updates: https://content.govdelivery.com/accounts/USIRS/bulletins/28264e0?reqfrom=share

 

Small Business Administration: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Georgia Department of Labor: https://dol.georgia.gov/blog/new-information-filing-unemployment-partial-claims-and-reemployment-services

Mortgage Relief: https://www.forbes.com/sites/advisor/2020/03/20/mortgage-relief-tracker-covid-19-relief-for-homeowners-and-renters/#7c85a7dd2f19

Credit Card Relief: https://www.bankrate.com/finance/credit-cards/issuer-assistance-programs-amid-coronavirus-fears/

Car Payment Relief: https://www.jdpower.com/cars/shopping-guides/automakers-create-coronavirus-car-payment-plans

Student Loan Relief: https://www.ed.gov/news/press-releases/delivering-president-trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Getting a Car Loan and Mortgage Loan in Bankruptcy

Since most Chapter 13 cases last for 5 years, issues can come up that require that they incur debt.  The bankruptcy code is equiped to handle these life issues but as with anything involving the court.

The Bankruptcy Code permits you to incur some kinds of new debt, but you will need to get the court’s permission in many cases. The following explains what kind of debt you may need and how to get it. You can learn more about Chapter 13 and the repayment plan in Chapter 13 Bankruptcy Plan.

Credit You Might Need During Chapter 13

The court might allow you to obtain new credit while you’re in a Chapter 13 plan. Here are some of the types of situations that arise and might cause you to need credit during your plan:

  • A new car. Cars don’t last forever. If yours breaks down, you might need to finance a new one. Getting a loan from a conventional lender is difficult, but there are lenders who specialize in lending to people making Chapter 13 payments. Be prepared to pay a high rate of interest, however.
  • Home. You may need to purchase a home for your family.

Getting New Credit in Chapter 13

The court will permit you to incur new debt for personal, family, or household purposes if it is necessary for you to continue to make payments under your plan. Put another way, if you can demonstrate to the Chapter 13 trustee and the court that you need the credit so you can stay in the plan then the court is likely to allow you to incur it. For example, if you need a reliable car to get to work so you can earn money to make payments to the Chapter 13 plan, the trustee and court are likely to approve the car loan.

In most cases, you need to obtain the court’s permission before you incur substantial debts.

How to Get Permission to Incur Debt to Purchase a Car

The procedures you must follow to ask the trustee and court for permission to incur new debt vary, so check with your Chapter 13 trustee or attorney to find out the specific procedures required in your bankruptcy court. Below we’ve outlined a typical process for getting a new car loan.

  • Get a Buyer’s Order from a Dealership: The first step is finding a dealership who are willing to finance an open bankruptcy loan. The dealer will draw up a buyer’s order with the details of the loan for the borrower to take to their attorney for a motion to be filed. This should include the highest interest rate possible and “or similar” next to the vehicle choice – otherwise, the process can be ruled invalid if the actual loan doesn’t match what’s on the buyer’s order.
  • Your Bankruptcy Attorney will file a Motion with the Court: Next, the borrower brings the buyer’s order to their attorney along with their reasons for needing a car.  A “Motion to Incur Debt” will be filed with the court, which includes a proposed adjusted repayment plan that factors in the auto loan. The client will also need to show that they can afford this extra strain on their budget.
  • The Court Makes a Decision: The creditors and other parties involved in the repayment plan also receive the motion and are given a chance to object. There may be a hearing the borrower has to attend to justify the loan. If the court approves the motion, they issue an “Order to Incur Debt”.

The borrower can then take the court order – the necessary authorization from the court – back to the same dealership to complete the purchase.

Keep in mind that the process could take up to a month or more, so try to plan ahead.

How to Get Permission to Incur Debt to Purchase a Home

  • Provide your attorney with a copy of the Purchase and Sale Agreement, proposed HUD statement, and Loan Agreement with the Lender: The first step is finding a mortgage company that will finance your loan while in an open bankruptcy loan. Once the terms of the loans have been determined you will need to provide your attorney a copy of the loan agreement.  You need to make sure that your real estate agent knows you are in a bankruptcy because the purchase and sale agreement needs to have language that the agreement is contigent on the approval of the bankruptcy court.  Your agent also needs to set closing AT LEAST 45-60 days out to allow this process to be completed. Your attorney will need a copy of the purchase and sale agreement and the proposed HUD statement to show who is getting paid what at closing.
  • Your Bankruptcy Attorney will file a Motion with the Court: A “Motion to Incur Debt” will be filed with the court and a hearing scheduled. The client will also need to show that they can afford this extra strain on their budget.
  • The Court Makes a Decision: The creditors and other parties involved in the repayment plan also receive the motion and are given a chance to object. There may be a hearing the borrower has to attend to justify the loan. If the court approves the motion, they issue an “Order to Incur Debt” and the loan can close.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

How Many Times Can You File For Bankruptcy Protection?

Sometimes situations can (and do) arise, where an individual has a need to eliminate debt utilizing the US Bankruptcy Code a second or even third time after previously filing. The key to understanding how many times you can file bankruptcy in Georgia is that there is no limit on how many times you can file bankruptcy, but there is a time limit set on bankruptcy discharges.

If your previous case resulted in a successful discharge of your unsecured debts, then the time limit allowed between discharges will depend on the type of bankruptcy you filed originally and the type you now intend to file.

Chapter 7 to Chapter 7 (8 years) – If you previously filed a Chapter 7 bankruptcy and received a discharge and are now looking to file a Chapter 7 case again, you have to wait eight years has passed from the date your prior case was filed.

Chapter 7 to Chapter 13 (4 years) – If you previously received a Chapter 7 discharge and are now looking to file a Chapter 13 case, you have to wait four years after the date of filing your original Chapter 7. Keep in mind, this time limit only refers to receiving another discharge. There may be a circumstance where you would want to file a Chapter 13 after a Chapter 7 without the intention of obtaining a discharge. Perhaps you got behind on secured payments, like a car loan or real estate mortgage after your Chapter 7 and need the protection of the bankruptcy court to stop a foreclosure or repossession. Perhaps your student loan payments are more than your monthly income can support and filing a Chapter 13 can give you relief by putting you in a payment plan without needing a second discharge.

Chapter 13 to Chapter 13 (2 years) – If you previously filed a Chapter 13 case and received a discharge and are looking to file a Chapter 13 case again, you have to wait at least two years from the filing date of the previous case.

Chapter 13 to Chapter 7 (6 years) – Finally, if you received a Chapter 13 discharge and now are considering filing a Chapter 7 case, you need to wait six years from the first filing date. This waiting period can be waived if you paid back 100% to your unsecured creditors in your Chapter 13 plan (or in some cases where you paid back 70% of your total debts) and the original case was found to be in good faith.

Bankruptcy is not only an excellent way to eliminate debt but is also designed for individuals to exit bankruptcy more fiscally minded and responsible. Barring this, life happens, and even responsible individuals can be struck with a divorce, job loss, medical bills, or other unexpected expenses or reductions in income.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Cramming Down a Car in Bankruptcy

“Cramdown” is an informal term for one of the most used benefits of Chapter 13 bankruptcy. You won’t find the term in the federal Bankruptcy Code, yet lawyers and judges use it all the time. A “cramdown” of an auto loan is a major benefit available in Chapter 13 that is not available in Chapter 7 bankruptcy.

It refers to a procedure provided under Chapter 13 law for legally rewriting a vehicle loan.  It results, usually, in reducing both the monthly payment and the total you pay for the vehicle. The more your vehicle is “underwater”—worth less than what you owe on it—the more you benefit from cramdown.

If your vehicle is worth less than you owe, or you are paying excessive interest, cramming down a car loan in Chapter 13 bankruptcy can reduce your balance, cut your interest rate, and slash your payment. 
Bad car loans can be devastating financially. As a bankruptcy attorney here is Atlanta, Georgia I have seen clients with auto loans more than two times the value of their vehicles and at exorbitant interest rates. In addition, many credit union’s will cross-collateralize car loans with consumer loans like credit cards which leaves many consumers with liens far above the value of their vehicles. Cramming Down the Balance on an Auto LoanCramming down your car loan balance in Chapter 13 reduces the balance to the vehicle’s fair market value. You pay the new lower amount in 36 to 60 months through your Chapter 13 plan. Although a creditor may object to the value that you propose, courts will generally accept the average Bluebook or NADA value. Any remaining balance becomes an unsecured debt like your credit cards, medical bills, etc. Because many Chapter 13 debtors pay only a small portion of their unsecured debt (often cents on the dollar), cramming down the balance can save you thousands of dollars.Cramming Down the Interest Rate on an Auto LoanThe bankruptcy code also allows debtors to cram down the interest rate on a vehicle loan. Here in the Northern District of Georgia, a rate of one or two points over prime is standard. The current prime rate(as of the date of this post) is 4.75%. Therefore, the court will allow a cram down of the interest rate in the range of 5.75% to 6.75%. If you are paying a high-interest rate, even a drop of a few points can make a significant difference.

The 910-Day Rule

To be eligible to cram down the balance on an auto loan, you must have purchased the vehicle at least 910 days (a little over 30 months or 2.5 years) from the date that you filed your Chapter 13 bankruptcy. The 910-day rule also applies to cramming down interest rates.

Stretching Out Payments on an Auto Loan

Another advantage of Chapter 13 bankruptcy is that you can stretch out your payments over the course of your 36 to 60-month plan, regardless of whether you are eligible for a cramdown. For example, if you have 36 months left on your auto loan, by placing it in a 60-month Chapter 13 plan, you can spread your loan out over 24 more months and significantly reduce the payment.

Making the Cramdown Permanent. You must complete your Chapter 13 plan to make the cramdown of the balance an interest rate permanent. If you do not complete your Chapter 13 plan, the original balance and interest rate may be restored and back interest added to the balance.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Debt Settlements vs. Bankruptcy

DEBT SETTLEMENT VS BANKRUPTCY: WHICH WILL GET ME OUT OF DEBT FASTER?

When someone’s finances become too much to handle, it’s common to look for other ways to manage debt.  If you fall into that category, you might find success negotiating a lower payoff with creditors by going through a debt settlement company.

When you are plagued with overwhelming debt, you’re likely contemplating the pros and cons of debt settlement vs bankruptcy. Each option offers some advantages, but many disadvantages as well. But, before you decide, it’s wise to understand the advantages of both bankruptcy and debt settlement so that you can make an informed decision. Here’s a short introduction on the benefits and drawbacks of debt settlement vs bankruptcy, and some information on helpful alternatives.

WHAT IS BANKRUPTCY?

In bankruptcy, you’ll enter a legally binding process that will erase most of your debt and/or structure any repayments you have to make. Bankruptcy will effectively get rid of (discharge) many types debts, but not necessarily everything that you owe. You’ll likely want to start by reviewing your debts, and determining whether bankruptcy would provide the relief you need.

WHAT IS DEBT SETTLEMENT?

In a debt settlement program, you’ll stop paying your bills to creditors and when the amount of your back payments is quite sizable, you’ll offer to settle your debt for some portion of the total amount you owe.

A legitimate debt settlement company will help you set up a plan to manage your debts. Typically, you’ll make regular payments to the company, who will hold the funds in escrow while negotiating with your creditors.

However, you REALLY need to investigate the debt settlement company before you sign up because the debt settlement industry is rampant with scam artists. Even though they promise to keep client funds in escrow to pay settled debts, many don’t, and when the company folds, clients learn that the company has used their deposit to pay for marketing campaigns and operations.

Some red flags to look out for:

  • High fees. You can expect the company to take their fee as a percentage of the money they save you when they negotiate a settlement with a creditor. A majority of your monthly payment may go to the debt consolidation company instead of your creditors. Sometimes the payments are structured in a way that you pay the debt relief company’s upfront fees first, while your credit report gets hit with a missed payment notification every month. This drives down your credit score even while you’re trying to settle your debts.
  • Promises to fix your credit score. Debt settlement companies cannot fix your credit score by removing negative information unless it’s inaccurate. Any promises to the contrary are based on a process that requires the company to dispute the information even if it’s correct.  Eventually, the correct negative information will pop back up on your report.
  • Guaranteed results. Debt settlement companies cannot ensure that a particular creditor will settle any debt for any amount. None of your creditors HAVE to enter into a debt settlement deal. It is 100% voluntary on their part.

There are some good companies out there but you have make sure you do your homework!

DEBT SETTLEMENT VS BANKRUPTCY: THINGS TO CONSIDER

How Long Does the Process Take?

  • Bankruptcy. A Chapter 7 bankruptcy usually takes about four to five months. In a Chapter 13 case, you’ll propose a repayment plan that can last from three to five years, depending on whether your family income falls below or above the median income for your state.
  • Debt settlement.There’s no set time. It will depend on how long it takes you to negotiate a settlement amount and gather or save the money needed to pay it.

How Much Will It Cost?

  • Bankruptcy. You can expect to pay a court filing fee of $310 for Chapter 13 bankruptcy and $335 for Chapter 7 bankruptcy.  Attorneys’ fees that vary by region and complexity of the case and credit counseling and debtor education courses for $15-$30. You’ll also have to pay into a three- to five-year repayment plan in Chapter 13 bankruptcy.
  • Debt settlement. The cost will vary depending on the result of your negotiations. Most creditors eventually settle for 40% to 60% of the balance but will likely require you to pay that in a lump sum.

Protection from Creditor Action

  • Bankruptcy. Creditors cannot choose whether or not they participate in the bankruptcy case. It applies to all. Creditors cannot take action to collect their debts while you are under the protection of the bankruptcy court.
  • Debt settlement. Creditor participation is voluntary. Until you reach a settlement, creditors are free to take whatever collection action they’re allowed by law, including filing a lawsuit. Creditors can cancel the agreement at any time. Sometimes creditors change their minds and decide to pursue other legal remedies to collect the debt, even if you are current on your payments to the debt consolidation company.

Effect on Credit

  • Bankruptcy. Chapter 7 bankruptcy will appear on your credit reports for ten years from filing. A Chapter 13 case will remain on your credit report for seven years after filing.
  • Debt settlement. Negative information about your accounts will remain on your credit report for seven years. Settling a debt instead of paying the full amount can affect your credit scores. When you settle an account, its balance is brought to zero, but your credit report will show the account was settled for less than the full amount.

Tax Consequences

  • Bankruptcy. You won’t have to pay tax on a debt discharged in bankruptcy. The Internal Revenue Service doesn’t treat this type of debt as income.
  • Debt settlement. The creditor can report the unpaid debt on IRS Form 1099-C (cancellation of debt), which the IRS will treat as income unless certain conditions are met. Therefore, you stand to pay income tax on the forgiven amount.

GETTING ADVICE ON DEBT SETTLEMENT VS BANKRUPTCY.

Neither bankruptcy nor debt settlement is a simple process. That’s why, when considering debt settlement vs bankruptcy, it’s important to seek financial advice from a certified credit counselor. Bankruptcy and debt settlement are just two options to consider when you’re trying to deal with the debt monster. If you’re strapped financially because of a job loss or unexpected illness, bankruptcy may be the only light at the end of the tunnel. Debt settlement, on the other hand, may be the better choice if you want to minimize the impact on your credit and you think you can repay your debt in a few years. Weighing the pros and cons of each option carefully can help you find the best fit for your situation

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer

Top 5 Reasons People Are Afraid to File for Bankruptcy Protection

Many people in the United States are afraid to file for bankruptcy because they do not understand that most people who file are financially better off in the long run. After filing, most people see their debt erased and their credit scores improved.  Despite all these facts, people are still afraid to file because they think that it means they’re admitting they failed in some way. Nothing could be further from the truth. The biggest reason people file for bankruptcy is that they experience some sudden financial shock. These include job loss, medical illness, divorce, small business failure, and family emergency. Most people file for bankruptcy because they experience an event that occurs at no fault of their own.

After almost 20 years as a practicing bankruptcy attorney and helping thousands of Georgia consumers through Chapter 7 and Chapter 13 bankruptcy cases, here are the top 5 reasons people are afraid to file bankruptcy in order to get a fresh start on their life.

Reason #1: If I file for bankruptcy I am a failure and I am better than that.

Letting go of your ego and your pride is hard. Plain and simple it is really hard to admit that you have hit a wall and need help. Some people are so proud, they will never accept a handout. Whether from friends, family, or the government, they would rather struggle than admit that they need charity. That is just not a good way to look at life. Government programs, including bankruptcy, exist to help people in their time of need, and these safety nets can be an essential way for some people to get back on their feet.  Our society is one that is set-up to make sure people don’t fall through the cracks.

Drowning in debt and being harassed by your creditors can prevent you from moving forward.  Does your pride and ego come before your family’s well being? Is it better to struggle to pay off credit card debt with 29% interest than save for your child’s college? While we all want to honor our debts, life happens and if you are unable to provide for yourself and your family then you need to take whatever steps necessary to correct that. If bankruptcy will allow you to get back on track then you need to put your ego to side and analyze this situation from a logical prospective. 

Reason #2: If I file for bankruptcy it will ruin my credit and I will never have good credit again.

It’s true that any negative information on your credit report will remain on your credit report for ten years from the date that you file your case.   However, it is not true that, simply because a bankruptcy appears on your credit report, you’re credit is destroyed or “ruined” for ten years.   Bankruptcy helps people resolve financial problems.   If you can’t pay your debts, your credit rating is probably damaged already and will continue to get knocked around until your do something about your debt. And if you’re up to your eyeballs in debt, who would ever give you a loan?   Don’t let your credit rating get in the way of getting help.

It is pretty much common knowledge that filing for bankruptcy is going to damage your credit score.  How much it will lower your score is hard to say; I have noticed that for those bankruptcy clients who have low scores when we file their case (550 or lower) that the bankruptcy doesn’t lower the score that much more – typically another 30-50 points.  However, for those clients who have decent credit (700 or higher) they usually take a hit in the range of 100 – 150 points.  I don’t know why this is or what the formula is for calculating this, but this is what I have observed in the hundreds of bankruptcy cases I have filed.

While bankruptcy will absolutely lower your credit score, most of my clients are surprised to see that their score will actually increase within 12 months of their bankruptcy case being discharged.  Most who look to file for bankruptcy are behind on their bills.  When you fall behind on your credit card payments each month the credit card company lets the credit bureaus know that you are late.  This lowers your score and continues to hit you month after month.

The filing of a bankruptcy stops the bleeding.  You are no long getting hit each month with a “late”.  You will get hit with a bankruptcy on your credit report, but that is a one time thing; it is not re-reported each month.  The further you get away from your filing date the better you will be.

Reason #3: If I file for bankruptcy I will never be able to purchase a home.

Most lenders will approve people for mortgages two after your case is over.   My mortgage friends now tell me that they can put people in a home as soon as 6 months out of bankruptcy.   Your credit will improve quickly after bankruptcy because your debt to income ratio is now amazing.   If you have financial problems, deal with them. Bankruptcy may be one way to do that.  

Reason #4: If I file for bankruptcy my friends, family, and neighbors will find out.

I must recite “Your bankruptcy is not Googleable” about 10 times a day.   Unless you’re famous, chances are very good that the only people who will know about a filing are your creditors.  While bankruptcy is of course a public record, those records are stored on a system that requires a username and password. Unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed.  Unless your friend or neighbor also files bankruptcy and you see them at court, they’ll almost certainly never find out you filed bankruptcy. 

Reason #5: If I file for bankruptcy I will lose my job

Your employer cannot fire you just because you filed for bankruptcy. The law prohibits both government and private employers from terminating your job due to your bankruptcy filing.  

The law also prohibits discrimination with respect to your employment because of your bankruptcy. While this does not necessarily cover hiring decisions, it does mean that if you are already employed, you can’t be treated differently just because you filed for bankruptcy. It doesn’t matter if you work for a government agency or a private company. The law applies to both.

Bankruptcy is a core feature of American history. Our Founding Fathers believed in allowing everybody to get a fresh start because they saw that people in England were sometimes thrown in prison for their debts. They wanted to create a better option that went more in line with what it means to be American.  The United States is also full of success stories of people who filed for bankruptcy and then were able to turn around their lives. Here’s a list of famous authors, artists, businessmen, athletes, and actors who, too, have dealt with financial struggles.

Thomas Jefferson: One of our founding fathers filed bankruptcy several times. While he helped create an inspired form of government, he was very poor with his money, spending large amounts on food and wine. P.T Barnum: Though he is best known for being the amazing showman who co-founded “Barnum and Bailey Circus”, he dealt with many financial struggles before his rise to fame. He filed for bankruptcy in 1871 due to bad business investments before organizing “The Greatest Show on Earth” in 1881.Mark Twain: Otherwise known as Samuel Langhorne Clemens, he invested most of his money in a contraption called the Paige Compositor that was created as an automatic typesetting machine before becoming the writer we know and love today. When this venture did not prove to be fruitful, he filed for bankruptcy in 1894 to discharge his debts. He did not forget his debts, however. He traveled through Europe lecturing for four years in every major city and used this money to repay all of the people he owed money to.Henry John Heinz: Filed for bankruptcy in 1875 after a year of poor harvest, where he could not meet the growing demands for his condiment products like horseradish, pickles, and sauerkraut. After his financial recovery, he introduced a new product to the market, tomato ketchup, and his company to this day is still very popular.Abraham Lincoln: Due to a failed business the eventual 16th President of the United States filed bankruptcy in 1833. Bankruptcy laws were much different than we have now and he was forced to repay his debts over 17 years.Milton Snavely Hersey: Mr. Hersey started four candy companies that failed before creating Hersey’s Food Corporations. He filed bankruptcy after his candy companies failed.

Henry Ford: The automobile manufacturer had two failed attempts at automobile companies before creating the name we all know today. He filed for bankruptcy after his first company failed due to a disagreement with a business partner. 

Jerry Lee Lewis: Though a famous musician, he managed to dodge the IRS for quite some time. Having racked up quite a bit of debt, he filed for bankruptcy in 1988 when the IRS then seized his cars, furniture, piano, and even collected concert ticket sales.

Burt Reynolds: This famous actor filed for bankruptcy in 1996 after his ugly divorce from Loni Anderson, having piled up over $10 million in debt. Despite his bankruptcy, losing his dinner theater and his ranch, he has continued on to be a famous actor and won a Golden Globe for Best Supporting Actor in Boogie Nights.

Mike Tyson: After spending nearly $300 million of his earnings, he filed for bankruptcy in 2003 having racked up $27 million in debt.

Larry King: This famous actor filed for bankruptcy in 1978 after a Wall Street scandal. Fortunately for him, he was able to get back on his feet with his show Larry King Live and make a full financial recovery.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

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How Co-Signers Are Affected in Bankruptcy: The Co-Debtor Stay

What Happens to Cosigners and Joint Account Holders in Bankruptcy?

When you file for bankruptcy protection, the bankruptcy discharge only eliminates your liability on discharged debts.   Your lender or credit provider can still pursue your cosigners and joint account holders to recover monies still owed on their loan. The extent to which cosigners or joint account holders can benefit from your bankruptcy depends on whether you file for Chapter 7 or Chapter 13 bankruptcy.
When unforeseen life events happen that cause financial hardships, a bankruptcy might be just the thing you need to get back on track. When considering a bankruptcy, the issue of co-debtors will arise.  If the debt is co-signed by spouses who are filing a joint bankruptcy petition, the issue of the co-debtors and bankruptcy is not a problem as both debtors will receive a discharge of the debt. However, if only one co-debtor files bankruptcy, this could leave the other co-debtor responsible for the entire debt.

Co-Signers and Chapter 7 Bankruptcy

As you most likely already know, co-debtors do not need to be spouses.  You can have co-debtors that include parents, friends, other relatives, business partners – anyone who agrees to co-sign debt for another person.  If only one co-signer files for bankruptcy under Chapter 7, Chapter 7 bankruptcy does not provide any protection to cosigners or joint account holders. When you file for Chapter 7 bankruptcy, you are protected by the automatic stay. However, your creditors are free to go after your cosigners and joint account holders to collect their debts. In fact, since creditors are prohibited from pursuing you, they will direct all collection efforts towards your cosigners and joint account holders.
Once the Chapter 7 case has been closed and the debtor receives a discharge, the debtor’s legal responsibility for the co-signed debt is released.  Unfortunately, the co-signer is not released from his or her legal liability for the debt and the creditor can legally pursue the co-signer for the entire balance due on the account.  If the debt is not paid, the creditor may file a lawsuit to seek a monetary judgment against the co-debtor and also report on their credit. In this case of co-debtors and bankruptcy, the debtor can voluntarily choose to pay the co-signed debt to protect the co-signer or the co-signer can choose to pay the debt in order to protect themselves from action by the creditors.
If you wish to remain liable on an existing debt after bankruptcy, you have the option to reaffirm it by signing a new agreement with your lender. The most common type of debt people reaffirm is their car loan because they wish to keep their car after bankruptcy. If you have cosigners or joint debtors on an account, reaffirming that debt can alleviate some of their burden by keeping you on the hook.

Co-Signers and Chapter 13 Bankruptcy

If the debtor files under Chapter 13, the protection afforded to the debtor is extended to the co-signer however, this is only for consumer debts.  If the co-signed debt is a consumer debt, the co-debtor is protected as long as the debtor remains in bankruptcy.  In most cases, when the debtor completes the bankruptcy plan and receives a discharge, the co-signer will be absolved of the debt if the debt was paid in full through the plan.  Please note however that if the debtor did not repay all creditors back in full then the co-debtor will still be responsible once the case is discharged. When you file for bankruptcy, your discharge only wipes out your obligation to pay back discharged debts. This means that if you have a cosigner or a joint account with another person, he or she will typically remain on the hook for that debt.  If you are attempting to cram down a car or other asset in bankruptcy you need to discuss this with your attorney because if there is a co-signer on this debt that is NOT filing a bankruptcy then this cram down will be for nothing when you exit your case.  

The Chapter 13 Codebtor Stay Protects Co-signers

If you file for Chapter 13 bankruptcy, a codebtor stay immediately goes into effect and protects cosigners and joint account holders on all consumer (non-business) debts. As long as the codebtor stay is in effect, your creditors are prohibited from attempting to collect their debts from your cosigners or joint account holders even though they did not file for bankruptcy themselves. Remember that the Chapter 13 codebtor stay will end if your case is closed, dismissed, or converted to a Chapter 7 bankruptcy.
It is always a good idea to contact an attorney who is knowledgeable about the ins and outs of Chapter 7 and Chapter 13 bankruptcy when you are considering filing a bankruptcy case.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

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How Does a Chapter 13 Bankruptcy Work?

A chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” (1) If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. § 1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

Advantages of Chapter 13

Chapter 13 bankruptcy is a debt consolidation and repayment plan that lasts 3-5 years. The length of the payment plan can be discouraging for some people and Chapter 7 bankruptcy may seem initially more preferable. However, Chapter 13 has many advantages, including some that are not available in a Chapter 7, and it may be the best solution for your long term financial health.

Some of the advantages of a Chapter 13 bankruptcy include:

  • allowing you to pay what you can afford,
  • discharging debts you do not pay in full,
  • saving your home from foreclosure, and
  • removing a 2nd or 3rd mortgage (“lien stripping“).

Chapter 13 allows you to make one monthly payment to a bankruptcy trustee that covers all of your debts. Your payment is determined by your budget, which you put together with your bankruptcy attorney for approval by the Bankruptcy Court. Your budget allows you to pay what you can afford.

Your budget is a combination of your actual monthly expenses, IRS standards, and standards of the Chapter 13 Trustee. Your income minus the above combination of expenses results in the amount you pay to a bankruptcy trustee every month. The amount you pay to the trustee is also called your discretionary income

Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

Chapter 13 Eligibility

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $394,725 and secured debts are less than $1,184,200. 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.

An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

How Chapter 13 Works

A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling and proof of all sources of income 60 days prior to the case being filed. The debtor must provide the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:

  1. A list of all creditors and the amounts and nature of their claims;
  2. The source, amount, and frequency of the debtor’s income;
  3. A list of all of the debtor’s property; and
  4. A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household’s financial position. If your spouse is not going to provide you with their financial information then you cannot file bankruptcy because you will not be able to complete the budget information.

When an individual files a chapter 13 petition, an impartial trustee is appointed to administer the case. The chapter 13 trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors.  The Chapter 13 trustee cannot answer questions about your case.  That is not their job.  If you have questions about your case you need to contact your attorney.

Filing the petition under chapter 13 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. Filing the petition does not, however, stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Chapter 13 also contains a special automatic stay provision that protects co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a “consumer debt” from any individual who is liable along with the debtor. Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose. If a company is a co-debtor whoever, the co-debtor stay will not apply to the company and collection action can continue.

Individuals may use a chapter 13 proceeding to save their home from foreclosure. The automatic stay stops the foreclosure proceeding as soon as the individual files the chapter 13 petition. The individual may then bring the past-due payments current over a reasonable period of time. 

Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. Most of the time, creditor do not appear at this hearing.  If they have objections they will just file them with the court and then contact the attorney to try to resolve them. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan. If a husband and wife file a joint petition, they both must attend the creditors’ meeting and answer questions.

In a chapter 13 case, to receive money from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has 180 days from the date the case is filed file a proof of claim.

At the end of the 341 hearing the trustee will announce their objections so that the debtor and their attorney know what needs to be resolved before the confirmation hearing.

The Chapter 13 Plan and Confirmation Hearing

Unless the court grants an extension, the debtor must file a repayment plan with the petition or within 14 days after the petition is filed. A plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically biweekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment on their claims.

There are three types of claims:

  1. Priority: Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding.
  2. Secured: Secured claims are those for which the creditor has the right take back certain property (i.e., the collateral) if the debtor does not pay the underlying debt.
  3. Unsecured: Unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor.

If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral (e.g., a car loan), and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral (which may be less due to depreciation). Payments to certain secured creditors (i.e., the home mortgage lender), may be made over the original loan repayment schedule (which may be longer than the plan) so long as any arrearage is made up during the plan. 

Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee. 

No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors will receive 28 days’ notice of the hearing and may object to confirmation. 

If the court confirms the plan, the chapter 13 trustee will distribute funds received under the plan.  If the court declines to confirm the plan or the modified plan and instead dismisses the case, the court may authorize the trustee to keep some funds for costs, but the trustee must return all remaining funds to the debtor (other than funds already disbursed or due to creditors). 

Making the Plan Work

The provisions of a confirmed plan bind the debtor and each creditor. Once the court confirms the plan, the debtor must make the plan succeed. The debtor must make regular payments to the trustee either directly or through payroll deduction, which will require adjustment to living on a fixed budget for a prolonged period. Furthermore, while confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor may not incur new debt without consulting the trustee, because additional debt may compromise the debtor’s ability to complete the plan. 

A debtor may make plan payments through payroll deductions. This practice increases the likelihood that payments will be made on time and that the debtor will complete the plan. In any event, if the debtor fails to make the payments due under the confirmed plan, the court may dismiss the case or convert it to a liquidation case under chapter 7 of the Bankruptcy Code. The court may also dismiss or convert the debtor’s case if the debtor fails to pay any post-filing domestic support obligations (i.e., child support, alimony), or fails to make required tax filings during the case.

The Chapter 13 Discharge

A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor: (1) certifies (if applicable) that all domestic support obligations that came due prior to making such certification have been paid; (2) has not received a discharge in a prior case filed within a certain time frame (two years for prior chapter 13 cases and four years for prior chapter 7, 11 and 12 cases); and (3) has completed an approved course in financial management (if the U.S. trustee or bankruptcy administrator for the debtor’s district has determined that such courses are available to the debtor). 11 U.S.C. § 1328. The court will not enter the discharge, however, until it determines, after notice and a hearing, that there is no reason to believe there is any pending proceeding that might give rise to a limitation on the debtor’s homestead exemption.

The discharge releases the debtor from all debts provided for by the plan or disallowed (under section 502), with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.

As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime. To the extent that they are not fully paid under the chapter 13 plan, the debtor will still be responsible for these debts after the bankruptcy case has concluded. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for restitution or damages awarded in a civil case for willful or malicious actions by the debtor that cause personal injury or death to a person will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. §§ 1328, 523(c); Fed. R. Bankr. P. 4007(c).

The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. 

It is always a good idea to contact an attorney who is knowledgeable about the ins and outs of Chapter 7 and Chapter 13 bankruptcy when you are considering filing a bankruptcy case.

If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at [email protected]

#bankruptcy #lawyer #attorney #foreclosure #debt #garnishment #repossession #lawsuit #creditcarddebt #freshstart #Atlantabankruptcyattorney  #Atlantabankruptcylawyer