What is Bankruptcy?
Bankruptcy is a federal legal process whereby the United States Courts forgive consumer and corporate debt in exchange for forthright and complete disclosure of your financial profile and distress. All successful bankruptcy outcomes are predicated on honest assessment and evaluation. We've created our online Bankruptcy Questionnaire to help you organize your thoughts and information and to allow us evaluate your financial image and prepare for your consultation.
Consumer Bankruptcy:
When an individual experiences extreme financial distress and delinquency in payments to creditors, one option for debt-relief may be to declare bankruptcy. In this process all or some of an individual's debt can be relieved, while maintaining personal assets like your home, your car and personal possessions. Bankruptcy is not the best option for everyone, but for many, it can provide a fresh financial start. Dave can analyze your situation and advise you whether bankruptcy is the correct path for you and, if not, help with other stress relieving debt solutions.
Commercial Bankruptcy:
Like individual consumers, in this economy many businesses are finding it harder and harder to meet their monthly overhead and expenses and pay off debts. It is an equally uncomfortable position for business entities to find themselves in as it is for individuals. Bankruptcy can provide relief from obligation to pay all or some of the debts acquired by a business. While this is only one solution, Dave can advise businesses whether bankruptcy is right for them and to create debt relief plans that are manageable.
How Does Bankruptcy Work?
In very simple terms, filing bankruptcy stops foreclosure actions and other creditor collection activities through the Court's issuance of what is known as an "automatic stay". Ultimately, the Bankruptcy Court will issue an order which eliminates or otherwise adjusts responsibility to pay certain debts accumulated by an individual or business.
Bankruptcy Credit Counseling Requirements:
In 2005 the US Congress undertook bankruptcy reformation and established the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The law requires credit counseling from an approved credit counseling agency as a prerequisite to filing bankruptcy. Dave will help educate you about these new counseling requirements and help you understand how this counseling can be an important step in achieving financial health and well being.
Is Bankruptcy Right for Me?
We understand that your sense of pride, or guilt, may prevent you from considering bankruptcy. These emotions may prevent you from contacting a lawyer to discuss the options to help lift you out of financial desperation. Nearly 2 million people filed bankruptcy in 2010, the highest number in recorded history. Our bankruptcy laws have been structured to help honest, hard working people suffering from financial trauma and economic devastation. Dave can assess your situation and help you to determine the best course of action. Understanding your options is essential to making strong decisions. We will help you with this in a dignified and respectful manner. Your initial consultation is cost and risk-free.
Why are so many Americans turning to Bankruptcy Debt Relief?
One of the goals of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act was to sway the number of bankruptcies filed in the U.S., indeed making some elements of filing for bankruptcy more difficult for consumers, providing greater protections for creditors in many regards. The Act was successful in lowering the number of bankruptcy declarations nationally in 2006 and early 2007. But as the economy became sluggish leading to the 2008 crisis, the number of filings rose. 2010 saw a record year for bankruptcy filings.
High unemployment and even higher foreclosure rates have required court systems nationally to respond in unprecedented ways, with many states establishing foreclosure courts. Aside from economic matters facing everyone, financial distress can be a natural result of uncontrollable circumstances. Medical emergencies, injury and disability, loss of a once stable job and failed businesses, divorce or death of a spouse - all of these can be initiating factors to financial distress.
We are all on this train together. Bad things happen to good people. Bankruptcy may be a good option for addressing and correcting insurmountable debt. There are options and we can help you work through it.
How Does Bankruptcy Effect My Credit Score?
A negative effect on your credit score should not be the sole factor in a decision to file bankruptcy. Many times, people wait too long to declare bankruptcy in fear of damaging their credit report. You might be surprised to know that declaring bankruptcy can be a very positive start towards repairing your credit rating. Most people in serious, embedded financial crisis have credit scores that reflect that situation. Experian spokesman, Rod Griffin says, "In virtually every instance, the consumer will already have repayment problems such as late payments, very high balances, charged-off accounts or collection accounts".
According to John Ulzheimer of Credit.com Educational Services, some consumers may even see a slight rise in their credit scores following bankruptcy. When bankruptcy is declared, your credit report is largely wiped clean. High balances, late payments and records of unpaid debts can be similarly discharged, though marked as part of your bankruptcy settlement. Bankruptcy will have an effect on your credit score, there is no doubt of that. But, if you've been struggling, the drop may not be as much as you would expect.
Declaration of bankruptcy could help your credit score from a long term perspective as well. Fair Isaac, the company that calculates the most widely used credit score, FICO, developed formulas that grade an individual's credit standings as compared to other consumers in similar financial positions. So, your FICO score is determined based on how you compare with other individuals who have filed bankruptcy. Fair Isaac categorizes consumers into 10 groups for calculating credit scores. Bankruptcy filers are one of those 10 groups. According to Fair Isaac spokesperson, Craig Watts, "It's a much fairer comparison. You're not compared with people with rosy, perfect reports."
Like everything else, what happens after your fresh start begins is up to you. Building credit will require consistent effort, but an enviable credit rating can be obtained after filing bankruptcy. You may not be able to obtain a perfect 850 while your bankruptcy stays in your report, but with consistent good credit management, achieving a score in the 700s is possible, and within a shorter time than you might think!
What Type of Bankruptcy Should I File?
The type of bankruptcy filing that is correct for you is not a decision to be taken lightly. Many elements of the bankruptcy process are unchangeable once decided, and qualified legal advice following a thorough financial assessment is decidedly the best path to follow. With that said, the three main types of bankruptcy are briefly outlined here. A video describing elements of different types of bankruptcy produced by the US Court System is provided here for your review as well.
Chapter 7 Bankruptcy
Broadly stated, Chapter 7 is a liquidation bankruptcy that eliminates many of your debts while allowing you to keep most, if not all, of your personal property. The process is faster than you might think, and once its started, is administrative in nature. The requirements on your time after filing are quite minimal.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, your debts and back payments are reorganized in a manner where you can pay them from disposable income over a period of time. Chapter 13 delivers a repayment plan that will describe in detail how your debts and delinquent payments will be paid, and which debts, if any, will be discharged.
Chapter 11 Bankruptcy
Chapter 11 Bankruptcy is mostly designed to help businesses reorganize their debt, but some individuals that do not qualify for Chapter 13 reorganization may fall into the Chapter 11 category. The law mandatorily requires a corporation to obtain legal counsel to represent it in the bankruptcy and restructuring process.
What Exemptions Are Available in North Carolina?
North Carolina recently expanded its statutory consumer bankruptcy exemptions to include $35,000 of homestead equity, $3,500 exemption toward the value of a motor vehicle, $5,000 exemption toward the value of personal household items, and a $5,000 exemption towards other property commonly considered a "wildcard". Typically, filing bankruptcy jointly for families doubles these deduction limits. There are a number of strategies available to maximize these exemptions. Dave Hillier can help ensure you receive the maximum exemptions available to you in the bankruptcy process.
How Do I Pay My Attorney Fee?
When it comes right down to it, the primary role of a bankruptcy attorney is to create a strategic plan that ensures a brighter financial position for you at the end of the process than the one you were experiencing at the beginning. We will be clear and ensure you understand filing costs and attorneys fees and only recommend bankruptcy if a measurable benefit can be acquired. Tax refunds, family funds, or, more often than not, money you have been using to pay creditors, are possible sources of your attorney fee. Dave offers a number of payment plans.
