STOP:
Harrassing Phone Calls
One of the most valuable and frankly unique services that we offer ancillary to the actual bankruptcy filing itself is that we will make the harassing creditor phone calls stop. Simply put, once you have retained us, which is to say, once you have paid at least $200.00, you may give your creditors our name and number and tell them that Attorney Haskell said that you cannot talk to them and that Attorney Haskell said that if they have any questions they are welcome to contact our office. They will call. Once they verify that you are our bankruptcy client, they will leave you alone for several months. During this time, we can put together a payment plan and get your petition filed. They are required to stop calling even after several months, but that is a little more challenging. As you can probably tell, not all of these people play by the rules. However they will stop calling for quite a while. They will call our office regularly, but that is not your problem. By the way, we have found that writing letters and making phone calls is an ineffective way of making the phone calls stop. After 25 years of doing this, we can say that the only effective way of stopping the phone calls is to tell those people they are wasting their time.
Interest Pile Up:
As you probably observed, the credit card companies love to kick you when you are down. If you are having a hard time making your monthly payment, they will jack up your interest rate. On top of that, they will tack on all kinds of fees and late charges such that there is no hope of ever catching up. We had a client whose credit card was charging her 30% interest. However, her monthly late fee and her monthly over limit fee were each higher than her monthly interest charge. She was paying an effective interest rate on the credit card of 98%. That means that if she made all of those payments for one year she would have essentially paid what she owed, but would still owe it all. Chapter 7 discharges all interest and fees along with the underlying principal. Chapter 13 stops interest and fees from accumulating during the course of the plan and discharges that percentage of accumulated principal, interest and fees which are being discharged as part of the plan.
Wage Garnishments:
Simply put, the moment a bankruptcy is filed everything that has occurred in the State Court stops immediately. As a result, a wage garnishment will end automatically at the moment of filing. What is more, if your employer has not yet forwarded to your creditor money from a previous paycheck that was garnished, that money will be returned to you as well
Foreclosures:
When the bankruptcy is filed, an automatic stay issues. That means that no creditor can take any further action against you without permission of the Bankruptcy Court. So if an auction is scheduled for 10:00 and your petition is filed at 9:59 that same morning, the auction is stopped. Even if the people at the auction are unaware that the bankruptcy has been filed, the auction never happens. We once received a very angry phone call from somebody who bought a property at auction only to learn later that a chapter 13 petition had been filed earlier that day. It was difficult explaining to this gentleman that he never bought the property, because the auction that he was the high bidder at never happened. It was automatically stayed and thus the fact that he did not know about the bankruptcy did not affect the fact that the auction was nevertheless void. In the case of Chapter 13 filings, the mortgage arrears can be reorganized for a three (3) to five (5) year period. During the reorganization process, the bank cannot foreclosure your property. At the successful conclusion of the plan, you will simply go forward as if you never fell behind in the first place.
Save Your Home:
As discussed above under foreclosures, you can reorganize mortgage arrears through Chapter 13 andprevent the bank from taking your house. What is more, if you are current on your mortgage but have equity in your house, know that inMassachusetts up to $500,000 of equity can be exempted from the bankruptcy. What this means is that if your house is worth $350,000 and you have no mortgage, you may keep it. If it is worth $750,000 but you owe $300,000.00 on it, you may still keep it.
Save Your Business:
Once common myth in Bankruptcy is that the only way to save a business is through Chapter 11. While Chapter 11 may be the only way to save large, publicly traded companies, it is usually the wrong way to go for small businesses and especially for businesses that are family owned or have very few partners. For these companies, much of the debt is personally guaranteed or otherwise likely to “pierce the corporate veil” anyway. As result, a Chapter 11 will cost a lot of money, but not solve the problem. However, with a little creativity there is usually a way to get a good result. Every client that I have represented in bankruptcy, who was in business before the bankruptcy and chose to stay in business, did so. I have certainly had clients who wanted to close their money-losing enterprises, and bankruptcy can be a very effective way of doing that as well. To say in business requires some creativity as, there is no one-size-fits-all solution.
Save Your Car:
Another common myth in bankruptcy is that you will lose your car. In Massachusetts, an individual may keep up to $7500 of equity in a vehicle ($10,000.00 if your are 65 years or older). A married couple can do that for both vehicles or stacked together their $15,000 exemption on a single vehicle. Since most cars of any value have car loans associated with them, they rarely have that kind of equity. Since car loans reduce the amount of equity in a car, they are good things. I am always amazed by the people who withdraw money from their 401(k)s to pay off their cars right before coming to see me. That is the wrong thing to do for many reasons, not least of which is that it puts the car at risk. If there is a little too much equity in a car, we can usually make a deal with the chapter 7 trustee to keep the car although some money will need to change hands. A chapter 13 can be useful for people who have fallen behind on theircar payments as these can be reorganized as part of the chapter 13 plan. In addition, if there is a lot of equity in the car, that equity can be protected through a chapter 13 plan.
Save Your Wages:
Filing bankruptcy will end any wage garnishment that any court may have ordered on a debt collection matter. Not only do garnishments stop immediately, but if your employer has not forwarded garnished wages from a previous paycheck, the employer will turn that money over to you as well. Sometimes, television shows confuse chapter 7 and chapter 13. I can think of an episode of LA Law which got this issue very wrong. Generally speaking, bankruptcy trustees are not scouring your budget looking for money to take away from you. A good lawyer will warn you if you are one of the exceptions, but they are very few and are usually the above median income debtors.
Save your Sanity:
The most satisfying thing about being a bankruptcy lawyer is seeing the relief clients feel after the initial consultation. They come into the office frazzled and harried. They are fighting with their spouse. Collectors are calling them all the time. There appears to be no way out and they are quite literally going crazy. Many people come in my office and tell me they can not sleep at night, and that they are starting to drink alot. All kinds of things are going wrong in their lives. They are literally bent over from all the stress that they are carrying on their shoulders. These problems can be made to go away through bankruptcy. It is always satisfying to see a client come walking in bent over and obviously distressed and to leave my office smiling and laughing. My happiest stories as a lawyer involve bankruptcy clients whose marriages we have saved because they are no longer fighting about money and bills. Financial distress is a major source of marital distress. Removing that stress can and often does save marriages.
Rebuild Your Credit:
By the time most people contact a bankruptcy lawyer, they are behind on the credit card payments or mortgage payment and their credit is already destroyed. Others realize that they are going to fall behind on their credit card payments and thus their credit will soon be destroyed. Our experience has been thatit is much easier to rebuild credit out of a bankruptcy then it is out of a mess. Bankruptcy is a discrete event. You file bankruptcy and from that point on you watch it in the rearview mirror. Three years after a bankruptcy filing, you are three years post bankruptcy. Missing credit card payments however keeps adding to your credit report. You are thirty days behind; then your are ninety days behind; then you are 180 days behind. It goes to collection. It has gone to court. It has gone to judgment. It has gone to supplementary process. All of that keeps adding more bad marks to your credit. What is more, your credit report says you cannot pay the debt you already have. Why would anyone want to give you more credit? With bankruptcy you owe no debt afterwards. You cannot file again for 8 years. If you are working steady, paying your bills on time and everything else is going well, you can and you will reestablish credit. Although it is true that bankruptcy stays on a current credit report for seven to ten years, it is also true that if you are doing these things, you will be able to get credit cards, car loans and even conventional mortgages, well before the seven to ten years is up.
Rebuild Financial Security:
When you are deep in debt and struggling simply to pay bills, you cannot save for the future or think about your future financial security. Once this debt burden is lifted from you shoulders, you may begin to save and invest and plan for the future and to establish financial security for yourself and for your family
Rebuild Your Peace of Mind:
Worrying about bills. Worrying about harassing phone calls. What is going to happen to you if you can not pay your bills is not good for your peace of mind. Putting this problem securely into your past and moving forward with “the slate wiped clean” is the best way available to rebuild your peace of mind.