Will I lose my property/home?

The possibility of losing your property, or even worse, your home does exist when you file bankruptcy. However, most people keep their property and home when they file bankruptcy.

Once you file bankruptcy, your property including your home no longer belongs to you, but becomes "property of the estate," UNLESS it is protected by an exemption. Section 541 of the Bankruptcy Code defines "property of the estate" as "all legal or equitable interests of the debtor in property as of the commencement of the [bankruptcy] case." What happens to the property contained within the "property of the estate" depends on which chapter of bankruptcy chapter you chose to file.

Exemptions allow you to keep certain property from becoming "property of the estate." Since exempt property do not become "property of the estate," you get to keep them. The "homestead exemption" is an exemption most people are familiar with. However, exemptions can be tricky in that you have to know which ones apply to your circumstances.

The Law Office of Bobby L. Reynolds will analyze your circumstances to determine how to save your home and maximize the amount of property you keep out of bankruptcy.

Will bankruptcy affect my credit and for how long?

The short answer is, yes. Filing for bankruptcy will negatively affect your credit. Unless you are one of the lucky few with good credit, most people considering bankruptcy already have a poor credit rating or are on their way to one. The silver lining in the cloud is that bankruptcy should eliminate most of your debt to help you back on your feet. The bankruptcy will stay on your credit report for 7 to 10 years, but during that time you will be able to rebuild your credit.

Can I file bankruptcy again if I have filed in the past?

Yes, you may file bankruptcy again if you have filed in the past, however, there are limitations on when you may file again.

If you want to file a Chapter 7 bankruptcy:

  • you must wait 8 years from the filing date of a previous Chapter 7 bankruptcy in which a discharge was granted.
  • you must wait 6 years from the filing date of a previous Chapter 13 bankruptcy in which a discharge was granted.
  • if you obtained a Chapter 13 discharge in good faith after paying at least 70% of your unsecured debt, the 6-year bar does not apply.
  • you cannot file for Chapter 7 bankruptcy if your previous Chapter 7 or Chapter 13 bankruptcy was dismissed in the past 180 days because you violated a court order or requested a dismissal after a creditor asked for relief from the automatic stay.

If you want to file a Chapter 13 bankruptcy, you may do so any time after filing a previous Chapter 7 or Chapter 13 bankruptcy, however:
  • you will not receive a Chapter 13 discharge if you received a discharge from a Chapter 7 bankruptcy filed in the last four years.
  • you will not receive a Chapter 13 discharge if you received a discharge from a previous Chapter 13 bankruptcy filed within the last two years.

How much will it cost me to file bankruptcy?

The cost of filing bankruptcy will vary from person to person depending on their circumstance. The cost can be broken down into three categories: ancillary costs, court fees, and attorney fees.

Ancillary costs are those costs associated with preparing for and supporting your bankruptcy. These costs are typically a few hundred dollars. Common ancillary costs include:

  • cost of obtaining credit reports, IRS transcripts, appraisals, or any other required information,
  • fees for the mandatory courses that each debtor is required to take, and
  • ordinary office expenses such as printing, faxing, postage, etc.

Court fees are the fees charged by the bankruptcy court. Unless you qualify for a waiver, the court will charge a filing fee to file a bankruptcy petition. The court currently charges the following to file an initial bankruptcy petition:
  • Chapter 7 - $335.00
  • Chapter 13 - $310.00

The bankruptcy court also charges fees to reopen cases, to covert a case from one Chapter to another, to split a case from a joint-debtor, and to make certain motions or amendments. The key point to take away here is that mistakes can be costly. Many of these fees can be avoided by correctly filing your bankruptcy documents from the start.

Attorney's fees are those fees charged by an attorney to handle your bankruptcy case. Attorney's fees are not fixed so they vary from attorney to attorney, however, the fees of most reputable attorneys will be comparable to each other. The two main factors that will affect attorney's fees are the Chapter under which the bankruptcy is filed and the difficulty of the case. Attorney's fees for a Chapter 7 can typically range between $1,000.00 to $2,500.00 whereas a Chapter 13 case will typically range from $2,500.00 to $4,500.00. As the difficulty of a case increases, the attorney's fees will increase beyond the fee range of a typical case. Common issues that will increase the difficulty of a case are student loan modifications, foreclosure/home loan modifications, and divorces.

If you're considering bankruptcy, the best advice you can follow is to hire a reputable bankruptcy attorney. Unlike, most other attorneys, a bankruptcy attorney will have the experience and tools necessary to handle your bankruptcy in an efficient manner. This will save you time and money. The Law Office of Bobby L. Reynolds, P.A. has been handling bankruptcy cases for over a decade. In that time it has invested in the tools and training necessary to efficiently file bankruptcy for its clients.

Why do you charge more for a Chapter 13 than a Chapter 7?

A Chapter 13 involves more work than a Chapter 7. Unlike a Chapter 7, a Chapter 13 requires the creation of a "Chapter 13 Plan." The Plan is basically a budget for the debtor to adhere to throughout the Chapter 13 bankruptcy. The Plan is ultimately approved by the Bankruptcy Court, but the court relies on the trustee's recommendation. It's not uncommon for the trustee to reject an initial plan requiring an attorney to revise the plan or bring a motion to challenge the trustee's recommendation.

Once the Plan is approved, the attorney oversees that the Plan is carried out. The debtor will usually make payments to the attorney and the attorney in turn will make the payments to the trustee. If adjustments to the Plan are required, the attorney will take the steps necessary to make those adjustments.

Are there alternatives to bankruptcy?

Listed below are several alternatives to filing bankruptcy. Like bankruptcy, each has its advantages and disadvantages. Generally, I recommend exploring all other avenues before filing bankruptcy. Bankruptcy should be utilized as a last resort.

  • Ignore the debt - DO NOT IGNORE THE DEBT. I only listed this option because so many people ignore their debt and I want to make the point that Ignoring the debt only makes things worse. Your debt will not magically disappear, so you might as well face it and take steps to eliminate it.
  • Do not pay - This is not the same as ignoring the debt. In this situation you are managing the debt to the best of your ability. You may not be making payments, but you are taking steps, such as responding/communicating with the creditor, to minimize the fallout. Sometimes there are legitimate reasons for not paying a debt. For example, a debt may be close to or beyond the statute of limitations. Another reason may be that you are "judgment-proof." See "What does judgment-proof mean?"
  • Negotiate with creditors - It doesn't hurt to try to negotiate with your creditors. You may be able to work out terms to make your debt more manageable. Keep in mind that every creditor is different. Some are more helpful than others.
  • Hire a debt consolidation company - Debt consolidation companies basically negotiate with the creditors for better terms. Generally, I don't recommend using debt consolidation companies because I believe you can negotiate with the creditors just as well as they can. However, if you decide to hire a debt consolidation company, DO YOUR RESEARCH. I cannot stress this enough. There are good debt consolidation companies out there, but there are many more bad ones that will put you in a worse situation than when you started. BE CAREFUL!
  • Ask for help - I will admit that I struggle with this one because of pride. But sometimes, you must swallow your pride and ask for help. Look to family, friends, and the community for help. They may not be able to provide financial help or immediate relief, but they may be able to help you in other areas that indirectly help manage your debt. Don't be afraid to ask.

What does "judgment-proof" mean?

The term "judgment-proof" refers to a type of debtor from which money cannot be collected. Typically, a creditor will bring a lawsuit against a debtor to collect a debt. If the creditor prevails, the court will issue a judgment in favor of the creditor for the debt owed. This judgment merely states that the debtor owes the creditor money. The issue for the creditor is how to collect that money. If the debtor does not pay, the creditor can motion to garnish wages or place a lien on the debtor's property. If the creditor is unable to garnish the debtor's wages or there is no property available to place a lien, then the creditor is unable to collect. Hence the debtor is judgment-proof.

Which chapter of bankruptcy should I file?

It depends on your circumstances. Your circumstances may allow you to exercise a choice between options. There may be only a single choice. Or perhaps, bankruptcy may not be an option for you. If your intent is to file under Chapter 7 then you must meet the requirements of the means test. If your intent is to file under Chapter 13, you will need to have a steady source of income to fund a payment plan. The Law Office of Bobby L. Reynolds can analyze your circumstances and provide counsel on which options are available to you.

Will all my debts be eliminated if I file bankruptcy?

Whether a debt is eliminated in bankruptcy depends on the nature of the debt. The bankruptcy term for the elimination of a debt is "discharge." There are some debts that cannot be discharged in bankruptcy. Examples include, child support, penalties for crimes, debts associated with alcohol-related accidents. Other debts are extremely difficult to discharge. Examples are student loans or tax debts. Debts that are generally discharged in a bankruptcy are unsecure debt. For example, credit card debt will typically be discharged in a bankruptcy.

The Law Office of Bobby L. Reynolds will tell you which of your debts can be eliminated, which cannot, and which will take a little effort.

Why do you charge a consulting fee?

The Law Office of Bobby L. Reynolds charges a consultation fee because unlike a lot of other attorneys it provides an individualized consultation. Many law firms offer a free consultation, but usually that's a gimmick to get you in the door. The consultation typically consists of general bankruptcy information you can find on any bankruptcy attorney's website.

The Law Office of Bobby L. Reynolds will analyze your debts and circumstances to come up with solutions that will help you reach your goals. After the consultation, you will know what your options are and whether bankruptcy is the right choice for you. If you choose to retain the firm, then the fee will be applied towards the fee for your case.