Bankruptcy

SAVE YOUR HOME. GET OUT OF DEBT. START FRESH.

Facing an issue of home foreclosure, car repossession, garnishment, credit card debt or divorce can be an overwhelming experience. It is hard enough to deal with the financial and emotional impact of these kinds of issues. Add to it a complicated legal process, and it is easy to find yourself unsure of what to do. Fortunately, a skilled attorney can explain your bankruptcy and other options and help you make wise decisions. At Francois Williams Legal, we understand what you are going through. Our attorneys will help you find peace of mind by making the process easy to understand.  

 

Bankruptcy is not the end of the world.  It does not make you a bad person.  It is a chance at a real Fresh Start and provides much needed Peace of Mind.  There have been almost four million (4,000,000) bankruptcy cases filed since the year 2016.  All of these people are not bad people.  They are largely good people who found themselves in a bad situation.  There is no harm in talking with us about your situation and learning what options you have available.  Contact us today for a no pressure, no obligation consultation.
 

Chapter 7 vs. Chapter 13 Bankruptcy

Thruth About Common Bankruptcy Myths

Bankruptcy vs. Debt Relief
 

 
Chapter 7 and Chapter 13 Bankruptcy
 
Filing for Bankruptcy Can:
  • Stop home foreclosure/Save your house

  • Stop evictions

  • Stop car repossessions

  • Stop wage garnishments

  • Stop lawsuits

  • Eliminate credit card debt

  • Eliminate medical debt

  • Stop creditor harassment

  • Stop evictions

  • Protect your security clearance

  • Eliminate certain tax debt

  • Cancel contracts and leases without termination fees

  • Remove 2nd mortgages in certain circumstances

  • Reduce vehicle payoffs and interest rates in certain circumstances

Chapter 7 Bankruptcy (Personal and Business)

In a Chapter 7 Bankruptcy, most (or all) of your debt is eliminated. This includes credit cards debt, medical bills, personal loans, foreclosure and repossession deficiencies, utility bills and some tax debt. Chapter 7 can be used to surrender houses and vehicles without having to pay the remaining balances owed. 

Most people do not lose any property in Chapter 7 Bankruptcy. Each person who files for Bankruptcy can exempt up to $12,000 worth of equity in property. The exemptions are used to protect household belongings, jewelry, tools, hobby equipment, equity in vehicles, etc. There is also a homestead exemption in the amount of $21,625 that can be used to protect equity in your home. Note that the exemptions are not necessary for property encumbered by liens. For example, if you have a vehicle with a Blue Book value of $20,000 that has a loan balance of $22,000, then there is no equity in the vehicle. Therefore, the exemptions are not needed to protect the vehicle. So long as you remain current on the payments, you will be able to keep the vehicle.

 

If you have a vehicle with a Blue Book value of $10,000, and a loan balance in the amount of $8,000, there is $2,000 worth of equity in the vehicle. By using your exemptions to protect the $2,000 in equity, you get to keep the car. Note that in order to keep the car, you must stay current on the car payments. 

Chapter 13 Bankruptcy

STOP FORECLOSURE BY FILING CHAPTER 13 BANKRUPTCY. Chapter 13 is a payment-plan Bankruptcy. It is designed to allow you to keep your property, while paying your creditors at least a portion of what they are owed. One of the most common uses of Chapter 13 is to pay back past due payments on mortgages and car loans. For example, if you are $10,000 behind on mortgage payments, filing a Chapter 13 will give you up to 5 years to pay back the $10,000. Through this process, you will be able to keep your home and vehicles.

 

Unsecured creditors, such as credit cards and medical bills, only get paid a percentage of what they are owed in a Chapter 13. That percentage is based on what the Court determines you can afford to pay. At the end of the Chapter 13, whatever is left owing on the unsecured debt is eliminated, just like in a Chapter 7.

 

There are other advantages to a Chapter 13 Bankruptcy, including:

 

Stripping a Second Mortgage Off of Your Home: If the balance on your first mortgage is more than the value of your home, you can strip a second mortgage off of the home. The balance owed on the second mortgage then becomes an unsecured debt. The second mortgage lender will then only get paid the same percentage as the other unsecured creditors.

 

Reducing the Pay-Off and Interest Rates on Car Loans: If your car was purchased more than 2.5 years before filing a Chapter 13, you can reduce the loan pay-off amount to the fair market value of the vehicle. Even if the car was purchased within 2.5 years of filing the Chapter 13, you can still reduce the interest rate on the car to around 4.75%. In either scenario, the new amount and interest rate that is determined to be owed on the loan is spread out over the life of the Chapter 13 Plan. For many people, the monthly payment on the car loan is more than cut-in-half by using this method.

The Truth About Common Bankruptcy Myths

I will lose my property in Bankruptcy

FALSE. The truth is most people that file Bankruptcy are able to keep all of their property, this includes houses and cars. Most property in Bankruptcy is exempt and protected from recovery by creditors. Typically, as long as you keep making the payments on houses and cars you want to keep, you will not lose them.

Personal taxes are not dischargeable in Bankruptcy

FALSE. The fact is that certain taxes are indeed dischargeable in Bankruptcy. A review of your personal tax debts will allow us to determine which taxes are, and are not, dischargeable through Bankruptcy. For taxes that are not dischargeable, you may have the option of using a Chapter 13 Bankruptcy to create a payback period of up to 5 years.

I will never get credit again

FALSE. You will be able to get credit again, typically immediately after coming out of bankruptcy.  Many people who go through Bankruptcy are able to get a credit card and buy a car once their case is done.  You can be in the position to purchase a home within 2 to 4 years. Remember, the most important thing following the filing of a Bankruptcy is what you do in the months and years following the filing. As long as you pay your bills on time and continue with steady employment, you will be able to obtain credit again.

I can only file for Bankruptcy once in my life

 FALSE. You can file Chapter 7 Bankruptcy again as long as it has been at least 8 years since receiving your last Bankruptcy discharge. Even if it is too soon for you to file Chapter 7 Bankruptcy again, you may still be able to file Chapter 13 Bankruptcy.

Bankruptcy will affect my spouse

FALSE. So long as you do not have joint debt with your spouse, your spouse's credit is generally not affected by your Bankruptcy.

I can choose which debts I include in my Bankruptcy

 FALSE. You must list all of your debts in your Bankruptcy, including debts you plan to keep paying, such as mortgages and car payments. Even though all of your personal debt may be discharged in Bankruptcy, you can still choose to voluntarily repay any particular debts.

I will lose my Security Clearance if I file bankruptcy

FALSE. The truth is, bankruptcy is preferable to having lingering financial issues. Often times, people up for renewal of their security clearance are advised to consider bankruptcy if they are dealing with significant financial issues.

Filing for Bankruptcy is a terrible thing to do

FALSE. Bankruptcy is not the end of the world. The fact is there are things that happen that are out of your control. When the debt becomes unmanageable, steps must be taken to get back on track. Bankruptcy was created for that purpose. In even considering filing for Bankruptcy, you have taken the first positive step to dealing with your financial problems and creating a fresh start for you and your family.

Bankruptcy vs. Debt Relief

Debt relief, aka debt management, programs offer to reduce what you owe on your debts, making it more affordable to become debt free. The way it works is, they determine amount for you to pay to them each month. They compile that money until there is enough for them to make a settlement offer to one of your credit cards. If the credit card accepts the offer, the account is paid, and money is again compiled until there is enough to make an offer on another credit card. While you are in the program, monthly payments are not being made to your creditors.

Here's the problems with these programs:

  • The credit card companies do not have to agree to settlement offers.

  • Interest and penalties continue to accrue while in the program.

  • Negative marks hit your credit report each month for each bill you are not paying, creating a significant negative credit history. It takes years to recover from this history.

  • You will have to pay tax on whatever portion of your credit card balances that is being forgiven.

  • The credit card companies often continue to harass you for non-payment. They may also sue you, leading to wage garnishments.

  • These programs are extremely expensive compared to bankruptcy.

  • Most people do not make it through a debt relief program due to continued creditor harassment and lawsuits

Here's why Bankruptcy tends to be the better choice:​
  • If you qualify for Chapter 7, you pay nothing to the creditors. If you file a Chapter 13, the amount you will be required to pay is typically much less than that required in a debt relief program.

  • In Bankruptcy, the creditors only get what the court determines you can afford to pay. There is no negotiation with the creditors. In a Chapter 7, the amount you pay is $0. In a Chapter 13, the monthly payment is determined primarily by your amount of disposable income.

  • The negative hits on your creditor report stop once a Bankruptcy is filed.

  • In a Chapter 13, the balances on your debts are set as of the date your case is filed. There is no more interest or late fees. Therefore, any amount you are required to pay goes directly to the principal owed.

  • Recovery from Bankruptcy is much quicker these days than it has ever been. For instance, with a Chapter 7, which typically lasts about 3 months, you will instantly receive credit card offers once your case is complete. Also, you can buy a car right out of Bankruptcy. When it comes to buying a house, you can qualify for a mortgage 2 to 4 years after a Chapter 7, depending on the type of financing you obtain. With a Chapter 13, you can actually buy a house and car while still in Bankruptcy.

  • Debt relief programs tend to only help with credit cards and certain loans. Bankruptcy can help with all types of debt, including: Medical debt, certain taxes, foreclosure and repossession deficiencies, utility bills, leases, and any other type of financial obligation.

  • Bankruptcy can be used to cancel contracts without termination fees, including cell phone, cable, subscriptions and leases.

  • Overall, Bankruptcy is a much more affordable, less stressful, less damaging option than debt relief programs.