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Most offices require payment of attorney fees up front (plus the filing fee) before a chapter 7 bankruptcy petition is filed with the U.S. Bankruptcy Court. Hoglund Law Office’s third party guarantor monthly payment plan takes the burden off of clients, who cannot afford a lump sum payment to get their case filed. Typical payments are $90-$100 per month. Also, some clients cannot afford to wait to file their case because of levies and garnishments. The third party guarantor plan does not require a waiting period to file the bankruptcy petition while the client is trying to save up the attorney fees.
Our office does not ask for any attorney fees up front before filing a debt reorganization plan. Furthermore, the attorney fees are paid out of the monthly Chapter 13 payment. You do not have to pay for an initial attorney consultation and you do not need to have any money at the initial consultation.
What is bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start by discharging debts. Filing bankruptcy immediately stops most of your creditors from taking any legal action against you while you are in your bankruptcy case.
What can bankruptcy do for me?
Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all your debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house and allow you an opportunity to catch up on missed payments. Bankruptcy does not, however, automatically eliminate mortgages or other liens on your property without payment.
- Prevent repossession of a car or other property or force the creditor to return property even after it has been repossessed within a certain time frame of filing a bankruptcy case.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
What bankruptcy cannot do:
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for everybody. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You may be able to force secured creditors to accept payments over time in the bankruptcy process and bankruptcy may eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt.
- Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony and certain other debts related to divorce, student loans, court restitution orders, criminal fines, and taxes.
- Discharge debts that arise after bankruptcy has been filed.
Will bankruptcy wipe out all my debts?
Generally yes, with some exceptions. Bankruptcy typically will NOT wipe out:
- Money owed for child support or alimony, fines, and taxes
- Debts not listed on your bankruptcy petition
- Loans obtained by knowingly giving false information to a creditor
- Debts resulting from “rdwillful and malicious” harm
- Student loans
- Mortgages and other liens that are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
What else should I know?
Utility services — Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills that arise after bankruptcy is filed.
Discrimination — An employer or government agency cannot discriminate against you because you have filed for bankruptcy.
Driver’s license — If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy may allow you to get your license back.
Co-signers — If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay the debt. If you file a Chapter 13, you may be able to protect co-signers, depending upon the terms of your Chapter 13 plan.
Discharge — You will receive your Order of Discharge officially discharging your debts about two months after your Meeting of Creditors for those clients that file a Chapter 7.
Pre-filing counseling & pre-discharge education:
In order to be eligible for a bankruptcy a debtor must receive a Certificate of Counseling from a U.S. Trustee approved counseling agency prior to the filing of a case. This certificate is valid for 180 days and must be filed with the court along with your bankruptcy papers. This counseling is designed to assist debtors in budgeting and overall fiscal management.
After you file bankruptcy, a debtor must receive a Certificate of Debtor Education from a U.S. Trustee approved counseling agency and file it with the court. In order for you to get a discharge of your debts in your bankruptcy case this Certificate needs to be filed with the court within 45 days after the Meeting of Creditors has been concluded.
The debtor education course is designed to educate debtors on wise money management and credit use. You also will get helpful tips and tools on how to obtain credit reports, dispute errors in your report, establish credit, and prevent identify theft.
What different types of bankruptcy should I consider?
There are two basic types of bankruptcy cases that consumers can file:
Also known as “liquidation,” this chapter of bankruptcy is generally the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations and partnerships. A trustee (appointed by the bankruptcy court) gathers and sells your non-exempt property and uses the proceeds from the sale to pay your creditors.
Most Chapter 7 cases are “no-asset” cases. This simply means that all of your assets are protected by an appropriate exemption and that you do not have any property for the trustee to take and sell.
If you’re an individual or a sole proprietor, you can file a Chapter 13 bankruptcy to pay all or part of your debts over three to five years. Rather than wiping out debts immediately, this option allows you to reorganize your debt so you have time to pay. Many people who file Chapter 13 bankruptcies have:
- Mortgages or other loans they would like to bring current, so they don’t lose their homes or other property
- Taxes, child support or student loans that can’t be wiped out by Chapter 7 bankruptcy
- Have valuable property that is not exempt, but the debtor can afford to pay creditors for the property from his or her income over time.
For Chapter 13 bankruptcy, you will need a stable income with disposable income (income left over after you pay the bare necessities of life such as shelter, food and utilities). You must have no more than $1,010,650 in secured debt (debt involving property that your creditor might take if you do not make your payments) and $336,900 in unsecured debt.
The filing of the Chapter 13 petition must be accompanied by a proposed payment plan extending over three to five years. The proposed payment plan must provide for the payment of all “priority claims,” such as taxes, in full.
The bankruptcy trustee appointed by the bankruptcy court must review the proposed plan for accuracy and feasibility. The proposed plan is distributed to creditors, who have the right to object to the plan if it’s unreasonable. You make monthly payments to the bankruptcy trustee, who distributes the funds to the creditors according to the plan. If the plan is completed as approved, your unpaid debts are “discharged.”
What chapter of bankruptcy can I file?
The chapter of bankruptcy for which you qualify is dependent on a six-month average of your total household income and the size of your household size. Once the average monthly gross income is determined, we then look to the median income for that household size in Minnesota.
Generally speaking, if you are below the median you can qualify for a Chapter 7 case. If you are above the median income you can qualify for a Chapter 13 case. A consultation with an attorney is the best approach in determining which chapter of bankruptcy to file.