Spring is a Great Time for a Fresh Start

Bankruptcy law is often described as giving filers a "fresh start", and this is true for a lot of reasons. Whether your finances are tied up with credit card debt, a lawsuit, medical bills, or a repossession (to name just a few problems), bankruptcy will help you back on your feet.

The biggest problem for many of my clients is that they cannot get out from under older obligations brought about by temporary unemployment, illness, or other misfortune. These problems lead to lawsuits, penalties, fines, fees, and other costs that can quickly dwarf the underlying obligation. $5,000 in credit card debt accumulated during a spell of unemployment can quickly become $10,000 with interest, court costs, etc. Ongoing interest can make it impossible to ever hope to pay off the debt. Bankruptcy can stop the spiral.

The bankruptcy discharge eliminates a wide range of debt. Credit cards, medical bills, car repossessions, payday loans, and sometimes even taxes can be wiped away. The bankruptcy exemptions allow you to "exempt" your personal property from being used to pay your creditors, so in the VAST majority of bankruptcy cases, you will not lose your home, car, personal possessions, bank accounts, retirement funds... or anything.

Bankruptcy really is a "fresh start", as opposed to "starting at zero". You keep your property and income, and clear out the old debt (and penalties, fines, etc.). Bankruptcy allows you to move forward without the burdens of the past without giving up your possessions. You'll keep your car to go to work, your home to live in, your retirement accounts, and everything else you need to be productive going forward.

Most surprisingly for most of my clients, your creditor score will usually INCREASE. You read that correctly. This is true because your ratio of debt disappears. Old lawsuits also destroy your credit, so eliminating them through bankruptcy improves your credit profile.

Spring is a time for personal growth and fresh starts. Contact us to discuss whether or not bankruptcy is an option for clearing up your financial problems faster than you ever imagined. I am an experienced Pittsburgh bankruptcy attorney who will be happy to review your situation in a free consultation.

Do I Have to Attend the Creditor Lawsuit Filed Against Me?

This is a common question I am asked the first time I speak to a new client. They have been sued by a creditor, usually on an old credit card debt or car repossession, and the paperwork the sheriff has served on them mentions a hearing date and time. Not surprisingly, this is a major concern.

We are conditioned to believe that not showing up to a hearing will have big, important, negative repercussions. In most cases this is true. When you don't show up to a court hearing, the judge will automatically rule against you and/or find you in contempt of court. In almost every situation, it is advisable to appear at a court action you are served with, and in most cases it is advisable to retain a lawyer.

Whether or not you should appear at a creditor lawsuit related to a debt will depend on one question... are you filing a bankruptcy? If the answer is "yes", you will probably NOT appear at the creditor lawsuit held at the Court of Common Pleas or magistrate level. Why is this seemingly negligent course prudent? It's alright not to show up when you are filing a bankruptcy because the bankruptcy will discharge the the underlying debt to the lawsuit. There is no reason to waste your time or pay a costly legal bill and have an attorney appear when the default judgment will be discarded anyways by the Bankruptcy Court. The automatic stay will stop the lawsuit, and the bankruptcy discharge will eliminate the lawsuit. The court will not hold you in contempt, as this is the normal practice.

Now, if for any reason, the debt related to the creditor lawsuit will NOT be included in the bankruptcy, you should be prepared to answer the lawsuit and appear in Court.

Contact us if you have been sued by a creditor on a debt. You should act as quickly as possible, as you only have 30 days to respond to the lawsuit in writing after you have been served, or the Court will cancel the hearing date and rule against you WITHOUT A HEARING. Yes, you read that correctly.

Call my office to speak to an experienced Pittsburgh Bankruptcy Attorney who can explain your rights to you and determine if bankruptcy is an option. It will be possible to file a bankruptcy even after the lawsuit has become a judgment, so it's never too late. You will need to do something about the judgment, because it will be good for 20 years, and may result in the loss of your home, car, bank account, or personal property.

Call sooner, not later...

Property Taxes and Bankruptcy

Property taxes and municipal fees can accumulate rapidly in a few years when a homeowner falls behind. Between the taxes, the interest, and attorney fees, the amount can quickly become unmanageable. Fortunately, Chapter 13 Bankruptcy provides an opportunity to square up with these debts over a 3-to-5 year Chapter 13 Plan.

Not paying property taxes is a serious matter. Municipalities and taxing agencies can, and will, get judgments against the homeowner and the property. Once these court judgments have been obtained, the taxing agency is within their rights to sheriff sale the property out from under you to pay the debt. You can absolutely lose your home over property taxes, and I have seen many clients in this danger. This takes many people by surprise, but it is a real possibility.

Chapter 13 bankruptcy can stop these lawsuits in their tracks, and even stop a sheriff sale. The Bankruptcy "automatic stay" under the Bankruptcy Code effectively stops any lawsuit related to property taxes from proceeding. However, the taxing agency will only be permanently stopped from collecting against your home if they are paid in full, with interest, in the Chapter 13 Plan. (If your Chapter 13 plan fails, they can reinstate the lawsuit).

Once again, paying these property taxes through Chapter 13 bankruptcy can occur over a 3-to-5 year period, during which you will receive Court protection from any property tax lawsuits or collections. This is a major advantage, as you are not required to provide all of the money at once. This is often the only way a debtor would be able to keep their property while facing large property tax obligations.

Interest must also be paid to the taxing agencies. This rate ranges from 10% for many local municipalities, to 12% for Allegheny County (NOTE: rates can vary by county and municipality). The ability to spread out payments over the Chapter 13 bankruptcy plan can certainly make re-payment possible.

Finally, it should be noted that Chapter 13 bankruptcy filers will need to keep their ongoing property taxes current. If current taxes are not paid while catching up property taxes in arrears, the debtor will be left in the same position as before filing.

If you are having difficulty catching up on property taxes, contact us to speak with an experienced Pittsburgh Chapter 13 bankruptcy attorney. The initial consultation is always free, and I will be happy to speak with you at length to determine if Chapter 13 bankruptcy is an option.

Student Loans In Chapter 13 Bankruptcy

The Bankruptcy Code does not provide much relief for student loan debt. This is unfortunate, because it is often the greatest burden for debtors, in some cases the only major debt. In general, student loan debts are not dischargeable in bankruptcy. Student loans will only be completely dischargeable if they meet the "undue hardship" standard which is quite difficult to meet under bankruptcy law.

In a Chapter 13 bankruptcy, some payments can be made towards student loans, allowing the debtor to reduce their student loan burden while eliminating unsecured debts such as credit cards, medical bills, unsecured bank loans, etc. It is an important component of bankruptcy planning.

In most Chapter 13 bankruptcies, student loans can be paid at the same rate as other general, unsecured creditors (such as credit cards, etc.). So, if your Chapter 13 plan requires your credit cards and other unsecured debts to be paid at 50% of their total value, you can allocate student loans to get paid at the same rate for the duration of your Chapter 13 bankruptcy plan. This allows you to reduce your student loan burden, while lowering the amount you are required to pay other unsecured creditors. It's a win-win situation for bankruptcy filers.

Now, it should be made clear, the balance owed on your student loans not paid through the Chapter 13 bankruptcy plan is not discharged at the end of your case. You will be required to resume making payments in the likely scenario that there is still a balance. But, as stated above, at least this balance will be reduced by 3-to-5 years of payments. And it will be done by paying less money to your credit cards, medical bills, and other unsecured debts.

If you are having trouble with student loans in addition to other debts, contact us to see if you qualify for relief by setting up a completely free consultation. I am an experienced Pittsburgh Chapter 13 bankruptcy attorney who can help explain your rights and options.

What Questions Are Asked at the Meeting of Creditors?

The Meeting of Creditors is commonly a cause for concern and stress for individuals filing bankruptcy. However, this concern and stress is normally misplaced... the Meeting of Creditors normally runs smoothly without the creditors even showing up, and a little preparation makes it a clear and straightforward process.

Of course, the Meeting of Creditors normally runs smoothly as long as you have hired an experienced bankruptcy attorney who has prepared your case with expertise and care. While the questions are simple, it is more important that the underlying petition is completed correctly.

The process is less mysterious and intimidating when I review with my clients the questions to be asked by the Trustee. The questions normally asked in Western Pennsylvania include:

• How did you arrive at the listed value of your home?
• Have you transferred any property to a friend or family member in the last 2 (or 4) years?
• Have you ever filed bankruptcy before?
• Have you reviewed the information sheet prepared by the United States Trustee's office?
• Do you have any claims or lawsuits against anyone else?
• Have you filed all of your taxes that are due?
• Do you have any domestic support obligations?
• Have you lived in Pennsylvania each of the last 2 years?
• Have you read and reviewed the petition? Are you personally familiar with it? Did you sign it? Are there any errors or omissions to report?
• Have you completed a credit counseling class?
• What is your reason for filing?

These questions are very straightforward. Different trustees may ask different versions of these questions, but the gist of the questions are always the same... do you have (or do you expect to receive) property that can be used to pay your creditors? Have you given away property that could be used to pay your creditors? Have you filled out your petition truthfully?

The Trustee assigned to your case asks the questions as a way of review your petition, making sure it is complete and truthful, and verifying that you are familiar with its content. The Trustee is not looking to trick or deceive you. Simple "yes" and "no" answers are appropriate for almost every question. The "reason for filing" question is asked only for survey purposes, and can be simply answered with responses such as "overspending" or "loss of income".

As long as you have been honest and thorough with your attorney during the preparation process, the Meeting of Creditors should be a simple formality. These questions normally take less than 5 minutes to ask (NOTE: different questions may be asked in more complex cases involving business assets). Thorough preparation and a short review before your hearing will assure there are no problems at all.