Many people wonder about every detail: What about the car? My antiques? My jewelry?
The answer is somewhat complex because every situation is different. The best way to get a gauge on what you can protect and what you can't is to consult with an experienced bankruptcy attorney who can help you analyze your individual situation, along with the laws that apply uniquely to Colorado residents.
That said, it's highly likely that your creditors aren't going to want to take the coat off your back or the ring off your finger. Unless you had a fairly sizable and expensive collection of jewelry, it's probably safe.
People may mistakenly think that they can protect these items by transferring them to family members prior to filling them. Not only could this be detrimental to your bankruptcy, it's illegal. The court wants to be able to consider all your assets when determining how the case will be handled. It doesn't want you shedding yourself of bad debt while hanging onto valuable assets. It's probable that if you have a vehicle that's paid off or an heirloom necklace that your attorney is going to be able to protect those items from creditors in a Chapter 7. However, if you start giving away or selling those things to friends or relatives, there's a strong likelihood that they might not be protected.
You'll also want to be mindful of taking out any large cash advances just prior to filing. For example, if you know you're going to be filing for bankruptcy and you go on a shopping spree with your credit card just a few weeks before, the bankruptcy trustee is going to see that. It is generally considered fraudulent and not only might you have to return those items if possible, but it may hurt your chances for a successful bankruptcy.
Likewise, you can't make payments to family just before you file. Family members and close friends to whom you owe money are considered creditors like anyone else, and you can't show favortism in this regard.
As Colorado Springs residents continue to grapple with a massive, fast-moving wildfire that has already killed at least two people, destroyed more than 350 homes and damaged dozens more, many may have just been pushed over the edge to a Chapter 7 bankruptcy.
It's no surprise that many were already suffering financially prior to this. Now, many have lost everything.
Our Colorado Springs bankruptcy lawyers know that despite the stringent guidelines imposed by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, special provisions were set forth to protect those who had suffered a major natural disaster, such as flooding, a hurricane, or tornado - or a fire.
Specifically, these provisions were created in the wake of Hurricane Katrina. Part of it deals specifically with bankruptcy fraud, which the courts do take very seriously. Usually, if you don't have sufficient or proper paperwork, your case might be closed, your debts deemed non-dischargeable or you might even be prosecuted. But these new provisions allow that if you're important documents or other paperwork was destroyed as a result of a natural disaster, you can't be prosecuted or penalized for that.
In that same vein, the normal deadlines and meetings that you may have been otherwise compelled to meet become more flexible. One example might be that a debtor might not be able to leave their location due to flooding. So in turn, if they do not attend their credit counseling meetings as a result, they can't be penalized for that.
Plus, while the Bankruptcy Abuse Prevention and Consumer Protection Act was designed to make it more difficult to file for bankruptcy (in an effort to drive down fraud), the natural disaster provisions actually make it easier for you to file if you've been affected by an act of nature. In part, that involves waiving lost property through the means test, waiving your credit counseling requirements and, as we mentioned earlier, not punishing you for not having the proper documentation that may have been lost in the disaster.
Those whose homes may have been damaged or destroyed by this blaze may feel financially ruined and hopeless. We can help.
According to federal law and the United States Bankruptcy Court, the rules concerning personal bankruptcy in Title 11 were passed by Congress in accordance with its Constitutional grant of authority. While states may pass laws that govern other aspects of a debtor-creditor relationship, they may not regulate bankruptcy itself. It is important to understand this as so many individuals are uninformed about bankruptcy laws.
If you are considering filing for personal bankruptcy, you will only need to be concerned with two types – Chapter 7 and Chapter 13. While it's certainly not required that people use an attorney, it is usually best to seek legal advice at some level and preferable to let a lawyer handle everything. Bankruptcy is one of those things that could be very costly if not done properly. In other words, the cost of your mistakes could far outweigh an attorney's fees.
Most bankruptcy lawyers will tell you; consider any realistic alternatives before filing for bankruptcy, such as reducing your debt or paying your bills. Filing for bankruptcy will be an irreversible step that will have a long term impact on your creditworthiness.
What are the two types of personal bankruptcy?
Chapter 7 and Chapter 13 are both named after the numeric title of its corresponding statute in the U.S. Bankruptcy Code.
Chapter 13 Bankruptcy
When one files under Chapter 13, it is possible to keep some property that might have otherwise been liquidated in a bankruptcy. It also allows you the chance to reduce the amount you pay toward your debts. Whenever possible, a Chapter 13 bankruptcy should be considered before any other type of bankruptcy.
The requirement for Chapter 13 bankruptcy is that the amount owed cannot exceed $250,000 in unsecured debt or more than $750,000 in secured debt. These limits were expanded in 1994, allowing Chapter 13 accessible to be more accessible to individuals.
Unsecured and Secured Debt
Unsecured debt, also known as "uncollateralized debt" includes credit card debt, medical bills and signature loans. When preparing a reorganization plan, your unsecured debt will be the lowest priority for payment.
Secured debt, which is often called "collateralized debt," is secured with the property itself, such as the house, car, boat or other big-ticket item. When a debtor defaults on secured debt, the lender can seize the property to recover what is owed.
How does Chapter 13 work?
Chapter 13 requires you to repay your debts over three to five years. You must begin paying on the plan 30 days after you file the petition with the court. It is customary for the petitioner to make one monthly payment to a trustee, who then distributes the funds to their creditors according to a payment schedule.
Chapter 7 Bankruptcy
When a person files for Chapter 7 bankruptcy protection, most of their debts are wiped out and will never have to be paid. However, once a Chapter 7 bankruptcy is filed one cannot file again for six years.
In Chapter 7 bankruptcy, petitioners provide the court with a full list of debts and a complete list of everything they own. They may also be required to answer questions about past financial dealings. Certain property is exempt and allowed to be kept by law but the trustee has the right to liquidate everything else, the proceeds of which are applied to repay debt.
For property that is excluded from liquidation, one must still purchase pay "purchase-money liens" or contractual payments in order to keep the car or house.
Which debts are not discharged in Chapter 7 bankruptcy?
While most of your major debts will be eliminated in a Chapter 7 bankruptcy, it may be impossible to get a fresh start from everyone.
Exclusions may include debts not listed on the petition, debts incurred by fraud, alimony or child support payments, or debts incurred from damages that occurred while intoxicated or in the course of a violent crime. Certain educational loans may also be excluded, as well as most types of taxes and debts from a prior bankruptcy. Some consumer debts may not be forgiven as well, such as purchases for more than $1,000 of luxury goods or services that were incurred within 60 days of a bankruptcy petition.
As you can see, it helps to know which type of bankruptcy is right for your situation. If you have questions about filing a petition for personal bankruptcy, consult with an experienced Colorado bankruptcy lawyer.
Filing for Chapter 7 bankruptcy can be stressful enough, but then your Colorado bankruptcy lawyer informs you that you must attend something called a "Meeting of Creditors" before your debts can be discharged? That might be enough to make you wonder what you got yourself into. Good news! There is no reason to fear this hearing when you have an experienced bankruptcy attorney by your side.
What is a Meeting of Creditors?
When you file for Chapter 7 bankruptcy, the meeting of creditors is a short court proceeding where the bankruptcy trustee and your creditors can ask you questions about your finances and the information you supplied in your petition while you are under oath. This meeting, which is also known as a 341 hearing, is essential in determining whether the papers you filed are accurate and complete.
Who Will Be at Your Chapter 7 Meeting of Creditors?
Typically, the Chapter 7 bankruptcy trustee will moderate the meeting of creditors, which means there will be no judge present. In fact, most Chapter 7 bankruptcy filers don't see a judge unless they are facing an objection or reaffirming a debt. In any case, all of your creditors will be invited to attend this meeting but they rarely show up. This is because creditors have a very short period of time in which they will be allowed to ask questions so they don't benefit much from being there. However, if a creditor has reason to believe you are hiding assets or committing another form of bankruptcy fraud, they may show up to present such evidence.
What Happens at the Meeting of the Creditors?
In most cases, you will only be examined by the bankruptcy trustee, but remember, your meeting of creditors is open to the public and several hearings are held within the same time period so you may have other debtors observing your hearing as they await their case.
When your case is called, you will go before the desk of the trustee to be examined under oath. You will be asked to provide the trustee with your full name and provide identification as well as your social security number. Since Chapter 7 bankruptcy authorizes the court to sell your nonexempt assets, most of the trustee's questions will focus on these assets.
After the trustee questions you, your creditors are allowed to examine you as well. If a creditor comes to the hearing, you may be asked about the nature or location of your assets; however a creditor will not be allowed to conduct a lengthy investigation at this meeting.
After the trustee and creditors have finished their examination, the trustee will conclude your hearing. Unless the trustee requires more information, you won't have to come in for another hearing like this. You can expect to receive your discharge once all the other requirements are satisfied.
If you have more questions about the process of filing Chapter 7 bankruptcy in Colorado, schedule a consultation with a Colorado Springs bankruptcy attorney.
Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net
This may be one of the most common questions I hear as a Colorado bankruptcy attorney, "Can I keep my house if I file Chapter 7?" But the answer isn't always so simple. In Colorado, keeping your home after Chapter 7 bankruptcy will depend on your answers to three questions. Do you really want to keep it? Do you have any equity in the home? And are you current on the payments?
Deciding whether you want to keep your house may be difficult, but if you owe more than it is worth it might not be an asset worth saving. Also, if your interest rate is too high or the house needs a lot of work it might be more than you can afford to keep. Some Colorado filers find they are better off letting it go in the bankruptcy and buying another home a few years down the road. The good news is that in Colorado, you can almost always keep your home if it makes financial sense to do so.
Secondly, the trustee in your bankruptcy case will want to know if you have any equity in the home. If the house is worth more than you paid for it, then you have equity. If you have equity, the trustee will determine if you have more equity than what is protected under the state's exemption statutes. These are the laws that determine what you get to keep in a bankruptcy. Unless you have exempt equity, the trustee is not going to come after your home. However if you have non-exempt equity there are some steps that can be taken to minimize it. This will be a topic for discussion with an experienced Chapter 7 bankruptcy lawyer.
Finally, if you are behind on your mortgage payments at the time of filing, your lender could either demand that you get caught up immediately or they could ask the court for permission to foreclose. This causes some risk and it might be better not to leave this decision up to the mortgager. When you speak with a bankruptcy attorney, find out if it makes more sense to get caught up before filing Chapter 7, or if a Chapter 13 bankruptcy makes more sense. Chapter 13 allows you to repay arrears on a mortgage over a three to five year period.
One of the benefits of filing for Chapter 7 bankruptcy in Colorado is how it wipes out all of your dischargeable debts. This will include not only credit cards and medical bills, but also the debt you still owe on your home and automobile. While you may no longer owe money on your home, keeping your home after bankruptcy will largely depend on you. Below are three common options for handling your home after a bankruptcy.
Reaffirm: This process allows the petitioner to request that the judge waive the discharge of a specific debt. With a mortgage or home-equity line of credit (HELOC), you agree to continue making payments on the house as agreed. As long as you continue to do this, the mortgagor cannot foreclose. However, if you become unable to pay, the lender can not only foreclose, they can sue you for the difference between what you owe on the home and what they sell it for at auction. One of the advantages to signing a reaffirmation agreement is it allows you to rebuild your credit score faster after bankruptcy.
Stay and Pay: This means you will continue paying the mortgage without a reaffirmation agreement. Essentially, this means you are paying a debt you no longer owe, but it keeps the lender from foreclosing because they are still receiving payments. Once you have paid the full amount that was owed before the bankruptcy, the lender signs the title over. This is a popular option because it even allows you to sell the property, but refinancing is impossible since there is no current debt left on the note. Along these same lines, if you were to go into foreclosure the lender cannot sue you for a deficiency.
Surrender: If you decide not to keep your home, or you don't feel that signing a reaffirmation agreement would be wise, you may simply hand the keys over to the lender and walk away. Chapter 7 bankruptcies free you from any associated debt with regard to your home, so there is no threat of the lender coming after you later on.
We've heard a lot in the course of our country's economic recession about how families have been affected: lost homes, lowered wages, unemployment, etc.
Colorado Springs Chapter 7 bankruptcy lawyers understand that any one of these things can cause a great deal of financial strain, but it's even tougher when you're trying to cope alone.
In fact, single people face more financial stresses than couples, according to a new report from the MetLife Mature Market Institute and the Society of Actuaries. In particular, women have an especially tough time when it comes to retirement savings.
A big part of it is simply coping with a single income. Married couples may have more expenses overall, but they can fall back on one income or the other if there is an unexpected financial crisis.
On average, singles have a lower income rate than any other family grouping in the country. On average, singles make about $32,000 a year and have asset levels that stand around $110,000. Their homeownership rate is currently only at slightly above 40 percent, and less than 20 percent said they were on track for an adequate retirement savings fund. Also, only about 20 percent of singles said they had even had the chance to START saving for retirement, and many worried that their standard of living was likely to drop of dramatically after retirement.
The study further found that couples were far more likely than their single counterparts to pay off debt or have met with a professional to help them map out their finances.
This is all particularly concerning because the population of singles is growing fast. The Census Bureau reports that between 2000 and 2010, the number of single-headed households shot up by about 15 percent (equaling more than 30 million nationwide).
The good news is that if you do get caught up in a personal debt crisis, a Colorado Springs bankruptcy can give you a clean financial slate.
One benefit to being single during the process is that you don't have to worry about jointly-held debts, as is often a concern with couples or recently-separated individuals.
A successful bankruptcy is unrivaled in terms of the freedom it offers, and we are here to help you obtain it.
Our Colorado Springs Chapter 7 bankruptcy attorneys have talked a great deal about the student loan debt trap that many young people have found themselves in over the last few years.
However, a new element of this crisis has recently emerged: That of older adults who are battling student loan debt. We're not talking about the parents of college students (although, they too are struggling).
These are individuals who have perhaps gone back to college either to change careers or boost their skill set. However, what certainly seemed like a smart move a handful of years ago has now left them burdened with debt and with fewer job prospects to boot.
It's important to note that unfortunately, a Chapter 7 bankruptcy will not erase student loan debt, except in extreme circumstances (your bankruptcy lawyer can help you explore whether that is a possibility for you). But what a bankruptcy can do is free you from the other debts that may have piled up as you worked your way through school.
These are not individuals who were careless about their future or reckless about their money. Here are some examples:
1. A 51-year-old who acquired nearly $90,000 in student loan debt after graduating from chiropractic college 15 years ago. Financial aid officers told her she could likely expect to repay it within five years. But with the economy tanking, she was never able to get her practice off the ground. Able to make the minimum payments, her loan has ballooned to over $150,000.
2. A 59-year-old attended school for arts administration back in the 1980s. He didn't finish his degree, but ended up taking various field-related jobs. As other financial obligations took priority, his student debt kept getting put to the back burner. He still owes$20,000.
3. A 64-year-old who attended law school after earning a Ph.D. in immunology, and then sent two children to college at top universities. Collectively, the family owes about $120,000.
Not all of these individuals are in terrible shape, but many live paycheck-to-paycheck. That means one medical emergency or personal injury could send them into a tailspin of debt.
You do have the ability to take the reins on the situation before that happens.
We can help.
If you are stuck in a cycle of high-interest debt, it could be time to consider filing for a Chapter 7 bankruptcy.
Colorado Springs bankruptcy attorneys know that it becomes a vicious cycle: You have poor credit, so they give you a high interest rate, and then you're stuck barely being able to make the minimum, so you're scraping by just so you can cover the interest. At that rate, it could be a very long time before you are free from debt.
For example, let's say you owe $20,000 and your interest rate is 17 percent. At that rate, you could pay $400 every month, and it would still take you 7 years to pay off - assuming you put no additional charges on that card. In that 7 years, you will have paid $15,000 in interest. Now, let's say you can get that interest rate lowered to 10 percent. At that rate, still continuing to make that $400-a-month payment, you can pay off that debt in five years, and pay about $6,000 in interest.
As you can see, interest rates make a huge difference.
Of course, that's not what the banks want, so they are likely to play hard ball when it comes to negotiating. And at the end of the day, if you're borrowing money because you're spending more than you make, then getting a lower interest rate is not going to be a long-term solution.
Factor in a major life change, such as a lay-off or illness, and the situation quickly begin to snowball.
This is where a Chapter 7 bankruptcy can help.
If will allow you to leave those debts behind - and not look back.
In moving forward, however, as you try to rebuild your credit, you are likely to be offered only credit lines that have exorbitant interest rates. The key at the very beginning is to taking out only the credit that you can afford to pay back in a short period of time. Doing this regularly over time will allow you to ultimately boost your credit score after bankruptcy.
What you want to keep in mind is that all this money you are forking over in interest to these banks is making it more difficult for you to retire on time, send your kids to college, start your own business - or whatever other goals you have.
A bankruptcy can change that.
For Colorado Springs debt-relief lawyers, a pair of competing headlines about statewide gas prices serve as a perfect illustration of just how complex, uncertain and stressful the economic recovery remains for many struggling families who are overwhelmed by debt and thinking about filing for Colorado personal bankruptcy.
On March 18, the Denver Post reported that Metro Denver recorded the lowest gasoline prices of any major city in the country last week, registering a whopping $1.23 difference in per gallon prices with Los Angeles, where gas prices were highest.
But just one day later, an article in the Reporter Herald revealed a recent and dramatic 4.6 percent spike in statewide gas prices. In Fort Collins alone, gas climbed more than $0.15 per gallon in one week.
TIME offers a few tips for Colorado motorists hoping to save pennies at the pump:
~ Invest the $40-55 for annual membership a big-box retailer (for example: Costco or Sam’s Club) that offers discounted gas.
~ Paying cash inside (instead of using your credit card at the pump) can mean up to $0.10 per gallon in savings at stations where credit card payments come with a premium price tag.
~ Go the there's-an-app-for-that route by downloading a gas-price checker app, or turn to websites like gasbuddy.com to find the cheapest gas in town.
According to the American Automobile Association, so far this week Colorado per gallon prices for diesel, premium, mid-grade and regular fuel are highest in Vail and lowest in Fort Collins. With that said, Denver and Boulder have tied for lowest premium price at $3.88 per gallon. (Meanwhile in Vail, premium gas tops $4.26 per gallon).
Denver bankruptcy attorneys know that for many Colorado families fighting to make ends meet, spending a few cents more (or less) at the pump can be the difference between staying in the black or reaching a personal financial crisis. For nearly three decades, the Law Office of Stephen H. Swift has helped thousands of Colorado families obtain debt relief. To schedule a free initial consultation to discuss what we can do to help you, call (719) 520-0164.
If you plan to file for bankruptcy in Colorado Springs you will no doubt meet with an attorney who will walk you through all your options, but most people want a little preview before they visit a law office. Unless you've been through the bankruptcy process before it's likely you have a long list of questions, such as "will I go to court?" or "will I be able to keep my house?"
In an attempt to prepare for the inevitable it is better to seek the advice of an experienced bankruptcy lawyer and avoid the temptation to just "Google it." While there is plenty of data available about different types of bankruptcy, few online sources will accurately summarize what to expect/
Below are five things you can expect when filing for bankruptcy in Colorado:
1. You will have to go to court. Before you start worrying about a long, drawn-out court process, in most cases you will only need to attend one hearing, known as the "meeting of creditors." This is a short and simple hearing where the trustee will ask you a few very basic questions. Creditors are also allowed to attend and ask questions but they must abide by certain state bankruptcy guidelines.
2. Your case will be complete within 4 to 6 months from the date of filing. This doesn't mean you should just go ahead and file right away. While bankruptcy can be very helpful in resolving financial woes, it is not always the best solution for everyone. In addition, it's important to choose the right time to file for bankruptcy relief. Most experts recommend you wait as long as possible to file because you can only do so one time every six years. Saving this option until you absolutely need it, but you may not even need to file. For example, if you have no "non-exempt" property or wages, there is nothing that the creditors can take from you.
3. There are some very specific things that bankruptcy can do. One of the most important things is the "discharge" or elimination of debts. It can stop a home foreclosure and allow you to catch up on missed payments, and it can stop the repossession of automobiles or other property, sometimes even forcing a creditor to return property that has already been repossessed. If your wages are being garnished or a creditor is harassing you for payment, filing for bankruptcy will put a stop to that right away. It can also prevent the termination of utility services.
4. There are some very specific things that a bankruptcy can't do. One of these is the discharge of debts that arise after the bankruptcy filing. It also cannot eliminate certain rights of secured creditors, particularly with car loans and a home mortgage, which means payments must be made on a regular basis in order to retain ownership of the property. In addition, certain types of debt are never discharged in a bankruptcy. These include alimony, child support, most student loans, criminal fines or restitution, and most taxes.
5. You will need to decide between Chapter 7 and Chapter 13 bankruptcy. It's not enough to show up a bankruptcy attorney's office and just "file for bankruptcy." You must know the differences between Chapter 7 and Chapter 13 as well as which one you prefer. Below is a description of each type of bankruptcy.
Is bankruptcy an option for you? Only you know the honest state of your finances and whether you are being threatened with foreclosure, repossession or garnishment. Bankruptcy is a great way to proactively deal with these problems, but everyone's situation is different. If you have questions about filing bankruptcy in Colorado, talk to a professional bankruptcy attorney at the Colorado Springs law offices of Stephen J. Swift.
Photo Courtesy of Ponsulak / FreeDigitalPhotos.net