Many people have heard or read that new Bankruptcy laws have taken away their right or ability to file for Bankruptcy. Others are under the misconception that they don’t qualify or they have to repay all their debts prior to filing for Bankruptcy.

I have one response for this type of information, too much internet, and friend miss-research.  While it is true that the change in the laws made it more difficult for people to file for relief under Chapter 7, many still qualify.  Wouldn’t you rather know how and if you qualify before you file than face attorneys at the U.S. Trustee’s Office on a Motion to Dismiss?

It pays to consult with someone who knows and practices bankruptcy.  Bankruptcy is not a cookie-cutter remedy.  Each case is different; with different people and different facts.  Bankruptcy is very complicated and intersects with many other areas of law.  In fact, my statement to clients is, “Bankruptcy is very complicated; please call with your questions or concerns.”  I welcome their questions knowing the answers give them peace of mind.  I am committed to returning calls within 24 hours, except weekends and holidays.  There are always some who try to abuse my availability but by and large, I have found most clients are comforted once they have the answers to their questions and we can work together to plan their fresh start.

I appreciate clients who will meet with me when they first start to realize they are experiencing financial difficulties.  This allows for discussion and education on which debts you have to repay and which you don’t.  You have the opportunity to see if you are comfortable trusting my office to handle your legal needs and to chart out a flexible plan for your fresh start.  Communication takes away the fear the unknown.   Most people know that the change in the laws added a year to the time you may file another Chapter 7 Bankruptcy and receive a discharge on the second Chapter 7.  Did you know that there are different time limits for filing a Chapter 13, then a Chapter 7, or a Chapter 7 then a Chapter 13, or a Chapter 13 and another Chapter 13?  Your attorney should.

You may file successive Chapter 13’s to force your creditors to accept a payment arrangement even though you don’t receive a discharge; this can be a great remedy if you suffer from a very aggressive creditor with a non-dischargeable debt.  Your Chapter 13 allows you to pay your allowable necessary expenses (like rent, food, insurance, medical costs), stop aggressive collectors and keep your payments to creditors reasonable.

The good news in bankruptcy is the creditors must accept the payment arrangements of a confirmed Chapter 13 plan, Chapter 7 discharges unsecured credit card debt, bankruptcy stops collection activities and credit scores usually improve after the bankruptcy discharge.  As an added bonus once the discharge order is entered the creditor is forever stopped from collecting on the debt.  A debt consolidation usually does not improve credit scores until the creditors are paid and may even attempt to collect on debt after you complete the payment arrangement.

I have consulted with clients who paid a ‘debt consolidation’ company before they came to my office in hopes they would protect or build their credit score only to be disappointed because a rogue creditor would not agree to the payments or their credit score did not improve because the debt consolidation company pays themselves first and the continuing default is reported to the credit bureaus. There is also the chance that the payment arrangement is just not affordable and bankruptcy would have been a better remedy. Our office will do a budget analysis to allow you to make an informed decision as to whether you can afford a payment arrangement.

It is a relief to have the strong arm and protection of the Bankruptcy Laws.  If someone is looking into debt consolidation I strongly suggest they consult with a bankruptcy attorney to see which remedy is best for them.  Ask yourself would you rather start saving for retirement now or later?  How much time do you have?

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