Bond & Botes https://www.bondnbotes.com Bankruptcy Lawyers in Alabama, Mississippi & Tennessee Thu, 20 Jun 2019 19:44:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.1 Can Bankruptcy Stop Foreclosure? /can-bankruptcy-stop-foreclosure/ /can-bankruptcy-stop-foreclosure/#respond Thu, 20 Jun 2019 19:44:20 +0000 http://www.bondnbotes.com/?p=50833 Many people facing foreclosure want to know whether bankruptcy can stop the foreclosure process and save their homes. The answer isn’t a straightforward “yes” or “no”. Rather, it is something like “yes, possibly, but probably not exactly the way you mean, and it depends on your circumstances.” The information below provides a general overview of how bankruptcy impacts foreclosure. However, every case is different. And, if the homeowner can’t prevent foreclosure or has determined that he or she can’t afford to keep the home anyway, it may be more beneficial to hold off on filing bankruptcy until after the foreclosure....Read   More

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]]> Many people facing foreclosure want to know whether bankruptcy can stop the foreclosure process and save their homes. The answer isn’t a straightforward “yes” or “no”. Rather, it is something like “yes, possibly, but probably not exactly the way you mean, and it depends on your circumstances.” The information below provides a general overview of how bankruptcy impacts foreclosure.

However, every case is different. And, if the homeowner can’t prevent foreclosure or has determined that he or she can’t afford to keep the home anyway, it may be more beneficial to hold off on filing bankruptcy until after the foreclosure. The best way to find out whether bankruptcy can help you avoid foreclosure is to consult with an experienced local bankruptcy attorney.

A Bankruptcy Filing Can Pause a Foreclosure Action

Because foreclosure involves secured debt, you cannot simply eliminate the debt as you would unsecured debt in Chapter 7 bankruptcy and keep the house that serves as collateral. However, bankruptcy can often stop foreclosure temporarily, which may provide the homeowner with an opportunity to stop the process permanently.

This slowing down of the process can be especially helpful in states like Alabama, which allow for non-judicial foreclosure, since non-judicial foreclosures can move forward very quickly and with little opportunity for the homeowner to fight the sale.

The Automatic Stay Halts Foreclosure

When you file a bankruptcy petition in either a Chapter 7 or Chapter 13 case, the court will–with limited exceptions–enter an immediate stay preventing creditors from pursuing any further collection action while the stay is in effect. In most Chapter 7 cases, the automatic stay remains in effect until the case is dismissed or discharged. In a Chapter 13 case, it may remain in effect for the duration of the three to five year repayment plan.

However, that doesn’t mean that the mortgage holder will necessarily be prevented from pursuing foreclosure while the case is pending. A secured credit can file a Motion for Relief from Stay, which is a request to the bankruptcy court to lift the stay as to that creditor and allow collection action such as foreclosure to go forward. The likelihood that a creditor will request relief from the automatic stay and be granted leave to move forward with foreclosure or other collection action depends on the specifics of your case. Your bankruptcy attorney can provide more information about the likelihood that your mortgage holder will be granted relief from the automatic stay and how you can effectively use the time available.

Stopping Foreclosure Through Chapter 7 Bankruptcy

The Chapter 7 bankruptcy process was designed to discharge unsecured debt, and so doesn’t provide a solution for most people facing foreclosure. Occasionally, the Chapter 7 process may provide breathing room for the bankruptcy trustee to sell the house prior to foreclosure. This obviously doesn’t save the home, but can be beneficial to the homeowner if there is equity in the house.

Generally, however, the key benefit a Chapter 7 debtor facing foreclosure receives is additional time. Depending on the circumstances, this time may be used to gather resources to attempt to catch up on mortgage debt, to attempt to negotiate a loan modification or other concessions from the lender that will forestall foreclosure, or to make alternative living arrangements. For those who have been juggling mortgage payments with large unsecured debts, eliminating those other debts through Chapter 7 may free up the funds necessary to keep mortgage payments current moving forward.

Paying Delinquent Mortgage Debt through a Chapter 13 Plan

For some homeowners facing foreclosure, the Chapter 13 bankruptcy process offers a real solution. Depending on the debtor’s income and the past-due mortgage balance, it may be possible to include that delinquent debt in the Chapter 13 plan, spreading out repayment of the past-due amount across a three to five year repayment plan.

This isn’t workable for everyone, since the debtor would have to keep current mortgage payments up to date at the same time he or she was making monthly payments to the bankruptcy trustee to pay toward the past-due mortgage balance and any other debts included in the plan. However, for homeowners who have adequate income but fell behind on mortgage debt and can’t pay the delinquent balance quickly enough to prevent foreclosure, Chapter 13 bankruptcy may be the answer.

Managing Deficiency Judgments through Bankruptcy

After foreclosure, some former homeowners face more unpleasant news: they may still owe the mortgage holder money. This situation arises when the foreclosure sale doesn’t net enough money to cover the outstanding balance on the loan and any costs of foreclosure.

While some states have laws protecting those who have lost their homes to foreclosure from further liability, deficiency judgments are permitted in Alabama, Mississippi, and Tennessee. Obviously, facing a large judgment and collection action can create real obstacles to rebuilding after foreclosure.

Since any debt remaining after a foreclosure is unsecured, a deficiency judgment can typically be discharged in Chapter 7 bankruptcy. This is generally true whether you file for bankruptcy before or during foreclosure and surrender or lose the house during the process or you file for bankruptcy after foreclosure. However, the timing of your bankruptcy petition may be important for other reasons, so it is in your best interests to consult with an experienced bankruptcy attorney before taking any action.

Here’s what Brad Botes had to say on the matter:

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/can-bankruptcy-stop-foreclosure/feed/ 0 How Bankruptcy Can Help Provide Instant Relief /2019/06/19/how-bankruptcy-can-help-provide-instant-relief/ /2019/06/19/how-bankruptcy-can-help-provide-instant-relief/#respond Wed, 19 Jun 2019 19:22:31 +0000 http://www.bondnbotes.com/?p=50831 Both Chapter 7 bankruptcy and Chapter 13 bankruptcy provide powerful tools for people who are overwhelmed by debt. However, neither type of bankruptcy is a magical solution that puts an instant end to a debtor’s financial problems. In a typical Chapter 7 bankruptcy case, it takes about 4 to 6 months to receive a discharge. A Chapter 13 case is built around a repayment plan that lasts from three to five years. On first hearing, those time frames can be discouraging to people struggling with past-due bills. Many people don’t take the first steps toward bankruptcy until the situation is...Read   More

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Both Chapter 7 bankruptcy and Chapter 13 bankruptcy provide powerful tools for people who are overwhelmed by debt. However, neither type of bankruptcy is a magical solution that puts an instant end to a debtor’s financial problems. In a typical Chapter 7 bankruptcy case, it takes about 4 to 6 months to receive a discharge. A Chapter 13 case is built around a repayment plan that lasts from three to five years.

On first hearing, those time frames can be discouraging to people struggling with past-due bills. Many people don’t take the first steps toward bankruptcy until the situation is dire, meaning that they’re in need of immediate relief and often exhausted from the stress of juggling bills and staving off debt collectors. Some are facing the threat of imminent repossession or foreclosure, or their wages have been garnished, jeopardizing the ability to pay even essential living expenses. In other words, many bankruptcy petitioners need help right now.

Fortunately, filing for bankruptcy does provide most debtors with some quick relief, from the day the petition is filed.

How Bankruptcy Can Help: The Automatic Stay

In most Chapter 7 and Chapter 13 bankruptcy cases, an automatic stay is entered immediately upon filing of the petition. The automatic stay is a court order that stays (or puts on hold) any collector calls, wage garnishments, repossessions and other collection actions–including lawsuits and foreclosure actions.

Of course, the automatic stay doesn’t last forever. But, with limited exceptions, its protections remain in place until either the bankruptcy case is dismissed or the debtor is granted a discharge–long enough to prevent most creditors from pursuing any type of collection action while the bankruptcy case is pending.

Collection Action After the Automatic Stay is Entered

Ideally, once the automatic stay is entered, all creditors and debt collectors would immediately stop contacting the debtor and pursuing other collection actions. But, it doesn’t always happen that way.

Some creditor and debt collector actions after the automatic stay is entered are honest mistakes. This is particularly true right after the bankruptcy petition is filed and the stay is ordered, since it may take several days for the creditor or collection agency to receive notice of the court’s order. Even further along the process, a creditor may occasionally make a mistake, such as neglecting to remove the account from a call queue or passing an account to a debt collector during bankruptcy.

The debtor can typically resolve those situations by advising the collector that he or she has filed bankruptcy and that there is an automatic stay in effect. The creditor may ask for the bankruptcy case number, or may request contact information for the debtor’s attorney.

Unfortunately, not every collection attempt after entry of the automatic stay is an innocent mistake, and not all are resolved as quickly and easily as calling the creditor with a bankruptcy case number or emailing a copy of the automatic stay order. Some creditors are lack adequate processes for updating customer accounts when a bankruptcy case is filed, and so persist in collection action even after notice. A few even willfully ignore the automatic stay, selling past-due accounts to debt buyers after the stay is entered or attempting to pressure debtors into making payment in spite of the bankruptcy filing.

The good news is that the automatic stay is a court order, which means that creditors and debt collectors who ignore it are breaking the law. That provides consumers with powerful tools when a debt collector violates the stay.

Stopping Collection Action Directly

Many types of collection action require the cooperation of third parties, including courts. In those situations, the debtor can often put a quick stop to the action simply by providing a copy of the automatic stay order. For example, if a creditor files a lawsuit against a debtor who is protected by the automatic stay, submission of a copy of the stay order to the court will typically stop the proceedings. Similarly, if a creditor attempts to obtain a garnishment order or seizes assets to satisfy an existing judgment, the automatic stay can prevent those efforts from moving forward.

Of course, not all collection action involves courts and other outside parties. The automatic stay also puts a stop to the stress associated with constant collection calls, past due notices, and demands from collection agencies and attorneys.

Legal Enforcement of the Automatic Stay

When a phone call or submission of a copy of the automatic stay order doesn’t stop collection action, or a creditor or debt collector persists in calling, sending demand letters, or attempting to initiate other collection actions, the bankruptcy court can help. While the court usually won’t impose sanctions for an incidental violation, serious violations and ongoing patterns of ignoring the stay can result in serious consequences for the creditor and compensation for the debtor.

In one recent case, a debtor was awarded more than $60,000 after a creditor ignored the stay order and proceeded with a foreclosure sale: $45,500 from the mortgage holder and $15,000 from the creditor’s attorney.

Learn More about How the Automatic Stay Can Help You

If your financial problems have reached the crisis point and you are facing wage garnishment, foreclosure, automobile repossession or mortgage foreclosure, contact us to learn more about how the automatic stay can create immediate breathing room to pursue a Chapter 7 discharge or formulate a Chapter 13 plan without debt collector harassment, lawsuits, wage garnishments, and other risks to your property. The initial consultation is free.

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Episode 53 – Next Lawyer Up with Ron Sykstus featuring Rebekah McKinney /2019/06/18/episode-53-next-lawyer-up-with-ron-sykstus-featuring-rebekah-mckinney/ /2019/06/18/episode-53-next-lawyer-up-with-ron-sykstus-featuring-rebekah-mckinney/#respond Tue, 18 Jun 2019 14:52:19 +0000 http://www.bondnbotes.com/?p=50828 Rebekah McKinney is a talented and tenacious lawyer and is always listed in the various published lists of the top lawyers in the State of Alabama.  She is a graduate of Vanderbilt University and the University of Alabama School of Law.  Her law firm is Watson McKinney, LLP and she has been involved in many different type cases throughout the State of Alabama.  She founded her firm, Watson McKinney, LLP, with her father, the legendary and preeminent Alabama lawyer, Herman “Buck” Watson.   Her family has a number of lawyers in it, to include her brother,  Jake Watson, who is also featured at Episode 48 of the Next Lawyer Up...Read   More

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Rebekah McKinney is a talented and tenacious lawyer and is always listed in the various published lists of the top lawyers in the State of Alabama.  She is a graduate of Vanderbilt University and the University of Alabama School of Law.  Her law firm is Watson McKinney, LLP and she has been involved in many different type cases throughout the State of Alabama.  She founded her firm, Watson McKinney, LLP, with her father, the legendary and preeminent Alabama lawyer, Herman “Buck” Watson.   Her family has a number of lawyers in it, to include her brother,  Jake Watson, who is also featured at Episode 48 of the Next Lawyer Up podcast.  I found Rebekah to be humble, smart and perceptive, along with a good sense of humor – no wonder why she always has prospective clients lined up trying to retain her!  I enjoyed speaking with her on this podcast and believe you will enjoy listening in.

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Bankruptcy Alternatives 101 /2019/05/28/bankruptcy-alternatives-101/ /2019/05/28/bankruptcy-alternatives-101/#respond Tue, 28 May 2019 19:35:41 +0000 http://www.bondnbotes.com/?p=50791 Nobody is eager to file bankruptcy, and for some people struggling with debt there are other viable alternatives. For most people, doing nothing and hoping for the best is not a viable alternative. Still, it’s one that far too many people choose. While facing financial troubles head on can be difficult and stressful, doing nothing only aggravates those problems. For most people, unaddressed financial issues ultimately reach a point at which they cannot be ignored. In some cases, that means serious crises like foreclosure, wage garnishment that doesn’t leave enough for necessities, or repossession of a vehicle necessary for work....Read   More

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Nobody is eager to file bankruptcy, and for some people struggling with debt there are other viable alternatives. For most people, doing nothing and hoping for the best is not a viable alternative. Still, it’s one that far too many people choose.

While facing financial troubles head on can be difficult and stressful, doing nothing only aggravates those problems. For most people, unaddressed financial issues ultimately reach a point at which they cannot be ignored. In some cases, that means serious crises like foreclosure, wage garnishment that doesn’t leave enough for necessities, or repossession of a vehicle necessary for work.

Therefore, it is essential that anyone who is overwhelmed by debt and without a clear solution in sight explore the options as honestly and objectively as possible and make clear, conscious decisions about how to move forward–whether that means bankruptcy, employing one of the strategies below, or something else entirely.

4 Bankruptcy Alternatives to Get Out of Debt

Creditor negotiation

The first line of defense for many people who are struggling to keep payments current is to negotiate directly with creditors. While many people with past due balances and collection accounts avoid picking up the telephone, this is another situation in which avoidance tends to make the situation worse. Of course, not all creditors and debt collectors will negotiate reasonably. However, it is rarely beneficial to assume the worst without exploring the options.

If you decide to attempt to negotiate with your creditors and debt collectors, it is important to take charge of the negotiation process from the beginning. Negotiating payments on a one-off basis, especially when those discussions are driven by collector-initiated calls, can lead to over committing and leaving other. Higher-priority debts unmanaged. Before reaching out to a creditor or debt collector, rank your debts in order of priority and calculate exactly how much you have to work with on a monthly or lump sum basis.

Drawing on existing assets

It may seem like an obvious solution, and it works well for some people. But, there are pitfalls as well, so employing this strategy requires forethought and some brutally honest math.

For example, a person who has significant equity in his or her home but is struggling with large credit card debt or other unsecured debt may see refinancing or taking out a home equity line of credit as the perfect solution. Paying off those unsecured debts with the equity in your home offers an opportunity to consolidate debts you have been juggling into a single monthly payment, and most likely to significantly lower the interest rate. However, this is typically a good solution only for those who have resolved their financial problems and have sufficient income to feel very comfortable in their ability to keep up the payments moving forward. That’s because another effect of paying off credit card debt, medical bills and other unsecured debt with home equity is to convert unsecured debt into secured debt.

That means the risk associated with non-payment skyrockets: defaulting on credit card debt may trigger collection action and even a lawsuit, but defaulting on mortgage debt can lead to foreclosure. This option may also be unavailable to those who are significantly behind on payments or have a significant history of missed payments. Even with substantial equity in a home, it can be difficult or impossible to refinance with poor credit. And, a negative credit history will typically mean a higher interest rate, decreasing some of the savings associated with this strategy.

Debt settlement

Debt settlement tempts many people carrying large balances. The promise of a significant reduction in the amount owed is understandably enticing. However, the debt settlement process doesn’t work exactly the way many people assume. Debt settlement companies save up money to negotiate with, and do not attempt to negotiate with creditors until they have collected enough funds to make a lump sum offering. Therefore, accounts continue to accrue interest and late fees and become increasingly delinquent while the debtor is paying into the fund.

During that time, the creditor is free to pass along the account to a collection agency, or even initiate legal action. This can result in serious consequences for the debtor, such as wage garnishment and serious damage to his or her credit report. And, there’s no guarantee that the debt settlement company will be able to negotiate a settlement. In fact, industry success rates are low. One report from the Center for Responsible Lending showed that 54.3% of consumers who enrolled in a debt settlement program in one calendar year had left the program without settling their debts by the end of the following year.

Thus, debt settlement is not a good option for most people. In addition, consumers who choose to work with a debt settlement company must be very careful about the organization they choose to work with. Many debt settlement companies have been sued or sanctioned by consumer protection agencies, and the Federal Trade Commission’s list of individuals and companies banned from debt relief activities includes a number of debt settlement providers.

Debt consolidation

involves taking out one new loan to cover all outstanding debt, with a goal of shifting several high-interest debts with competing due dates into one lower-interest loan. Debt consolidation can lower monthly payments and begin to improve payment history, but consumers considering this option should consider the total long-term cost of the loan rather than just the monthly payment and interest rate. While part of the month-to-month savings may be accomplished by lowering the interest rate, the savings is often partially attributable to a longer loan term. That means that even with a lower interest rate, the consumer may end up paying more total interest in the long run.

But don’t be afraid to look to bankruptcy

If debt is spiralling further out of control despite your best efforts, or you’re holding on by juggling late payments and watching balances grow with no end in sight, bankruptcy may be the right option for you. Chapter 7 bankruptcy can eliminate many unsecured debts, such as credit card debt, past-due medical bills, and that mysterious $200 the cable company insists that you owe months after you’ve terminated your service. For those with delinquent secured debt or significant assets, a Chapter 13 repayment plan may offer time to catch up on a monthly basis without constant collection efforts, late fees, and the risk of lawsuits or repossession.

To learn more about whether bankruptcy might be the right solution for you, contact us for a free case evaluation.

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Episode 52 – Next Security Clearance Expert Up with Ron Sykstus featuring Jeff Bennett /2019/05/23/episode-52-next-security-clearance-expert-up-with-ron-sykstus-featuring-jeff-bennett/ /2019/05/23/episode-52-next-security-clearance-expert-up-with-ron-sykstus-featuring-jeff-bennett/#respond Thu, 23 May 2019 18:06:43 +0000 http://www.bondnbotes.com/?p=50822 In this episode of “Next Security Clearance Expert Up”*, I was fortunate to be able to discuss security clearance issues with Jeffrey W. Bennett who is very well respected in this field. In addition to having a combined 25 years of experience in the National Industrial Security Program, Jeff is a former Army officer with military intelligence experience and he also speaks three languages! Jeff’s primary area of expertise is in the field of industrial security.  He has really mastered this area and eagerly shares his knowledge.  In fact, he is so prolific on this topic that he has his own publishing arm,...Read   More

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In this episode of “Next Security Clearance Expert Up”*, I was fortunate to be able to discuss security clearance issues with Jeffrey W. Bennett who is very well respected in this field. In addition to having a combined 25 years of experience in the National Industrial Security Program, Jeff is a former Army officer with military intelligence experience and he also speaks three languages!

Jeff’s primary area of expertise is in the field of industrial security.  He has really mastered this area and eagerly shares his knowledge.  In fact, he is so prolific on this topic that he has his own publishing arm, a blog and a podcast!

Also, since turnabout is fair play, I did this podcast with Jeff after he was kind enough to have me on his podcast discussingSecurity Clearance Problems and How to Solve Them.  I had never met Jeff in person prior to doing this podcast and it was great to get to know him.  He really is an important and integral contributor to our industrial security community.

* I should note that this is the really the second episode of the “Next Security Clearance Expert Up.”  See Episode 31 for my podcast featuring Stan Miller.

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Bankruptcy and Credit: To File, or Not to File /2019/05/07/bankruptcy-and-credit/ /2019/05/07/bankruptcy-and-credit/#respond Tue, 14 May 2019 19:35:36 +0000 http://www.bondnbotes.com/?p=50789 There’s no question that bankruptcy is a negative on your credit report. A Chapter 7 bankruptcy case stays on your credit history for 10 years, and a Chapter 13 case for seven. It will come as no surprise that most creditors don’t love to see bankruptcy when they’re reviewing your credit report. That said, the impact of a bankruptcy filing on credit scores differs significantly depending on your starting point—an important piece of the puzzle that is often overlooked when people offer generalized advice about bankruptcy and credit. Filing for Bankruptcy with a High Credit Score Although the general statement...Read   More

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There’s no question that bankruptcy is a negative on your credit report. A Chapter 7 bankruptcy case stays on your credit history for 10 years, and a Chapter 13 case for seven. It will come as no surprise that most creditors don’t love to see bankruptcy when they’re reviewing your credit report.

That said, the impact of a bankruptcy filing on credit scores differs significantly depending on your starting point—an important piece of the puzzle that is often overlooked when people offer generalized advice about bankruptcy and credit.

Filing for Bankruptcy with a High Credit Score

Although the general statement that bankruptcy hurts your credit score is widespread, one source of this concern is a widely-quoted hypothetical from the Fair Isaac Corporation (creators of the FICO score). Obviously, they know how credit scores work, so when they told the world that credit scores could be expected to plummet after a bankruptcy filing, it was easy to take them at their word.

However, the two hypothetical cases often referenced to show this significant decline were based on starting credit scores of 780 and 680. A 780 credit score is excellent, so it’s not a big surprise to learn that someone with a very strong positive credit history would see a big drop-off after filing bankruptcy. In the example provided, that decline was 220-240 points, bringing the score down to the mid-500s.

The hypothetical consumer who started with a solid-but-not-excellent 680 lost 130-150 points, also bringing his score down to the mid-500s.

But, the examples ended there, with the impact of bankruptcy on a good to great credit score. And, while there are exceptions, the vast majority of people seriously considering bankruptcy don’t have good to great credit scores. In fact, in many areas a small percentage of consumers reach these scores. 2017 Experian data shows that Mississippi residents have the lowest average credit scores in the country, with Alabama and Georgia tied for third-lowest.

Filing for Bankruptcy with a Low Credit Score

Fortunately, we have a big of data from other sources about the more realistic and relevant impact of bankruptcy on the credit scores of people who are struggling with past-due balances when they file for bankruptcy protection—or don’t.

The Federal Reserve Bank of Philadelphia analyzed data from Equifax to track the impact of bankruptcy on those who file for Chapter 7 or Chapter 13 bankruptcy in 2010. The result was surprising to many: both Chapter 7 and Chapter 13 filers saw a significant jump in their credit scores shortly after discharge. For Chapter 7 filers, the average increase was just over 82 points, while those receiving a Chapter 13 discharge saw an average increase of about 75 points.

Why are these outcomes so different from those set forth in Fair Isaac’s hypothetical models?

At least in part because the real bankruptcy petitioners studied didn’t typically have credit scores of 780, or even 680. The average pre-filing score for Chapter 7 petitioners was 538.2, and Chapter 13 filers had a slightly lower average score.

To File or Not to File?

A few years later, the Federal Reserve Bank of New York took the analysis one step further, comparing credit score trends of insolvent debtors who did and did not file for bankruptcy. In the time period studied—1999 to 2011—credit scores for insolvents who had filed for bankruptcy protection were consistently higher than those for insolvents who had not. For example, in the first quarter of 2011, average credit scores for bankruptcy filers hovered above 620, both one quarter and four quarters after bankruptcy. Those who didn’t file, on the other hand, posted average scores of about 550 after two quarters and about 570 after four.

Similarly, those who filed bankruptcy after reaching the point of insolvency were consistently more likely to have been extended new lines of credit one year later.

Of course, there are many factors that play a role in the determination of a consumer’s credit score, and many factors that impact the decision to file for bankruptcy protection. However, the New York Fed concluded that as a general rule, filing for bankruptcy would likely be preferable for an insolvent debtor.

In 2017, another report from the same institution affirmed that bankruptcy petitioners have typically seen a significant decline in credit scores in the year leading up to bankruptcy, followed by a partial rebound after. A long-term analysis showed that scores continued to increase across the 60 quarters (15 years) after bankruptcy, although the progress isn’t perfectly linear. Successful Chapter 7 and Chapter 13 filers each saw a small bump when the bankruptcy dropped off of their credit reports.

The Bottom Line about Bankruptcy and Credit

The bottom line is that the impact of bankruptcy on your credit score depends on a variety of factors. For those already struggling with debt and seeing a decline in credit scores as debts are reported delinquent or passed to collection agencies, bankruptcy may have a positive impact in the short term as well as the long term.

Like most bankruptcy-related and other legal issues, there is no cookie-cutter answer, and general news reports aren’t necessarily a good source of information about your specific situation. Scheduling a free consultation with a local bankruptcy attorney is a great way to obtain information and guidance tailored to your circumstances.

Contact us to get started right now.

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Episode 51 – Next Lawyer Up with Ron Sykstus featuring Cliff Hill /2019/05/14/episode-51-next-lawyer-up-with-ron-sykstus-featuring-cliff-hill/ /2019/05/14/episode-51-next-lawyer-up-with-ron-sykstus-featuring-cliff-hill/#respond Tue, 14 May 2019 18:06:19 +0000 http://www.bondnbotes.com/?p=50816 I can’t imagine that there are many people in North Alabama who aren’t familiar with attorney Cliff Hill.  Cliff was a network news anchor for several years prior to attending law school and his law school journey was not an easy one.   He would leave the news station immediately after the evening newscast and then go to law school in Birmingham five days per week. This went on for several years.  Talk about dedication to the law!  Cliff is one of those people who studied virtually every aspect of the law and is very conversant on a broad spectrum of...Read   More

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I can’t imagine that there are many people in North Alabama who aren’t familiar with attorney Cliff Hill.  Cliff was a network news anchor for several years prior to attending law school and his law school journey was not an easy one.   He would leave the news station immediately after the evening newscast and then go to law school in Birmingham five days per week. This went on for several years.  Talk about dedication to the law!  Cliff is one of those people who studied virtually every aspect of the law and is very conversant on a broad spectrum of legal topics.  Now, though, he dedicates his law practice primarily to personal injury cases and social security disability.  The name of his law firm is Hill and Jordan.   Cliff is very gregarious and one of those people who has never met a stranger.  I hadn’t talked to him much since our oldest sons played high school football together a number of years ago. Cliff was, of course, the president of the high school football booster club.  It was great to catch up with him and learn more about his background and entry into the legal profession.

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Who Can File for Chapter 7 Bankruptcy? /2019/05/07/who-can-file-for-chapter-7-bankruptcy/ /2019/05/07/who-can-file-for-chapter-7-bankruptcy/#respond Tue, 07 May 2019 19:41:13 +0000 http://www.bondnbotes.com/?p=50788 Technically, any individual can file for Chapter 7 bankruptcy unless the debtor, in the preceding 180 days, either: Had a bankruptcy petition dismissed because he or she willfully failed to appear in court or to comply with orders of the court, or Voluntarily dismissed a bankruptcy case after secured creditors sought leave of the court to recover collateral A bankruptcy filing will also typically be dismissed if the debtor has not completed the required credit counseling in advance of filing and submitted a certificate of completion with the bankruptcy petition. Of course, when people ask whether they can file Chapter...Read   More

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Technically, any individual can file for Chapter 7 bankruptcy unless the debtor, in the preceding 180 days, either:

  • Had a bankruptcy petition dismissed because he or she willfully failed to appear in court or to comply with orders of the court, or
  • Voluntarily dismissed a bankruptcy case after secured creditors sought leave of the court to recover collateral

A bankruptcy filing will also typically be dismissed if the debtor has not completed the required credit counseling in advance of filing and submitted a certificate of completion with the bankruptcy petition.

Of course, when people ask whether they can file Chapter 7, what they generally really want to know is whether they can use the Chapter 7 bankruptcy process to discharge unsecured debt. That is, after all, the goal of a Chapter 7 case. The answer to that question is a bit more involved.

Bars to a Successful Chapter 7 Case

Means Test Qualification

The 2005 revisions to the U.S. Bankruptcy Code included provisions to ensure that bankruptcy filings weren’t “abusive”–in other words, to make sure that people filing for Chapter 7 bankruptcy and discharging debt really were in financial crisis and hadn’t just decided it would be easier not to have to pay. The multi-step financial test associated with that analysis is known as the Chapter 7 “means test.”

If the debtor doesn’t pass the means test, the Chapter 7 bankruptcy case will either be dismissed or converted to a Chapter 13 case. So, it is in a debtor’s best interest to do the math in advance, ideally with the help of a qualified bankruptcy attorney.

For many people, the analysis is quick and easy: if the debtor’s income is below the median income in his or her state for a household of the same size, the filing is presumed not to be abusive and the debtor doesn’t have to complete the means test. For those with above-median incomes, the next step is to calculate projected disposable income over the next five years. This is accomplished by deducting allowable monthly expenses from monthly income and then multiplying by 60. However, not all expenses are included in this calculation, and some of the expenses you’ll deduct will be based on IRS standards rather than the actual amount you pay.

If disposable income–the amount left over when you’ve deducted allowable expenses from income, is less than $8,175, there’s no presumption of abuse. The calculation stops and the debtor can move forward. If disposable income exceeds $13,650, a presumption of abuse arises and the debtor can’t pursue Chapter 7 bankruptcy unless special circumstances apply.

These dollar values are scheduled to update in 2022.

For debtors who fall into the gray area with at least $8,175 but not more than $13,650 in disposable income over five years, there is another step–determining whether the leftover income is enough to pay 25% or more of unsecured, non-priority debts over five years. If not, there is no presumption of abuse and the debtor may proceed. But, if the debtor will have sufficient disposable income to pay at least 25% of those debts, the presumption of abuse arises. Unless there are special circumstances, the debtor will be unable to proceed with Chapter 7 bankruptcy, though Chapter 13 may be an option.

Time Bars to Discharge

A debtor will be disqualified from receiving a discharge in a Chapter 7 bankruptcy case if he or she:

  • Was granted a discharge in a previous bankruptcy case that commenced within 8 years prior to the filing of the current petition, or
  • Within one year prior to the filing of the petition, in another case:
    • Transferred, destroyed or concealed property with intent to hinder or defraud a creditor,
    • Concealed, destroyed, or falsified financial records,
    • Made a false claim or provided a false account,
    • Failed to satisfactorily explain loss of assets, or
    • Refused to obey an order of the court or respond to material questions

Jeopardizing a Chapter 7 Discharge

A would-be Chapter 7 debtor passes the means test and is otherwise qualified to receive a discharge can usually eliminate most unsecured debts in bankruptcy–if he or she plays by the rules. It’s important to be aware that the bankruptcy discharge isn’t guaranteed. Rather, a discharge can be denied if:

  • In the Chapter 7 case, the debtor commits any of the acts described in the section above, such as transferring property to defraud creditors, or
  • The debtor fails to complete the required financial education course after filing the petition but prior to requesting a discharge

For most debtors, the Chapter 7 process is relatively painless, and debts can typically be discharged in 4-6 months. However, there are several mistakes a debtor can make that will derail a Chapter 7 case or lead to denial of discharge. These include filing too soon after a prior discharge or disqualifying event, filing under Chapter 7 with too much income relative to expenses, and failing to follow the rules and provide complete and accurate information during the bankruptcy proceeding.

Working with an experienced bankruptcy attorney from the beginning can help to ensure that you’ve chosen the best solution for your circumstances, are fully qualified for the type of relief you choose to pursue, and understand exactly what is required of you to successfully complete your bankruptcy case and receive a discharge.

To learn more, schedule a free consultation with one of our experienced bankruptcy attorneys.

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Episode 50 – Next Lawyer Up with Ron Sykstus featuring Henry “Hank” Hildebrand /2019/05/07/episode-50-next-lawyer-up-with-ron-sykstus-featuring-henry-hank-hildebrand/ /2019/05/07/episode-50-next-lawyer-up-with-ron-sykstus-featuring-henry-hank-hildebrand/#respond Tue, 07 May 2019 19:14:57 +0000 http://www.bondnbotes.com/?p=50787 Nashville is now considered the “Bachelorette Capital” of the United States.  In that same vein, if there is a “national” hub of bankruptcy in our country, Nashville would have to be considered one of the front runners in this field as well. It also turns out that, with respect to bankruptcy filings, Tennessee usually leads the nation, year after year, in chapter 13 cases. At the center of this bankruptcy hub stands Henry E. “Hank” Hildebrand III.  Hank is the standing chapter 13 and chapter 12 trustee for the Middle District of Tennessee based in Nashville.  He is really the embodiment of someone who has mastered...Read   More

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Nashville is now considered the “Bachelorette Capital” of the United States.  In that same vein, if there is a “national” hub of bankruptcy in our country, Nashville would have to be considered one of the front runners in this field as well. It also turns out that, with respect to bankruptcy filings, Tennessee usually leads the nation, year after year, in chapter 13 cases. At the center of this bankruptcy hub stands Henry E. “Hank” Hildebrand III.  Hank is the standing chapter 13 and chapter 12 trustee for the Middle District of Tennessee based in Nashville.  He is really the embodiment of someone who has mastered his craft and there really is not an issue with regard to consumer bankruptcy where Hank is not considered the preeminent expert on the topic.  In fact, his commentary and thoughts on various decisions that are issued throughout the country are always eagerly awaited by everyone in the field of bankruptcy law.  I have talked to Hank on occasion at various CLEs over the years so I was happy to be able to spend some one on one time getting to know about his life both in and outside the practice of law.  Interestingly, Hank thought early on in his legal career that he would end up practicing “beer law,” until that job offer took an unexpected turn!  In any event, I was recently at a hearing in Hank’s town so it was good to spend some time with him at his office in “Smashville.”  That last sentence is really meant for me since I just wanted to say the word I kept seeing while I was there in the city!

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Episode 49 – Next Lawyer Up with Ron Sykstus featuring Russ Crumbley /2019/04/30/episode-49-next-lawyer-up-with-ron-sykstus-featuring-russ-crumbley/ /2019/04/30/episode-49-next-lawyer-up-with-ron-sykstus-featuring-russ-crumbley/#respond Tue, 30 Apr 2019 17:30:45 +0000 http://www.bondnbotes.com/?p=50763 For anyone who travels on South Memorial Parkway/231 in Huntsville, you can’t miss attorney Russ Crumbley’s building.  Talk about location, especially now that the Parkway construction has been completed!   Russ is a highly respected and well known attorney.  He and his lawyers handle cases that cover a wide range of law.  Russ has a tremendous and admirable work ethic, which is evident when he talks about changing careers from working in the medical field to deciding to attend law school.  I had never really gotten to know Russ prior to this podcast so I was happy to be able to sit down with him...Read   More

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For anyone who travels on South Memorial Parkway/231 in Huntsville, you can’t miss attorney Russ Crumbley’s building.  Talk about location, especially now that the Parkway construction has been completed!   Russ is a highly respected and well known attorney.  He and his lawyers handle cases that cover a wide range of law.  Russ has a tremendous and admirable work ethic, which is evident when he talks about changing careers from working in the medical field to deciding to attend law school.  I had never really gotten to know Russ prior to this podcast so I was happy to be able to sit down with him and get an opportunity to learn about him and his life in the law.

The post Episode 49 – Next Lawyer Up with Ron Sykstus featuring Russ Crumbley appeared first on Bond & Botes.

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