Are All Debts Forgiven in Bankruptcy?

Are All Debts Forgiven in Bankruptcy?

Are All Debts Forgiven in Bankruptcy?

Bankruptcy is a very useful thing that can help many people and give them a fresh start in their financial lives. Many debts can be discharged in bankruptcy. However, there are sometimes exceptions. Debts that are commonly discharged in bankruptcy include things such as:

  • -credit cards or unsecured loans
  • -car repos and deficiency balances
  • -SOME car accidents
  • -material supplier debts
  • -medical bills
  • -lawsuits and judgments
  • -evictions and unpaid rent
  • -unpaid utility bills
  • -foreclosure balances

There are exceptions, however, to the above standard discharges covered by going bankrupt. The following are four different examples of these exceptions:

Excessive credit card use immediately leading up to the bankruptcy. If you go on a major credit spree just before filing for bankruptcy, you may have troubles. The creditor may challenge your request claiming you never intended to pay for those items. If this happens your entire balance MAY NOT be discharged.

Being under the influence of drugs or alcohol when you cause an accident or maliciously or willfully causing an accident. Debts under these kinds of circumstances cannot be eliminated.

In the case of money owed to suppliers, if you STILL have material that the supplier can recover and resell, you have to return it. You don’t get to keep it, eliminate your debt and then resell the material for your own profit.

Committing fraud when you’re sued may prevent debts from judgments against you from being discharged.

More: How to get your credit on track for 2020

The aforementioned debts are the most common types included in bankruptcy petitions. It should be noted that each case is unique and has its own set of circumstances. Therefore you should always consult an attorney concerning your particular debts as well as do your own personal research.

See also:

Should I File Bankruptcy?

Bankruptcy and Divorce

What Can I Keep After Bankruptcy?

 

How Do I Start a Bankruptcy?

How Do I Start a Bankruptcy?

Where do you start if you are considering bankruptcy?

Reality has changed for millions of people over the last few years. Even though the housing market has recovered nicely, for some, this reality is not in their favor.  If you feel overwhelmed by a mountain of debt and can’t see your way out of the situation. It might be time to consider filing for bankruptcy.

Filing bankruptcy is a serious matter. You should get financial counseling before you take this step, but if you have no other option, the process can protect you from harassment.  It is pretty straight forward.  Over time, if you are careful, you will have a chance to rebuild your credit.

Once you have researched your options and concluded that bankruptcy is the best way forward, make sure that you understand the process before you begin filing so that at any point along the way you will know what steps are next.

How Do I Start a Bankruptcy?

The first step in filing bankruptcy is to determine what you owe to each lender. You can do this by obtaining a copy of your free credit report from each of the three major reporting agencies: Equifax, Experian and TransUnion. This will provide you with the most recent records of your debts and will play an important part in ensuring that you properly proceed.

Next, visit the U.S. Courts Bankruptcy website.  Here you can find information regarding the type of bankruptcy you will need to file. Generally, you will file under chapter 7 or chapter 13.  When you understand the differences you are ready for step 3.

You will probably want to obtain an attorney who specializes in bankruptcy in your area.  This is always recommended because his/her expertise can help you make your way through the often confusing process of bankruptcy.  They can also advise you on how to get creditors off your back while you are moving ahead.

Locate a bankruptcy attorney in your area. Although an attorney is not required to file for bankruptcy, it is highly encouraged that consumers use a knowledgeable bankruptcy attorney. The bankruptcy process is not clear-cut and it is important to have an experienced professional on your side. The e-bk website maintains a lawyer directory that will help you in your search for an attorney to help you with filing your bankruptcy.

Once you have your records in place, meet the attorney in person. If you are married or have a partner, bring them along and talk about the right process for your bankruptcy. This will also mean taking a Means Test that will determine whether you file for chapter 7 or chapter 13 bankruptcy. Once your path is set, the attorney will file a petition on your behalf. The entire process can be quite lengthy, but once the petition is filed with the court, you are well on your way to a new beginning.

Filing bankruptcy in Western Washington should never be your first step in finding debt relief, but if you have exhausted your other options and still find yourself unable to meet your debt obligations, bankruptcy can help you move forward toward a better future.

Contact Advantage Legal Group for more information on Western Washington bankruptcy.

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    Is Bankruptcy Embarrassing?

    Is Bankruptcy Embarrassing?

    Is Bankruptcy Embarrassing?

    Being an adult is rough. As an adolescent we would hesitate to do things, worried about what our peers would think, and often, being an adult is no different. Being an adult doesn’t mean you no longer have emotions or that you don’t worry about others judging you. However, being an adult DOES mean that you need to go ahead and make the hard decisions that DO come with consequences, BUT do turn out better for you in the long run.

    Bankruptcy has a weird stigma and connotation like people think their name will appear on some “website of shame” or something. The truth is, unless you’re a celebrity, you probably won’t hit any tabloids.

    Most of bankruptcy is between you and your lawyer. As with any other attorney/client relationship, the attorney/client privilege of confidentiality applies.

    When your case is filed with the bankruptcy court, your case will be sent to your creditors for obvious reason. Additionally, any family or friends that you owe money to will be notified as well since you are required to list ALL debts. Therefore, now your lawyer knows and the people you owe money. No one else. It is true that your filing of bankruptcy is public record but no one would ever know unless for some reason they purposely sought it out.

    The only time you will be out in public discussing your bankruptcy is at your “Meeting of Creditors”.  This meeting is a short meeting between you and your bankruptcy trustee. Creditors are welcome to attend however, they usually don’t.  These meetings are generally held in a conference room and last about five minutes or so.  So, rest assured that this is a short meeting with STRANGERS that you’ll probably never see again. So, once again unless you’re a celeb and get caught by TMZ, the process is relatively short and painless.

    No one will know you filed for bankruptcy unless you tell them. Besides all this, if you’re facing serious financial problems and TRULY WANT to begin to do what RIGHT with your money, you shouldn’t feel any shame in creating a fresh start with a clean slate for yourself. Hold your chin up and begin on the path of financial responsibility.  You got this.

    See Also:

    Bankruptcy Basics

    Should I File Bankruptcy?

    Bankruptcy Myths

     

    Before I File for Bankruptcy, Can I Sell Some of My Assets?

    Before I File for Bankruptcy, Can I Sell Some of My Assets?

    Bankruptcy is all about helping an individual(s) resolve debt and learn better financial management. Getting a fresh start is not just about leaving the past behind but it also requires someone to protect the assets they still have. You can maximize the benefits of this by NOT borrowing, selling or getting rid of these assets before you file for bankruptcy.

    Before I File for Bankruptcy, Can I Sell Some of My Assets?

    All too often, bankruptcy attorneys meet clients who have taken desperate measures in order to stay afloat with mountains of debt. They operate under the belief that they will lose their assets after filing bankruptcy. However, the truth is, that it can be harder to recover from bankruptcy if you don’t have the basics, such as a home, car, retirement accounts, unemployment benefits, tools of your trade and so on.

    Bankruptcy Protection and Your Assets

    A lot of times bankruptcy will provide protection for your assets. Straight bankruptcy (Chapter 7 filing) will protect “exempt” assets which means people filing for this type of bankruptcy will be able to keep much of what they own. Assets that have a higher value than what is exempt by law can be kept by “an adjustment of debts” under Chapter 13 bankruptcy for items that are nonexempt. To develop a plan to protect these assets, obtain an experienced attorney.

    Bankruptcy Can’t Bring Back What Has Already Been Lost

    Although bankruptcy can provide protection for what you currently own, it cannot bring back what you may have already lost before you filed for bankruptcy. Things that have been spent, sold or borrowed against to avoid financial disaster could have been saved if bankruptcy was filed beforehand.

    Most people facing bankruptcy don’t realize the consequences of borrowing, selling and spending or that their assets may be protected under law. An experienced attorney can help place you in the perfect position for filing bankruptcy.

    SEE ALSO:

    Should I File Bankruptcy?

    What Can I Keep After Bankruptcy?

    Ready to schedule a consultation?  425-452-9797 Or Contact Us Here

     

    How Fast Can My Credit Score Come Back After Bankruptcy?

    How Fast Can My Credit Score Come Back After Bankruptcy?

    Bankruptcy can be a scary word but it also can mean freedom and relief from major stress. There are a lot of reasons why someone might choose to file bankruptcy, either a divorce or painful separation from someone that has ruined your credit, medical injuries or bills, or even job loss. Bankruptcy is nothing any of us should enter into lightly, but it may also be the best option. One of the most common questions we get is how long does it take to reestablish credit after a bankruptcy. Here are some important answers to how fast can your credit score come back after you’ve suffered bankruptcy.

    It’s important to know that bankruptcy can and probably will cause your credit score to drop dramatically. There’s no way to underestimate the impact of a bankruptcy and it is one of the worst things you can do to your credit score, however, if you don’t need your credit score for any other major purpose in the next few years, it may be worth it to get you out of the stress and payments of medical bills, credit card debt, or other issues that are proving just too difficult to handle on your own.

    Bankruptcies can also cause long-term damage to your credit report. Any public record of a chapter 7 bankruptcy can stay on your credit report for up to 10 years. Chapter 13 or any accounts included in the bankruptcy as well as third-party collection debts, tax liens, and judgments can stay on your credit history for up to seven years.

    Related: Chapter 7 Vs. Chapter 13 Bankruptcy

    The good thing is that the negative impact the bankruptcy has on your credit will diminish over time. Time is definitely on your side when it comes to re-establishing your credit. Here are some key things to do to ensure that time is not only working for you but when the time comes for that bankruptcy to drop off, your credit score will skyrocket.

    Schedule a Consultation

    #1. Check your credit report frequently.

    Credit reports aren’t perfect and you may find errors from time to time. It’s important to check your credit history after bankruptcy as scary as it may be. Just a bite the bullet and do it. Did you know that 25% of US consumers have found errors on their credit reports that may affect their score? As soon as your bankruptcy is complete make sure that the accounts that were discharged are reported as “discharged. Verify that they have a zero dollar balance and that the bankruptcy filing date is correct so that you can remove this bankruptcy as quickly as possible.

    #2. Consider a secured credit card or a credit builder loan.

    I know that you’re thinking you just got out of debt so why would you get more in debt? But to rebuild your credit means you have to have a certain history of positive impacts on your credit, which means rebuilding credit. Get a small secured loan or credit card and pay it off every single month.

    #3. Consider becoming an authorized user on someone else’s account.

    If you have a trusted friend or relative consider asking them to add you to their credit card account. Your credit will benefit from their positive history, as long as they have some. You can use the credit card in your name and it’s a good way to rebuild your credit.

    #4. Ask for the consumer credit bureaus to report any payments.

    If you are making on-time payments whether it’s to your car payment, student loan, or even rental payments, ask your landlord to report your monthly payment to Equifax, Experian, and/or Trans Union if possible. Of course, you can control is someone else is going to do it, but it is a step to reestablish your credit.

    More: How long does it take to Increase a Credit Score?

    Again, it can take anywhere from 3 to 10 years for your credit to come back depending on the type of bankruptcy you’ve chosen and how quickly you’re willing to repair it. If you need help with any bankruptcy attorney issues or have more questions on bankruptcy in western Washington contact our office at any time.

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    More:

    Protecting Bank Accounts When filing for Bankruptcy

     

    Protecting funds in a bank account is often a top priority of those filing for Chapter 7 or 13 bankruptcy. The effect that bankruptcy will have on any money deposited into your personal bank accounts is dependent upon if the money has been protected by a bankruptcy exemption and the amount of pre-bankruptcy planning you were able to do to protect the money that is not exempt in the bankruptcy process.

    Pre-bankruptcy planning is common and legal, it is sometimes referred to as asset conversion. Though it may sound like it is something sneaky asset conversion is a method used to re-organize any assets and keep as much property in your hands and out of the reach of creditors as possible. The way to do this with bank account funds would be to invest any amount over the exemption amount in exempt assets.

    While it is perfectly legal to convert the non-exempt property into the exempt property it needs to be done in “good faith” and the law does not allow someone filing for bankruptcy to hinder, delay, or defraud creditors. You need to be extremely careful when converting bank account funds to the exempt property because determining the good faith of your asset conversion is tricky and while courts recognize asset conversion as legal a small amount of courts recognize pre-bankruptcy planning as ethical practice.

    Read more: Should I Even File Bankruptcy? 

    Forms of allowable pre-bankruptcy planning that do not send up red flags in court include: paying down your mortgage in states with large homestead exemption, making an annual contribution to your retirement account, IRA or other exempt pension plan as defined by your state exemption list, purchase exempt personal property like cars furniture and clothes according to state exemption amounts, purchase of life insurance, pay down nondischargeable debts like taxes, student loans, alimony and child support.

    If a court finds that you have attempted to defraud creditors with asset conversion it could impose civil or criminal penalties. Courts will look at factors such as misrepresenting asset values, investments made were worth less than money spent, family or close friends were involved in property purchases, a radical change in lifestyle.

    There is another thing you can do to protect finds in your bank account. If you owe the bank or credit union you have an account with money at the time you file for bankruptcy, for example if you have taken out a mortgage or car loan with them,they have the right to “set off” any debts owed to them with any bank account funds you have in their bank. They have the right to do this at anytime regardless of a bankruptcy claim. Banks rarely use “set off” rights but it is still a good decision to take every precaution and think of every likely scenario before filing for bankruptcy.

    Bankruptcy laws are very different in every area and it is impossible to know the best way to protect accounts and what measures you should take without an experienced lawyer. If you are considering filing for bankruptcy please contact the team at Advantage Legal Group.

     

    Is Bankruptcy Scary?

    Is Bankruptcy Scary?

    Bankruptcy scares people. In fact, even people up to their eyeballs in debt, are scared witless by the thought of filing bankruptcy! It seems absurd almost.

    What ‘s so scary about filing bankruptcy?Is Bankruptcy Scary?

    There are three unspoken fears about bankruptcy:

    • -loss of control over financial affairs
    • -the future with a bankruptcy on their record
    • -public exposure as a failure with their finances

    Let’s look at these scary aspects, in broad daylight and see if there is anything worthy of tremble and fear.

    Loss of control

    Filing bankruptcy passes nominal ownership of everything you have, outside of some kinds of retirement assets, to the Chapter 7 trustee for the benefit of your creditors. On the surface that does sound kind of scary. However, nearly 98% of Chapter 7 cases are no asset cases. That means that the debtor loses nothing to the bankruptcy trustee on behalf of creditors.

    This is because their possessions have little net value or an exemption protects the asset for the debtor’s benefit.

    In some situations, it may be hard to tell what assets are worth or whether they are saleable. The uncertainty makes it unpredictable to pass control to a trustee. That’s a case for a Chapter 13 because the debtor keeps everything he wants to keep, and pays some fraction of their value to creditors over time by cash. The debtor proposes the plan, suggests the values, and can get out of bankruptcy if the case should take an unexpected turn they weren’t hoping for.

    Future credit in doubt

    The commercials that try to sell you some for-profit solution to your debt problem scare you by saying that you’ll never get credit again if you wipe out your debts in bankruptcy or they tell you you’ll have to wait a good ten years before you can get credit, but it’s nonsense.

    Bankruptcy makes you almost instantly a better credit risk than you were before you filed. Does that sound crazy? The reason is because now there are fewer demands on your income.

    Bankruptcy is more expensive right after filing, but all things being equal, the cost of borrowing goes down the farther out you get from bankruptcy.

    The truth is the availability of credit and its cost depends on a lot of things and no one can predict them all.

    However, this is a hard cold truth you should know…. loaded with debt, you probably couldn’t get more credit now even if you didn’t file for bankruptcy. SCARY!

    Public exposure

    Bankruptcy may make you feel as if you’re going to be drug out to the town square to be tarred, feathered and ridiculed, but this is simply not true.

    Most of that view of bankruptcy is all in your mind. Bankruptcy cases are in the public record, and anyone who wants to find out can find out, BUT, how much time do you spend figuring out which of your neighbors and coworkers have filed bankruptcy? See? Nobody cares! And, anyway, you would also be surprised at how many people, famous and anonymous, have filed bankruptcy themselves. Studies show that job loss, divorce, and illness account for a large percentage of debts leading to bankruptcy. You are NOT the only one to ever travel this road and it doesn’t make you less of a person!

    These absurd fears need to be knocked down a notch or two or three!

    Not so scary

    Bankruptcy is nothing to be afraid of but not fixing a problem that has a solution is!

    Bankruptcy Requirements

    Bankruptcy RequirementsBankruptcy Requirements

    Some of history’s most successful business owners including a past president have gone through bankruptcy. Henry Ford, Walt Disney, even Abraham Lincoln all went through bankruptcy. Bankruptcy can actually be good for society, allowing people to make mistakes and recover from them and move on. Without bankruptcy, we wouldn’t have the Ford Motor Company (Ford’s second try) or Abraham Lincoln wouldn’t have gone into politics ( he first had a failed general store). Let’s demystify bankruptcy today by laying down the facts:

    In order to qualify for Chapter 7 Bankruptcy, there are seven basic requirements:

    • – Client’s annual income must be below the median
    • – $52,384.00 for an individual with no dependents
    • -$65,802.00 for couple with no dependants ( for each dependant add about $9,000 to $10,000)
    • – Filed prior bankruptcy in the last 8 years?
    • -Equity in the home?
    • -Amount of unsecured debt (credit cards, medical bills, auto deficiencies, and mortgage deficiencies)

    Once a client qualifies for bankruptcy they usually ask if they’re going to lose anything/everything and the answer is usually no. Most clients don’t lose anything they own. However, everybody’s situation is different and it depends on your own individual circumstances. Following are a list of exemptions:

    -Homestead   $125,000   (up to) State

    -Federal:

    -Wildcard       $12,725 Ind   $25,450 JT

    -Household   $12,250 Ind   $24,500 JT

    -Jewelry         $1,550   Ind   $31,00   JT

    -Tools Trade   $2,300 Ind   $4,600 JT

    -Auto               $3,675 Ind     $7,350 JT

    at Garage Sale VALUES!

    If you’re being garnished, sued or if you’re just drowning in debt, or maybe you just want a fresh start for the new year or you’re facing retirement….whatever your reason it’s time to start looking out for yourself and clearing out debt so that you can begin saving. Call Advantage Legal today and get your free consultation.

    SEE ALSO:

    Bankruptcy 101

    What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

     

    Bankruptcy Fees are Increasing

    Bankruptcy Fees are Goin’ UP!

    As of June 1st, 2014 the Bankruptcy Court will be increasing its fees for filing and general services. Periodically the filing fees in the U.S. federal and state courts do increase and that’s why we’re seeing this happen. If you are considering filing bankruptcy, now may be a good time to get going on filing that petition in order to avoid the fee increase. It may not be a huge increase, but it’s still an increase and if you’re at the point of considering bankruptcy you obviously have a desire to start being smart with every penny you’ve got!

    More: –Should I File Bankruptcy?Bankruptcy Fees are Increasing

    There are several bankruptcy fees that will increase on June 1st under amendments to the Bankruptcy Court Miscellaneous Fee Schedule that were approved in March by the Judicial Conference of the United States.

    Changes include:

    – The adversary filing fee in bankruptcy proceedings will increase from $293 to $350, a $57 increase. This new fee is equivalent to civil filing fees in federal district courts.

    -Currently, administrative fees are $46 in all cases. They will now the fee will be $75 for cases filed under Chapters 7, 12, and 13, and $550 for cases filed under Chapters 9, 11, and 15.

    More: –What Can I Keep After Bankruptcy?

    -Separate administrative fees have also been approved for when married couples divide a bankruptcy filing into two cases (see also: Can One Spouse File for Bankruptcy? ) This approval was done by the Judicial Conference due to the fact that divorce or separation often occurs while a case is being adjudicated.

    To learn more about the bankruptcy process or the different types of bankruptcy, or anything bankruptcy related for that matter, check out our blog or these specific articles:

    Bankruptcy Basics

    Bankruptcy Myths

    Bankruptcy Process and What to Expect in Court

     

    Bankruptcy Filings are Dropping Across the Nation

    Bankruptcy Filings are Dropping Across the Nation

    Bankruptcies, both of personal and business nature, continued to steadily drop throughout 2013 across the nation. This is both shocking and interesting as bankruptcies were actually predicted to rise by at least 8% in 2013. Business bankruptcies in particular, actually dropped 24%. This is the lowest they’ve been since 2006 and this trend is expected to continue through this new year of 2014.Bankruptcy Filings are Dropping Across the Nation

    2012 filings showed double digit reductions in many states across the nation. Arizona alone reported a 19% decrease. Hawaii saw an 18% decrease. This trend does seem to be domestic which is pretty interesting. As our state’s bankruptcy filings fall, those of places such as Belgium saw a 9.4% increase and The Republic of Cyprus  almost entirely filed for bankruptcy as a whole in March of 2013 before they asked for help and therefore managed to stay financially afloat.

    Obviously most people try to avoid bankruptcy as it has a negative stigma and can be costly. This fact coupled with the increased availability of consumer credit markets means the option for people to borrow rather than file for bankruptcy becomes more favorable and will consequently continue the downward trend in filing for bankruptcy.

    However, filing for bankruptcy is still the best option for some. It helps discharge debts, whether medical or credit and helps people focus on the unforgivable debts which can include such things as taxes or possibly child support. It’s this aspect of bankruptcy that offers many businesses and individuals peace of mind.

    Should you choose to file for bankruptcy in 2014, Advantage Legal Group is here to help. For more information on bankruptcy, check out these blogs:

    What to Do After Filing For Personal Bankruptcy

    Will Bankruptcy Mean I Have to Give Up My House?

    Preventing Bankruptcies