"At Risk" Property During Chapter 7 Bankruptcy

Chapter 7 bankruptcy is generally a numbers game between the bankruptcy trustee and the debtor. The trustee seeks to liquidate the debtor's non-exempt assets to pay creditors, and the debtor tries to avoid liquidation of any property. When property is identified by the trustee as non-exempt, the trustee may ask the debtor to turn over the property (or its cash equivalent). The trustee will then liquidate the property and distribute the proceeds to creditors.

The United States Trustee Program reports only around four percent of all Chapter 7 bankruptcy cases are “asset cases.” In other words, statistically only one case in twenty-five has an asset that can be converted to cash and distributed to creditors. Some common types of non-exempt assets include:

• Cash money
• Tax refund
• Vehicle equity
• Home equity
• Misidentified financial account
• Unlisted property

Whenever a non-exempt asset is found by the bankruptcy trustee, the debtor’s case comes under greater scrutiny, the case is generally prolonged while the asset is administered, and creditors are invited to file proof of claims to participate in the distribution of the asset.

The key to keeping property during a Chapter 7 bankruptcy is early identification and full disclosure with your bankruptcy attorney. Poor communication between the client and attorney is usually the cause of “at risk” property. Every bankruptcy attorney has a story about a client who informs the trustee at the 341 meeting of creditors, “I didn’t tell my attorney about this property, but. . .” This story seldom has a happy ending for the client and usually results in the loss of that property.

There are many ways to protect property during a Chapter 7 bankruptcy. Be sure to discuss all of your assets with your attorney. If you have doubts whether you have an ownership interest in property, discuss it with your attorney. Your attorney can provide you legal options to protect your assets and avoid “at risk” property.

Options When You Have More Month Than Money

Many professionals, including bankruptcy attorneys, will advise a debtor who is unable to pay monthly debts to “investigate your options.” So how many “options” does a person have when there is not enough money to pay the bills? The answer is: three.

The first is the “Do Nothing” option. Debtors who engage in this option hope that by avoiding phone calls and collection letters the debt will somehow just disappear. That is the same magic that makes a two year old become invisible when she closes her eyes. Obviously if you won’t see it, the collection companies can’t see it.

The “Do Nothing” option is the worst option of all because the debt does not disappear. In fact, the debt becomes bigger with increased fees and interest. Additionally, the debt collection efforts become more aggressive and may result in harassing telephone calls to family, neighbors, or your employer. Finally, you will likely be sued, your property seized or your income garnished.

The second option is “Negotiation.” Many debtors have had positive experience with this option which may include direct negotiation with the creditor for better terms, or help through a third party like a credit counselor or an attorney. Unfortunately, many people do not realize the consequences of negotiation which may include a resulting tax debt, negative items on a credit report, increased debt through fees and default interest rates, and substantial third party fees. It is well documented by the media and state attorney generals that many debtors that attempt the Negotiation option (e.g. credit counseling, debt settlement, debt negotiation, etc.) end up in worse financial shape because they opted for debt negotiation. If you elect the Negotiation option, hire a qualified and experienced professional.

The final option is “Bankruptcy.” Many professionals describe Bankruptcy as the “final option,” but in truth it may be the best option when you cannot pay your bills. Bankruptcy can give an honest debtor breathing room to reorganize debt without the pressures from collection agencies. Bankruptcy can also legally discharge debt without increased fees or tax consequences. At the end of a bankruptcy case the debtor can go forward with a “fresh start” and new financial beginning.

If your family is struggling with more month than money, it is time to examine your options. In the end, choose the option that is best for your family. Speaking with a qualified bankruptcy attorney can answer many of your debt questions.

The Elderly, Debt and Bankruptcy

Many older Americans struggle each month to pay credit card debt with a modest income. Often paying unsecured debt is a tremendous burden and requires a sacrifice of basic necessities. Sometimes the elderly conserve utilities, or cut back on food, or forgo prescription medication to pay credit card companies.

The subject of bankruptcy is especially difficult for elderly people who may cling to preconceptions that are out-dated or otherwise incorrect. There have been many changes in the laws that protect an elderly person’s ability to meet basic monthly living expenses. Many retirement accounts and social security income are protected from creditor garnishment. Additionally, elder Americans are often judgment proof, meaning all income and assets are protected from creditors. Unfortunately, many older Americans fail to take advantage of these protections because they believe they can honor their obligations by paying minimum payments each month. The sad truth is that it often takes decades to pay off a credit card by making minimum payments.

The stress and worry over repaying unsecured debt can cause health issues for young and old. A great deal of this stress and worry can be alleviated by choosing a feasible plan to either pay or discharge this unsecured debt. Bankruptcy is one tactic for managing unsecured debt and for reorganizing an elderly person’s finances. An experienced bankruptcy attorney can explain your options and provide solutions for living on a fixed income. Don’t let credit card debt turn “the golden years” to rust.

The Law Office of Erich M. Niederlehner, PA, is more than willing to help elderly Americans through difficult financial times. Many times the elderly do not need to file bankruptcy, but often choose to do so to stop all the collection calls and harassment. We have 4 convenient locations in Mobile, Pensacola, Fairhope and Fort Walton Beach. Please call toll free 877-607-2228 to schedule a free consultation. Congress has designated us a debt relief agency. We help people file for bankruptcy under the bankruptcy code. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Main office is in Pensacola, Florida. No attorneyclient relationship is established by using this
website.

Got Debt? The Consequences of Ignoring your Debts

I recently read a newspaper advice column written by a Certified Financial Planner who suggested that, as a practical matter, there is no difference between ignoring your credit card debt and filing bankruptcy. Well, let’s look at the “practical effects” of ignoring your credit card debt:

First, ignoring credit card obligations will cause a persistent series of harassing telephone calls and letters from credit card companies, collection agencies, and finally law firms. Phone calls are systematically made to the debtor’s home and work, and sometimes to third parties including neighbors, extended family, and your employer. The agencies that collect credit card debt are experts at telephone harassment – it is one of their most important weapons.

Bankruptcy, on the other hand, stops all collection calls.

Second, your credit score will be ruined on a continuing basis. For each month that a credit card goes unpaid, the creditor will report negatively to the credit reporting bureau. Additionally, collection agencies will often further harm your credit score by “resetting” the date of last activity when the account is transferred to a new collector.

Bankruptcy stops all negative reporting. Discharged debts should be identified as “Discharged in Bankruptcy” with a zero balance. The debtor’s credit report and score can begin to recover from the date of the bankruptcy discharge.

Third, you can (and will) be sued. The typical consumer will undoubtedly lose a lawsuit over a legitimate debt. The resulting judgment may include substantial penalties, interest, court fees, and attorney fees. A judgment creditor can collect from your wages, your property, and your bank account. While there are some people who are judgment proof, they are the exception and not the norm. Most people have assets that a judgment creditor can attack.

Bankruptcy prevents all lawsuits and even stops collection actions from judgment creditors.

Many consumer advocates have likened credit card debt to an illness. Like any illness, the cure is not found in ignoring the problem, which will only make things worse. If you are sick from credit cards and are unable to pay your debts, consult with a bankruptcy attorney and find the cure! At the Law Office of Erich M. Niederlehner, PA we encourge you to take control of your financial future, ignoring your problems will not make them go away. So if you have mounting credit card debt - Go Green! Cut up the plastic.

The Law Office of Erich M. Niederlehner, PA has 4 convenient locations in Mobile, Pensacola, Fairhope and Fort Walton Beach. Please call toll free 877-607-2228 to schedule a free consultation. Congress has designated us a debt relief agency. We help people file for bankruptcy under the bankruptcy code. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Main office is in Pensacola, Florida. No attorney client relationship is established by using this website.

Allow Bankruptcy Courts to Modify a Debtor's Mortgage on their Primary Residence

With the growing foreclosure numbers and poor economic news coming out daily, Senator Harry Reid, introduced an amendment to Senate Bill 2636, which would allow a Bankruptcy court to modify the terms of a mortgage for a debtor’s primary residence. The Court would modify the terms of the loan when the debtor can not afford to make the current payments on their subprime or ARM loan. This would allow the debtor to keep their home and continue to pay for the home. As it stands today, bankruptcy courts can modify debt on vacation homes, cars, boats, and investment property, but not loans on a primary residence. This is a major contributing factor to the growing foreclosure crisis and it needs to be stop. It is against public policy to prevent a bankruptcy court from modifying a loan on the primary residence, but allow the bankruptcy court to make a boat loan more affordable. This is why in Florida a creditor who is not a mortgage holder and did not preform work on the home can not force you to sell your home to pay their debt. Many many people are hurting in today’s economy, some of the problems are self made, many more are beyond their control nor were the problems foreseeable. Regardless of how the situation came about the fact remains, people need help and your United States Senate has the ability to help resolve the problem to some extent. The major question now is what will the Senate do? Is the Senate bought and paid for by the mortgage company lobby, which opposes this bill, or are our Senators we send to Washington truly there to help hardworking Americas and do the “people’s work,” or is that just a sound bite?

In the Pensacola area with housing values dropping daily, people who bought at the top of the market may find themselves owing more than what the house is worth. With this negative equity it is impossible to obtain new financing to lower payments or avoid the interest rate increase if they purchased their home with an ARM loan. I see people on a daily basis that are behind on their mortgage because of illness and being off work. Others are behind because they purchased their home with an ARM and the interest rate has increase the payments to where they can no longer afford the home. Giving the bankruptcy courts the ability to modify residential loans would greatly help the people of Pensacola get back on their feet and let the bankruptcy system fully help a debtor gain a fresh financial start.

A foreclosure hurts the entire community. So I would caution those of you that say some one should lose their home if they spent more than they can afford, or ignore this call to action as you feel you will never be in this type of financial situation. When a house is foreclosed on in your neighborhood, and is sold at a rock bottom price it lowers the property values of all the homes in the neighborhood. So if your neighbor can prevent their home from being foreclosed on it not only helps them from becoming homeless it helps the entire community by not lowering the property values in the area. Plus, by allowing one to keep their primary residence it saves tax money in not having an increased homeless population to which the community must then deal with.

This is a genuine crisis that threatens every community. Congress should take immediate and targeted action, I just hope they do so before it is to late. I would urge you to contact your Senators, and ask them to support Senate Bill 2636. Ask your Senator to make a true difference in the live’s of hardworking Americans who are down on their luck. Ask them to protect your home’s value by preventing people from losing their primary residence in foreclosure. Urge support of Senate Bill 2636, and particularly Title IV of the legislation.

Below are links to web pages for Florida Senators Mel Martinez and Bill Nelson so you may contact them and them to support of Senate Bill 2636.

Mel Martinez:
http://martinez.senate.gov/public/index.cfm?FuseAction=ContactInformation.OfficeLocations&CFID=7700771&CFTOKEN=24801601

Bill Nelson:
http://billnelson.senate.gov/contact/offices.cfm

Bankruptcy Attorney Erich M. Niederlehner, of Mobile, Alabama, Pensacola Florida & Fort Walton Beach, Florida provides qualitiy legal Bankruptcy services to the citizens of Escambia County Florida, Santa Rosa County Florida, Okaloosa County Florida, Walton County Florida, Mobile County Alabama, Baldwin County Alabama which includes but is not limited to the following cities:

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Toll Free: 877-607-2228
Pensacola: 850-607-2222

Alabama and Florida Bankruptcy Attorneys offer Affordable Bankruptcy, Debt Relief & Debt Consolidation in Alabama and Florida. Bankruptcy Attorneys provide Low Cost Bankruptcy & Discount Rates on Bankruptcy Attorney Fees serving Mobile, Alabama, Pensacola Florida & Fort Walton Beach, Florida.
Alabama and Florida Bankruptcy Lawyer – Attorney Erich M. Niederlehner Chapter 7 &13, Affordable Debt Relief & Bill Consolidation in Alabama and Florida.

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