In Chapter 7 the attorney’s number one job is to make sure that you don’t lose anything and to make sure everything you own is protected. In a Chapter 7, you are allowed to keep a certain amount of property, and pension plans, retirement plans, 401(k)s and some equity in your house. You’re also allowed to keep workers compensation cases and personal injury cases from car accidents, but that’s all you’re allowed to keep to make your fresh start with.
If you owe anything beyond that, the trustee can sell it to pay off some of your debts. In a Chapter 7, the attorney’s job is to make sure you get to keep everything you possibly can and that you don’t lose anything more than you have to.
Chapter 13 is more complicated because you’re setting up a payment plan and you have to deal with different creditors, who get paid in order of priority; taxes often get paid first, then secured creditors like your mortgage and car, then you have to deal with your unsecured creditors, although some creditors may have cosigners on and you’ll want to treat them differently. If you have student loan debt, you may want to treat that differently than credit card debt; these are all the issues that come up in a Chapter 13, so you need an experienced attorney to guide you through and make sure everyone gets paid in a way that’s to your best advantage.
Can An Attorney Help Give Me the Best Advice on What Sort of Bankruptcy to File For?
Absolutely; in fact, the form you will fill out lists the different kinds of bankruptcy and the attorney will explain those and discuss the pros and cons of each. There are advantages of Chapter 7 over Chapter 13 and vice versa, and an experienced attorney can help guide you through and make sure you make the best choice for you and your family.
How Can My Attorney Actually Help Me Save Money in the Long Run?
That’s the interesting thing about the no-money-down Chapter 13; if you do that and you cram down your car, you will save more on that alone than it will cost you to file in the first place. The cars rapidly depreciate once you buy them, so the time you’re 2 or 3 years down the road you’re often as much as $8,000 under water on the car, and cramming down the car loan can save at least that much. Plus, you get to keep your car and you won’t have to worry about the creditor repossessing it; you get to keep driving to work and taking care of your family.
When Do People Typically Start Falling Behind on Their Debts?
The most common thing people say when they come to see me is they just wish they could have come in earlier. No one wants to file for bankruptcy, so they put things off and do things like use one card to pay another car and move money around until eventually there’s nothing left.
They continue to wait, hoping that things will turn around and get better, which doesn’t happen; it’s a snowball effect and once it starts downhill, you can often never catch up. By the time they come to see me, they wish they’d spent money on debt consolidation or they realized how much they could have saved if they’d done it years earlier.
Once you get to a certain point, all of your money goes to things that happened in the past. By filing a bankruptcy, you can stop putting your money toward the past and you can start saving for the future. For example, if you’re paying $300-$400 a month on credit card minimum payments and you file bankruptcy, you can put that $300 a month into a bank account, and in two years, you’ll have $7,000, which you can used for a down payment on a house on an FHA loan two years after filing the bankruptcy; the sooner you file the sooner you can get to that point.
For more information on Benefits of Hiring An Attorney, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (410) 243-1508 today.