WHO SHOULD FILE FOR BANKRUPTCY?
Most of us are already living on the edge and it only takes one or two events to push us into serious debt. The triggering event can be a death of a spouse, a serious medical diagnosis and its subsequent treatment of the illness, a job loss, or a divorce. Most recently, that event is likely to be COVID-19. The financial hole you fall in to can almost be debilitating in that you do not know what your options are and you begin to ignore late notices and creditor calls. You suddenly notice that you are taking home less money and find out that your creditor is garnishing 25% of your take home pay every two weeks. Alternatively, you come home one day to find a Notice of Foreclosure taped to your door. If this sounds familiar to you, it is not too late to get control of your financial situation. When you are ready to act and take back control of your finances, call us immediately so we can give you legal advice and help you plan your next steps. Don't wait. Call now. Plan ahead. The consultation is free but the peace of mind is priceless.
WHAT IS A CHAPTER 7 BANKRUPTCY?
This is the typical bankruptcy that most Americans will file. Chapter 7 of the Title 11 of the United States Bankruptcy Code governs the process of liquidation of Bankruptcy law of United States. It is known as the "fresh start" bankruptcy because that is exactly what it is designed to do. It allows you to get rid of credit card debt, payday loans, medical bills, past eviction debt, past repossession debt, and most unsecured debt. One of the myths about filing bankruptcy is that your credit score will take a severe nose dive. The truth is that most of our clients get an increase in their credit score upon filing. How does this happen? It is usually because your unsecured debt is eliminated and you are then able to rebuild your credit immediately. Will you lose your car or your house? It depends. If you're current on the payments then you can probably keep them. At Hallaq Law, PLLC, we have two experienced attorneys who can help you navigate the process of filing Bankruptcy. We can analyze your personal situation to see if bankruptcy will in fact help you financially, and discuss your options with you - your first consultation with us is FREE. Call or text us at: (206) 423-9592 or (206) 751-6643 or email us at [email protected]
DO I QUALIFY FOR A CHAPTER 7 BANKRUPTCY?
Here at Hallaq Law, PLLC, we don't make you fill out lengthy questionnaires. We don't make you jump through hoops just to speak to us. When you call us, you speak directly to an Attorney. We make an appointment with you for your first consultation at a time that is convenient for you. At that time, we will gather all of your information on your family's income, assets, liabilities, household size among other considerations. We will answer any questions you have about Chapter 7 and what it means to you and your family. After this consultation, we should have a good idea about whether you qualify for a Chapter 7, and if not, we will explore your other options and give you a thorough analysis of what your next steps should be. Sometimes, we will ask you to wait a few more months before you can file and other times, a Chapter 13 bankruptcy might make more sense.
HOW MANY TIMES DO I HAVE TO GO TO COURT?
Once we file your bankruptcy case, you will get a 341 court date that is automated by the Court. The date is approximately 30 days from the filing date. One of the attorneys from Hallaq Law, PLLC will be with you at your court hearing date. If you live in King county, your hearing will be in downtown Seattle. If you live in Snohomish county, your hearing will be in Everett, and if you live in Pierce county, your hearing will be in downtown Tacoma. You are required to attend this hearing. If all goes smoothly, it should be your ONLY court hearing that is mandatory for you. At Hallaq Law, PLLC, we will prepare you for the court hearing by providing you with a list of potential general questions and we will also prepare you for your case specifically.
Your court testimony itself should last around 5 minutes although you should plan to be in court for around an hour since you will need to wait for your case to be called. The bankruptcy Trustee represents the Bankruptcy estate so he or she has a duty to ask questions of your bankruptcy petition and financial estate. The Trustee's questions are designed to determine if there is any asset you have that is unprotected and that he/she can take for the benefit of your creditors.
HOW LONG DOES IT TAKE BEFORE MY BANKRUPTCY CASE IS DONE?
After you attend your 341 court hearing, you will have to pay your filing fee if you had not done so, and you will need to take your second credit counseling class. If the Chapter 7 Bankruptcy Trustee asked for any documents at your 341 hearing, those will need to be submitted before your case can be discharged. If you have done all of the above then in approximately 60 days, the court will issue a discharge order which will be very generic. Once the Discharge Order is filed, your case is then complete and you will be done with the process. For a short period of time following your discharge, you will still be subject to the obligations of the bankruptcy court. Specifically, if you become entitled to monies or assets, such as through an inheritance, lottery winnings, etc. that are beyond your normal income, you are required to report any such income that you become entitled to (even if you have not received the asset yet) from 180 days from the time that we filed your case. After six months have elapsed from the time that you originally filed your case, if you become entitled to such an asset, then the asset will not be affected by your bankruptcy case. If you have any questions, or if you are confused as to what type of asset needs to be disclosed, please contact me as soon as possible.
WHAT IF I FORGOT TO LIST A CREDITOR AND MY BANKRUPTCY CASE IS DONE? CAN THE CREDITOR STILL COME AFTER ME?
If there is information that you neglected to list in your bankruptcy schedules, such as a missing creditor, or an asset that you were not aware of, or forgot about, you remain under a continuing obligation to notify the bankruptcy court about such information. In the case of a missing creditor, your bankruptcy case will discharge that obligation even if you did not list that creditor. The problem is that for any creditor that was not listed, there is no penalty for them contacting you in ignorance of your Bankruptcy filing. If you have questions about this, please contact us.
WHAT DOES THE DISCHARGE ORDER MEAN AND HOW DOES IT BENEFIT ME?
Your Chapter 7 Bankruptcy Discharge will operate to discharge most unsecured obligations. An unsecured obligation is an obligation that is a “promise to pay”, such as a credit card, line of credit, medical bill, etc. Some obligations are “secured”, meaning that the creditor holds a lien in some item of property that you have. Most commonly, these take the form of cars, and homes, however, you can pledge some types of personal property, if the creditor required this type of security as part of your loan. Most secured obligations are discharged in the sense that you will no longer be under an obligation to continue to make payments on the obligation, however if you stop paying on that obligation, the creditor has the right to ask you to return (surrender) the property. If you surrender the secured property you will no longer owe that creditor any debt, even if the property was worth less than what you owed the creditor. You may have signed a reaffirmation agreement on your secured obligations, which means that the debt is not discharged even if you return the secured property.
WHAT IS A REAFFIRMATION AGREEMENT?
If you signed a reaffirmation agreement to keep some item of property (such as a car) and resume payments, you must make each and every payment on time, each month. If you do not, you risk losing the collateral (i.e. car) to a repossession, and possibly having the creditor pursue you for any unpaid balances. You may deal directly with those creditors from this point forward, to ensure that your account remains in good standing. If chose to surrender collateral, such as a car, rather than sign a reaffirmation agreement, the creditors may resume their collection activity, however, you will not be responsible for any unpaid balances, so long as you do not oppose their recovery of the collateral.
HOW CAN I REBUILD CREDIT AFTER FILING BANKRUPTCY?
You will likely be contacted by various companies claiming that they can offer you opportunities to “rebuild your credit.” Oftentimes these offers take the form of a new credit card, a new car loan, or a “credit repair specialist” who will work with you to fix your credit report. It is imperative that you act with prudence and be a careful consumer. Such offers are usually skewed against you, with high interest rates, or services that turn out to be things that you can do yourself. Please resist the temptation to jump at the first opportunity for credit. Your credit will slowly rebuild itself by operating your personal life in a careful and financially responsible manner, such as by maintaining steady income/employment, saving money (avoiding overdrafts), paying your monthly bills on time (avoiding late pays), and sticking to a monthly budget. Sadly there is no magic secret to rebuilding your credit, and the major bureaus will maintain the record of your bankruptcy for at least 10 years.
WHAT IS THE TOTAL COST OF A CHAPTER 7 BANKRUPTCY?
Hallaq Law, PLLC does not hide the ball. We explain every fee and cost associated with your case in plain language BEFORE you make a decision to hire us. Hallaq Law, PLLC does provide our clients with affordable payment plans - you pay whenever and whatever you can afford to pay. The attorney's fees varies and your attorney will discuss it with you at the time of your free consultation. There is a court filing fee which is $335.00 and that fee goes directly to the Court, which you can pay after filing. We will also pull a due diligence report and we pass the cost ($40) to you. You also need to take two credit counseling courses and we have found a company that will provide it to you for a flat fee of $24.00 for the first class and $20.00 for the second class.
WHEN DO I GET MY GARNISHED FUNDS RETURNED TO ME?
Upon filing your case, the automatic stay period is the part of the Federal Bankruptcy law that prevents creditors from collecting on your debts without first getting permission from the Bankruptcy court. The stay operates two ways for you if you are currently being garnished: 1) It immediately stops any pending garnishments and 2) We will likely be able to recover any money that has already been garnished from you if it is over $600.00 and if it has been garnished in the last 90 days. The automatic stay also stops all lawsuits, repossessions, and foreclosures.
For more questions about Chapter 7 bankruptcy, please visit our Resources page.