Contact David Galler, personal bankruptcy attorney in Atlanta now for cost-effective bankruptcy filings in Atlanta, Roswell, Marietta, Alpharetta, and SandySprings.
What is personal Bankruptcy?
You default in your installments. Usually, within 15 days of default, the lending firm gently reminds you about the payment. You do not pay it. 30 days pass, and you still have not paid the first default while the date of the second installment draws near.
Things start getting more serious now. Lenders remind you, not so gently anymore, of your EMIs.
At this stage, if you feel that you will not be able to service the monthly payment of your loans, you can try the Debt relief agencies.
Debt Relief agencies, as the term suggest, try to heave off the borrowings off your back. This type of method is especially useful for non-secured loans. On registering they advise you to stop paying the installments. Instead, they suggest you put something (whatever you can spare) in a separate savings account. They keep an eye on the money deposited every month in that savings account. When it reaches a threshold value, which they find palatable to the lender, they negotiate on your behalf.
Because you have stopped paying the monthly repayments, the non-secured lenders are already nervous. If they pressurize and you file a bankruptcy petition, they may not get anything or get peanuts compared to the actual loaned amount. Taking advantage, the debt relief organizations vigorously bargain with the creditors for a much reduced one-time payment to clear all your arrears. What usually happens is that you are forgiven about 40 %-50 % of your liability. Rest you have to pay in a lump sum amount. This debt relief action clears that particular debt from your credit records.
I understood debt relief. But how can I file personal bankruptcy?
If you feel that you are unable to service the debt and cannot save even the amount needed for debt relief now or in the near future, its worrying time for you. American laws are strict on loan servicing, especially in secured loans. Soon you will face foreclosure, repossession, wage garnishment notice, legal suites and rude calls.
Now, you may think of personal bankruptcy chapters to come and rescue you.
You can file a personal bankruptcy under chapter 7 or chapter 13.
Chapter 7 mandates that your monthly income should be below the median level for that State. If it’s above that level, you can try for chapter 13.
Chapter 7 is mainly used to pay off your unsecured loans. Your legal counsel in consultation with all the stakeholders drafts the payment plan. A reduced amount is arrived for each loan, to consider it as repaid. All your liquid and non-exempt assets are sold or auctioned to get an amount which pays off all your creditors as mentioned in the plan. Once you repay the loans as per the draft, the court issues a discharge certificate.
What chapter 7 leaves you is a basic lifestyle. Usually, a chapter 7 helps to square off your business assets. If you want to save your business assets, because you feel the downturn is temporary, go for chapter 13.
Chapter 13 is used for either of the two purposes. It’s sometimes used in conjunction with chapter 7 to pay off both secured and unsecured part of your loans. Sometimes 13 is used standalone when your income level is higher than what’s required in chapter 7. It is best for situations where you feel you can pay off the loans if given a longer timeframe.
Filing for chapter 13 and chapter 7, the personal bankruptcy chapters
Make an itemized list of your all expenses, your debts with lender details, the household expenses, and any revenues. Submit them to your personal bankruptcy attorney. Let them decide which chapter of bankruptcy is better for you.
The attorney form will fill out all the paperwork for you. You have to pay the required court fees, and then the firm will file the case on your behalf.
Let’s take the case of chapter 13. Within 90 days of filing the lawsuit, you have to submit the plan showing the means to repay the loan. Generally, if payment in bankruptcy is not the full amount, but a mediated lesser amount that’s decided between your personal bankruptcy attorney or your legal counsel and the creditor. If the trustee board is convinced of the viability of your repayment schedule, you will get the go-ahead to start making repayment in installments.
Under chapter 7, some debts are non-dischargeable. Tax arrears, child support, alimony arrears are non-dischargeable in chapter 7. In chapter 13 you can repay these with a proper penalty.
It’s interesting to note that in chapter 7, your attorney fees are also non-dischargeable. However, it’s possible to these fees under chapter 13 in a phased manner.
It’s not that only you can initiate your own bankruptcy. Your creditor may forgive you for one or two defaults in installments, but if he senses that your financial condition is tottering on the brink and the whole loan amount is in danger of being non-performing asset, he may serve you bankruptcy notice.
Take action, negotiate with your lenders and respond within 21 days of receiving this notice. Else you may be deemed to have committed “bankruptcy act” where upon bankruptcy petition can be filed against you by your creditor.
The State of Georgia has its own bankruptcy rules. You will find plenty of bankruptcy attorneys based in the Atlanta, Georgia.
Fees for filing bankruptcy
If you find yourself incapable of paying the attorney fees during the trials, you can try for fees which you are supposed to be paid only when the bankruptcy is successfully discharged. Fees for filing chapter 13 is 310 dollars. The trustee charges a fee between 15 dollars and 20 dollars on filing the case.
What are the types of personal bankruptcy?
We have currently two chapters of personal bankruptcy, chapter 7 and chapter 13. While chapter 7 is typically used for clearing non-secured loans with the existing non-exempt assets, chapter 13 is used for finishing the secured debts. In chapter 7, the lump-sum amount is obtained by selling the assets, which is paid to lenders included in chapter 7 bankruptcy.
In chapter 13, all the assets are not sold off; rather the client is encouraged to pay a fixed sum per month in clearing the debts, while keeping the assets. The sum you need to deposit per month comes from the disposable stable income of the debtor. The time period for full payment of debts, as per the plan, range between 3 to 5 years.
Personal bankruptcy lawyers charge around 1500 $ when the case is uncomplicated. However complications mostly arise, and bankruptcy attorney fees normally come to 5000 to 10,000 $ in each case.
How much does it cost to file personal bankruptcy?
To file chapter 7 position, one needs to deposit 335 $ while for chapter 13, filling fee is 310 $.
Why do you need to hire a personal bankruptcy attorney?
After getting the discharge, your credit rating comes down drastically, and the bankruptcy blot stays on your credit records for several years. However, between the two, chapter 13 is better in the sense that it allows your assets to be still with you, while you use them productively to pay your bankruptcy installments. In this way, you can save your assets and part your debts. But foremost, take the advice of a personal bankruptcy attorney in Atlanta, Georgia.
Never try to fight in a personal bankruptcy by yourself, although that is permissible. It is better that you supply the data but leave the data crunching and analyzing to the bankruptcy attorney. You will need to do lots of paperwork, which you will find difficult to properly fulfill. A wrong filing can even shove you to the wrong side of bankruptcy law.
The are many seemingly simple actions like purchasing an item on credit card when already on default or after the bankruptcy petition has been filed. These seemingly clever actions may land you in bigger trouble and cancel your bankruptcy appeal. Only experienced Bankruptcy lawyers can advise on your actions when you are preparing to go under bankruptcy.
As a debtor, you need as much trimmed version of actual debt, as possible. Only an attorney firm, who knows bankruptcy code in and out, can negotiate firmly with the lender for a much-reduced payment amount, which is to be paid to forgive the rest of the debt.
Select as your legal counsel somebody who has a stellar success rate in chapter 7 and 13 and who offers a personalized solution for every client. See whether he has a contingent payment mode, where you pay only on successful discharge. Make that free consultation call today!
Merin Mathew is a freelance writer