Name: Attorney Mark Buckley, CFP
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Top 7 Reasons To File Chapter 7 vs Chapter 13

The US Bankruptcy Code provides a number of choices to people struggling with debt. The most popular choice is to file a Chapter 7 Bankruptcy petition. Here are seven reasons why.

Time—A normal Chapter 7 bankruptcy case takes about 100 days from beginning to end. After a brief creditor’s meeting one month into the process, the case ends two months later.
Property—Because federal and/or State exemption laws allow a debtor to protect their assets, most Chapter 7 filers do not lose any property. The bankruptcy trustee handles most cases as “no asset” cases, meaning that the debtor is not required to forfeit any property.
Cost—Filing under Chapter 7 is considerable cheaper than filing under Chapter 13. Even though lawyer fees may differ from state to state, most bankruptcy attorneys will quote a fee that is fair and affordable. Bankruptcy lawyers who practice exclusively in bankruptcy (not general practitioners) understand you don’t have extra money to overpay for their services.
Repayment—You are not required to repay unsecured non-priority creditors like credit cards, utility bills, personal loans, or medical bills. If you created your debt in good faith and no creditor objects to your bankruptcy, most unsecured credit obligations will be destroyed in your bankruptcy.
Privacy—Record of your bankruptcy is only accessible in the court system. In most cases, the only people who will know you filed for bankruptcy protection are you, the court, and your creditors.
Credit—Most people who file under Chapter 7 can reestablish credit shortly after their bankruptcy concludes. (Your debt to income ratio improves once your debt has been eliminated: the first step towards rebuilding your credit.)
Stress—Most chapter 7 filers never set foot in a courtroom. Instead, they merely attend a brief, informal hearing with the trustee assigned to their case.

Get Bankruptcy Advice Even If You Have No Intention To File

A common emotion for most Chapter 7 bankruptcy filers is REGRET. Not regret for filing bankruptcy, but regret for not seeking legal help earlier for their financial struggles.

This may sound self-serving coming from someone who has helped more than 3,000 clients in Rhode Island file for bankruptcy relief, but ask anyone who has filed a Chapter 7 bankruptcy. Most debtors waste time and money on weak attempts to solve an unfixable mess.

Recently, I spoke to married client who hadn’t saved much for retirement. He sold his house a few years ago and put the $ 120,000 profit in the bank, hoping it would supplement the $ 40,000 kept in a 401k plan.

Over the years, he spent $ 80,000 of his precious savings and all of his 401k in order to pay substantial credit card debt. He still owes $ 37,000 and asked me if he could NOW file a Chapter 7 bankruptcy to discharge the remaining debt.

Under federal bankruptcy protection laws, he would have difficulty protecting his remaining $ 40,000 in the bank. Because the account is joint, he may be able to protect half, but the rest is fair game for the bankruptcy trustee to go after. Now in his 70’s, there is no way this retired man could afford to lose $ 20,000.

What went wrong? What should he have done?

If he had called me years ago, I would have explained how under Rhode Island law, he could have exempted all the equity in his modest home and still file bankruptcy to discharge his considerable credit card debt. I would have also explained how it almost never makes sense to liquidate qualified retirement assets to pay credit card obligations. Instead of taking a 10% penalty on the early withdrawal, paying income tax on the gain, and forfeiting the future growth of the account, he should have known that bankruptcy exemption laws are quite generous in protecting retirement assets.

In other words, he could have kept his house and retirement account and discharged all his credit card debt . . . with ease!

It is unfortunate that he spent most of his life savings on debt that could have been eliminated with a simple Chapter 7 bankruptcy filing.

Here is my point. You may never want to, or need to, file for bankruptcy relief. But you should talk with a skilled bankruptcy lawyer who can explain all of your debt options.

So, when do you know its time to seek help? Do you have more than $10,000 in unsecured debt, are you robbing Peter to pay Paul, are debt collectors calling you at home or at work? If so, something is seriously wrong.

Bottom line: You would be surprised what you could learn from sitting with a qualified bankruptcy attorney. A good bankruptcy lawyer can offer a free consultation and patiently explain all of your debt-relief options.

Which Debts To Pay First

Re-prioritizing Your Bills

You may have been advised by experts to pay off high-interest debt before other expenses. In most cases, this advice is quite sound; however, did you know that there are certain times in which it is best to pay off debts with lower interest rates first? Don’t exhaust your limited resources without first prioritizing your debt obligations.

NerdWallet financial expert Tim Chen says, “When you have several different types of debts and your income isn’t quite keeping up with your total expenses, it can be tough to figure which debts to pay first. Ignoring high priority debts and focusing on less important ones may ultimately leave you in a worse situation than you were before. It’s often helpful for many people to have a table that lists their debts in order of highest priority to lowest.”

Here are some tips to help you re-prioritize your personal expenses?

First, start with secured debts—debts associated with assets that can be repossessed or otherwise seized. Your car and your house keep you moving, protected, and able to look for work, and as such they should be your first priority as far as protection is concerned. In the event that paying for even these most basic of priorities becomes untenable, Chapter 13 bankruptcy offers makes it possible to re-sort your finances, restructure your payments, and satisfy your creditors.

Deal with debts that can result in serious penalties second. Failing to pay off certain kinds of debt can result in serious penalties (including prison time.) Clearly, it is best to resolve these financial shortcomings as soon as possible.

The next debts to clear are those for services that require continued use. There are certain services that we simply cannot do without—electricity, running water, medical aid in the event of injury. Failing to recompense your doctor for his services will probably require you to find another, and late payment on utilities bring financial penalties with them. Although increasing numbers of doctors and utilities are willing to work with you on payment plans during these difficult economic times, you need to try to pay off debts associated with these services in a timely manner.

Finally, leave your unsecured debts (debts with no assets backing them) for last. Although the creditors of these debts may harass you while you make more pressing payments, they are unlikely—and in many cases unable—to repossess your property and more willing to work something out with you. If you still can’t cover your credit card debt after eliminating the first three varieties of debt, you should probably consider filing for Chapter 7 bankruptcy, which removes unsecured debt in order to allow you time to save for higher priority expenses.

If you are one of the millions of Americans in financial trouble, consult a qualified bankruptcy attorney.

College Students And Overwhelming Credit Card Debt

Bad college credit?

In all but a few isolated cases, student loans are not dischargeable in bankruptcy. However, this is not the case for student credit cards, which can be cleared of debt under Chapter 7 bankruptcy.

Banks and credit card companies are all too eager to cash in on the spending habits of American college students. College students tend to use credit cards indiscriminately, creating a profitable market as far as credit card companies are concerned. Meanwhile, banks use the college years to establish financial relationships with young adults.

The CARD Act, a recently passed motion to limit the marketing reach of lenders to students, established a minimum age at which a person can obtain a credit card. Unfortunately, this did not prevent credit card companies from discovering some very large loopholes in this new law.

For example, the CARD Act specified that people under 18 years old need cosigners in order to acquire cards. While this was intended to refer to parental permission and oversight, college teens twisted the word of the law in some serious ways, having older classmates or fraternity brothers function as cosigners. And all along, this activity was encouraged by those who made their livings selling plastic cards. While the CARD acts was intended to prevent credit card companies from selling their goods on campus, sellers managed to skirt that issue as well.

The evidence is telling: last year, Bank of America spent $62 million for the right to market their credit cards to kids on campus alumni associations. Meanwhile, at the University of Southern California alone, it invested $1.5 million in attracting almost 700 new accounts. Ultimately the total amount invested for all banks to get on college campuses in the past year alone amounted to over $82 million, creating 53,000 new accounts.

If you are a student struggling with credit card debt, bankruptcy can offer you a fresh start. Contact the Law Offices of Mark Buckley to schedule a free initial debt consultation.

“How Much Do You Charge To File Bankruptcy”

A percentage of callers always begin with that magic question: What do you charge for bankruptcy?

Price is always a fair question when it comes to hiring any professional. If I were paying a plumber to fix a toilet, or a dentist to pull a tooth, I want to know two things:

is he experienced to do the job
is his fee reasonable for my particular job

Sometimes you strike a good deal and sometimes you don’t. Hiring a bankruptcy lawyer is no different. Sit in on some Rhode Island bankruptcy court hearings in Providence for a day and you will quickly discover that good bankruptcy lawyers know what they are doing, but many “general practice” lawyers do not.

You will also determine which lawyers are running bankruptcy mills. I have seen some lawyers file 30 cases at once, miss filing deadlines and receive court sanctions for their poor representation. Don’t be fooled by the big billboards, the radio advertisements or their claims of filing more cases than any other firm. You should hire a lawyer who is respected by the court and the bankruptcy trustees; not someone who has a reputation of cutting corners and being unprepared.

So, back to the question of “price”. What do I charge for a Chapter 7 bankruptcy? It truly depends on what your case looks like. Its not like buying a gallon of gas where you just buy it from whoever is the cheapest. Bankruptcy is anything but a one-size-fits-all situation. Tell me your story first, we will explore all options, and if we are a good fit, I will quote you a price you can afford. (And yes, I do realize that if you had a lot of money, you wouldn’t be needing to call me. I get it.)

Filing for bankruptcy is a very complex process with specialized procedures tailored to your individual situation. Remember, your legal costs correspond to the complexity of your bankruptcy case. Fortunately, bankruptcy attorney fees are relatively inexpensive in comparison with the relief of having your debt cleared once and for all.

Another factor that will influence the amount of your bankruptcy attorney fee is the length of time your case will take to run its course. Generally speaking, a more complicated case will take longer for a bankruptcy lawyer to see through, resulting in higher prices than would be charged for a short, simple case. Easy cases should be done quickly and inexpensively. That is why I charge the lowest fee to a senior citizen, living on Social Security, with no real estate and only a few credit cards.

The costliness of your legal fees also depends on the size and volume of your assets and debts. In most cases, your legal bills will be lower the fewer assets, properties, cars, investments, and debts you have accrued. The Law Offices of Mark Buckley can provide an initial consultation to determine the value of your assets, and, consequently, determine the cost of your bankruptcy case.

Lastly, the amount of money you pay to file for bankruptcy is directly related to the type of bankruptcy you file under. When a client files bankruptcy under Chapter 13 of the US Bankruptcy Code, for example, his attorney can put the majority of his attorney fee in the Chapter 13 plan, a payment scheme that demands less money up front from the person filing.

As a RI bankruptcy lawyer practicing for 21 years, I have counseled thousands of good people struggling with bad debt problems. If you are getting collection calls, being sued for wage attachment, or just simply getting close to your breaking point, its time to call a professional.

Top 7 Reasons To File Chapter 7 vs Chapter 13

Get Bankruptcy Advice Even If You Have No Intention To File

Which Debts To Pay First

College Students And Overwhelming Credit Card Debt

“How Much Do You Charge To File Bankruptcy”

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