For the last 30 years, I’ve been drawing pictures and timelines to explain to my Chapter 7 bankruptcy clients how the process works. I finally decided to make a video and hope you find it helpful.
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.
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.
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.
Bankruptcy Relief For RI Seniors
“An increasing number of Americans aged 65 and older are declaring bankruptcy,” writes Reuters in a recent report. “Those aged 65 and older represented seven percent of bankruptcy filers in 2007, a mind-boggling jump from 1991. They are easily the ‘fastest-growing age demographic…’”
The sad fact is that many older Americans cannot help living beyond their means. Age discrimination, paired with fewer job openings, makes it almost impossible to increase their income. American seniors are dealing with an unsettled economy, decreasing pensions, increasing medical expenses, and unstable investments. Because members of America’s senior population rely mostly on fixed incomes, they are increasingly forced to rely on credit just to survive.
In the end, the only course of action left for many senior citizens is to file for Chapter 7 bankruptcy relief. Although the idea of filing bankruptcy may initially be hard to accept, it is important to understand the benefits of filing for bankruptcy when there are no other reasonable options for debt repayment.
One of the biggest misconceptions about filing for bankruptcy is that you automatically have to give up certain assets. This is clearly not true. In Rhode Island, for example, those who meet the residency requirements can protect up to $ 300,000 worth of equity in their home. Rhode Island exemption laws also allow protection of up to $ 12,000 worth of equity in motor vehicles (cars, trucks, motorcycles).
There is also generous protection of retirement accounts, household furniture, clothing, jewelry and a Rhode Island “wildcard” that can be used to protect an additional $ 5,000 worth of other property. Bottom line, most who file a Chapter 7 bankruptcy in Rhode Island don’t lose any property at all.
An ideal Chapter 7 debtor should be current on the secured debts for property she intends to keep, like mortgages and car loans. In as little as 100 days after filing her Chapter 7 bankruptcy petition, her case concludes and her dischargeable debt is wiped out.
While the number of seniors filing for bankruptcy relief is increasing, many others still do not understand their rights under the law. They are often bullied by creditors to hand over their social security checks and not have enough money left over to buy food or medicine. It becomes increasingly important to seek the help of a qualified bankruptcy attorney in these situations.