Month: January 2020

How Filing for Chapter 7 Bankruptcy Can Prevent Car Repossession

If you are failing to keep up with the payments on your car loan, you risk the danger of the creditor repossessing your car. While filing for Chapter 7 bankruptcy may not automatically prevent car repossession, the stay period that comes with it can give you the needed leverage to negotiate a new agreement with your creditor, or even cure your default. Continue reading to know more about how filing for Chapter 7 bankruptcy can help prevent car repossession.

The Automatic Stay Period

When you file for Chapter 7 bankruptcy, an automatic stay goes immediately into effect. This implies that for the duration of the bankruptcy process, most creditors cannot continue their debt collection activities, including trying to repossess your car. While it only lasts for a few months, the time opens up some options for you to exploit in order to prevent car repossession.

Your Options

Negotiate a New Loan

A debt discharge under Chapter 7 could be potentially costly for the creditor, especially if the car is worth less than your loan balance. Faced with such a scenario, they may be more willing to open up new negotiations with you, and agree to be a more manageable repayment schedule.

Cure Your Default

Since collection activities are halted during the bankruptcy process, it can allow you to bring your loan balance to current. If the lender sees you can continue paying your debt, they would see no reason to repossess your car.

Redeem Your Car

Under bankruptcy, you have the option to redeem your car from the lender. This means that you essentially buy back the vehicle by paying the lender its market price or the remaining debt you owe to them, whichever is lower. To redeem, you are required to file a motion with the bankruptcy court, and obtain their permission.

It’s a useful option if your car is worth less than your outstanding debt, or you don’t owe much on the vehicle. However, the payment made has to be in a lump sum. So unless you have ready cash in hand, this option may not be viable.

Exceptions

In some cases, an automatic stay period may not be entertained. This is usually the case if you are a serial filer who has filed for multiple bankruptcies in a short span of time. Additionally, your creditor can petition the court to have the automatic stay lifted and resume their collection activities.

In both scenarios, the judge makes their decision on a case by case basis. It is best to consult with a legal attorney beforehand if you are considering filing for bankruptcy primarily to benefit from the automatic stay period.

Hire an Attorney

Because bankruptcy can be difficult and time-consuming, the aid of a legal attorney can be crucial to help you better navigate through the process. For a free consultation with an experienced lawyer, book an appointment with us online or call 512-640-3340.

Bankruptcy 101 – 6 Key Facts to Remember Before Filing

When you are under a mountain of debt, filing for bankruptcy may be the only viable option, as it can allow you a fresh new start in your financial life. However, it doesn’t hurt to have a little bit more know-how about bankruptcy before you considering filing for it.

1. Two main types of Bankruptcy

For consumers, the two main types of bankruptcy they can file under are Chapters 7 and 13. The first option allows you to discharge your debt by liquidating your non-exempt assets, while the second will enable you to reschedule your debt repayment plan. For more information, be sure to check out this blog.

2. Your Location Matters

Bankruptcy laws can vary from state to state. This is why it is crucial to do research on your local state laws or consult an attorney before filing for bankruptcy.

3. It’s Not Free!

On average, the cost of filing for bankruptcy can range from $1500 to $3000 on average. First, there are the necessary filing fee and court fees you have to pay. Second is the cost of hiring an attorney. Sure, you can file for bankruptcy without a lawyer, but your chances of succeeding can be very low.

Nonetheless, these costs are often well worth it as bankruptcy helps you escape the even costlier dilemma of high debt burden.

4. It Doesn’t Always Make Your Credit Score Worse

If you are falling behind with repayments, and are heavily indebted, filing for bankruptcy probably won’t make a significant dent on your already worse credit score. In the long run, you may even see your credit score improve after bankruptcy. You may even qualify for an FHA loan a year or two after you filed for bankruptcy.

5. Bankruptcy is Public

Your filed bankruptcy is held in public records; this means that anyone can potentially seek it out if they are interested. Fortunately, unless you are really famous, few people would be aware of your case. The only people who would likely be searching it up would be individuals and organizations doing background checks on you, e.g. your employer, security personals, and creditors.

6. You have to Attend Classes

Before you file for bankruptcy, you are required to attend a 60 to 80-minute pre-bankruptcy counseling session within 180 days before the filing date. After your bankruptcy is officially concluded, you will need to attend another 120-minute credit counseling session. Fortunately, you are given the option to attend the class online or through the phone if you can’t do so in person.

Before filing for bankruptcy, consulting with a legal attorney is always recommended. They are in a position to best guide you on how to proceed with the bankruptcy process with minimal losses.

If you require a professional, personalized legal service, consider The Law Offices Sean T. Flynn. To schedule your free consultation, call 512.640.3340, or contact directly online.

6 Mistakes to Avoid Before Filing for Bankruptcy

1. Not Choosing the Right Chapter

The most common consumer bankruptcies are Chapter 7 and Chapter 13. However, there is a considerable level of difference between the two. Chapter 7 liquidates your assets as a means to pay off your outstanding debt, while Chapter 13 re-organizes your debt repayment schedule. Some people get confused between the two and end up realizing too late that they opted for the wrong one, after going halfway through the exhaustive process.

2. Withdrawing Funds from a Retirement Account

Retirement accounts, such as your 401(k), are exempt from bankruptcy proceedings. Many people, unaware of this, mistakenly withdraw funds from these accounts. However, such withdrawals are considered as income and are considered non-exempt.

3. Running up on Credits

Since filing for bankruptcy discharges your credit card debt, some people assume that they can get away with using their credit cards as much as possible before filing for bankruptcy. However, charges made 90 days before filing, or any cash advances taken out 70 days before filing, are not forgivable under a bankruptcy case, and the filer is still required to pay back the outstanding sum.

4. Transferring Assets to Someone Else’s Name

To avoid the risk of foreclosure, some people attempt to transfer the rights to their assets to a family member, friend, or person they can trust. However, doing so won’t actually guarantee the protection of your assets as transfers done with this intent is referred to as fraudulent conveyance. Courts are allowed to reverse such transfers if they occurred within four years of the day you file bankruptcy.

5. Paying Back Debt Owed to Family or Friends Before Filing for Bankruptcy

Family and friends often come first, but unfortunately, debt is a definite exception. If you pay back the debt you owe to your family or friends before filing for bankruptcy, the trustee may deem it a case of preferential payment and could potentially file a lawsuit against them for the return of these payments.

6. Not Taking the Help of an Attorney

Another major mistake many people make before filing for bankruptcy is not to take legal aid from an attorney to help them through the process. Most attorneys offer free consultations and can help you find the best route through the complicated legal process to ensure that the end results of the entire bankruptcy process are more in your favor.

Even today, many Americans have little knowledge of bankruptcy, which is why they end up making the wrong choices in the process that end up costing them dearly. Here are 5 mistakes to avoid before filing for bankruptcy. For a free consultation on consumer bankruptcy and more, book an appointment with the Law Offices of Sean T. Flynn by calling 512.640.3340 and scheduling one directly online.  

5 Biggest Reasons Why so Many Chapter 13 Cases Fail

According to available data, only 33% of Chapter 13 bankruptcy cases result in a discharge. For comparison, nearly 96% of Chapter 7 cases succeed.  There are many factors involved that result in such a striking failure rate for chapter 13 cases. We list down the 5 biggest reasons why so many chapter 13 cases fail.

1. Loss of Motivation

Filing Chapter 13 is a long and arduous process. Unlike Chapter 7, which usually lasts for only a few months, in the case of Chapter 13, you need to complete a 3-5 year repayment plan before the remaining debt is discharged.  Many filers simply get tired of the process and realize that fighting to retain certain properties simply isn’t worth their energy.

2. Not Enough Resources

A lot of individuals filing for Chapter 13 bankruptcy just don’t have the required resources to begin with. Often as a sort of last resort, they file for a Chapter 13 case to stop a foreclosure or lawsuit. It is only when once the process is started that the court discovers that the filer doesn’t have the financial means to go through the Chapter 13 repayment plan and dismiss their case.

3. Sudden Changes in the Financial Status

As mentioned before, a Chapter 13 plan is a long drawn process. During that 3-5 year period, a lot could change that would undermine a filer’s ability to go through the plan. They could lose their job, lose their medical insurance, or incur extra expenses due to some unforeseen circumstances. All this impacts their ability to go through with the repayment plan, and their cases are dismissed as a result.

4. Strategic Reasons

Sometimes, debtors themselves may file for Chapter 13 without the intention of completing it through. They do so for strategic reasons. This could range from wanting to delay foreclosures, to avoiding a lawsuit, to negotiating a new settlement with their creditors. Not all of them would necessarily benefit from discharge, and they drop out halfway through the case.

5. Not Hiring an Attorney

Chapter 13 Bankruptcy is a far more complicated process than most people realize. There is a lot of subjectivity in how the legal provisions are interpreted, and you need an experienced legal profession on your side to help you built up your case. According to a 2011 study by the Bankruptcy Court for the Central District of California, of all those who filed for Chapter 13 bankruptcy without an attorney, only less than 0.5% managed to get a confirmation. In comparison, those filers who were represented by an attorney have a confirmation rate of an astonishing 55%!

Struggling with debt and in need of legal assistance? Book an appointment online or call at 512-640-3340 for a free consultation with a seasoned attorney.

Get A Fresh Start

Schedule a time to speak with an expereinced Bankruptcy Attorney today!