Answers to Your Most Frequently Asked Questions
You're probably full of questions right now—and that's okay, because we have answers! Check out some of the questions we hear the most about bankruptcy, divorce, and child custody from clients just like you.
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How hard is it to file bankruptcy?
Filing bankruptcy seems like a big mystery to most people. The information online is expansive, and can add to the overall confusion. Not to mention there is plenty of incorrect information and misleading articles as well! So how hard is it to file bankruptcy? How long does it take? Will I ruin my financial future by filing bankruptcy? All of these questions are legitimate concerns for American consumers. Well, we have good news for you. There is only one thing you really need in order to file bankruptcy: an experienced attorney. That's it. You don't need to worry about anything else if you find the right attorney. How do you know what to look for? Here are 3 easy ways to find the perfect bankruptcy lawyer:
1. Someone who gives you the whole picture. Some bankruptcy lawyers will say anything to bring you on as a client, even if you don't really need to file bankruptcy! You need to find an attorney who won't hesitate to tell you if bankruptcy is NOT your best option.
2. A free consultation. Bankruptcy attorneys who are confident in their knowledge and ability to give you the best information will usually offer a free initial consultation. That way you can get insight on your situation and test your comfort level with the attorney, without spending a dime.
3. Solid online reviews. Google and Facebook are great places to look for bankruptcy attorneys in your area! Both websites offer reviews upfront. Read all of them, even the bad ones. If an attorney has bad reviews, look to see how they responded to those reviews! If the reply is carefully thought-out, chances are the attorney is very careful to take care of their clients, even the upset ones!
Will Bankruptcy Stop my Garnishment Forever?
I frequently meet with individuals who ask me whether or not bankruptcy will stop their garnishment. My answer always surprises them a little. Not only will a bankruptcy stop your garnishment, but if we file you before your garnishment hearing date, we can even get that money back for you! Now of course there are a couple stipulations to go with this (1) we have to have you filed before your garnishment hearing date, and (2) if you have filed for bankruptcy before we need to make sure that there is enough exemption left on your Homestead Deed.
The way that a garnishment works is first your creditor has to get a judgment against you (unless they are the IRS or Student Loans). Once they have a judgment against you they can immediately start to garnish up to 25% of your take home pay. This is a huge hit for some people.
When you are being garnished that money isn't going directly to the creditor. Instead it is going into a trust account with the court and it will sit in this account until your Garnishment Hearing Date, when the creditor comes to pick it up. This is why as long as we file your bankruptcy before your hearing date, we can get that money back for you.
Say that it is past the hearing date though. Sometimes it is still a good idea to file for bankruptcy. otherwise that creditor will keep coming back with a garnishment until you are paid off. Every time they file a new garnishment more and more fees are added on to your bill (interest, attorney's fees, etc.). What started off as a $3,000 can quickly turn into $11,000 and more! It may seem like you will never pay the bill off.
This is why even though you might not get that money back it's still a good idea to file for bankruptcy because it will stop any future garnishments from happening.
If you are struggling with a garnishment that you cannot pay, call us at 757-276-6555! I will meet with you one-on-one and discuss how a bankruptcy can help you to become debt free.
Can I lose my house to foreclosure because of other debts?
In certain circumstances, a creditor who has gotten a judgment lien against your house can force a foreclosure sale. This is a rare circumstance, but most states do allow this to happen. If you are concerned about a judgment lien, this is a good resource for you to find out more information. Another way you could end up with a foreclosure despite paying your mortgage is if you owe back taxes on your real estate. The city or county you live in (or where the property is located) can do a tax sale of real estate for back taxes. This is also a rare situation since it requires a court proceeding.
If you have a foreclosure pending, or suspect that you might get a notice of foreclosure soon, you need to get in touch with a seasoned bankruptcy attorney as soon as possible. Foreclosures can be stopped, but waiting until the last minute will put you in danger of losing your home. Request our free report on the options you have to save your home from foreclosure, or contact our office at (757) 340-3100 for a consultation with the attorney!
What is the difference between debt consolidation and bankruptcy?
Over the years, I have met with many individuals who have tried using a debt consolidation company to assist them with reducing their monthly payments on credit cards, and to pay off these debts. I have also had people come to me and ask if they should try using a debt consolidation program instead of filing for bankruptcy. My answer is always the same: “If you have the ability to pay your debts off in a three to five year period without using the money you need to live on, then you should do it”. However, there are some huge differences between bankruptcy and debt consolidation that you should be aware of. This article will go over most of those differences.
1) Debt consolidation attempts to work with your credit card debts to negotiate a repayment plan at a reduced interest rate, and maybe a reduced balance. They do not work with other types of debts like medical bills, payday loans, car loans, tax debt or mortgage arrears. In contrast, bankruptcy will deal with all of your debts. If you do a Chapter 13 repayment plan, you will determine the amount that will be paid back to your creditors based on your financial situation. Unsecured creditors, like credit cards, medical, payday loans, and even taxes, will not receive any interest on their balances.
2) Debt consolidation attempts to work out a payment plan that will pay the credit card debts in full and the payment plan can last for several years. In bankruptcy, you will either wipe out the credit card debt in a Chapter 7 bankruptcy, or you will be in a Chapter 13 payment plan that deals with all of the debts for no longer than 60 months.
3) A debt consolidation program is voluntary for your creditors and they can opt out at any time. For example, I had clients who had participated in a debt consolidation program for over three years before they came to see me. Prior to entering the program, one of their creditors had obtained a judgment against them. The creditor agreed to participate in the debt consolidation program. My clients never missed a payment but one month the company that they were making their payments to messed up and did not send a payment to the creditor who had the judgment. The creditor immediately implemented a garnishment against my clients, taking 25% of their take home pay. After they came to see me, we filed a Chapter 13 bankruptcy, which is not voluntary for the creditors. The bankruptcy stopped the garnishment and they were able to pay off all their debts in less than five years. If they had come to see me three years earlier, they would have been able to be debt free much sooner.
4) Your credit report will take a monthly hit while you are in the debt consolidation program. A credit report shows if you are paying your creditors according to the contract. If you are not paying according to the contract, your credit report will show that an account is delinquent according to the contract terms, and every month it will show a higher delinquency. Since the debt consolidation program is based on paying the creditors back at a lower interest rate and lower payment than the minimum monthly payment, every month the credit card companies will report that you are delinquent on your payments. This lowers your credit score of course. However, when you file a bankruptcy your credit score will take a hit at first, but then you can begin rebuilding your credit by making on time payments immediately. Most of my clients see significant increases in their credit score within one to two years after having filed a bankruptcy.
5) Debt consolidation programs have a large number of fraudulent companies. When going into a debt consolidation program, you have to be very careful who you are working with. There are thousands of horror stories about individuals who have paid a debt consolidation company thousands of dollars, and nothing was paid to their creditors. Bankruptcy is governed by Federal Law and any attorney who represents individuals in bankruptcies will be supervised by the Bankruptcy Court, the US Trustee and the state bar.
There is a time and place for debt consolidation companies, and there are some reputable companies. However, you must be very careful when considering one of these programs and make sure that it will meet your needs. Likewise, filing for bankruptcy should never be an easy decision, but it can provide you with complete debt relief that is not available anywhere else.
If you are struggling with bills you cannot pay, contact Hampton Roads Legal Services at 757-276-6555. I will meet with you one-on-one and discuss how a bankruptcy can help you to become debt free!
Will my bankruptcy filing fees increase under Donald Trump's new budget?
A lot of media attention has been given to President Trump's new budget plans. Attorney Pfeiffer explains...
When an individual or couple files for bankruptcy, they have to pay a "filing fee" to the Bankruptcy Court for filing the case. This filing fee is normally included in the fees you pay to your attorney. The budget proposal that President Trump has submitted to Congress includes a provision to raise the bankruptcy filing fees. While the discussion has centered around raising the fees for Chapter 11 cases, normally when the fees are raised for one Chapter, the fees for all other Chapters are also raised. A Chapter 11 case is a reorganization bankruptcy. Normally these cases are filed by businesses who need to "reorganize" their business strategy, and often involves closing stores. However individuals can also file a Chapter 11 case. Non-business Chapter 11s tend to be individuals who have high income and/or high debts. Why can't these individuals file a Chapter 13 bankruptcy, which allows them to develop a re-payment plan? Because there is a limit to the amount of secured and unsecured debt that an individual can have and still file a Chapter 13 bankruptcy case. If the individual’s debts exceed the limit, they may have to file a Chapter 11 case. Chapter 11 cases are different from Chapter 7 and Chapter 13 cases in that the debtor incurs quarterly fees based on their monthly income. There are also monthly reports that have to be submitted to the US Trustee. Because of the ongoing requirements in a Chapter 11 case, a debtor needs to be represented by an attorney that is experienced in this type of bankruptcy.
It has been several years since the bankruptcy fees were raised, so it would not be unusual to see an increase in the cost to file any bankruptcy, not just Chapter 11. If filling Chapter 7 or Chapter 13 bankruptcy is something you have been considering, do not wait to see if the fees are raised. Attorneys cannot decrease these fees for you. The fees are set by the bankruptcy court and must be paid or the case will not be filed. Attorneys have to pay this fee before they can submit your case, which is why the fee is typically included in the total price that you pay. Our attorney's will be happy to speak with you about your situation in our free initial consultation. If you are not ready to have a meeting yet, take advantage of the books and reports we offer that will give you more information before you take the next step. Remember we want to do what is best for you and help you reach the fresh start you deserve, even if that does not mean filing bankruptcy. Our attorney will not advise you to file if that is not in your best interest. Call us at 757-340-3100 to schedule your free consultation and discuss your options!
What types of people are best suited for a debt management plan?
The Types of People Best Suited for Debt Management Assistance
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Are you struggling with credit card debt? It may seem as though you pay your credit card debts, but the balances never seem to budge. Often credit card debt has nothing to do with someone’s spending patterns, and is instead the result of extended unemployment, divorce, an accident or long-term illness. A Debt Management Plan can help many to determine the best course of action, and regain a firm financial footing. Whether the final result is adjusting your household budget, debt consolidation, or bankruptcy. There are many options available.
If you are wondering if a Debt Management Plan could help, consider the following:
Signs that you may need assistance
There is a certain type of person that is best suited for a Debt Management Plan. These individuals struggle to make minimum payments, but may not see their balances going down. Another sign could be that they miss making credit card payments, or pay them late and suffer the penalty.
If you find yourself unprepared for unexpected emergencies, such as car repairs, you could be a candidate for a Debt Management Plan. People that write checks for necessary expenses and hope that the check doesn’t clear until the next payday may also find a Debt Management Plan helpful.
Believe it or not, it is possible to save money and a Debt Management Plan may be able to help you find ways to tuck a little savings away.
Obstacles to getting out of debt
There are some barriers to pulling yourself out of credit card debt without help; the charges and fees asserted by credit card companies can inflate the balance on credit cards. This may result in consistently being over your credit limit and paying additional surcharges on these fees. It is like taking one step forward, and then two steps back.
Other obstacles to getting out of credit card debt could be life in general. A financial crisis can derail your budget and cause panic and hardship. No matter how hard you try, life can get in the way of paying down your credit card debt.
Debt management assistance options
Most creditors will work with Consumer Credit Counseling Agencies to provide financially distressed clients some relief through a Debt Management Plan. This can take the pressure off and alleviate some stress as you pay down your credit card debt, as long as the client will be able to pay off their credit card debt at reduced interest rates and lowered monthly payments, and have that credit card debt paid in full within a 5 year period.
Ways that a Debt Management Plan can help
Once you have completed a credit counseling session with an approved consumer credit counseling agency, that agency can help you pay off your credit card debt by working with your creditors to:
- Lower monthly payments
- Reduce or eliminate interest rates
- Stop late and over-the-limit fees
- Consolidate credit card payments into one monthly payment
- Stop collection calls and harassment from creditors
What you need to know:
- A Debt Management Plan can provide a thorough assessment of your financial situation.
- A Debt Management Plan can help give some relief as you work to pay down your balances.
- Enrolling in a Debt Management can put an end to the stressful collection calls.
- A Debt Management Plan may even help clients save money, and build a nest-egg for unexpected financial emergencies.
- If bankruptcy is a client’s best course of action, they can create a plan that has the best possible impact for their future.
Progress starts with action
If you suffer from some of the financial hardships mentioned above you may be a good candidate for a Debt Management Plan. These programs can help you get back on track and help get your financial future in order so you can pay off your credit card balances faster and on-time. However, a Consumer Credit Counseling Agency won’t be seeking you out as your creditors may already be; you have to take the steps to make things happen.
Want a free consultation to determine if bankruptcy is a viable option to resolve your debt situation? Call us today at (757) 276-6555.
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What are the signs that it's finally time to file bankruptcy?
Bankruptcy is intended to help honest debtors get a fresh start, but there is no hard and fast rule on who will benefit most from bankruptcy. These are some of the warning signs that I look for when advising someone that it may be time to file bankruptcy.
You are struggling to make rent or mortgage payments.
When someone is faced with mounting bills, some debtors will play a game I call the Credit Card Shuffle, randomly choosing which minimum payment to make based on how nasty the collection call will be. Some debtors will even pay credit card bills before paying their rent or mortgage rather than face those harassing collection calls. This is simply wrong. Your family’s food and shelter should take priority over credit card debt.
Are you losing sleep or constantly arguing with your spouse because of your debt problems? Money problems are a leading cause of divorce. Bankruptcy is not a cure all, but it can help remove your financial problems as a source of difficulties and stress in your marriage.
I have seen far too many clients losing sleep and suffering stress‑related health problems because of their financial struggles. A willingness to work multiple jobs or crazy overtime hours may be a sign of good character, but it can lead to burnout, exhaustion and anxiety. Anxiety over debts can also lead to depression which can cause numerous health problems. Do not let bills cause you to suffer physical health problems.
Changes in your normal behavior.
Are you considering doing something illegal to fix your debt problems or something that could put your health or the health of your family at risk? Have you taken up gambling or drinking? Are you doing things that are "out of character" for you? These may be signs of desperation and it may be time to see an attorney.
The Balance Transfer Shuffle.
Are you constantly applying for new credit cards to take advantage of low balance transfer rates? This may be a sign that you are in over your head in debt.
If any of these apply to you, call us today at 757-276-6555 to schedule your free no obligation appointment with our experienced attorney. We will meet with you, analyze your situation and explain how bankruptcy can help you to regain control over your finances.
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Can the bank take money out of my account to pay my credit card?
The practice of taking money from a bank account to pay a debt owed to the bank is called "setoff". While many loan agreements may provide for a set off of funds, the Fair Credit Billing Act (FCBA) prohibits a bank that issued a credit card from removing funds out of a deposit account to satisfy its credit card claims. This prohibition is very broad and contains only minimal exceptions. For example, the bank is prevented from exercising set off after the termination of the credit card, unless the debtor has incurred additional debt after termination of the card. The law also prevents financial institutions from taking money the consumer intends to deposit, before it is formally deposited. For more information on setoff, read our article.
If you have a bank account and a credit card issued by the same bank in Virginia, you need to review your agreement and make sure that you have not authorized the bank to take funds out of your account to pay your credit card debt. If you are struggling to pay your credit cards, it may be time to file a Chapter 7 or Chapter 13 bankruptcy. Contact Hampton Roads Legal Services today at 757-276-6555 to schedule free consultation to see if bankruptcy will help you!
What does it mean when a case has been dismissed with prejudice?
A dismissal with prejudice means that the court has made a final determination on the merits of the case, and the debtor is now forbidden from filing another bankruptcy for a designated period of time. This bar from refiling will be set by the Judge in the dismissal order and can be from a couple of months to several years. The dismissal of bankruptcy cases with and without prejudice is authorized by the Bankruptcy Code (the Code). Generally, dismissals are ordered without prejudice. However, if the Court feels that the individual is abusing the bankruptcy process, they may dismiss the case with prejudice. Your attorney can give you a more detailed explanation of a dismissal with prejudice, and every situation is different. If you are concerned, be sure to ask your attorney for more information!
What should I know about the bankruptcy hearing?
After your bankruptcy is filed with the Court, a date and time for the Meeting of Creditors, commonly called the 341 hearing, will be set. You must appear at this hearing. If you file a joint case with your spouse, you both must attend. Failing to show up or properly prepare for your hearing will not buy you more time. If you are not present at the time of your hearing, your case will be dismissed, and you will have to either re-file at a future date or seek the Court's permission to have your case reinstated.
If you have filed your case without the assistance of a bankruptcy attorney, you will receive information about documents that must be provided to the trustee assigned to your case before your hearing. You must provide all the requested documents well in advance of your hearing. If you fail to provide the required documents, you will either have to attend a second hearing or your case could be dismissed. If you are represented by an attorney, they will normally have collected these documents or notified you of any additional documents that are required.
You must go through security to enter the Federal Building in Norfolk. If your hearing is there, it is very important to arrive at least 30 minutes before the hearing time to allow sufficient time to get through security. You must bring a valid government issued photo ID to enter the Federal Building. If your hearing is in Newport News, you do not have to go through security to enter the hearing room.
You must also provide a photo ID at the hearing and proof of your social security number. Valid documents to prove your social security number are: Original Social Security Card, Medicaid or Medicare card with your full Social Security Number on it, a W2 or 1099 or a tax transcript from the IRS. A copy of your tax return is not acceptable. Be sure that that the document you want to use has your full Social Security Number on it. Many documents only list the last four of your number.
If you have any questions about your hearing, make sure to contact the paralegal assigned to your case. If you have tried to file without an attorney and you are struggling with how to handle your case, please call our office and ask about your options, and be sure to read Attorney Pfeiffer's book on the subject of filing without an attorney! You can request a copy in the link to the left of this page.