What type of Bankruptcy programs are available?
The U.S. Congress has made laws which provide specific bankruptcy programs for the following groups:
1. Individuals (this includes single persons, married couples, and sometimes small businesses that are being operated as sole proprietorships).
2. Farmers
3. Businesses or Corporations
There are different guidelines for each of these three groups. However, this section will discuss information and procedures which pertain primarily to individuals, couples, and business sole proprietors. Typical debts for individuals and couples include: home mortgages, mobile homes, cars, finance company loans, credit card debts, medical bills, IRS claims, student loans, etc.

Why do individuals usually file bankruptcy?
(a) Many of our clients have filed because they have found that their current income is not enough to keep up with their debts and their income is not likely to be enough for them to "catch up" in the future. They frequently tell us that they have "borrowed from Peter to pay Paul" for as long as they can. They simply want a "fresh start" so that they can get their finances under control and keep them under control from now on.
(b) Other clients explain that they have had unexpected financial problems. For example, they have lost their job, had an illness, experienced a divorce, or had a business fail.
(c) Some clients are behind on payments for their home, cars, or mobile home and they file to stop the foreclosure of their home mortgage or the repossession of cars, mobile home, or other properties that they value. Note: Chapter 13 can stop a mortgage foreclosure, even if you have been "served with papers". However, bankruptcy must be filed before the actual foreclosure sale takes place. Chapter 13 may also enable you to get back a repossessed vehicle, but you must act quickly - before the car has been sold by the finance company.

How can bankruptcy help?
There are two kinds of Bankruptcy Chapters which are usually used by individuals and couples. These two options are called Chapter 7 and Chapter 13. King & Dalrymple, P.A. will meet with you free of charge to review your debt and assets and talk to you about your goals. The kind of assistance that you can get from Bankruptcy often depends on
(a) which Chapter is being used;
(b) whether your debts are mostly "secured debts" or "unsecured debts" (A debt is secured if the lender has collateral such as a boat, car, house, or the like. If the lender has no collateral for the debt (like credit cards, signature loans, etc), the debt is unsecured.);
(c) your assistance in providing the necessary information in a timely fashion.

A few examples of the kinds of help available from bankruptcy are listed below:

• In a Chapter 7 case, it is common for many kinds of unsecured debts to be completely eliminated. In a Chapter 13 case, those same debts are more likely to be consolidated and paid in part - from 1% to full payment - depending on your income and your assets. For example, unsecured debts of $8,000 can sometimes be reduced to as little as $400 in a Chapter 13 case if your budget is very tight and you own a limited amount of property.

• When a person is behind on house payments, a Chapter 13 case will allow the missed payments to be caught up over a period of three to five years so that the "catch up" payments will be relatively small. If you file a Chapter 13 before the mortgage company actually starts the foreclosure proceeding in Court, you will avoid having to pay fees for the mortgage company's attorney to file the foreclosure lawsuit.

• In a Chapter 13 case, individuals are often able to keep autos and various kinds of personal property even though payments are behind. In many cases, the monthly payment for secured debts can be reduced or consolidated to a more affordable monthly amount, payable over a period of three to five years.

Some form of help is available whether you file Chapter 7 or Chapter 13. Examples of relief available under both Chapters are:

• Protection from harassment by creditors. Once the papers are filed (Chapter 7 or 13), creditors are prohibited by law from contacting you in any way. Instead, they must deal with your attorney.

• Lawsuits filed against you for unpaid debts will usually be stopped by the filing of a Chapter 7 or Chapter 13 case.

Will I lose my house, car, or household items?
Many people who could benefit greatly from Bankruptcy are scared to even ask about the Bankruptcy options because they have heard that they will "lose everything". The truth is, most people do not lose their property by filing Bankruptcy. In fact, most of our clients file because they would probably lose property if they did not file. NOTE: there is an option to turn in any items that you feel that you can no longer afford.

There are two important reasons that explain why most individuals do not lose assets.

1. First, in a Chapter 7 case there are many items which are exempt from being taken to pay debts. These exemptions include a specified amount of your equity in: (a) your residence, (b) your auto, (c) your household goods, (d) your jewelry, (e) your tools of trade, and several other items.

2. The second factor that explains why most individuals do not lose assets is the provision in Chapter 13 which generally allows a person to keep the property they own at the time they file under Chapter 13. In exchange for keeping these assets, the person filing is required to make monthly payments. The amount of such payments is determined by (a) the amount of income which is left after your monthly essentials have been paid for (Essentials would include such things as house payments/rent, electricity, phone, food, clothing, insurance, transportation, medical/dental, church contributions, child care, etc.) (b) the amount of nonexempt property you own, and (c) the property that you are keeping that is under lien. This "extra income" is then used to pay your secured debts and as much of your unsecured indebtedness as possible during a period which is usually three to five years. It has been our experience that clients pay: (a) their secured debts in full, and (b) part of their unsecured debts (from 1% to full payment) through this consolidated payment plan.

It is always essential to list all of the property that you own when you file either Chapter 7 or 13.

Can I get my car back if it was repossessed prior to my filing bankruptcy?
If you file bankruptcy prior to the vehicle actually being sold by the creditor, more often than not, we will be able to get the vehicle back for you. You may have to pay the repossession fee and any storage fees to the creditor, up front, depending upon how long the vehicle has been in the possession of the creditor or its agent. The faster you file bankruptcy after the repossession the better off you are, because this often makes for a smaller storage fee. There may also be additional attorney fees required.

How does a Chapter 13 plan actually work?
The amount which you must pay each month is determined by analyzing your debts, your income, your normal monthly expenses, and your assets. From these factors, a monthly payment is calculated. In most cases, this one payment will replace all the installment payments you have been making for autos, furniture, appliances, finance company loans, and the like. It is not unusual for this payment to be less than half of your existing payments. This payment will be made to a Bankruptcy Court Trustee beginning four weeks after the Chapter 13 case is filed. The Trustee then divides the payment appropriately and pays the proper creditors. From 8% to 10% of the payment is used to pay the Trustee's expenses for operating the program.

Can tax claims and student loans be included?
State Income Tax Claims, Federal Tax Claims, and Real Estate Taxes must be included in a bankruptcy filing.

Student loans can also be dealt with effectively in a Chapter 13. Depending on such factors as income and assets, from 1% to full payment of a guaranteed student loan will usually be paid over the three to five year Chapter 13 Plan. The balance owed on a student loan will be postponed and paid after the bankruptcy has been completed. Since most other debts will be taken care of by the bankruptcy, it is then easier to pay the remaining student loan obligation.

In order to redeem property sold at a tax sale prior to filing bankruptcy, the redemption tax amount must be paid outside the bankruptcy plan. Most tax claims and US guaranteed student loans will not be eliminated by filing a Chapter 7.

What will filing bankruptcy do to my credit?
If you file a Chapter 7 Bankruptcy, this will be reported on your credit report for a period of ten years. A Chapter 13 is reported for seven years. This does not necessarily mean that you will not get any credit but it will likely be more difficult to get credit. Many people who have gone through a difficult financial period prefer to "pay as they go" and gradually rebuild their credit.

Would a second mortgage be better than a Chapter 13?
Sometimes people get into serious financial trouble by getting a second mortgage or home equity loan to consolidate debts or to pay for home repairs. Unless you are sure that you can pay a second mortgage payment, a second mortgage or a home equity loan could actually jeopardize your home ownership and make it more difficult to get the full benefit of a Chapter 13 program. It is especially important to talk to an attorney with Chapter 13 experience before making a decision to obtain a second mortgage to catch up debt payments or to consolidate debts that would otherwise be unsecured.

Do married couples need to file jointly?
The cost is the same whether one or both married persons file a bankruptcy petition. The decision about whether both should file is generally made after the debts are analyzed by your attorney. It has been our experience that about 65% of married couples file jointly. Note, if you have someone who signed as a "co-debtor", the CO-debtor may be protected if you ask the attorney to do so. This protection, however, may be limited and cannot be guaranteed.

What information should I bring to the first interview?
You should also visit 'Your First Consultation' page to find more information. Here is a list of the most important things to bring to the first interview with the attorney:

1. List all debts owed.
2. Recent pay stub for each employed adult.
3. If you own a house or mobile home, bring a tax bill.
4. If you own a mobile home, bring the purchase documents if available.
5. Copy of any lawsuits or any loan documents that you may have.

*Bringing young children to these meetings could make it difficult for you to get a full understanding of Bankruptcy.

Use this as general information only. See an attorney for specific legal advice about this complex subject.