Losing sleep at night?
Debt collectors calling you at all hours?
READY FOR A FRESH START?

Consider Bankruptcy

What Is Bankruptcy?

Bankruptcy is a means of discharging the obligation to pay some or all of your debts. Bankruptcy is not a modern concept. The Law in the Old Testament of the Bible provides that at the end of every seven years every creditor shall release his debtors. (Deuteronomy 15: 1-2). More than 200 years ago the Constitution gave to Congress the right to make laws concerning bankruptcy.

Bankruptcy Is Still An Option!
You may have heard that bankruptcy is no longer an option. This is NOT TRUE. It is more complicated than it used to be, but a fresh start is still available to most debtors.
Why Do People File Bankruptcy?
In my experience, the most frequent reasons for filing bankruptcy are:

  1. Job loss
  2. Catastrophic medical bills
  3. Divorce
  4. Parents who have assisted adult children with their financial problems
What Can Bankruptcy Do For Me?
Bankruptcy discharges liability for most or all debts and provides a fresh start. When the debt is discharged, the debtor has no further legal obligation to pay the debt.

  1. Stop foreclosure actions and allow an opportunity to catch up on missed payments.
  2. Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
  3. Stop wage garnishment and other debt collection harassment.
  4. Restore or prevent termination of certain types of utility service.
  5. Lower the monthly payments and interest rates on some debts.
  6. Provide an opportunity to challenge the claims of certain creditors.
How Do I Declare Bankruptcy?
To declare bankruptcy, debtors file a petition in Federal Court, asking the court to discharge their debts. The petition gives information to the court about your finances, your assets and your debts. YOU MUST BE COMPLETELY HONEST IN PROVIDING THIS INFORMATION. The petition is signed under penalty of perjury. Lying to the federal court can send you to federal prison, just like Martha Stewart.

Before filing, debtors must participate in a credit counseling briefing with a court-certified counseling service. This can be done on the internet or by telephone. We will provide a list of certified counselors.

Will I Lose All My Property?
In a Chapter 7 bankruptcy, a trustee is appointed by the court to represent the interests of the creditors. It is the trustee’s job to determine whether you have any assets that may be used to pay the creditors. Each state has laws listing assets which are exempt from taking by a creditor. The laws vary from state to state. Most bankruptcy debtors have only exempt property and are able to keep most or all of their property. If you cannot afford to make the payments on a secured debt, bankruptcy lets you return the collateral without having to repay the debt.

In a Chapter 13 bankruptcy, the bankruptcy trustee has a different job. The Chapter 13 trustee receives your Chapter 13 plan payments and distributes them among your creditors. Chapter 13 debtors may usually keep even non-exempt assets while making their plan payments.

What Else Do I Have To Do After Filing?
In order to receive a discharge, the debtor must participate in a debt management education session with a certified provider. This session can be completed on the internet or by telephone. In a Chapter 7 bankruptcy, this session is usually the only remaining obligation of the debtor, unless there is property to be turned over. In a Chapter 13 bankruptcy, in addition to making the monthly plan payments, the debtor must provide income information and copies of tax returns to the trustee each year. Your plan may require that you turn over your tax refunds to the trustee.
May I File My Own Bankruptcy Petition?
Bankruptcy petitions may be filed without an attorney. Many debtors did so before the amendments to the bankruptcy law took effect in October 2005. Filing a bankruptcy has become more complicated and the unrepresented debtor may risk losing assets that could have been saved with the advice of a good bankruptcy attorney.
What Kinds Of Bankruptcy Are Available?
Most consumers use Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Petitions under Chapter 11 are usually reorganizations of businesses. Farmers may file under Chapter 12.

Chapter 7 is sometimes called “straight bankruptcy.” In Chapter 7, all unsecured debts (debts for which there is no collateral that could be repossessed) are discharged. Debts secured by collateral are treated differently, depending on the kind of property and the debtor’s intentions concerning the property.

In Chapter 13 bankruptcies, the debtor makes a plan to repay debts over a period of three to five years. Unsecured debts may be paid at a percentage of the debt owed. There are several ways of treating the payment of secured debts in a Chapter 13 plan.

When To Consider Filing Bankruptcy
By: Carl H. Starrett at http://chs-law.com

Bankruptcy is intended to help honest debtors get a fresh start, but there is no hard and fast rule on who will benefit the most from filing for bankruptcy. These are some of the warning signs that I look for when advising a potential client that it may be time to file for bankruptcy:

    1. Struggling to make rent or mortgage payments. When someone is faced with mounting bills, some debtors will play 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. Food and shelter should take priority over credit card debt.
    2. Stress. 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.
    3. Health. Far too many clients lose sleep and suffer 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.
    4. 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.
    5. 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.
What Bankruptcy Can't Do
It is usually not possible to:

  1. Eliminate certain rights of secured creditors. Although a debtor can force secured creditors to take payments over time in the bankruptcy process, a debtor generally cannot keep the collateral unless the debtor continues to pay the debt.
  2. Discharge types of debts singled out by the federal bankruptcy statutes for special treatment, such as child support, alimony, student loans, certain court ordered payments, criminal fines, and some taxes.
  3. Protect all cosigners on their debts. If relative or friend co signed a loan which the debtor discharged in bankruptcy, the cosigner may still be obligated to repay that part of the loan not paid during the bankruptcy case.
  4. Discharge debts incurred after bankruptcy has been filed.
Which Form Of Bankruptcy Should I Use?
The bankruptcy petition forms ask for income of any kind received by the debtor’s household during the six months before filing bankruptcy. This amount is divided by six to obtain an average monthly income and then multiplied by twelve to determine the gross annual income. If the gross income is less than the median income for the size of your household in your state, you are presumed to be eligible for a Chapter 7. If the gross income is greater than the median income, a means test of your expenses is used to determine whether you can file Chapter 7.

If your income is greater than the amount allowed for a Chapter 7, if your mortgage lender is about to foreclose, if you have debts assigned to you in a divorce, or if you have filed a Chapter 7 bankruptcy within the last 8 years, a petition is filed under Chapter 13.

Do I Have To Go To Court?
Some legal issues require a hearing before the bankruptcy judge, but most debtors do not appear before the judge. The debtor usually makes one appearance before the bankruptcy trustee. The debtor must present a photo ID and proof of social security number. In a Chapter 7 bankruptcy, the trustee will ask questions designed to find out whether the debtor has assets the trustee can take to pay the creditors. In a Chapter 13 bankruptcy, the trustee will ask questions to make sure that the debtor understands and can pay the Chapter 13 plan.
When Will My Debts Be Discharged?
In a Chapter 7 bankruptcy, discharge is granted after 90 days from filing. If the trustee has received some assets, the bankruptcy will be closed after the assets have been sold and the creditors paid. In a Chapter 13 bankruptcy, the discharge is granted when the terms of the Chapter 13 plan have been fulfilled.
How Will Bankruptcy Affect My Credit?
Bankruptcy may remain on your credit record for 10 years after filing. Creditors don’t seem to distinguish between Chapter 7 and Chapter 13 filings in determining credit scores. However, many debtors already have low scores when they file. Sometimes bankruptcy improves your chance of obtaining credit because you don’t have to pay all the old debt. Lenders also know that you can’t file another Chapter 7 bankruptcy for eight years.
Bankruptcy Terms & Definitions
Debtor
This is the term given to someone who owes creditors and files for bankruptcy. Once your case is filed, this term will apply to you.

Creditor
This is any person that you owe. It may be a bank, finance company, hospital, retail store, credit card company or an individual.

Secured Creditor
Is a creditor who has a lien on some property that you own. A lien gives that creditor certain rights in the property ahead of other creditors.

Automatic Stay
Is a rule of the Bankruptcy Code that prevents a creditors from taking any action to collect their debt or taking any action against a debtor’s property. It begins on the day your case is filed. Creditors may ask the Court for “Relief from the Automatic Stay” by filing a Motion. If granted, such a Motion would generally permit them to repossess property.

Judgment
Is a court order that says that you owe a creditor money. It may also order that certain property may be sold to pay that creditor.

Judgment Lien
Is a lien on property that is created when a creditor sues you.

Tax Lien
Is a lien created by the IRS, State or other taxing authority. It is similar to a judgment lien.

Exemption
Is the amount of money or the value of property you are allowed to keep in bankruptcy without paying for it. With some exceptions, exemptions may generally be applied only to property that is not subject to a creditor’s lien.

Trustee
Is the person who will supervise your case. The trustee is responsible for ensuring that you have done everything that you are supposed to do to comply with the Bankruptcy Code. He or she also sells assets that are not exempt and distributes money to creditors.

Discharge
If a debt is discharged you will not be required to pay it. However, a secured creditor may collect from property that is subject to its lien, such as a house or car. The primary purpose of a bankruptcy is to discharge most debts in order to give the debtor a fresh start.

Why Should I Retain Penny Souhrada As My Bankruptcy Attorney?
I am an Iowa Bankruptcy Lawyer, practicing law since 1994 and bankruptcy law since 1998.  I am a member of the National Association of Consumer Bankruptcy Attorneys (NACBA), the only organization dedicated to providing legal services to consumer debtors. I have attended more than 200 hours of continuing education to ensure complete understanding and compliance with the law.

The decision to file bankruptcy is not an easy one, but it is my goal to make the process as painless as possible for you.

Actions To Avoid Before Bankruptcy

DON’T GIVE AWAY ANY MONEY OR ANYTHING OF VALUE:
The Trustee may want you to turn over the same amount to pay your creditors, or may ask the donee to give the money back. This also applies to sales of property for less than fair market value.

DON’T PAY BACK ANY DEBTS TO FRIENDS OR RELATIVES:
The Trustee may seek an order to return any money paid. Please consult me before taking such action.

DON’T SELL, TRANSFER OR TRADE ANY PROPERTY WITHOUT CONSULTING ME:
This includes vehicles, real estate, equipment or anything else of value in your name. If property is supposed to be in someone else’s name but has not been transferred yet, do not transfer it without consulting me first. You might be doing something unnecessary or something that would prevent receiving a discharge.

DON’T LET FAMILY MEMBERS OR ANYONE ELSE PAY OFF ANY OF YOUR BILLS OR PUT PROPERTY IN YOUR NAME:
It may be OK, but maybe not. Don’t take a chance. Consult me first before you do something that is not in your best interest.

DON’T TRY TO HIDE ASSETS:
There may be ways to legally retain an asset, but only if we know about it.  If you lie or try to hide assets, you could be liable for a fine and federal prison sentence.

DON’T DESTROY YOUR BUSINESS RECORDS:
You could lose your right to a discharge if you try to keep information from the Trustee.

DO NOT ACT ON ADVICE FROM YOUR CREDITORS:
Some Creditors will tell you anything to get you to make a payment. Remember, all they are trying to do is to keep you from filing, so that they won’t take a loss. Don’t act on their comments. If you have questions about bankruptcy, call and ask us.

DO NOT ACT ON ADVICE FROM YOUR FRIENDS, OR FAMILY:
Friends and family always mean well, but they don’t have the training or experience to tell you how bankruptcy works or to answer your questions accurately. They probably have not reviewed your entire situation. You are hiring us to work for you. Call us with all your questions and concerns and keep calling until we have answered all your questions. Every question is important. Every concern is real and deserves to be to dealt with.

Penny Souhrada

Get In Touch

It’s easy to get more information or schedule an appointment.  Just fill out the brief contact form and I’ll get in touch with you shortly.  You may also call my office at 563-322-0455 if it’s more convenient for you.

Disclaimer

We are a debt relief agency. We help people file for relief under the U.S. Bankruptcy Code. This website contains general information only.  This is not legal advice and it is NO substitute for a consultation with a lawyer!  No attorney-client relationship is formed until you come and see me, in person. The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise.

This disclosure is required by rule of the Supreme Court of Iowa. A description or indication of limitation of practice does not mean that any agency or board has certified such lawyer as a specialist or expert in an indicated field of law practice nor does it mean that such lawyer is necessarily any more expert or competent than any other lawyer.  All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This notice is required by rule of the Supreme Court of Iowa.

Memberships and offices in legal fraternities and legal societies, technical and professional licenses, and memberships in scientific, technical and professional associations and societies of law or field of practice does not mean that a lawyer is a specialist or expert in a field of law, nor does it mean that such lawyer is necessarily any more expert or competent than any other lawyer.  All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered.  This notice is required by rule of the Supreme Court of Iowa.

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