Bankruptcy May Be an Answer If:

Posted on April 20, 2011 at 3:16pm by

Neil Sader of The Sader Law Firm had the opportunity to discuss bankruptcy options with the CPA’s of Marks Nelson Vohland Campbell Radetic this morning.

Here are some very useful notes from the discussion to keep in mind:

Bankruptcy may be an answer if:

  1. Lawsuits have been filed or garnishments issued;
  2. Client is receiving collection letters or phone calls;
  3. Client is opening new credit cards to pay off old ones;
  4. Client is only making minimum payments;
  5. House is in foreclosure;
  6. Past due tax problem from 2007 or earlier;
  7. Unusually high medical bills;
  8. Financial problems due to divorce;
  9. A failed business; and,
  10. Stress and/or inability to sleep because of financial worries

Chapter 7 bankruptcy

  1. All unsecured debt is discharged
  2. Does not discharge secured debt unless property is surrendered
  3. There is now a means test and if debtors earn over $50,000 it can be a problem
  4. Once filed, creditors must stop all action, including lawsuits, collection calls and letters
  5. Usually takes 4 to 5 months from filing to discharge being entered

Chapter 13 bankruptcy

  1. Stops home foreclosure and repossession actions and allows debtors up to 60 months to cure arrearage
  2. Chapter 13 repayment plan can pay anywhere from 0% to 100% to unsecured creditors. The amount of payment depends on disposable income calculation
  3. Attorneys fees can be paid over time too
  4. Cannot borrow or obtain new debt while in Chapter 13 unless court approves
  5. Payments are made to trustee by wage order from employer
  6. Only individuals can file Chapter 13 – not companies

Chapter 11 bankruptcy

  1. Stops lawsuits, garnishments, bank threats such as set-offs
  2. Provides a business a breather to catch its breath and realistically assess its chances of success
  3. Allows businesses to propose a plan lasting up to 10 years which can address secured, unsecured and tax claims
  4. Can write down secured debt if the creditor is under-secured
  5. Can easily cost $50,000 plus take a significant amount of time and resources

Also of interest, here are common bankruptcy myths that were discussed (all of which are untrue):

  1. Bankruptcy is only for people with no money
  2. Debtors who file lose all their personal property
  3. Credit is ruined after filing bankruptcy for 10 years
  4. Only deadbeats file for protection
  5. There is a minimum amount of debt needed to file
  6. There is such a thing as a “medical bankruptcy”
  7. If I intend to pay a creditor, I do not need to list them
  8. If I pay something to a creditor – they have to accept it
  9. Why list all assets . . . . Bankruptcy is about debts
  10. Married people both have to file together
  11. Houses are automatically protected in Kansas
  12. Taxes and student loans cannot be discharged
  13. I can only file every 7 years

The Sader Law Firm has more than 30 years of combined experience in Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases and can help address your questions to help you make the right decision as to what type of bankruptcy you should file. Contact an attorney at The Sader Law Firm today for a free consultation at (816) 561 1818 to find out whether you qualify for bankruptcy and to learn more about the options available to you.

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