ARE THERE OPTIONS OTHER THAN BANKRUPTCY?
Negotiation. Yes, sometimes we can negotiate your debts down to 50% of the current balance. However, if you do enter into a settlement, you will probably have to pay income tax on the debt that was forgiven.
Debt Counseling. Debt counseling does not lower your debts, it just simply consolidates them and strings them out for several years. Some creditors will lower the interest rate while you are in a Debt counseling program.
We will recommend credit counseling if your debts can be paid off within a short time with a monthly payment that you can afford. There are drawbacks to credit counseling: 1) you pay an enormous amount of money over a period of several years – money that your family could put to better use; and 2) credit counseling actually hurts your credit while you are in the counseling program.
A Chapter 13 Bankruptcy operates much like a credit counseling program but will almost always save you money. Also, the creditor’s participation in a credit counseling program is voluntary. Your creditors do not have to work with the counseling service and, in fact, many do not. They have no such discretion in a Chapter 13 Bankruptcy. If you are considering credit counseling, ONLY go to Consumer Credit Counseling. It is a highly reputable and nonprofit organization. The counselors at these agencies are very good. All other agencies in our opinion, especially those located out of the state, are scams.
WHAT IS THE EFFECT ON MY CREDIT?
Future credit reports will show that a bankruptcy was filed and a discharged obtained. While this reference can remain on your credit report for up to 10 years, for most purposes, cars and home mortgages included, the creditor looks back over the past two years. You will be able to get car loans immediately and home mortgages after 1 year. You will even receive credit card and pre-approved loan offers in the mail after you receive a discharge. Most of our clients experience an immediate “improvement” in their credit score.
If someone has told you otherwise, put us to the test. Look in any local paper under car dealers to see how many advertise “Bankruptcy? No Problem,” call mortgage companies and ask.
WILL MY NAME APPEAR IN THE PAPER?
While the filing of a bankruptcy is public information, the names are not generally published anywhere except in the Federal Courthouse database.
However, if you are filing a business bankruptcy, the filing may appear in local newspapers as well as the Central Pennsylvania Business Journal. All bankruptcies filed in Lancaster County are reported in the local newspaper.
WILL MY EMPLOYER/BOYFRIEND/GIRLFRIEND GET NOTICE?
Almost never.
WILL THIS AFFECT MY TAXES/SOCIAL SECURITY/RETIREMENT?
No
DOES ANYBODY COME TO MY HOUSE?
No
WHAT IF I LIE?
DON’T DO IT. We will not risk our reputation. If we know you are intentionally misrepresenting facts or hiding assets, we will withdraw our representation.
DO YOU OFFER PAYMENT PLANS?
If you do not have all of the money “up front” to file for bankruptcy protection, please let us know and we will set you up on a payment plan. Typically, we require $100.00 down and $100.00 per month until the balance is paid in full.
WHAT ABOUT REAL ESTATE?
If you own real estate and are unsure whether a creditor has a lien against your property or if you have been sued, it is generally advisable to obtain a lien search. If a judgment has been entered against you in the Court of Common Please, a lien has attached to any real estate you own by operation of law. District Justice Court judgments do not attach to the real estate unless they have been transferred to the Court of Common Pleas. Judgments may generally be avoided in bankruptcy, and you will own your real estate cler of the judgment lien as long as the appropriate motion is filed with the court. If there is any uncertainty regarding the status of a lien, let us know and we will put you in touch with a local title company to perform a lien search.
WHAT IS RELIEF FROM THE AUTOMATIC STAY?
If you have a vehicle or home loan, and do not make payments, you will receive a Motion for Relief From The Stay. If you intend to keep the vehicle or house covered by the motion, you MUST NOTIFY US IMMEDIATELY. A Motion for Relief is a request by the creditor to continue or start foreclosure or a repossession action. If you do not wish to keep the asset and pay the underlying debt, the you do not need to respond.
WHAT ARE MOTIONS TO AVOID LIENS?
Often people pledge personal assets to “secure” a debt. Usually, finance companies will ask you to do this. If you have pledged property and wish to keep the property, we will have to file a “Motion to Avoid the Lien”. This will often require substantial extra work on our part, and in Chapter 7 cases we charge an additional fee of $300.00. This is generally far less, however, than the value of the assets we protect. In a Chapter 13 Bankruptcy, this service is included in the base fee.
WHAT IS A REAFFIRMATION?
If you have a house or vehicle that you wish to keep, and the asset is security for a debt (mortgage or car loan), the creditor may request a “reaffirmation agreement”. This is an agreement to remove the debt from bankruptcy and to continue to pay the debt on the agreed basis. YOU DO NOT HAVE TO REAFFIRM ANY DEBT.
As long as you continue to pay the loan, you will be allowed to retain the property. If you are current with your payments, but might experience difficulty paying in the future, do not reaffirm the debt. However, if you later cannot afford the debt, you can surrender the asset without consequences.
If you do wish to reaffirm a debt, we will review the agreement and return it to the creditor to file with the court. In a Chapter 13 proceeding, we will require that $774.00 be paid before filing. This amount covers the $274.00 filing fee and $500.00 attorney’s fee. There is an additional $3,000.00 fee that is paid “through the Plan” over a 3-5 year period. This covers any and all negotiations that may be required with the Trustee and/or your creditors, response to any Motions filed by your creditors, as well as the review of Proofs of Claim filed by creditors and attendance at the confirmation hearing, if necessary.
Please be advised that there is a $25.00 fee for all returned checks.
WHAT ABOUT UTILITIES?
Back utility bills ARE dischargeable in bankruptcy. A new utility bill is started from the date of the bankruptcy filing. Service that has been disconnected MUST be reconnected by the utility after the filing of the bankruptcy. The utility company requires a security deposit on the new account. Usually the security deposit is approximately $100.00.
WHAT ABOUT MY BANK ACCOUNTS?
If you have a bank account with the same bank or credit union to which you owe money, you should immediately transfer your account to another bank. This prevents the bank or credit union from doing what is called a “setoff” against your account.
You should also move your account if you bank with Well Fargo, whether you owe that bank money or not. It is Wells Fargo’s policy to freeze all accounts owned by individuals filing bankruptcy.
CAN I USE CREDIT CARDS AFTER MEETING WITH AN ATTORNEY?
After you have considered filing bankruptcy or have determined that you are “insolvent”, DO NOT incur any more debt. Any debt that you incur could be determined by the court to be “non dischargeable”.
CAN I BUY OR SELL PROPERTY DURING MY BANKRUPTCY?
Yes, but contact your attorney before doing so. Sales of homes must be reproved by the Court.
WHAT IS A DISCHARGE?
Approximately 60 days after your Meeting of Creditors, you will receive a Discharge (Final Decree) signed by a Bankruptcy Judge. This means your case is closed and your debts are discharged. The only debts typically not discharged are most taxes, student loans, criminal fines, child and spousal support.
HOW DO I DEAL WITH CREDITORS?
After you have paid the initial retainer fee, you should refer all calls from your creditors to our office.
Tell them to call DeARMOND and ASSOCIATES at (717) 846-3200 .
Legally, a creditor or collection agency who has been informed that you are represented by an attorney cannot contact you again. If the same creditor or a collection agency representing the creditor calls again, get the name of the creditor or the name of the creditor that they are representing, a phone number and extension and call us with this information. We will demand they stop calling. If they continue to call after that point, we will take legal steps to stop them.
Here are some common statements we hear from some creditors, all of which are absolutely 100% false. If you hear this, call us who said this and give us their number.
COMMON CREDITOR MISSTATEMENTS:
“I can call you until you give me a docket number of a bankruptcy.” (Wrong, under Pennsylvania law, they must stop after being told you have a lawyer.)
“We’re not covered by the bankruptcy laws.” (They are).
“We can call you at work even though you told us not to.” (Wrong, if told not to call you at work, they must stop.)
“I can call anytime.” (Wrong, only between 8 A.M. and 9 P.M. local time.)
“I can call as often as I want.” (Wrong, only once every 7 days after last speaking with you.)
“Somebody from our company called yesterday ? I didn’t know.” The calls are logged in a computer system. They use this trick to call you more than once every seven days (which violates the last rule).
I’m sending someone out to get your property.” Or the ever popular: “You’re going to lose all your property in bankruptcy.” (They can’t take anything, and you don’t lose your property if it is exempt, which it generally is.)
If a creditor now or in the past year has violated your rights with any of the foregoing “lies” and you consider the conduct of the creditor to be “harassing, abusive, or oppressive,” you may have a civil suit available against them. Contact us if you believe this has occurred.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
