Bankruptcy Attorney

Bankruptcy Attorney

How to Pick a Bankruptcy Attorney – Personality and professionalism matter, and like anyone a lawyer who appears terrific on paper can fall short in person. It’s critical that you trust that the person you hire will be working in your best interest. Look for the following three qualities during your consultation.

• They discuss alternate resolutions: Chapter 7, a complete cancellation of eligible debts, might not be the best or only way to deal with your financial problems. If there are other options, an ethical lawyer will present them. Another suggestion might be a credit counselor’s formal debt management plan, especially if most of your lenders are credit card companies. The interest rate reduction the agency may be able to secure can translate into lower payments. Chapter 13 bankruptcy, a court-supervised payment arrangement, might also be on the table. A lawyer may recommend it if you have enough income to support at least some of your liabilities and own property that could be taken in a Chapter 7 or a lawsuit. Understanding the full menu of resolutions and then choosing from them reduces the possibility that you will regret making the decision to file for bankruptcy.
• They display a passion for the process: You wouldn’t have a heart operation performed by a indifferent surgeon, nor would you want the person representing you in bankruptcy court to be distant or aloof. Therefore, the lawyer you’re considering should exude a genuine passion for the occupation and process. Find out why he or she chose to specialize in bankruptcy law. Listen carefully to the response. Many lawyers find the work fascinating and rewarding.
• They hear and understand you: For most people, declaring bankruptcy is a painful decision. Because of the emotions involved, you’ll want your attorney to not just to have the proper credentials, but to exhibit a desire to understand your specific situation and goals. Your lawyer should possess empathy and a willingness to take the time to ask probing (sometimes difficult) questions. “Only hire someone who wants to know what led to your financial predicament.” “Someone who will can address what your biggest worries are.” Not all lawyers have great bedside (or courtside) manners, so after the meeting, ask yourself if you’re truly comfortable with that person and if all of your concerns were addressed. If you feel like a number rather than an individual, cross that lawyer off your list and move on to the next until you find one who treats you with some respect.

Utah Bankruptcy Law

Lawyers, even those who help you not pay your creditors, aren’t free. The cost varies by complexity and location, but in general is between $800 and $2,500 from start to finish. Avoid ultra-low-rate bankruptcy mills that advertise heavily and crank out the cases. “They usually only have a few lawyers and a large number of legal assistants.” “For a simple run-of-the-mill case, they’re probably ok, but you don’t know when complications may arise. The first time you meet with your lawyer would be at the creditors meeting, and if there is a problem, they won’t be prepared to handle it properly.” Don’t presume you get more for hiring the most expensive lawyer on the block, however, or less if you scrape the bottom of the price barrel. “Fees are determined by the market.” “In some areas, caps are set by the courts. This means that, for the same price, the client can usually get an experienced, highly qualified lawyer for the same price as a novice.” Be sure to ask what it covers, though, as some attorneys include court and other costs in the quoted fee, others don’t. Once you’ve found the person who possesses the ideal combination of experience, character and cost, you’re set. If you choose to move forward with filing, you can do so with assurance that you’re working with a lawyer you can trust.

Bankruptcy Discharge

In a bankruptcy proceeding, the debtor and the court figure out a plan to repay creditors as much as possible. In exchange, the debtor is released from legal liability for the rest of the debt that he owes. The remaining debt is discharged and the debtor is not legally responsible for paying the debt.

Are Attorney’s Fees Dischargeable?

In personal bankruptcy, most debts are dischargeable even unpaid attorney’s fees. Section 523 of the Bankruptcy Code lists fees that are not dischargeable. They include child support, alimony, debt that was incurred through fraud or false pretenses, luxury items bought right before the bankruptcy, government education loans, medical costs from driving drunk, reckless failure to pay debts, court fees, and other court costs. Since the current bankruptcy attorney’s fees are included in court costs, she will get paid. In contrast, attorneys that the debtor hired prior to bankruptcy will probably not get paid. Often, attorneys with unpaid legal fees will lodge a complaint with the Bankruptcy Court, claiming that their fees were non-dischargeable. However, these claims usually fail because they run counter to the purpose of bankruptcy, which is to give the debtor a new economic start. In response to this, attorneys are now anticipating their clients’ bankruptcies. Attorneys now routinely maximize their “retainer” (down payment) and encourage clients to file bankruptcy before legal services are rendered.

What If I Filed for Bankruptcy after a Divorce?

Family law practitioners, in particular, often run into problems when their clients file for bankruptcy immediately after divorce. Family lawyers have frequently argued that their fees are non-dischargeable, because they help the client to fulfill the duty to support the child, which is itself non-dischargeable. The BAPCPA, a bankruptcy law that went into effect in October 2005, made the law even stricter regarding the non-dischargeability of family support obligations. However, courts rule that if attorney’s fees were not ordered to be paid in the original child support decision, then they are dischargeable in subsequent bankruptcy. Attorney’s fees are not alimony. Although attorney’s fees help collect spousal support, they do not go into a spouse’s pocket. Finally, there is no justification for favoring family lawyers above other lawyers who might be owed even greater sums of money.

Can I Discharge Fees or Fines Imposed By the Court?

The answer is typically no, you cannot discharge fees imposed by the court. Fines and other fees imposed by the legal system are designed to punish citizens who break the law. It would be unfair to punish some citizens and not other citizens simply because they can’t afford the penalty. The only possible exception is if the fine or fee given is not retributive or punitive in nature. In personal injury lawsuits, for instance, the damage award taken from the defendant is not meant to punish the defendant, but to restore what was lost to the victim.

Do I Need a Bankruptcy Lawyer?

Filing for bankruptcy is a very complicated process. The law varies depending on where a bankruptcy is filed and also depends on which type of bankruptcy is filed. A bankruptcy lawyer knows the particulars of filing for bankruptcy, can recommend what chapter of bankruptcy is right for you, and can ensure that your paperwork is filed correctly so that all eligible debts are discharged.

Flat Fees Versus Hourly Fees

Many attorneys, especially bankruptcy attorneys, will charge a “flat rate” to represent you in a bankruptcy case. You’ll pay a fixed amount for the attorney to represent you, regardless of the amount of time the attorney spends on your case. Other attorneys will charge you an hourly rate, although it’s uncommon in consumer bankruptcy cases. The more likely scenario is for the attorney to charge a flat fee for the bulk of the matter. The lawyer will charge an hourly fee for any extra work required for services like defending against an objection to discharge. Your contract should spell out what the flat fee covers.

Average Chapter 7 Bankruptcy Attorney Fees

Most Chapter 7 bankruptcy attorneys will base their fees on how complicated your case is and what other attorneys in the area would charge for a similar bankruptcy. If you have a lot of assets or debt, you might pay more than an unemployed person with no assets. In general, attorney fees for a Chapter 7 bankruptcy range from $1,000 to $3,500 depending on the complexity of the case. Larger firms with more advertising and overhead costs sometimes charge more than a solo practitioner, but not always. Some larger operations offer low fees and count on a higher volume of cases. Also, you might find a solo practitioner will cost more but offer more personalized service. It will depend on the office. You can expect a newer attorney to charge less than a more experienced lawyer, and if your case is a simple Chapter 7, you might not need an attorney with years of experience. Keep in mind, however, that bankruptcy is a specialized area of law and that most attorneys who don’t regularly practice bankruptcy won’t accept a bankruptcy case. When shopping around for a bankruptcy lawyer, call at least a few attorneys in your area. Compare their fees and ask if bankruptcy is an area they specialize in, as well as the number of cases they file each month.

Paying a Chapter 7 Attorney

You’ll pay your Chapter 7 attorneys’ fees in full before the attorney files the case and with good reason. Chapter 7 wipes out most unsecured debt in a Chapter 7 case, including attorneys’ fees. So if you had a balance due when filing the matter, it would get discharged. Chapter 7 attorneys know this, of course, and require full payment.

Average Chapter 13 Bankruptcy Attorney Fees

Most courts have guideline “acceptable” fees for a Chapter 13 bankruptcy. Unless exceptional circumstances justify it, an attorney won’t be allowed to charge more than the court’s guideline fee. Chapter 13 guideline fees are different for each judicial district. However, they are typically between $2,500 and $6,000 depending on the complexity of the case. For instance, if you own a business, the case will likely require more work and justify a higher fee.

Fortunately, most attorneys don’t require you to pay the entire Chapter 13 bankruptcy fee upfront. In most cases, attorneys will ask for a portion of their fees before filing your matter, and the remainder will get paid through your Chapter 13 repayment plan. How much a bankruptcy lawyer will require before filing will depend on each attorney or firm. But on average, you can expect to pay about half of the total fee before the attorney files your case.

Attorneys’ fees in bankruptcy cases are somewhat unusual in that they must be disclosed to and approved by the court. However, this doesn’t mean that the bankruptcy court fixes the amount that attorneys can charge in bankruptcy cases. Attorneys are free to charge what is reasonable given their experience and the complexity of your case subject to review by the court. Some courts have a “presumptive” maximum fee for certain types of bankruptcy cases, but the attorney can overcome the ceiling by demonstrating a good reason for charging more.
Attorneys’ Fees, Court Costs, and More
When you hire an attorney to represent you in bankruptcy, you should plan to pay three amounts:
• the attorneys’ fees the lawyer charges to advise you, complete your bankruptcy paperwork, and represent you at bankruptcy hearings
• the bankruptcy filing fee you’ll pay to the court to file the bankruptcy paperwork, and
• the cost of a pre-bankruptcy credit counseling course.
Many people can pay the court’s Chapter 7 filing fee in up to four installment payments, and some get the court fees waived. By contrast, you’ll have to pay the court fees for a Chapter 13 case at the time of filing.
Choosing Between Debt Consolidation or Bankruptcy
If you’re like most folks who carry multiple credit cards, the merry go round of payments is a monthly frustration and chances are good you’ll eventually face problems making your deadlines. Nearly half of Utah’s households carry a balance from month-to-month and the amount they owe is growing. The average family that carries a balance owes $15,094 in credit card debt, which helps explain why the Federal Reserve said card debt hit a record $870 billion at the start of 2019.
Delinquencies – payments that are more than 90 days late also rose to 3.22% at the end of 2018 and the credit reports of about 37 million cardholders were dinged because of it. If you’re one of the dinged, it might be time to get brutally honest with yourself. You’ll need to ponder if you have enough income to fund a debt consolidation plan or whether your finances are so out of whack that the only alternative is to surrender and file bankruptcy. Struggling with debt is a juggling act and dropping the ball can have serious consequences. Before you decide how to approach your situation, it’s a good idea to take stock. You may have multiple unpaid credit card balances, a student loan and a home loan, each requiring either a fixed or minimum monthly payment. Make a list of them all and include the balance owed, the required monthly payment and the interest rate. Add up your minimum monthly payments. This exercise will give you a sense of your situation. Though there are assortments of techniques to reduce debt and make it more manageable, debt consolidation and bankruptcy are two of the most common.
Debt consolidation, which could be accomplished through a nonprofit credit counselor, turns an assortment of unsecured credit card debts into a single, affordable monthly payment that eliminates debt in 3-5 years. The alternative, bankruptcy, seeks court protection from creditors and can either discharge debt or reduce it with a payment plan that can take up to five years to complete.
Debt Consolidation
Debt consolidation is a strategy to reduce the interest rate and lower the monthly payment on credit card bills by combining them into a single payment.
There are several ways to accomplish this, including:
• Enrolling in a credit consolidation program through a nonprofit credit counseling agency. The agency will collect monthly payments from you that include a service fee and pay off your creditors in an agreed upon amount until the debt is eliminated.
• Taking out a debt consolidation loan through a bank, credit union or online lender. Typically, there are fees associated with the loan and your credit score will influence the interest rate. If you don’t have at least a good credit score something above 650 – that interest rate may not be much better than what you’re paying on your credit cards.
• Taking a do-it-yourself approach by contacting your card companies and offering to repay them at a lower interest rate. Creditors don’t have to accept your terms.
Before attempting this, it’s wise to research tactics and techniques, considering the pros and cons. You can use a nonprofit credit counselor to guide you through the process and offer suggestions.
Pros of Debt Consolidation
Whether you use a nonprofit credit counseling agency or go it alone, the objective is to turn an assortment of bills into a single monthly payment. If the consolidation loan or debt management program has a lower interest rate than the original debt, you can save money and lower payments. Using debt consolidation will maintain your access to credit and if your plan is successful, your credit score should improve.
Cons of Debt Consolidation
Trying to arrange your own repayment plan usually requires a solid credit score. Whatever type of debt consolidation loan you pursue, a good credit score is usually necessary for approval. The higher your score, the lower your interest rate is likely to be. Also remember that paying off a consolidated debt could take several years and will require that you force yourself to rein in spending, especially credit card spending. Finally, before paying off unsecured credit card debt with a home equity loan or line of credit, remember that you’re putting your home at risk. If you don’t make payments on time, the lender could foreclose on your home.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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How Does Bankruptcy Restructuring Work?

How Does Bankruptcy Restructuring Work

The essential task of bankruptcy and restructuring lawyers is to avoid a client’s bankruptcy. The term ‘bankruptcy’ itself is a technical term that refers to when financially distressed companies, unable to restructure on their own, file for Chapter 11 to undergo a court-supervised restructuring. In order to avoid this scenario, a company must successfully “restructure its debt to keep the company together and retain its value,” But the path to financial viability through court or not can be convoluted. The legal know-how required and the multitude and variety of actors involved make bankruptcy and restructuring a rather complex practice. Bankruptcy and restructuring attorneys must be adept at transactional work and litigation across a range of areas like M&A, securities, banking, labor and employment, environment, tax and IP.

What Bankruptcy Lawyers Do For You

• Analyze the situation in order to determine the feasibility of staying out of bankruptcy. What’s the problem? What caused it? How big is it? Will it result in a default that is uncontrollable? Who’s in the creditor body? Are they secured or unsecured? What’s the litigation status? What’s the liquidity status? Are there sufficient funds to stay in business while being restructured?

• Look for ‘red flags’, such as jurisdiction. “You need to know if the entity has international operations, how it operates, how it’s interconnected”.
• Work with financial advisers to create a model of how the crisis will be dealt with.
• Try to persuade creditors to “just stand still” and not pursue immediate payback. “You need to focus on the nature of the debt in order to determine who you approach to get a standstill or moratorium”.
• Negotiate with creditors and try convincing them that the problem is best solved out of bankruptcy.
• If negotiations are successful, work out payment plans for each creditor.
• If not successful, file for Chapter 11.
Court-supervised restructuring for debtor
• Initiate a Chapter 11 case to pursue restructuring within the protective provisions of the Bankruptcy Code (usually known as ‘filing for Chapter 11’).
• Prevent stigmatization of employees and business operations. Create a detailed communication plan to include regulators, shareholders, employees, vendors and clients. “Entry into Chapter 11 should be made as smooth and unruffled as possible.”
• Secure financing.
• Once liquidity is secured, work with the management team and financial advisers to decide what’s core and non-core to the business. Establish the company’s new vision.
• Build creditor consensus around the chosen exit strategy. This can be a lengthy process and require delicate negotiations.
• If creditors think they are being economically harmed, there could be extensive litigation.
• Document and effectuate the eventual agreement.

The Four Reorganization Bankruptcy Chapters

Debtors choose to reorganize under either Chapter 9, 11, 12, or 13, depending on the particular circumstances. An overview of each appears according to filing frequency.

Chapter 13: Individuals and Couples

This chapter allows single and married people (but not businesses, other than sole proprietors) to pay discretionary income (the amount remaining after paying living expenses) into a plan for three to five years. If your family income is above the average for your state (called the median income), your plan will be 60 months long. When income falls below the median, 36 payments are required, but you can propose a plan that spreads out what you need to pay over 60 months, if necessary.

How Debts Get Paid During the Plan Period

Bankruptcy law assigns a higher priority to some debts and requires the filer to pay them fully over the course of a three to five year plan. Examples of priority claims include the following:
• recent income tax debts
• past due child support and alimony payments, and
• overdue payments on secured debts like house notes (you don’t have to pay off the entire mortgage within the plan, however).

Most of your other debts like credit cards and medical bills will fall into the category of general unsecured debts and won’t necessarily be paid anything. They’ll receive something only if you have disposable income after all your higher priority claims get paid. Even then, the unsecured claims might be paid pennies on the dollar. The remaining debt gets discharged at the end of the case. Another interesting feature of a Chapter 13 plan is its ability to cram down (reduce) a secured debt (other than the mortgage on your residence or a recently purchased vehicle). If the collateral (the property securing the debt) is worth less than what you owe, you can propose to pay just the value of the asset plus interest at one or two points above prime. For high-interest loans that are under water, this can save you thousands of dollars. Unfortunately, not all secured loans are subject to cram down. It’s not available for the mortgage on your residence or on car loans that are less than two and one-half years old when you file your case. Also, you must be able to pay off the entire cram down amount over the course of the plan, something many people aren’t able to do for high-value property, such as vacation rentals.

Chapter 11: Businesses and Individuals

Chapter 11 bankruptcy is best known for helping prevent large corporations from closing their doors. Because of the expense involved in filing a Chapter 11 case, it’s used by small businesses to a lesser extent, and, on a rare occasion, by individuals whose debt balances exceed the Chapter 13 debt limitations. In many Chapter 11 cases, creditors actively work with the debtor to evaluate the debtor’s financial health and determine the best way to tackle the debtor’s debt. This collaboration will include more than renegotiating loan terms, although that accounts for an important part of the plan. During the first months of a Chapter 11 case, the parties look carefully at many aspects of the business. Decisions might be made to do one or more of the following:
• change leadership
• sell underperforming assets, or
• reorganize operations to make them more efficient.
The debtor then proposes a plan for paying its debts. A Chapter 11 plan must be approved not only by the bankruptcy court but by the creditors owed the most money. If a debtor fails to propose a confirmable plan, a creditor (or the trustee, if one has been appointed), can offer a plan that will be submitted to the creditor body for a vote. Once a plan is confirmed, the debtor can spend years carrying out its terms.

Chapter 12: Farms and Fishing Operations

If your primary business is farming or fishing, you’ll likely choose to file for Chapter 12 bankruptcy. The procedural aspects of Chapter 12 and Chapter 13 cases are similar; however, Chapter 12 bankruptcy provides more flexibility because it allows for the seasonal nature of the farming and fishing industries. The Chapter 12 debtor has 90 days after filing the case to propose a plan lasting from three to five years. Instead of making monthly payments as required by Chapter 13 bankruptcy, the Chapter 12 plan can allow for seasonal payments. The plan can also provide for a cram down of virtually any secured debt, including homes and farmland, and allow for the modified secured debt payments to extend beyond the five-year plan limit.

Chapter 9: Municipalities (Cities and Governments)

Chapter 9 bankruptcy is reserved exclusively for municipalities and governmental units like utilities and taxing districts. The plan and the plan approval process in Chapter 9 bankruptcy are similar to Chapter 11 bankruptcy. Creditors in Chapter 9 are not allowed to propose a plan, but taxpayers and creditors can file a plan objection.

Reasons Behind Restructuring

The overarching goal of a restructuring is to increase shareholder value but there are many reasons behind restructuring.

• Focusing on Core Business: Groups of shareholders can actively demand management to increase shareholder value by focusing on the private company’s core businesses. Pressure from shareholders can cause management to create a restructuring plan that will focus the private company’s resources on core businesses.

• Eliminating Poor Performers: Poor performance of a subsidiary due to industry conditions, poor management, or ineffective corporate strategy can be detrimental to the financial performance of the parent private company. Therefore, a parent private company commonly divests the poorly performing subsidiary. This may immediately improve the financials of the parent private company by not including the poorly performing financials of the divested subsidiary in the consolidated statements. As a result the parent private company might eliminate capital outflows that were needed to fund the failing business. Additionally, a divestiture of a failing business will provide additional capital the parent private company can use to stimulate growth in its core businesses. Finally a divestiture, if communicated correctly, will boost morale of existing employees and improve the public perception of the parent private company.

• Highlighting Undervalued Assets: Large private companies may have smaller subsidiaries that are high growth or strong performing private companies that may not be properly valued since their performance is hidden by the size of the conglomerate. In such a case, the parent private company may want to divest a part or all of the strong performing private company via a sale, spin-off, split-off or equity carve-out. Highlighting the positive attributes of the undervalued business is a benefit to both the shareholders of the parent and the divested private company. Divesting the smaller private company allows it to raise their own capital via debt and equity markets that is separate from that of the parent private company. By using their own cost of capital, the divested private company doesn’t need to vie for capital allocation from the parent private company. Additionally, the divested private company can be properly valued by the market based on its respective multiples. Furthermore, the parent private company receives proceeds from the divestiture that it can reinvest or issue to shareholders.

• Realizing Value from Stronger Business: Where strong performing businesses are not valued by the market, there is an opportunity for the parent private company to realize the value of this business through a sale or divestiture. Proceeds from this sale can be used to develop other parts of the private company’s businesses or pay down debt.

• Realigning of Capital Allocation: A private company with multiple business units, funding and capital allocation issues restrains optimal operations of its subsidiaries. There are often internal conflicts as management teams vie for capital from the parent private company. This leads to potentially inefficient allocation of capital where certain businesses will have excess capital while others will be under funded. Inefficient capital allocation restrains the growth of subsidiary private companies. In such a case, separation of the different business lines allows each newly divested private company to raise capital to service their needs.

• Avoiding Takeovers: Restructurings have been used to avoid takeovers. Selling or spinning off a key business unit can be an effective deterrent for takeovers since acquirers will have to pay capital gains tax on spin-offs of the target private company that were initially tax-free. Increasing leverage can also help defend against takeovers, but the effect on operating flexibility must also be taken into account.

• Lowering Borrowing Costs and Optimizing Capital Structure: Different operating divisions of a larger corporation have different operating risks and capital requirements that may overshadow each other. In such cases the parent private company may find itself over leveraged. One of the main goals of restructuring would be to reorganize the capital structure of the private company to lower borrowing costs. The capital structure of a private company should always strive to optimize funding costs. The goal is to balance between the high costs of equity and the lower costs of debt and the benefits and detriments of both methods of funding. Funding operations through debt issuances can lead to financial distress as the interest expense to service the loan can consume cash flow. Divesting a business division is a great way for a private company to improve its financial position.

• Providing Management Incentives: Management teams of a subsidiary often operate off the incentives based on the performance of the parent private company as a whole. Stock option plans that are given to executive level management teams of subsidiaries that are based off the stock performance of the parent private company are not always appealing if the operating activities of the subsidiary are not properly valued by the market. Separating the subsidiary from the parent creates lucrative invectives for management whose compensation is now directly based on their division’s performance.

• Pre-IPO Housecleaning Process: Prior to the initial filing of an S-1, firms that intend or explore the option of going public must enter a restructuring process. This pre-IPO restructuring process is known as the “House Cleaning” process and is done to ensure that the firm is SEC and compliant in terms of accounting, compensation, contractual agreements, corporate structure, and tax-related considerations. This process will begin with a combination of marketing/public relations and auditing processes and may prove quite costly, especially in combination with SEC filing fees. The time between the initial S-1 filing and the first day of trading, the firm must report as if it were a publicly traded firm each quarter. For firms that are unable to quickly achieve compliance, this may prove quite costly and often will result in an IPO withdrawal filing.

Methods to Assess Forms of Restructuring

There are two basic forms of restructuring: financial and transactional. A financial restructuring usually takes place when the operating performance of a private company is doing well but the capital structure needs improvement. Transactional restructuring takes place when there is a need to reconfigure both the operating effectiveness and the capital structure of a private company. Many times financial and transactional restructurings can occur simultaneously.

• Tax Basis in Different Businesses: Tax basis is one of the most important considerations in a restructuring process. In a situation where the tax basis is high the parent private company may consider a taxable direct sale of the asset where as when the tax basis is low there parent private company may consider a tax-free alternative such as a spin-off or a split-off.

• Break-Up Valuation: Before deciding on a type of divestiture, a parent private company should perform a break-up valuation to determine the extent to which a subsidiary is under or over-valued. The break-up valuation will determine which type of divestiture will be most appropriate.

• Leverage: If the parent private company is over-leveraged, it may force the parent private company to sell certain assets where as on the other hand if the parent private company is underleveraged it may wish to pay a special dividend to shareholders or take on additional debt.

• Operating Performance: The operating performance of the parent private company is the summation of the performance of its individual subsidiaries. The parent private company may wish to divest poorly performing divisions in an effort to optimize operating efficiency or divest strong but undervalued business units to realize their true value.

• Private Company Makeup: The corporate culture and overall structure and strategy of a private company may occasionally differ from its subsidiaries. It may be necessary to divest business divisions whose operations or goals conflict with overall strategic direction of the parent.

• Threat of Takeover: A parent private company may consider restructuring to defend against a threat of hostile take-over. The type of threat will determine the restructuring options available to the targeted private company. If the acquiring private company plans to use the excess cash of the targeted private company to help finance the acquisition the targeted private company may pay out a special dividend to shareholders thereby reducing the ability of the acquirer to complete the acquisition. On the other hand if a the acquiring private company is targeting specific assets of a private company the targeted private company may choose to divest those assets to realize their value on the open market thereby foiling the efforts of the acquirer.

Bankruptcy Lawyer Free Consultation

When you need legal help with a restructuring bankruptcy, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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How To File Bankruptcy In 2020

How To File Bankruptcy In 2020

Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who can’t pay their bills and decide whether to discharge those debts so they are no longer legally required to pay them.

Bankruptcy laws were written to give people whose finances collapsed, a chance to start over. Whether it was bad decision-making or bad luck, lawmakers could see that in a capitalistic economy, consumers and businesses who failed, need a second chance.

The American Bankruptcy Institute (ABI) did a study of PACER stats (public court records) from 2016 and found that 95.5% of the 499,909 Chapter 7 bankruptcy cases decided that year were discharged, meaning the individual was no longer legally required to pay the debt.

Only 22,388 cases were dismissed, meaning the judge or court trustee felt like the individual had enough resources to pay his/her debts.
Individuals who used Chapter 13 bankruptcy, best known as “wage earner’s bankruptcy,” were about split in their success. Slightly more than half (166,424) were discharged and 164,626 were dismissed.

First, you need to know whether you need to file bankruptcy. Filing bankruptcy is a way to stop a garnishment as soon as the bankruptcy petition has been filed. Chapter 7 bankruptcy is a very effective tool for erasing credit card debt, medical debts, and most other unsecured debt. But you can only be use it once every 8 years. Chapter 13 bankruptcy is another type of bankruptcy available to consumers. The main difference between Chapter 7 and Chapter 13 is that you pay a portion of your debts making monthly payments to the Chapter 13 Trustee. You only pay as much as you are able to base on the means test and your actual income and expenses, without regard for interest rates on unsecured debt. Debts like student loans, child support, alimony, and recent tax debts will not be eliminated when your bankruptcy discharge is granted under any type of bankruptcy. Also, if you have any cosigners, they will not be protected by your personal bankruptcy. Temporary debt relief is immediate in all types of bankruptcy as the automatic stay prohibits creditors from contacting you as soon as you or your bankruptcy lawyer file your bankruptcy petition. It also stops a garnishment right away.

That’s one of the most important bankruptcy basics that everyone should know. Depending on the filer’s credit score when the Chapter 7 bankruptcy is filed, it may initially drop a little. However, once the debt relief becomes permanent when the bankruptcy discharge is entered, most people are able to rebuild their credit score within less than one year. In the United States, filers in 96% of all Chapter 7 consumer bankruptcy cases are able to keep all of their property even after their bankruptcy filing.

Collect Your Documents For Bankruptcy

Before getting started, you need to collect all your financial documents so you understand the current state of your finances.

First, you need to obtain a copy of your credit report from Experian, TransUnion, or Equifax to learn how much debt you owe. You can obtain your credit report from all three at for Free.
Some of your debts may not be listed on your credit report, like medical bills, personal loans, or tax debts. Make a list of any missing debts as you will need to list all of them on your bankruptcy forms.
In addition to your credit report, you will need the following documents:
• Tax returns for the past 2 years
• Pay stubs or other proof of your income for the last 6 months
• Recent bank account statements
• Recent retirement account or brokerage account statements
• Valuations or appraisals of any real estate you own
• Copies of vehicle registration
• Any Other Documents Relating to Your Assets, Debts, or Income. Having these documents next to you will help you get an accurate picture of your finances.

Get Credit Counseling

An important first step to the bankruptcy process is credit counseling. Everyone who files for bankruptcy is required to take a credit counseling course that is approved by the Department of Justice. Credit counseling courses like this one give you an idea of whether you really need to file for bankruptcy or whether you could get back on your feet through some type of informal repayment plan.

You will provide the credit counseling agency with your income and expenses. Together, you will review the options for repaying the debt, like debt consolidation, or debt settlement. In many cases, this exercise only confirms that you don’t have any feasible options for addressing the debt other than bankruptcy. But it’s a valuable exercise even still.
The course takes at least one hour and can be completed online or by telephone. The course fee ranges from $10 to $50, depending on the provider. But if your household income is under 150% of the federal poverty line, you should be able to get this fee waived.
Once you complete the course, you will receive a certificate of completion. Keep it. You will need to give a copy of this certificate to the court when you file your bankruptcy forms.

This is the most time-consuming step. The Bankruptcy Forms include 23 separate forms totaling roughly 70 pages. The forms ask you about everything you make, spend, own and owe. If you download and print out the forms online, you will have to enter repetitive data and make lots of math calculations. You really need to hire a lawyer.

Filing for Chapter 7 bankruptcy normally requires a $335 filing fee, which must be paid to the court in person in exact change.
If you don’t have the funds to pay the filing fee now, you can complete a special form, asking to pay your fee in installments. You can ask to pay the $335 fee in up to 4 payments within 120 days of your filing date.
If paying in installments isn’t even possible, you can submit another form to apply for a fee waiver. To qualify, your total household income must be under 150% of the federal poverty line. The court will decide whether you get a fee waiver after you file. If your application is denied, the court will order you to pay the fee in installments.

Once you have prepared your bankruptcy forms, you will need to print them out for the court. You must print them single-sided. The court won’t accept double-sided pages.
You will also need to sign the forms once they are printed.
Most bankruptcy courts require just 1 copy of the petition, but some courts like the bankruptcy court in Manhattan require 4 copies. So call your local bankruptcy court to find out how many copies you will need to bring.

Don’t do it yourself. You wouldn’t do your own open heart surgery. Don’t do your own legal work.

The clerk will take your bankruptcy forms and ask you to take a seat in their waiting room. It shouldn’t take long for the clerk long to process your case – about 15 minutes. During this time, they will scan your forms and upload them to the court’s online filing system.
As soon as they are done processing your forms, the clerk will call you back to the front desk. The clerk will give you:
• Your bankruptcy case number
• The name of your bankruptcy trustee
• The date, time, and location of your meeting with your trustee (this is called the “Meeting of Creditors” or “341 Meeting”)
At this point, your case has been filed! Congrats! Something very important has just happened. Your debt collectors are now legally prohibited by bankruptcy’s Automatic Stay from contacting you to collect your debts, from garnishing your wages, or foreclosing on your property. This lasts until the end of your bankruptcy case, at which point most, if not all, of your debts will hopefully be erased.
But you’re not home yet – there are other steps you need to complete to get a fresh start!

The bankruptcy trustee is an official appointed by the court to oversee your case. Pay attention to mail you receive from the trustee after filing. The trustee will send you a letter asking you to mail them certain financial documents, like tax returns, pay stubs, and bank statements. If you don’t mail the the trustee the requested documents, you will not get a discharge of your debts.

As soon as possible after filing your bankruptcy forms, you also need to take your second mandatory bankruptcy course. The second course, called the Debtor Education Course, is similar to the credit counseling course. But it is designed to educate you on making smart financial choices so that you won’t have to seek bankruptcy relief in the future.

Course 2 can be completed online or by phone and takes at least 2 hours to complete. The fee for the course ranges from $10-$50. But the fee may be waived if your household income is under 150% of the federal poverty level.
If you don’t complete the course, you will not obtain a fresh start. So, make sure to complete the course as soon as possible after filing.

Attend Your 341 Meeting

Finally, you need to attend your 341 meeting. The location of the 341 Meeting depends on where you filed your bankruptcy case.
Usually, the 341 Meeting takes place about a month after filing. The main purpose of the 341 Meeting is to ensure that you are not hiding any expensive assets that should be distributed to creditors. If your papers were done correctly, you should have no trouble answering the questions. Most meetings last only about 5 minutes. Creditors are allowed to attend, although they almost never do.

Important note: You must bring your government-issued ID and social security card to the meeting. If you don’t bring them, the trustee cannot verify your identity and the meeting cannot go forward. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for.

In most cases, the trustee “closes” the case at the end of the meeting. In that case, unless something very unusual happens, you get a letter two months later from the Court stating that your debts have been discharged.
10. Optional – Dealing with Your Car

Finally, there’s an additional step in the bankruptcy process if you own a car with outstanding debt. If you want to surrender the car to the lender, the lender will file a motion with the bankruptcy court to ask permission to retake the car.

Alternatively, you might choose to keep the car by “reaffirming” the car debt and continuing making payments on it. In that case, your lender would normally send you a reaffirmation agreement that you would need to sign and return within 45 days after your 341 meeting. The lender would then file the signed reaffirmation agreement with the court for approval. If the judge approves your reaffirmation, you would get a notice of reaffirmation along with your discharge. And you would be able to keep the vehicle as long as you stay current on your payments.

Finally, you may also have chosen “redeem” the car by buying it back from the lender in one lump sum, usually obtained from a lender. If you chose redemption, you will be required to filing a motion in the bankruptcy case.

Filing for bankruptcy takes some preparation. Hiring a good bankruptcy attorney is one way to file. But if you cannot afford one and you need a fresh start, you should see if you qualify for bankruptcy with Ascent Law LLC.

Bankruptcy Free Consultation

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. We want to help you. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Will Bankruptcy Show Up On My Credit Report?

Will Bankruptcy Show Up On My Credit Report

Bankruptcy may help relieve your debt obligations, but it will impact your credit for years. Bankruptcy is a special legal proceeding you can use to reorganize or get rid of your debt, depending on your financial situation. Bankruptcy can be helpful if you’re overwhelmed with financial commitments, but it could also negatively affect your credit. A bankruptcy will generally stay on your reports for up to 10 years from the date you file. The good news is your credit can gradually heal if you take the right steps.

How bankruptcy appears on your credit reports

Bankruptcy is a type of public record that can be listed on your credit reports. As long as it’s listed on your reports, the bankruptcy may negatively impact your credit. According to the Fair Credit Reporting Act, a Chapter 7 bankruptcy may stay on your reports for 10 years from the date you file. A discharged Chapter 13 bankruptcy typically stays on your reports for seven years from the date you file, but it could remain for up to 10 years if you don’t meet certain conditions. Both types have the same impact on your credit scores. However, it’s possible that a future lender could view one type more favorably than the other. This type of public record may lower your scores significantly. If your credit was healthy before the bankruptcy, it may be hit harder than someone with poor credit. Ultimately, how a bankruptcy affects credit can vary, partially because of the different factors that make up each person’s credit.

How accounts appear on your credit reports

Before filing for bankruptcy, you probably had bills you struggled to keep up with credit cards, medical debt and more. When you include those accounts in a bankruptcy filing, they’ll still be reported on your credit reports. Accounts discharged in bankruptcy can be reported as “discharged” or “included in bankruptcy” with a zero balance. Even though you owe $0 for them, they’ll still appear on your reports. If you apply for credit, lenders may see this note when they check your reports, and they may deny your application. But here’s that good news we promised: Accounts included in a bankruptcy filing won’t be reported as “unpaid” or “past due” anymore, and you may feel relief without those financial burdens. Your credit scores will eventually start rebounding with those positive effects. That’s assuming, of course, you use credit responsibly from here on out.

Credit recovery post-bankruptcy

After filing bankruptcy, you can work to build your credit again but it won’t be instantaneous. Start by making a list of the debts included in your bankruptcy, and check them on your credit reports. After they’re discharged, it may take about two months for the accounts to be updated on your reports. They should be labeled “included in bankruptcy”, “discharged” or similar language. Check your reports every few months for errors. Make sure to check that the negative marks are removed in a timely fashion. In the meantime, consider building credit with a secured credit card. Only take out lines of credit you can afford, and pay back debt as agreed. After several years’ worth of responsible credit behavior, your credit scores can improve. “If someone walks the straight and narrow after bankruptcy,” “it would be possible their scores would be higher now than prior to the bankruptcy.”

How Long Does a Bankruptcy Stay on Your Record?

Although a bankruptcy filing remains on your credit report for up to a decade, the effect on your credit diminishes over time until it drops off your report completely. Chapter 7 bankruptcy is the classic bankruptcy measure for people who have defaulted (that is, failed to pay) their loans. This form of bankruptcy forgives most debts, including:
• Credit card debt
• Medical bills
• Personal loans
Chapter 7 bankruptcy stays as a negative mark on your credit report for 10 years from the date of filing. The bankruptcy also can cause your credit score to drop by as much as 200 points or more. Any debts that were wiped away by filing for Chapter 7 bankruptcy will be included on your credit report. To qualify for Chapter 7 bankruptcy, you must first pass a means test that assesses your income and assets-to-debt ratio. Often, property, cars and other valuables might have to be liquidated in order to pay back as much of the debt as possible but some day-to-day essentials you own might be exempt under the law, such as your house or computers you use for work. Chapter 7 bankruptcy (unfortunately) doesn’t apply to student loans, taxes, criminal fines, alimony or child support. There are some consequences you can’t escape.

How long does Chapter 13 stay on your credit?

Chapter 13 bankruptcy, also known as “wage earners bankruptcy,” is for people who earn too much to qualify for Chapter 7 but not enough to meet creditors’ immediate payment requirements. As with Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy will torpedo your credit score, and the filing will remain on your credit report for seven years. If you need to apply for another loan during that time, you’ll need to file a motion and obtain the court’s permission first. Under Chapter 13 bankruptcy, the court creates a payment plan for you to repay your debt over the span of three to five years. After that span of time, any remaining debts are wiped clean meaning that your creditors may not get the full amount you owe them. Chapter 13 bankruptcy allows you to repay some of your debt while still holding on to your assets, including cars, jewelry and property.

Can you get bankruptcy off your report faster?

What’s interesting is that there’s no minimum amount of time before bankruptcy can be removed from your credit report; 10 years is only the maximum. So get a free credit score and credit report and look really closely for mistakes. If you find any errors with your personal information, debts, creditors, timelines or other information, file a dispute with the credit bureau. Any entries related to your bankruptcy must appear on your credit report correctly, and mistakes could force a credit bureau to remove the bankruptcy from your report. Bankruptcies automatically fall off your credit report after the designated amount of time. If you notice that a bankruptcy doesn’t come off your credit report after the expiration date, you should file a dispute with the credit bureaus.

How Are Delinquent Accounts Reported on Credit Reports?

People who file for either type of bankruptcy may have accounts which have been delinquent for several months or even longer. The individual delinquent accounts are deleted seven years from the original delinquency date. The delinquency date is the date the account first became delinquent. Filing for either kind of bankruptcy does not alter the original delinquency date nor does it extend the time the account remains on the credit report.

In most instances, since the account was delinquent before it was included in the Chapter 7 or Chapter 13 bankruptcy, it is likely to be deleted before the bankruptcy public record.

How Bankruptcy Affects Your Credit

Filing for bankruptcy makes it challenging to receive credit cards or lower interest rates because lenders will consider you risky. These consequences could occur immediately, affecting any short-term needs such as getting affordable interest rates or approval from prime lenders. Rebuilding your credit as soon as possible is paramount. One way to increase your credit score is to pay all your bills on time each month, creating and sticking to a budget and not incurring more debt. You should also avoid overuse of credit cards and failing to pay balances in full each month. Having a good credit score gives consumers access to more types of loans and lower interest rates, which helps them pay off their debts sooner.

New Bankruptcy Laws

The bankruptcy law changed in 2005, making it more difficult for individuals to file for Chapter 7 bankruptcy and have all their unsecured debt discharged. Government-backed and private student loans are rarely included in either type of bankruptcy. The “not dischargeable” rule also applies for court-ordered alimony, court-ordered child support, reaffirmed debt, federal tax liens for taxes owed to the U.S. government, government fines or penalties and court fines and penalties.

What Documents Do You Need to File Bankruptcy?

Before filing for bankruptcy, consumers should collect several financial documents including:
• Tax Returns
• Bank Statements
• Paycheck Stubs
• Debt Statements
If you discharged debts in bankruptcy, here’s how they should (and should not) be listed on your credit report. In short, yes. Not only will a bankruptcy filing remain on your credit report for seven to ten years, but you can expect information about the debts discharged (forgiven) in bankruptcy to continue to appear on your credit report, too.

Reporting Debts as Discharged in Bankruptcy

While it might be daunting to think about a bankruptcy filing showing up on your credit report for ten years, it might not be as bad as you think. A bankruptcy discharge can help you clean up debt much faster than you’d be able to do yourself. For instance, instead of a delinquent or unpaid debt lingering on your report for years, it will show as being discharged as part of your bankruptcy. In fact, creditors won’t be able to report your debt in a variety of ways that could cause your credit to suffer, such as allowing the obligation to show as:
• currently owed or active
• late or delinquent or outstanding
• charged off
• having a balance due, or
• converted to a new type of debt (re-aged or given new account numbers, for example).

Such reporting labels are often the reason creditors deny applicants credit. In some cases, applicants must pay off such debt as a condition of loan approval. Instead, when you pull your report, each qualifying debt should be reported as:

• having a zero balance, and
• discharged, “included in bankruptcy,” or similar language.
Unfortunately, some creditors don’t update information to the credit reporting agencies. This tactic could be a way to get you to pay up, even though you no longer legally owe the debt. If your credit report shows an improperly labeled discharged debt, you’ll want to take steps to correct the problem.

Checking Credit Report Accuracy after Bankruptcy

You’re entitled to get a free credit report from the three major credit reporting agencies (TransUnion, Equifax, and Experian) each year. That should allow enough time for creditors to report the bankruptcy information. Thoroughly review each listed debt for accuracy. Also watch out for unfamiliar creditor names or debts, as they might be discharged debts that were bought and sold to a third party, but are not accurately reflected as having been discharged. To make changes, follow the instructions under the “Correcting Misreported Discharged Debt” heading. You’ll want to claim each of the remaining two credit reports at three-month intervals. Each time, check to see if the credit report reflects the previously requested changes, and, take steps to correct any remaining inaccurate information. This approach should allow you to clean up your credit report at no cost to you.

Correcting Misreported Discharged Debt

Disputing errors is relatively straightforward. You’ll do so by using the online procedure provided by each of the three major credit reporting agencies. A creditor who repeatedly refuses to report your discharged debt properly might be in violation of the bankruptcy discharge injunction prohibiting creditors from trying to collect on discharged debts. If you take steps to remedy the misreporting, and the creditor (or collector or debt buyer) refuses to fix the error, talk to a bankruptcy attorney. The Fair Credit Reporting Act is the law that requires consumer reporting agencies (also called credit bureaus) to maintain an accurate file of your credit information. Creditors who report your information to the consumer reporting agencies (CRAs) must also be truthful and accurate. The FCRA tells CRAs and your creditors what they can report and how long it can legally show up on your credit report.

How Much Will My Credit Improve Once My Bankruptcy Falls Off?

Bankruptcies fall off personal credit reports after 10 years, after which time a damaged credit score can begin to improve. There’s no way to determine exactly how much your credit score will improve after bankruptcy, because it depends entirely on the decisions you make after the 10-year period. By actively working to improve your credit score, it’s possible to raise it out of the “high-risk” category and eventually into the 700’s or higher, to a maximum score of 850. Rebuilding a credit score requires patience and consistent financial responsibility.

What You Can Expect

After a bankruptcy, you can expect your credit score to be well below 640. Credit scores can range anywhere from 300 to 850, with anything above 700 considered “low risk.” To begin the process of improving your credit score, check your credit report after the bankruptcy falls off. The closer to 300 it is, the more work you will have to do to approach 700. Actively work to boost your score for six months, and then assess how much it has improved. Use that figure to guide your expectations for future improvement. For example, if you find that your score increased 30 points after six months of diligent debt management, you might set a goal of increasing it another 30 points in the next six months. This can give you a target towards which to work, although the exact improvement in any given period is never guaranteed.

Manage Bill Payments

Never miss a bill payment including utilities, rent, mortgage, credit cards or any recurring obligations. Consistently paying bills on time can keep your credit score from temporarily dropping as you work to build it back up. Set up automatic bill payments whenever possible to avoid the risk of forgetting a due date. Create a spreadsheet or chart to regularly track your upcoming payments, and pay bills a few days early whenever possible. Work with your past creditors to establish affordable payment plans for any debts that were not removed by the bankruptcy, such as student loans.

Rebuild Good Debt

Maintain one credit card and one store credit account, but only if you can afford to make the payments. Do not use any form of debt to finance luxury goods or leisure and entertainment products. Do not allow your credit accounts to exceed 30 percent of their total limits at any given time and make larger than minimum monthly payments if possible. It may seem counter-intuitive, but actively using your credit is essential to rebuilding your credit score after a bankruptcy. Establishing a record of responsible borrowing is one of the most important factors in boosting your credit score.

Check Your Credit Report

Check your credit report every few months to be aware of the factors influencing your credit score. Compare each entry in the report to your own financial records to ensure that debt balances and account histories are accurate. Dispute any inaccurate or fraudulent listings in your report as quickly as possible to avoid negative impacts. Personally contact any companies that have legitimately listed defaults or missed payments, and work with them to establish repayment plans to avoid further negative reports.

Work With Your New Creditors

If you ever have to miss a debt payment due to unforeseen financial hardship, contact your creditor long before your next due date. Work with the creditor to establish a future payment arrangement, and ask a service representative or manager to note your account with a “promise to pay.” Specifically request that the creditor not report the missed payment to credit bureaus, and check your credit reports after a few weeks to ensure that it did not.

For many, bankruptcy is a last resort. If you’re considering filing, know the financial and credit implications. Your credit will show a public record of bankruptcy for up to 10 years, and discharged accounts will get a negative mark. You can lessen the effects on your credit by responsibly using credit going forward and making sure your credit reports accurately reflect your situation.

Bankruptcy Attorney Free Consultation

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. We want to help you with a chapter 7, chapter 11, chapter 12 or chapter 13 bankruptcy in Utah. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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File Bankruptcy Or Try To Settle?

File Bankruptcy Or Try To Settle

When you’re in need of serious help getting your credit back on track, there are two debt relief options that are worth considering. Both debt settlement and bankruptcy will reduce or eliminate your debt, but can also negatively impact your credit in the near term. Here’s what you need to know about both.

What Is Debt Settlement?

Debt settlement allows you to negotiate with creditors to pay off debt on delinquent, unsecured credit accounts and personal loans for less than you owe. For example, a person with a $10,000 balance on their credit card might pay $4,000 to close and settle the account and have the remaining $6,000 forgiven. Debt settlement is really only a viable option for people who have reliable income. That’s because you’ll need to make each payment you agree to with creditors over the course of your settlement plan, which for some, can last a couple years.

What Is Bankruptcy?

Bankruptcy can give you a fresh start or help you re-organize your debts and pay your creditors less depending upon the type of bankruptcy you file. All bankruptcy provides court-ordered protection from creditors, but the type of bankruptcy you file will depend on your personal financial situation. Chapter 7 allows for your debts to be fully discharged, while Chapter 13 provides for an organized repayment plan (there’s also Chapter 11, though it is most often used by businesses).

How to Decide Which Is Right for You

As you consider debt settlement and bankruptcy, it’s important to take an honest look at the amount of your debt, your budget and your available funds/income. Identify short and long term financial goals and how your credit health will impact these. To assess your qualifications and options for filing bankruptcy, it’s best to speak with a bankruptcy attorney. Most offer a free consultation and you’re under no obligation to file after speaking with them.

If you’d like to consider debt settlement, you can begin by assessing:
• Your balances: Some amounts are too small for settlement.
• Your creditors: Each company has its own approach to dealing with delinquent accounts and their policies change periodically.
• Your cash flow: Do you have the funds to settle all your debts within 18 months or, ideally, 12 months as this reduces the risk of being sued?
• Your budget: Can you pay your settlements on time and still pay your other bills?
• Additional funds: Are there other sources of funds, e.g., something you can sell, loans from family or friends that you can access?

If debt settlement is the right option, you’ll work with a debt settlement company to negotiate on your behalf or you can negotiate directly with each of your creditors. In most cases, filing for bankruptcy will damage your score much more than debt settlement. A Chapter 7 bankruptcy stays on your credit report for 10 years. Chapter 13 stays on for seven. Filing for either type can also lower your credit score by 150 to 200 points. Successfully settled debts are marked as “settled” on your credit report for seven years, but you won’t face as many restrictions during that time period when it comes to borrowing. And your credit score may take a dip that’s just as bad as filing for bankruptcy. The danger is when debt settlement isn’t successful. If you’ve stopped making payments on your debt in anticipation of a successful settlement, you risk defaulting on your debts if it doesn’t come through. You’ll mar your credit report and might be left with no alternative to bankruptcy. Of course, you can continue paying your creditors throughout the settlement process, but most people don’t due to the expense.

Which Is Easier To Qualify For?

Debt settlement typically comes with fewer qualification requirements. Anyone with unsecured debt of $7,500 or more can qualify to enroll in most debt settlement companies, though most don’t operate in all 50 states. In contrast, you have to have less than $1,184,200 in secured debts and $394,725 in unsecured debts to qualify for Chapter 13 bankruptcy. You also have to be employed. Qualifying for Chapter 7 bankruptcy is much more complicated: You must meet a laundry list of criteria that proves you don’t and won’t have the funds to pay your debts. To be eligible for any type of bankruptcy, you’re also required to get credit counseling from an approved agency before filing. And you won’t qualify for bankruptcy if you’ve had a past bankruptcy petition dismissed in the past 180 days.

Filing Chapter 7 Bankruptcy

You have two options when it comes to a bankruptcy filing and they both work differently. In a Chapter 7 bankruptcy, your debt is wiped out, regardless of how much you owe. The kinds of debts you can get rid of through Chapter 7 include medical bills, credit card bills and unsecured loans. Student loans generally can’t be discharged in either type of bankruptcy unless you’ve got a sustained financial hardship that keeps you from making your payments. To file Chapter 7, you have to meet certain income guidelines under the means test. The guidelines are determined using Census Bureau data. They’re based on where you live and how many people are in your family. You have to be at or below the income limit established for your family size to qualify for Chapter 7, unless you can prove that you don’t have enough disposable income to pay a certain percentage of your debt each month. One disadvantage of Chapter 7 is that you may have to give up some of your assets as a trade-off for eliminating your debt. These assets are turned over to the bankruptcy trustee overseeing your case, who’s responsible for liquidating them and using the proceeds to pay your creditors. Depending on where you live, you can claim federal or state exemptions to protect certain assets, like bank accounts, jewelry or vehicles. But there are limits to how much you can exempt.

Chapter 13 is also a way to clear your outstanding debts but the process is a little more involved. Typically, a Chapter 7 bankruptcy can be completed within six to nine months, but it can take up to five years to get a discharge in a Chapter 13 case. Unlike Chapter 7, there are limits to how much debt you can include in a Chapter 13 filing. When you file, you have to agree to pay back some or all of your debts. The amount you have to pay back typically depends on the types of debt included in the bankruptcy and how much you owe. A Chapter 13 payment plan can last three or five years, based on your income. If you default on your payment plan, the case can be dismissed which leaves you open to collection actions and you won’t get back any of the money you paid in. The upside of a Chapter 13 case compared to Chapter 7 is that you get to keep all of your assets. If you’re behind on your mortgage payments, you can also file Chapter 13 to get caught up if a foreclosure is pending. Depending on whether you’re upside down on your home, you could also use a Chapter 13 filing to get rid of a second mortgage.

Debt Settlement Basics

Settling a debt means asking your creditor to accept less than what’s owed to resolve the account. Generally, creditors will only settle a debt once your account falls significantly past due. The amount that you can settle a debt for depends on the creditor, but you may be able to settle for anywhere from 35 to 75 percent of the total balance. There are companies that offer debt settlement services for a fee but it’s possible to settle a debt on your own. Once you decide how much you can afford to pay, you just call the creditor up to get the negotiations started. Typically, you have to be able to make one lump sum payment or several smaller payments if your offer is accepted, so you should only consider settlement if you have cash on-hand. If the creditor is willing to work with you, they may try to make a counteroffer but you should only agree to what you can afford. Once an offer is accepted, you pay the creditor and the remaining balance is forgiven. The account will be reported as “Paid” or “Settled” on your credit and you won’t have to worry about any additional collection actions.

Advantages and Disadvantages of Debt Settlement

Debt settlement can be the best way out of a financial mess, but it is full of pitfalls. The biggest problem is convincing a creditor, or multiple creditors, to accept less than they are owed. Creditors aren’t obligated to enter a settlement agreement, but many are willing if they believe you can’t pay and otherwise will file for bankruptcy protection a step that could mean they receive little or nothing. Some people hire a debt settlement firm to represent them, but others negotiate themselves. The advantage to contracting with a debt settler is saving time and avoiding the hassle of negotiating yourself.

Advantages to settling a debt:
• Pay a fraction of what you owe to become debt free.
• Mitigate the long-term credit damage of bankruptcy to your ability to borrow money.
• Negotiate with creditors and avoid the time and expense involved in bankruptcy.
Disadvantages to debt settlement:
• Creditors might not want to negotiate with you.
• When the creditors learn you can’t pay, they might file legal actions aimed at garnishing your wages.
• Stopping payments to convince creditors that you are serious about not paying could result in your accounts going into collection, further damaging you credit as your debt increases.
• If you settle a debt, state and federal tax collection will treat the forgiven amount as income and require you pay taxes on it.

Advantages and Disadvantages of Bankruptcy

Bankruptcy chapters 7 and 13 are the two avenues individuals have to clear their debts through the courts. Chapter 7 eliminates your debts, but in some states might require you to liquidate all you own, including your car and house, to help compensate your creditors.

Chapter 13 protects your home from foreclosure but requires that you partially repay creditors over a three to five year period. Because it requires repayment, it is often called “wage earners bankruptcy.” Both chapters will cause long-lasting damage to your credit report. In addition, student loan debt, income taxes and child support payments can’t be discharged in bankruptcy, so you will still be obligated to repay them.
Advantages to Chapter 7 bankruptcy:
• Clears most debts and offers a financial fresh start.
• Doesn’t require the filer to pay taxes on unpaid debts.
• Prevents creditors from pursuing collections.
Disadvantages to Chapter 7 bankruptcy:
• Damages credit report for 10 years.
• Some states allow seizure and sale of you home and other properties. You should review what is exempt in your state.
• Requires that you wait eight years before filing again under Chapter 7.

Advantages to Chapter 13 bankruptcy

• Protects your property, including your house and car, from foreclosure and repossession to cover debts.
• After you complete required payments, you receive a discharge of debt.
• You aren’t required to pay taxes on forgiven debt.
• Waiting period before you can file again is two years – six years less than under Chapter 7
Disadvantages to Chapter 13 bankruptcy:
• Requires that you follow a court-ordered payment plan that lasts three to five years.
• Reduces your credit score for years, making it difficult to borrow money or obtain credit.

Where Bankruptcy Doesn’t Help

Bankruptcy does not necessarily erase all financial responsibilities. It does not discharge the following types of debts and obligations:
• Federal student loans
• Alimony and child support
• Debts that arise after bankruptcy is filed
• Some debts incurred in the six months prior to filing bankruptcy
• Taxes
• Loans obtained fraudulently
• Debts from personal injury while driving intoxicated
It also does not protect those who co-signed your debts. Your co-signer agreed to pay your loan if you didn’t or couldn’t pay. When you declare bankruptcy, your co-signer still may be legally obligated to pay all or part of your loan. Most people consider bankruptcy only after they pursue debt consolidation or debt settlement. These options can help you get your finances back on track and won’t negatively impact your credit as much as a bankruptcy. Debt consolidation combines all your loans to help you make regular and timely payments on your debts. Debt settlement is a means of negotiating with your creditors to lower your balance. If successful, it directly reduces your debts.

Bankruptcy Lawyer Free Consultation

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. We want to help you. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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What Happens After The Foreclosure Sale Date?

What Happens After The Foreclosure Sale Date

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

What Happens After the Foreclosure Sale Date?

As a homeowner, the last thing you want to think about is losing your home. But as many people have found, it’s common to struggle with those hefty mortgage payments, especially if you lose your job or the housing market crashes. Even if you have fallen behind on your payments, you may be able to get back on track and save your home. However, if you’ve exhausted your options and face foreclosure, it’s important to know what happens after the foreclosure sale date.

Can You Get Your House Back After Foreclosure?

No. Not in Utah. Some other states allow for this under a process called “statutory redemption.” Under this rule, you have a limited amount of time to pay the foreclosure sale price (plus interest in many cases), and you are usually allowed stay in your home during the redemption period, whether it’s 30 days or two years.

Some states permit a foreclosed homeowner to buy back the home within a certain period of time after the sale. This is called a redemption period. To redeem the home, you usually have to pay the total purchase price, plus interest, and any allowable costs, to the purchaser who bought it at the foreclosure sale. In some states, though, you’ll have to pay the total amount owed on the mortgage loan, plus interest and expenses.

The deadline and procedures for exercising a right of redemption varies from state to state, and not all states provide a redemption period after the sale.

In order to redeem, the former homeowner has to come up with another source of financing. But getting a bank to lend you money after a foreclosure can be very difficult, even if you have a steady income, because your credit score will have taken a bit hit.

Some special programs are available to help homeowners in this type of situation. For example, a program called Stabilizing Urban Neighborhoods (SUN) offered by a nonprofit organization helps foreclosed homeowners in Massachusetts, Maryland, Rhode Island, New Jersey, Illinois, Connecticut, and Pennsylvania by purchasing foreclosed properties and then reselling those properties back to the former homeowners, usually at current fair market value, with a new, fixed-rate 30-year mortgage.

If your state provides a redemption period after the sale, you sometimes have the right to live in the home payment-free during this time. For example, in Michigan, most homeowners get a six-month redemption period (some people get a year) during which time they can live in the home. (Under some circumstances, though, like if the foreclosed homeowner unreasonably refuses to allow the purchaser to inspect the home, the purchaser can begin an eviction sooner.

By staying in the home during the redemption period, you can save money by living rent-free. This way you can use the money that you otherwise would have spent on housing to pay other bills and start rebuilding your credit.

In some cases, you might be able to remain in the home as a tenant after the foreclosure sale. For example, Freddie Mac offers a program that allows recently foreclosed homeowners to rent their home on a month-to-month basis, if Freddie Mac acquires the property as a result of foreclosure. (You can learn more about this program, called the Freddie Mac REO Rental Initiative, at the Freddie Mac website. If you want to find out if Freddie Mac owns your loan, go to or call 800-Freddie.)

Live in the Home until You’re Evicted

If you don’t move out after the purchaser gets title to the home (typically either after the sale or after the redemption period), the new owner (often the foreclosing party) will start eviction proceedings to remove you from the property. The length and procedures for the eviction process varies from state to state. In some cases, the foreclosing party can include the eviction as part of the foreclosure action—depending on your state’s law and the circumstances of your case—while in other instances, it will have to file a separate eviction action with the court.
You might receive a notice prior to the start of the eviction (called a Notice to Quit), which gives you a certain amount of time—for example, three days—to leave the home before the eviction officially starts. While you can stay in the home until you’re forcibly removed through the eviction process, it is generally best to leave the property before this time period expires. (You can learn more about eviction after foreclosure in Foreclosure Timeline: Getting Notice to Leave.)

Getting a Cash for Keys Deal

To avoid having to complete an eviction, the purchaser might offer you a “cash for keys” deal. With this arrangement, you agree to leave the home by a certain date, and in good condition. In exchange, the purchaser gives you a specified amount of cash to help pay for your relocation costs.

Moving Out Voluntarily After the Foreclosure Sale Date

If you’ve stopped paying your mortgage, you’re allowed to remain in your home until the foreclosure process is completed. Once you reach the foreclosure sale date you go from being a homeowner to a tenant, as title legally passes from you to the new owner. Some owners may agree to rent the home to you, but most will want to take possession as soon as possible. Each state has its own laws and regulations governing this process, including the amount of time an owner must give you to vacate the property.
At this point, you can move out voluntarily, attempt to redeem the property through statutory redemption, or wait until the sheriff shows up to execute an eviction. Because the eviction process takes time and money, some owners will actually pay you to move out voluntarily, a practice called “cash for keys.” This arrangement spares you the hassle of an eviction and provides you with some extra funds to help with your relocation.

Eviction after Foreclosure

So what happens after the foreclosure sale date if you’ve decided against moving out voluntarily? In that case, the new owner will try to force you out. However, this must be done formally through the court using the eviction, or “unlawful detainer”, process. Once you’ve received a notice of eviction, you can still move out voluntarily. Otherwise, you will be escorted off of the property in a matter of days by local law enforcement.
It’s also important to know that an eviction can further damage your credit score, making it difficult to obtain a loan or convince a landlord to rent to you. Many housing applications and even some job applications will ask if you’ve ever been evicted, and landlords and employers can verify this information by examining evictions in public records.

Rebuilding Your Finances after the Foreclosure Sale Date

Whether you move out voluntarily or are evicted, a foreclosure does significant damage to your credit score. This makes banks very hesitant to lend you money, and makes landlords question whether you’ll pay rent consistently. As a result, you should start saving as much money as possible during the foreclosure process in case you need to pay a higher deposit to ease the concerns of your future landlord. Additionally, you’ll need to focus on rebuilding your credit by paying bills on time and getting control of your debt. After seven years, the foreclosure should disappear from your credit report, making life a little easier.

What Happens if My Landlord Goes into Foreclosure?

It’s also possible to be seriously affected by a foreclosure even if you don’t own a home. This is the case for renters whose landlords fail to pay their bills. Without even knowing that a foreclosure is taking place, you could receive a notice to vacate the property – even if you have many months left on your lease. Fortunately, you should be given at least 90 days’ notice, and you may be able to sue your landlord to help cover the costs of relocating.

Be Prepared for What Happens After the Foreclosure Sale Date. Since a foreclosure has significant ramifications on your housing, finances, and credit, it’s important to consult an attorney as early on in the process as possible. Whether you’re trying to avoid foreclosure, or you’re in the final stages of one, you’ll need to know what your options are and what to expect after the foreclosure sale date. Be prepared and make well-informed decisions by contacting a local lawyer who has experience with foreclosures and foreclosure alternatives.
Options left after the Foreclosure Sale Date

Loan Modification

Modifying your loan is another option you have to stop a foreclosure. Your attorney can negotiate on your behalf with the bank to modify your loan and thus help you save your home. In most cases, your loan modification is likely to be accepted if you show that you are willing and able to pay back the money you owe.

If you had difficulties paying your mortgage due to a valid hardship — factors outside your control such as loss of employment, a chronic sickness that drained your finances, change in market interest rates and so on, your loan is likely to be modified. However, keep in mind that it is up to the bank to accept or reject your loan modification request. A good foreclosure defense lawyer will have a loss mitigation team to present your situation to the bank in such a way to get your loan modification approved.

Deed-in-Lieu of Foreclosure

Sometimes, a deed-in-lieu of foreclosure can be a better option than doing a short sale or modifying your loan. In a deed-in-lieu, you convey all the interests in your home to the bank to satisfy the mortgage debt and thus avoid the home being foreclosed.

When a deed in lieu is completed, you will be completely released from the debt associated with the mortgage. A deed in lieu will save you from the long foreclosure process, which usually increases the amount of deficiency due to attorney fees incurred by the lender to initiate and execute the foreclosure. Moreover, your credit will not suffer as much as it would should a foreclosure take place.

Filing for Bankruptcy

Filing for Chapter 7 or Chapter 13 bankruptcy can help to delay the foreclosure sale date. During this period, the attorney can work out a deal with the bank’s attorney to modify your loan repayment terms.
In most cases, foreclosures are initiated after you have repeatedly failed to service your monthly payments. If financial hardship is the reason for you failing to pay the mortgage, you are likely to be given new terms of payment. However, this decision is not automatic and will depend with the bank.

Short Sale

When the date of sale has been delayed, you can opt for a short sale rather than wait for your home to be auctioned. Remember, the bank is only interested in recouping back their money and if your home is auctioned, it may go for a price that is much lower than its market value. Moreover, if the money the home fetches is not enough to cover your debt, you will be responsible for paying the remaining amount known as a Deficiency Judgment. A Deficiency Judgment must be filed by the bank within four years of the foreclosure sale date.

A short sale can help you get a fair price for your home, pay off your remaining mortgage balance and remain with a good amount of cash to help you move on. This is a better route than waiting for the home to be auctioned.

The most important thing to do when you receive a foreclosure sale date notice is to contact and cooperate with an experienced foreclosure attorney in your area to help you determine your next step. Call Ascent Law LLC today for your free consultation.

Foreclosure Attorney Free Consultation

When you need legal help with a foreclosure in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
itemprop=”addressLocality”>West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Fraudulent Conveyance Explained

We spend a lot of time thinking about and writing about fraudulent conveyances here.  That’s because a fraudulent conveyance can totally defeat an asset protection plan, no matter how good your asset protection attorney may be.  Laws regarding fraudulent conveyances make certain types of transfers wrongful.  One type of transfer that is prohibited is a transfer made within a certain period of time before a claim is made or while a claim is pending.  What is a claim?  Claims take many forms.  Claims can be lawsuits, demand letters, or even accidents where an injured person has yet to contact the person at fault.

Fraudulent Conveyance Explained

Let’s look at an example.  Consider an oral surgeon or dentist (“doctor”) who is not properly insured and accidentally causes injury to a patient during a surgical procedure.  If the patient sues the doctor, then the doctor’s personal assets are at risk.  The doctor’s personal assets include cash, stocks, bonds, investment properties, and in some cases even items like cars, boats and airplanes.

What we’ve established so far is that a doctor with assets has caused an injury.  Assume that no lawsuit has been filed.  Even though there is not a lawsuit pending, there is a “claim” against the doctor.  The doctor knows that she or he could end up owing money to the patient, and that is enough.  What can the doctor do to protected assets?

The answer is complex.  While the doctor can continue to move money and assets around, if the doctor moves assets to a place where they cannot be reached by the injured patient, then a court can “set aside” those transfers of assets.  The bottom line is that a court can require transferred assets to be given to the injured patient, even if the doctor is no longer legally and technically the owner of the assets.

In other words, once a claim exists, it is too late to protect most assets.  While one can continue moving assets while a claim is pending, it is almost impossible for an asset protection attorney to develop a plan that would make assets immune, at that point.  The moral of the story is that people with assets who are engaged in professional practices (e.g. doctors, dentists, lawyers, real estate developers, etc.) need to engage an asset protection attorney before claims arise.  That is the only way that a plan providing true asset protection can be developed and tailored to meet the needs of specific individuals.

It is true that some assets, in some states, are exempt assets and automatically protected.  But if you are a person with assets that go beyond exempt assets, then you should consider proactively pursuing an asset protection strategy.

What is Funding?

  • Primary and Second Homes (non-rentals)

The first asset you need to consider is your primary residence.  If you live in a state with fantastic homestead protection like Utah, then you don’t need to do anything.  Your home is protected.  Otherwise, you need to provide some protection for your home.  The typical way to do that is to transfer or “deed” your primary residence into your asset protection trust.  The same is true of any second homes that you own but don’t use to generate rental income.

  • Rental Properties

Rental properties are slightly riskier than non-rental properties.  As a result, there needs to be some additional insulation around them in order to protect your other assets.  That additional insulation comes in the form of a limited liability company (a “LLC”).  The funding works as follows:

  1. The LLC is created, and it is owned in the exact same proportions as the rental property to be transferred.
  2. The rental property is deeded into the LLC.
  3. The LLC is transferred into your asset protection limited partnership.

It’s very important that you follow the exact sequence described above, because in some instances it can save you money by avoiding transfer taxes and/or a reassessment for tax purposes (check with your local taxing authority and clerk of court to make sure).

  • Safe Assets

Cash, stocks, bonds, precious metals, and jewelry are all considered “safe assets.”  That’s because they can’t generate liabilities for you.  Think about it like this: Someone can get injured on your rental property.  That’s just not true of your safe assets.  Because of this unique feature, your safe assets can be owned directly by your limited partnership, without the need to insulate those assets with an LLC.

  • Vehicles

Vehicles are very risky assets.  As a result, they should be left outside your plan completely.  Own vehicles in your personal name, and trust that your other assets are safely protected.

Free Consultation with a Lawyer in Utah

If you have a bankruptcy question, or need help with Asset Protection, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed thousands of cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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Asset Protection or Bankruptcy

Asset protection planning is closely related to financial planning.  Both asset protection and wealth preservation strategies are about managing risk, which requires careful planning and appropriate asset allocations.

Asset Protection or Bankruptcy

Asset Protection Works like Premium Insurance

In the insurance industry, underwriters charge fees (“premiums”) to undertake risks.  Individuals and businesses pay those premiums in order to limit their exposure to financial losses.  In other words, premiums represent known, fixed costs that are paid in exchange for a release from future liabilities, the extent of which are unknown.  Traditionally, asset protection has worked in a similar way.  The transaction fees required to set up wealth preservation strategies and asset protection plans are fixed, up-front costs similar to insurance premiums.

In the aggregate, people are more likely to lose money due to poor financial planning–a lack of proper asset allocation, biased advisors, and a bad economy or poor investment choices–than they are to lose money in a lawsuit.  But each individual situation is unique, and some people are in riskier, more lawsuit prone businesses than others.  In the case of high net worth individuals with significant exposure to risk (e.g. physicians like OBGYNs), certain wealth preservation strategies (in addition to insurance) absolutely must be pursued.

Wealth Preservation Through Asset Management

The least expensive form of wealth preservation comes from shifting at-risk assets to exempt assets.  The only cost from such a reallocation of assets (other than transaction fees) is a possible reduction in liquidity.  As an example, one could sell a certain portion of their stock or bond portfolio and purchase a cash-value life insurance policy.  While stocks and bonds are highly vulnerable in a lawsuit by creditors, the cash value of life insurance is protected from the claims of creditors in many states.  The practice of economics is the shifting of assets from areas of low yield to areas of high yield.  Thus, if one can achieve her or his required rate of return via one of two investment vehicles, it makes economic sense to choose the less risky vehicle–the vehicle with less exposure to a suit by creditors.

Preservation of Assets

Where the goal is preservation of assets, timing is another consideration.  The structure of any asset protection plan should match the investments made within the plan.  It would make little sense to implement a wealth preservation strategy intended to last 30 years only to lose the principal in risky, short-term investments.  In the very near future, however, it may be possible to earn growth portfolio type gains while only taking wealth preservation risks.

Why Bankruptcy Doesn’t Always Work

If I lose my case, I’ll just file for bankruptcy.” We hear that statement often from scared doctors, dentists, orthodontists and other professionals, trying to fool themselves out of needing asset protection. Most of these doctors, unfortunately, don’t understand U.S. and state bankruptcy laws. Most believe that if a huge lawsuit comes their way, they can simply declare bankruptcy, have the judgment forgotten and continue their normal life.

Besides the damage to one’s credit and the rebuilding process that would ensue over the next seven years, there are many consequences originating from federal and state bankruptcy rules that govern a person’s lifestyle. For example, federal bankruptcy rules state that a married couple can have $34,850 in home equity after bankruptcy. Chances are, as a successful medical professional, you have more equity in your home than that. Be prepared to sell the house, give the profits to your debtors and move into an apartment. It may be easy to declare bankruptcy and avoid paying off a lawsuit debt, but we guarantee that it will be difficult having to change the lifestyle your family has become accustomed to.

The bankruptcy exemption rules are very specific about business “tools of the trade”. A successful doctor may have a thriving practice with a state-of-the-art office. But if that doctor declares bankruptcy, all the “tools of the trade” will be sold off to debtors except for $1,750 according to Federal laws. What type of doctor’s office can be run with just $1,750 in equipment?

Each state has their own bankruptcy exemptions and these take the place of federal exemptions where applicable. Lucky doctors in Utah get to keep their home after declaring bankruptcy no matter what the value.

Utah Bankruptcy exemptions and generally, Utah is very lenient compared to most states. For most successful professionals, declaring bankruptcy will drastically alter their lives.

After learning of these rules, most of our clients come to the understanding that it will be better for the happiness of their family to utilize asset protection to protect wealth instead of giving it up through bankruptcy. Before considering bankruptcy as an option, please consult with an attorney specialist in your state.

Free Consultation with a Lawyer in Utah

If you have a bankruptcy question, or need help with asset protection in Utah, call Ascent Law now at (801) 676-5506. Attorneys in our office have worked on thousands of cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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How Often Can You File Bankruptcy?

How Often Can You File Bankruptcy

While you can file bankruptcy as many times as you like, you can only receive a discharge every so often – usually 8 years from the date you filed your last case and got a discharge. It’s always a good idea to have a free consultation with a bankruptcy lawyer to check on the specifics in your situation – because the truth is – it depends – and the laws also change from time to time. Wiping away debts and getting a fresh start through the bankruptcy discharge is the primary goal of most debtors. The question then is not really “how often can you file for bankruptcy?” as much as it is “how often can you receive a discharge of debts through bankruptcy?”

This post will review what you need to know about Chapter 7 and 11 discharges, previous Chapter 12 and 13 bankruptcy discharges, what happens when your discharge is revoked, and when you will need a qualified bankruptcy attorney.

How to Get a Discharge in the First Place

Most debt can be discharged in a personal bankruptcy case, with the exception of student loans and tax debt. So long as you qualify for the bankruptcy chapter under which you file, most consumer bankruptcies filed with the help of an attorney are discharged — and you’ll pay pennies on the dollar for your debt.

Your bankruptcy discharge can be denied, however, if you do any of the following:

  1. Attempt to defraud: If you transfer, move, or conceal property, you’re in big trouble. Make sure to talk about all transfers before your bankruptcy filing with your bankruptcy attorney.
  2. Conceal or destroy information:This also goes along with failing to keep information on your financial situation in the first place. Keep all records on your finances in a safe and organized place.
  3. Lie: A no-brainer, but, any sort of false statement made underpenalty of perjurymay not only land you back in court, but in jail.
  4. “Lose” assets: This is when you can’t explain any sort of loss or deficiency in assets.
  5. Refuse to comply with a court order: Similar to lying, disobeying the court is a bad idea.
  6. Fail to take an instructional course: When you file for bankruptcy, you must take two instructional courses in finances. One is about credit counseling, while the other is about financial management. These courses are mandatory under the federal law that governs bankruptcy.

If you follow the rules of bankruptcy and don’t commit any of the above offenses, your bankruptcy should be in the clear.

Frequency of Bankruptcy Discharges for Chapter 7, 11, 12, 13

But what happens when you need to file bankruptcy again?

Once you have already filed for Chapter 7 bankruptcy, the bankruptcy court will deny a discharge in a subsequent Chapter 7 case if you already received a discharge in your previous Chapter 7 or Chapter 11 case if it was filed within the last eight years. In simple terms, you can obtain a Chapter 7 bankruptcy discharge every eight years. The eight-year time period starts to run from the date your previous case was filed.

The bankruptcy court will also deny a Chapter 7 discharge if the debtor has previously received a discharge in a Chapter 12 or Chapter 13 case filed within the last six years unless the debtor meets fairly strict requirements regarding the amount of debt she paid back in her Chapter 13 case. Similarly, a debtor is ineligible for a second discharge under Chapter 13 if he or she received a prior discharge in a Chapter 7, 11, or 12 case filed within four years of the current case or in a Chapter 13 case filed within two years of the current case.

Your Bankruptcy Discharge Can Be Revoked

Additionally, bankruptcy courts may revoke a discharge under certain circumstances. For example, a trustee, creditor, or the U.S. trustee may request that the court revoke the debtor’s discharge in a Chapter 7 case based on allegations that the debtor obtained the discharge fraudulently, like if you concealed property or failed to keep adequate records.

Typically, a request to revoke the debtor’s discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.

Complaints Seeking Revocation of Discharge Will Require Retaining Counsel

Keep in mind that the mere filing of an adversary proceeding (a lawsuit filed in the bankruptcy court) seeking to revoke the discharge will require hiring an attorney to answer the allegations of improper conduct. If these allegations are not addressed in a timely fashion, the debtor will lose their discharge by default.

The possibility that a bankruptcy discharge can be revoked highlights the importance of full disclosure to your bankruptcy attorney. You must inform your bankruptcy attorney of all assets and debts in order to ensure that your discharge is not subsequently challenged.

Free Consultation with a Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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How Bad is Bankruptcy For Your Credit?

What stops people from filing for bankruptcy? Ask a bankruptcy lawyer and you’ll get different answers. Is it fear, pride or a belief that declaring bankruptcy is in some way unethical? If you stopped and asked 10 people on the street for the number one reason not to file bankruptcy, most would mention damage to their credit.

How Bad is Bankruptcy For Your Credit

Bankruptcy in Utah

There is a common public perception that playing the “bankruptcy card” creates a ripple effect that reaches every aspect of your life in a negative way. After all, bankruptcy does show up on your credit report for 10 years and no one wants to start a job interview by discussing a past chapter 7 case. Filing for bankruptcy certainly won’t make it easier to rent an apartment or lock in a good rate on a mortgage. However, it won’t disqualify you from future credit either.

The Toothpaste is Already Out of the Tube

To be sure, filing bankruptcy is not something that is to be entered into lightly, however, there is more than a hint of irony in the reasons people commonly give for not filing bankruptcy. Perhaps the most commonly cited: that bankruptcy will ruin your credit (and by extension your life). Unfortunately, bad credit is a scenario that has already unfolded for a good number of people who find themselves in financial distress. For many people, the biggest reason not to file bankruptcy (damage to credit) has already happened by the time the thought of bankruptcy pops in their head. Maybe a series of financial missteps or the loss of a job have caused charge-offs, liens, foreclosures, missed payments and a whole host of other negative credit events to appear on your credit score, is a bankruptcy really going to make much of a difference?  Sure, bankruptcy will add another negative mark on your credit report, and you’d like to avoid it if possible, but in the long run it may actually give you greater access to credit. Taking your unsecured debts to zero and using the momentum to start over will help you build a stronger credit score. Waiting around with the phone off the hook won’t.

Bankruptcy vs. Other Negative Credit Events

Chapter 7 bankruptcy stays on your credit report for 10 years, whereas a foreclosure will usually stay on your credit report for 7 years. However, don’t assume that foreclosure is preferable to bankruptcy simply because it stays on your credit for a shorter period of time. Many credit counselors report foreclosure as having twice the negative impact on your credit score as a bankruptcy. According to Ray Hooper, Education and Housing Director for the Consumer Credit Counseling Service of Greater Dallas:

“A foreclosure is very serious to mortgage lenders. They’re going look at a foreclosure more seriously than they will a bankruptcy that doesn’t include the house.”

According to FICO estimates, bankruptcy will cause a reduction in the filer’s FICO score of between 130-240 points, whereas a foreclosure, deed in lieu or short sale will cause a reduction in the 85-160 range.

Public Records and Bankruptcy

Tax liens, judgments and bankruptcies are all listed under the “Public Records” section of your credit report. Any reported Public Record will damage you credit, however it’s important to understand that bankruptcy filings don’t have their own section on a credit report. They are lumped in with other government initiated events. If you’ve already had a tax lien or judgment reported on your credit, the negative impact of a bankruptcy will be decreased and the benefits of filing may outweigh the additional credit damage.

Even missing payments on credit card accounts can drop a credit score by 75 points or more. The point is not to make light of the seriousness of a bankruptcy filing, but merely to point out that, viewed in light of a series of negative credit events, bankruptcy becomes more and more attractive when a consumer’s debts have spiraled out of control.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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