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Debt is weighing on a man and consuming all his money.

An Open Letter From a Bankruptcy Lawyer: The Truth about Bankruptcy and Debt Relief

To Anyone Feeling Overwhelmed with Debt:

As a bankruptcy attorney, my office deals with people who are going through stressful moments in their lives. Every day we help educate people on bankruptcy and debt issues. Hardest part about talking with individuals about debt relief options is combating the significant misconceptions about debt issues and bankruptcy. If we are able to explain the correct information, we can help individuals truly understand the legal process and get a fresh start. But, it is not always easy because many sources promote bankruptcy as the worst option out there and that bankruptcy means you are a failure; these ideas are completely false and do not reflect the actual concept of bankruptcy.

I get asked all the time, is bankruptcy the right option for me? Should I file? I almost always respond that I can’t make that decision; it is a financial decision only you can make. On occasion, when it is the only reasonable option available to achieve their goal (like stopping a foreclosure or garnishment), I let them know it is likely your best option here. Sometimes, I can say — especially when the debt level is very low — I cannot recommend bankruptcy. Often with low debt, the bankruptcy fee could be better put to use to settle debts, make a few payments, or just use the money to live. But, often, the answer is that bankruptcy is a good option, but you need to figure out if it is the right option for you.

For many, whether bankruptcy is a right option comes to whether they can accept bankruptcy as a financial choice and not a reflection of his/her personal situation.

Bankruptcy myths and misconceptions

More often than not, individuals who are great candidates for bankruptcy have preconceived ideas about bankruptcy. Sometimes, the myths can make people wait to consider their options. Waiting can sometimes be the right decision, sometimes filing sooner means you are getting a fresh start sooner, it really depends. Too often, I hear people say:

1. Your credit will be ruined after bankruptcy.
2. You should only file if I have a lot of debt; filing for only $20,000.00 isn’t worth it.
3. I will lose everything, if I file.
4. I can’t have any assets if I want to qualify for bankruptcy.
5. I have a security clearance; I can’t file.

All those reasons for not considering bankruptcy are incorrect. Bankruptcy is a legal and financial option to help individuals and/or businesses manage their debts. Addressing each of those concerns:

Credit after bankruptcy

Six months to a year after bankruptcy discharge, most debtors’ have between a 600 and 650 credit score; some of my clients have even seen higher. This increase in credit is usually without too much effort. If you take good steps toward improving your credit and using credit responsibly, it can be even better.

Additionally, you will be receiving offers for credit (i.e. credit cards and car loans) immediately after filing Chapter 7 or shortly after any discharge. After bankruptcy, most people have no debts (or a limited number of debts) and there is a restriction on when the debtor may file bankruptcy again. After a Chapter 7, a debtor cannot file a Chapter 7 for at least 8 years. This makes you a better credit risk than someone with a similar credit score.

How much debt should you have before considering bankruptcy?

There is no legal amount minimum debt necessary to file bankruptcy. We usually recommend at least $15,000.00 before you start considering bankruptcy as an option. But, the amount of debt usually depends on your income. If, after reviewing your finances, you do not believe you can pay the debt back within 4 to 5 years, then bankruptcy is definitely an option to consider. A Chapter 7 would let you wipe most debt away and Chapter 13 lets you restructure the debt and often allows a payment based on your monthly disposable income.

Bankruptcy is a legal and financial decision; it is not an ethical or moral one. Congress included bankruptcy as an option to deal with debt. They understand people need help dealing with debt. It also isn’t a kiss of death like many people believe it is; your credit will improve and you are allowed to keep certain things.

What can I keep in bankruptcy?

You can keep various things in bankruptcy. In a Chapter 13, you almost always keep everything you want to keep. In a Chapter 7, you are not completely without assets. There are certain bankruptcy exemptions (or protections) that apply to anyone filing for bankruptcy. Your exemptions vary depending on what state and federal laws apply to your circumstances. Most individuals are allowed to keep some cash, up to a certain value of a car, retirement plans, a base amount of household goods, and various other things. The government understands you should be a zero when you have your fresh start, but they do not want you to keep more than a fair share of assets.

Do I have too many assets to file bankruptcy?

Your assets are not part of the analysis of determining if you qualify for bankruptcy; the court is considering your debts and incomes. Assets are a consideration in determining what you could lose in a Chapter 7 or how many needs to be paid out in a Chapter 13. Sometimes it is surprise what can be protected in a bankruptcy. For example, I have some clients who are able to protect $200,000.00 worth of equity in their home and others who cannot even protect $7,000.00 worth of equity. Assets vary dramatically from individual to individual; an experienced attorney can advise you on what could be at risk in your particular situation.

Security Clearance in Bankruptcy:

Being in northern Virginia, we regularly have individuals who file bankruptcy with security clearances. Filing for bankruptcy relief will not automatically prohibit you from obtaining a security clearance. But whether you have a history of financial irresponsibility will be considered during the evaluation process. If the debt was incurred due to a situation outside of the control of the debtor, such as divorce, illness, loss of job, etc., the concern of losing your security clearance is often a lot lower. The evaluation heavily concerns whether it is likely you will be in debt again.

Bankruptcy is a legal way to apply for debt relief. Handling your debt through a bankruptcy is a better option than just having outstanding debt. With substantial debt, the government can be concerned about the potential for being compromised or bribed. A bankruptcy means your debt has been discharged in a Chapter 7 and/or you have a reasonable repayment plan in a Chapter 13. In fact, getting rid of debt in a bankruptcy could increase your chances of approval. Filing shows that you are taking proper steps toward correcting your financial situation.

Options to manage debts:

The most important thing I tell my clients is that they should understand all options available to them. Bankruptcy is just one financial tool out of many that you can use when having financial problems. Only when you understand all of your options can you make the best decision for your situation. Other options we often at least want our clients to understand include: debt negotiation, debt consolidation, and waiting. Each option can have pros and cons, but will vary due to the specifics of a person’s situation.

Timing is also important when considering your financial issues. Some people come to talk about a bankruptcy months before filing. Others file within two days of filing. If you understand the pros and cons of a bankruptcy well before you file, you could make decision about when to file that is best for you. If you wait until the last minute to consider bankruptcy, for example when a foreclosure is schedule or a garnishment is pending, you have a limited timeline and may have not been able to full review any pros and cons. For example, we do not usually recommend filing bankruptcy within 90 days of any cash advance due to the fact a creditor can object to that debt being discharged.

We offer a free consultation to potential clients for many reasons; we want clients to understand the process, and to see if the client is comfortable with our office. Bankruptcy is a personal process; you must disclose a lot of personal and financial information. If you are not comfortable, you may leave some important information out. We tell our clients you need to be comfortable with us; clients need to be completely candid with your bankruptcy attorney. Many problems can be prevented during a bankruptcy with complete and exact information. Fixing problems after the fact can be difficult, especially when due to lack of information.

You are not alone.

Since the economic downturn of 2007, millions of individuals have filed bankruptcy. Some people have had to file bankruptcy twice in the last 10 years because of many factors, like difficultly finding work even after a bankruptcy, negative equity in real estate, and much more. Bankruptcy is one of many debt relief options; even if you do not need bankruptcy, you may find relief using other options, such as debt negotiation or settlement.

Bankruptcy is a financial tool; Congress included bankruptcy in the laws because the government understands that people can need help with their debts. To make the best decision for any situation, you should educate yourself on all available options. Bankruptcy is one option to help manage one’s finances, it may be or may not be the best option for you, but you owe it to yourself to at least understand the option.

If you want to talk about available options to deal with your debt in northern Virginia or DC, set up an appointment with our office. We want to help you understand your options and get on the right track.

Sincerely,
Ashley

 

 

Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients deal with debts for most of her career. It is important for her that her clients are making the best decision for their circumstances.

How to Handle Garnishments: Options to End Creditors Collection Efforts

Garnishments are just one way that a creditor can try to collect on a judgment. If you are facing a garnishment, you should understand your options. Understanding how to handle garnishments can save you time and money.

Garnishments are a scary thing. A creditor wants to take money out of your paycheck or your bank account. In Virginia, a creditor can perform either a wage garnishment or a bank garnishment. For a wage garnishment, a creditor can garnish 25% of your “disposable income,” which means they get 25% of your paycheck after deducting for requires taxes. If you are very low income, your income may be too low to be garnished; but, this is very low threshold. For a bank garnishment, a creditor can seize all money in a bank account up to the amount of the judgment. Some funds cannot be garnished, such as social security.

If you are being garnished, there is likely a judgment against you. Most creditors can only garnish you  if there is a judgment against you; the most common exceptions to this rule are tax debt and federal student loans.  Since federal student loans and taxes are owed to the government, they are given special rights to collect. A judgment could have been obtained without you ever having appeared in court or being personally presented with documents.

Some individuals come into our office unsure why they are being garnished or believe they can fight the garnishment. In Virginia, the law requires that a creditor served you at your last known address. Service does not have to be in person, like you often see in the movies (i.e., someone handing you papers and saying you were served). The sheriff or process server can post the notice on the front door of your last know address or hand the papers to any adult living in your residence. If you never got the paperwork, it does not matter — it’s still valid.

On occasion we are able to vacate (reverse) a judgement on grounds that you were served somewhere that was not your residence, but this is rare. Additionally, even if you can get the judgment vacated, you will likely be sued again by the creditor after the judgment was vacated. If the judgment was based on a valid debt, this may be a futile effort.

Guaranteed Ways to Stop a Garnishment

Only two guaranteed ways exist to stop a valid garnishment: satisfy the debt in full or file bankruptcy.

Pay the debt

If you can full pay the debt, a garnishment would stop. Creditors cqn only collect up to what they are owed. However, this can include interest and attorney fees, if they judgement allowed for those expenses. Depending on how old a judgment is, it may have increased dramatically due to interest. We have seen some clients with judgments subject to 30% interest!

Filing bankruptcy

Filing bankruptcy stops any and all collection activity; it is the trump card that debtors can play against handle garnishments and stop creditors from collecting. The moment you file a bankruptcy, as long as you haven’t had multiple bankruptcy cases pending within the last year, the federal court issues an order that says all creditors must immediately cease any and all collection activity. To ensure the creditor has knowledge of a bankruptcy, our office sends notice of the bankruptcy to any creditor attempting to garnish you and the court where the creditor obtained the judgment. Sometimes, we are even able to get some of the garnished funds back.

Bankruptcy is often the only guaranteed way to stop a garnishment. Often, we recommend bankruptcy as the only viable way to stop garnishments. Often, our clients often spend less to file bankruptcy than to pay or settle a judgment.

Ways to Attempt to Stop a Garnishment

There are two other ways that can either potentially handle garnishments. We rarely recommend these two other options, but in certain circumstances they may help; these options are negotiate the debt or file a Homestead Deed.

Negotiate the Debt

We occasionally can recommend trying to negotiate a debt; but, creditors are less likely to negotiate after a judgment is obtained. Creditors get certain rights when they obtain a judgment, these rights include garnishments, interrogatories (getting you to answer questions under oath), etc. If the creditor is getting more through the garnishment process than you are offering, it is not very likely they will take the settlement.

File a Homestead Deed

One other option to handle garnishments that we rarely recommend is to file a Homestead Deed, but it can serve a limited purpose. After a garnishment has been filed you will be served with the garnishment summons. On the garnishment summons, there will appear a “return date.” This date is when the judge will determine if the creditor is owed the funds or not. A homestead deed, which is a document particular to Virginia, advises the court that you are using your lifetime exemption under Virginia Code § 34-4 to protect up to $5,000.00 (or $10,000.00 if you are over 65). You must file the document in the land records.

We do not recommend a Homestead Deed because it offers a temporary solution. This protection is a lifetime exemption. This means that if $3,500.00 has been garnished from your wages during the past 6 months and you file a Homestead Deed to protect the funds, then you have used the $3,500.00 to get the funds release. Following the Return Date, the creditor can just file another wage garnishment immediately and start the garnishment all over again. Eventually, you will exhaust the the $5,000.00 protection. Using up this exemption also result in limited protections in any future bankruptcy; debtors must also use a Homestead Deed in bankruptcy to protect cash, or cash like assets.

 

Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients manage various types of debts for years. Ashley focuses on helping her clients finding the ideals solution to their debt problems. Ashley reviews each person’s personal situation to determine his/her best options. She regularly helps clients handle garnishments and other collection activity.

Schedule C: Property Exemptions

Keeping Assets in a Chapter 7: Understanding Bankruptcy Exemptions

Bankruptcy Exemptions are the laws that allow you to keep assets in a Chapter 7 Bankruptcy

The most common type of bankruptcy is a Chapter 7 bankruptcy, aka a liquidation bankruptcy.  The process usually takes approximately three to four months for a standard case. During this process you file a petition that provides information about your life. This information includes your income, expenses, debts, assets, and personal information. The bankruptcy process allows you to keep certain items. If you have more then the minimal items the bankruptcy trustee sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay creditors. Understanding bankruptcy exemptions can help you determine the right debt management option for you.

Who can file

Chapter 7 is an option for individuals or businesses. An individual gains fresh financial start after filing a Chapter 7 — only select debts remain after discharge. A business uses a Chapter 7 to close the business after it is no longer profitable.

 

How to qualify

When a debtor files Chapter 7, the court looks at the household income. If the household income is below the median for your state, you can qualify for Chapter 7. If your household income is above the median income for your state, you may still qualify. The court analyzes all income under the “Means Test.” This test is basically used by the court to determine if you have any disposable income at the end of every month to pay over to your creditors. The court determines the disposable income by deducting specific monthly expenses from your “current monthly income” (your average income over the six calendar months before you file for bankruptcy). Some of these expenses are actual expenses, such as car payments, mortgage payments, taxes, etc. Other expenses are based on the Internal Revenue Service standards for your county, such as utilities, food, etc.

 

Exemptions

When filing a Chapter 7, most people are most concerned about what assets you can keep. There are certain bankruptcy exemptions (or protections) that apply to anyone filing for bankruptcy. Your exemptions vary under state and federal laws. The exemptions you can use depend on state law and where you have resided for the past two years.
In Virginia, there are various exemptions that apply for residents. Some of the most common exemptions include:
Clothing: up to $1,000 of the value of clothing. Used clothing have a very low resale value; we use thrift store prices to value clothes. The only issue that ever arise are if there are a significant amount of newer designer clothes.
Vehicles: each debtor may keep up to $6,000.00 in equity in a car. If a car is jointly owned, this means a couple can have up to $12,000.00 worth of equity in the car. This means that if you have a car worth $20,000.00, but there is a $18,000.00 loan on the vehicle, there is only $2,000.00 worth of equity.
Household good and furnishings: each debtor can keep up to $5,000.00 on household goods. Generally, there is no issue with these items unless you have valuable antiques or collectibles.
Wedding and engagement rings: debtors are allowed an unlimited exemption for wedding and engagement rings. This means there is no limit on the value you can have for an engagement and/or wedding ring.
Tenants by the Entirety: there is an unlimited exemption for property titled Tenants by the Entirety (TBE) when there is no joint debt between the spouses. In Virginia, the law allows property (usually a marital home) to be titled in a specific manner between a married couple, but also requires that no joint debts exist between the parties. If you think this may apply to you, then I recommend speaking to an experienced bankruptcy attorney. Steps have to be taken to ensure there is no joint debt and that needs to be proven to the trustee in your case.
Federally-qualified retirement plans: traditional retirement plans, such as your 401(k), IRS, Thrift Savings Plan (TSP), etc. are all 100% exemption.
Tools of the trade: there is a $5,000.00 exemption for assets that are directly related to your primary profession.
Wildcard: Virginia bankruptcy exemptions are generous for everything exception a potential wildcard. A wildcard applies to any asset that has no other exemptions available, including cash in the bank and equity in a house. A debtor may also use this exemption to supplement any other exemption if more protections are needed.

Virginia’s wildcard is also called a Homestead Deed; it has this name because a document must be filed in the land records in the county in which you reside. This exemption is a $5,000.00 lifetime exemption. Debtors receive additional $500.00 exemption for any dependents.The exemption increases to $10,000.00 at the age of 65. However, since this is a lifetime exemption, if you file bankruptcy and use $1,500.00, you only have $3,500.00 remaining for any future bankruptcies filed in Virginia (until you turn 65).

 

NOTE: The above list of Virginia bankruptcy exemptions is NOT complete or exhaustive list. It includes only the most common exemptions. Additionally, these exemptions may change. 

 

Warnings about assets, exemptions and transfers 

It is also important to note that transferring assets to avoid including them in your bankruptcy is a bad plan. All transfers of property within two years of filing bankruptcy must be disclosed. The case trustee can reverse transactions. If the court determines you did the transfer with the intend to avoid a bankruptcy or to hide assets from creditors, the court may also deny you a discharge of your debts.

 

The court may review all debts that a debtor paid back within the last year. If you have paid back family, friends, or business partners, the court can actually sue those individuals for return of the funds. The court believes that a debtor must treat all creditors the same; as a result, you must treat American Express the same as Uncle Joe. Paying one creditor more money than another is considered a preference because you are giving preferred treatment to one creditor over another.
Once a Chapter 7 bankruptcy is filed, you cannot voluntarily dismiss the case.  A judge must review any request to end a debtor’s case. A judge will not dismiss your case just because a debtor is losing property or a trustee sues a debtor’s  family member.

 

An experienced Virginia bankruptcy attorney will be able to review your situation and help prevent potential problems in your case. Having an lawyer handle your case properly from the start can prevent problems later on.

 

Alternative options

If Chapter 7 is not right for your situation, there can be other options. Many people who qualify for Chapter 7 due to their income, choose to file a Chapter 13 because there are not adequate bankruptcy exemptions to protect all of their assets. If you have nonexempt assets, a Chapter 13 is another option to consider. In a Chapter 13, you are allowed to keep all nonexempt assets because debtors are required to pay out the value of these unprotected assets over the course of three to five years. Additionally, sometimes debt negotiation is a better option. If you have limited amounts of debt or cannot qualify for a Chapter 7, sometimes having an attorney help you settle a debt, is a better option.

 

 

 

Most individuals want to keep as many assets when possible, if you are filing bankruptcy.  Having an experienced bankruptcy attorney can help ensure your case goes smoothly and can help protect as many assets as possible. Attorney Ashley Morgan has experience dealing with all the above issues.
Sign for United States Bankruptcy Court

Top 17 Dos and Don’ts for Bankruptcy

Having financial problems? Think bankruptcy may be an option for you? To help ensure you keep your options open and available, understand there are things you should or shouldn’t do. In many cases, if you take certain action, such as transferring a house into the name of a family member before filing bankruptcy, you may either limit your options available or put your asset at risk.  There are even some actions that could completely jeopardize your ability to get a bankruptcy discharge. Here is a list of dos and don’ts for bankruptcy.

Here are the Top 17 Dos and Don’ts for bankruptcy:

  1. Do talk to a bankruptcy attorney immediately. Most bankruptcy attorneys offer free consultations, so you should take advantage of that. Talking to an attorney doesn’t mean you will definitely be filing bankruptcy. It allows you to understand how bankruptcy would apply to your situation. There are many different types of bankruptcy and it is important to understand how each option could apply to your situation; individuals primarily file Chapter 7 or Chapter 13. Additionally, you want to find a bankruptcy attorney that makes you feel comfortable. You will only be completely honest with someone if you trust him or her.
  2. Don’t transfer property or money. It is important for you to be aware that transferring title to property before declaring bankruptcy is not an option. Do not sell or transfer assets to your friends or relatives to hide them from creditors or the bankruptcy court. The trustee will ask you about such transfers at the first meeting of creditors, and has the power to recover those assets. The trustee can basically undo any transaction you have done within a certain time frame. In Virginia, it is two years. Also, don’t transfer money into your kids’ bank accounts. They have you as a co-signor or guardian and are subject to the same review as your accounts. Hiding assets can be a reason for the court to deny you a discharge, and you can be subject to criminal prosecution.
  3. Do tell your lawyer everything. Even if it is embarrassing it is better if your attorney knows everything about your situation. If you have made major purchases recently, then it may be important to wait to file. Or if you have an existing medical condition, it may be important factor to consider in the timing of your bankruptcy. Additionally, it is important to list all assets and debts. Anything that isn’t listed in your petition may not be discharged. Additionally, failure to list all your assets and your debts may result in not getting a discharge.
  4. Don’t leave out income. People think that a second, part-time job does not count as income. All household income must be included. The court will look back at least six months to see what your household income has looked like. Similarly, even if your spouse is not filing, you must list his/her income unless you are legally separated. The court needs a picture of your household. The court cannot require a spouse to pay a debtor’s debts, but they can require a spouse contribute to the household. If you want to claim somebody as a dependent in your bankruptcy, you must include their income. Additionally, social security does not count in qualifying you for bankruptcy, but it still must be listed.
  5. Do keep track of expenses. Part of a bankruptcy filing is disclosing expenses. Many individuals do not always realize where their money is going. But we want to be as accurate as possible with our accounting. If you are sending your mom, $300 per month, we want to make sure we account for that. Some expenses may be questioned or deemed unreasonable. If you are spending $1,000.00 per month on food for a household of one, the court may not allow the full amount unless there is a good justification. Other expenses may be allowed, but could be questioned if higher than average. For example, if you are paying $700.00 per month for medical expenses, it is important to keep documentation in case you need to prove it later on.
  6. Don’t pay back preferred creditors or family/friends. Many consumers want to pay certain creditors in full before filing for bankruptcy. The court doesn’t want you to play favorites and pay money to some creditors and not pay the rest. The court believes all creditors should be treated the same; however, there are exceptions for secured creditors, like your mortgage or car loan. The Trustee can reach back ninety days to recover money paid to general creditors and spread it out more evenly to all of your creditors. The Trustee can take back funds paid to your family and friends, if you have paid them back within a year.
  7. Do make sure to list all debts. Bankruptcy does not allow you to pick and choose which debts to list or not list. You must list all debts, from the credit card with American Express to the personal loan from Aunt Sally.
  8. Don’t incur any new debt without first asking your attorney. It might be a good idea to get a secured car loan before the bankruptcy filing hits your credit profile, but it is a bad idea to buy non essential assets like laptop, plane tickets, TVs, etc. It is important to talk about the pros and cons to opening a new account before filing. Additionally, any new accounts may delay your filing or complicate your case.
  9. Do keep current on payments for non-dischargable debts. Bankruptcy usually cannot discharge student loans, taxes, child support, etc. This means these debts will be around even after your discharge. Talk to your bankruptcy attorney about your specific situation, but generally, you want to keep paying these debts
  10. Don’t make any last minute charges or purchases. When the creditor gets the notice that you filed, it takes a look at your account history. If it sees a bunch of charges right before filing, it will get suspicious. Additionally, creditors can object to any major purchases within approximately three months of filing bankruptcy. The creditor can basically file a separate lawsuit with the bankruptcy court and ask it to not discharge that part of your debts.
  11. Do keep track of deposits and withdrawals. The trustee in your bankruptcy will review your bank statements. He or she may have questions about large cash withdrawals or deposits. It is important to remember what the money was from/for. For example, if you pay your rent in cash every month, try to make sure you get a receipt and keep it.
  12. Don’t take any cash advances. Do not make any major cash advances off of credit cards prior to filing for bankruptcy. A creditor can object to the discharge of debts incurred as cash advances before filing.
  13. Do disclose all assets. Anything that you own needs to be listed in your petition; this includes your 15-year-old furniture and the bank account with 25 cents. Additionally, even if you are on title of an asset, like a house or a bank account, it still means you have an ownership interest. Many families add parents or children to bank accounts to make transferring assets easier, this still means under the law it is yours. It is important to disclose this to your attorney up front to prevent any problems.
  14. Don’t borrow or withdraw from your retirement. Federal and Virginia law protects your tax retirement accounts from creditors. But funds in these accounts lose this protection the moment you withdraw them. You could also be liable for taxes and penalties for an early withdrawal. These taxes and penalties may not be dischargeable in bankruptcy and could cause a hardship down the road.
  15. Do separate money. If you have money that may be protected, for example, social security, settlement from a personal injury lawsuit, etc., you want it to be clear where the money came from. Put all the funds in a separate account that you own with the same type of funds, for example, have an only social security account where money is deposited in and no other funds go in. This will make it easier for an attorney to advise you if there is a way to protect the money during a bankruptcy.
  16. Don’t file until your medical conditions are stable. If you are considering filing bankruptcy due to medical debt or expect to have major medicinal procedures in the near future, you usually do not want to file bankruptcy until those are taken care of. Unexpected complications can occur that can cost significant amounts of money. You may limit expenses, if you have insurance coverage; but, insurance does not always cover all treatments and procedures and there is often a deductible and out of pocket to consider. Filing bankruptcy to just have more medical debt occur soon after is not a good outcome.
  17. Do file your taxes. It is important to make sure you are current with your tax filings before filing bankruptcy.  When filing a Chapter 7, the court will require you to provide your most recent tax filings; the court may hold your case open until the tax return is filed and you have received any refund. If you file a Chapter 13, court will require you to file the last four years of returns in order to be compliant with bankruptcy laws.

The bankruptcy court review’s a debtor’s financial situation. This list of dos and don’ts for bankruptcy should help you understand that making financial decisions before filing can impact your case. Most bankruptcy courts can look back at least two years to review transactions completed by the debtor; the trustee in your case can also undo certain transactions. It is important to not take any actions that could jeopardize your assets or even your discharge. Talking to an attorney as soon as you are facing financial difficulties can help. Just talking to a bankruptcy attorney does not mean you are agreeing to file bankruptcy, but can help you understand the option if you need to in the future.

 

 

It is important to preserve your rights in a bankruptcy.  Having an experienced bankruptcy attorney can help ensure your case goes smoothly and you come out with a fresh start. Ashley F. Morgan Law, PC helps many individuals manage their debts every month. Attorney Ashley Morgan has experience dealing with all the above issues.