Anyone who has recently suffered serious financial headaches due to loss of job or decrease in monthly pay has probably heard all the advice they need from family, an ex-brother-in-law, neighbors and the guy on the adjacent stool at your local drinking establishment about what to do to solve your dilemma. The financial pressure is really on if you begin to lag behind on several mortgage and car payments. If you’re the annuitant of this scenario and wish to assuage your fears of losing everything you own including the shirt off your back, best you eschew all the aforementioned suggestions and get back to what your best options are for you and your family before you think about packing up and moving to the nearest boxcar or homeless shelter.
At this stage of the game, your best consideration for a possible solution is the yellow pages. You heard right. Please find your local directory and turn to the law section where you see the words: bankruptcy lawyers or bankruptcy attorneys. Hold on. Calm down. You’re only looking to contact bankruptcy lawyers or bankruptcy attorneys for advice as to what you’re next move should be. And since the new bankruptcy law came into effect in 2005 it may be a bit harder to file than in years prior to 2005. Also, locating reliable, friendly and affordable bankruptcy lawyers or bankruptcy attorneys may be harder to find and, perhaps, a tad bit more expensive. Many years ago lawyers who specialized in a Chapter 7 bankruptcy were like ants at a lakeside picnic; around every corner near a courthouse. Today, not so much.
Before addressing new laws, you should know the filing process. It starts with a petition that includes your income, description of property, if any, debt exempt property, monthly living expenses, money you spent in the past 24 months and/or any property you gave away during that period. You will also need a complete list of all your creditors, the type of claim and debt amount. These are all put together in a file and later given to your new attorney who will review your information and subsequently file in bankruptcy court on your behalf. The good news is once filed in the court, your attorney will be issued an “automatic stay” which legally prevents any creditors or collection agencies from hassling you. The bad news is it could take up to 2 months to get on the court docket.
Some 2005 changes would be: restricted eligibility for Chapter 7 bankruptcy filings which usually applies to those with higher incomes who would have to pass the “means test.” Check with your attorney on this. Another new Chapter 7 filing law is counseling requirements which will determine whether you really need to file for bankruptcy versus an optional repayment plan to help get you back on your feet. However, if it’s determined you are a repayment plan candidate, you’ll need a certificate showing you completed the counseling before your attorney can file.