How do the different chapters of Bankruptcy Work?

How do the different chapters of Bankruptcy Work?

Being indebted is a challenge that most people or companies will face in a lifetime. When a debt problem becomes overwhelming, filing for bankruptcy might be a viable option. An experienced bankruptcy attorney at Zellar & Zellar, Attorneys at Law, Inc., will assist in determining which bankruptcy option is appropriate for your specific situation.  There are several bankruptcy options, such as Chapter 7 (Liquidation), Chapter 11 (Business Reorganization), Chapter 12 (Farmers) and Chapter 13 (Repayment Plan).

Chapter 7 bankruptcy: A Chapter 7 bankruptcy is often more geared towards individuals and married couples.  A Chapter 7 bankruptcy attorney at Zellar & Zellar, Attorneys at Law, Inc., deals with what is considered a “liquidation” form of Bankruptcy.  Chapter 7 will relieve you of many of your debts upon issuance of the discharge. Upon the filing of the Chapter 7 case, an “Automatic Stay” is invoked, which prevents creditors from contacting you concerning the collection of the outstanding debt. Chapter 7 will not clear all debts, as some debts are considered “non-dischargeable” such as certain taxes, student loans, child/spousal support obligations, which will still need to be paid after the bankruptcy case is completed.

Chapter 11: Chapter 11 bankruptcy is traditionally filed for businesses and corporations struggling with debts, and not individuals. When your company faces huge financial debts, Chapter 11 helps debtors as they find a fresh start. Chapter 11 does not make your commercial enterprise “go under.” However, you will get more time to restructure debts.

Chapter 12:  Chapter 12 is available to farmers and family farmers who generate most of not alll of their income from operating a farm.  It is a reorganization over time that allows the farmer who is Debtor to remain in possession of their farm and their assets and pay their debts back in a restructured manner over time.  The farmer can continue uninterrupted farming operations and can reduce secured debt and eliminate unsecured debts over time while keeping the farm operational.  It is like a chapter 13 on steroids for Farmers and it is a wonderful remedy to the family farmer in financial distress. It may offer the hope of saving the farm instead of losing it to the creditors.

Chapter 13: When Chapter 13 bankruptcy lawyers file for bankruptcy on your behalf, you will have a new financial beginning, but you will still pay some of the remaining debts.  Often times, this is an individual’s only other option for bankruptcy if they cannot qualify for a Chapter 7 Liquidation bankruptcy case.  If a debtor’s gross income is more than median IRS income for their family size, there is likely some amount of disposable income that can be used to pay at least a portion of their unsecured debts.  Another reason certain debtors choose Chapter 13 bankruptcy is to save their home from foreclosure, as a Chapter 13 can allow repayment of missed mortgage payments over five years as opposed to coming up with a lump sum reinstatement amount.  It is advisable to discuss this option with an experienced attorney at Zellar & Zellar, Attorneys at Law, Inc., if you find yourself on the brink of a foreclosure action.

When do Debtors file for Chapter 7 Bankruptcy?

As a liquidation bankruptcy strategy, Chapter 7 can wipe out all unsecured debts including medical bills and credit cards.  Chapter 7 can also discharge a mortgage debt if the debtor decides not to retain their home.  You are eligible for Chapter 7 bankruptcy if you have no disposable income or have few assets. Chapter 7 requires the appointment of a trustee to administer the debtors case, which means if you have too much “stuff” or too much equity in the items that you own, the Trustee could liquidate that property and use the proceeds to pay your debts.  To qualify for a Chapter 7 bankruptcy, you must be at or below median income for your family size, based on IRS income standards.

For Whom is Chapter 13 Bankruptcy Suitable?

People who earn regular income can use Chapter 13 to reorganize debts. Chapter 13 has many benefits because debtors can repay unfulfilled mortgage payments over time, and not all at once. Chapter 13 allows you to retain your property, unlike in Chapter 7, where property may be lost in liquidation. In Chapter 13, you will pay all or part of the debts in an agreed repayment plan based on your income, type of debt, and expenses. Chapter 13 is appropriate for debtors who desire to catch up on child support, alimony, car purchase installments, or real estate mortgage arrearages. Your unsecured debts must not surpass $394,7255 and $1,184,200 worth of secured debts if you intend to use Chapter 13. A Chapter 13 case can last between three and five years, depending on your gross annual income.

If you are unsure which bankruptcy chapter works best for you and your family, contact the experienced attorneys at Zellar & Zellar, Attorneys at Law, Inc., for a free consultation.  We have four conveniently located office in Zanesville, Newark, Lancaster and Columbus.  Call and schedule your appointment today.

© Zellar & Zellar, Attorneys at Law, Inc., 2017; All Rights Reserved

How will filing bankruptcy affect my credit score?

The Credit Implications of Filing for Bankruptcy

It is never an easy decision to file bankruptcy.  Often times, medical expenses, job loss, or a family death can push someone towards filing for bankruptcy.  They know it’s the best thing for their situation and for their family but may wonder how long this will follow them around, and what filing for bankruptcy will do for their future. Here, an experienced bankruptcy attorney, such as the attorneys at Zellar & Zellar, Attorneys at Law, Inc., will discuss the credit implications of filing for bankruptcy.

How does bankruptcy affect credit?

When determining how bankruptcy affects someone’s credit, they need to look at the type of bankruptcy they’re filing.  Chapter 7 and Chapter 13 bankruptcies can stay on a credit report for between seven and ten years after filing, but creditors look more favorable upon Chapter 13 as opposed to Chapter 7 bankruptcy. This is in part because Chapter 13 allows someone to continue paying on their debt over three to five years.

By contrast, they are not required to repay debts when they file Chapter 7 beyond liquidating non-exempt assets and paying creditors from those proceeds. Either way, both types of bankruptcy eventually put them in a better position to rebuild their credit because they’ve taken the steps to free up their obligations to pay their old debts, essentially starting over.

No doubt at first, someone’s credit report is not going to fare well with a new bankruptcy attached to it. But, over time, their credit report will, in fact, improve.  Additionally, if a Debtor has secured debt that they intend to keep (such as a car payment or mortgage payment), current payments on those obligations will also help rebuild credit.  As long as any new debt that the individual is able to obtain is paid on time, and that there are no other blemishes on their credit report, the bankrupt individual will see that with time, the credit score will improve.

There is no way to get through the bankruptcy process without having implications on someone’s credit. And, it’s possible that someone will not qualify for Chapter 13, leaving them with no choice but to file for Chapter 7. The best thing they can do for themselves is to contact an experienced attorney at Zellar & Zellar, Attorneys at Law, Inc., for more information on the entire bankruptcy process. One of our experienced bankruptcy attorneys will review your entire situation in order to help make an informed decision.  Call our office today to schedule your free consultation.

© Zellar & Zellar, Attorneys at Law, Inc., 2017; All Rights Reserved

Top 5 Reasons People Filed Chapter 13 Bankruptcy in 2017

Top 5 Reasons People Filed Chapter 13 Bankruptcy in 2017

Many people today are suffering from financial problems. Bills are piling up quickly, and individuals do not have the money to make the payments on their credit cards, medical bills and/or personal loans. Consumers get constant calls from creditors demanding payment, and they just need some relief. In some cases, the best option is to file for Chapter 13 bankruptcy.  It is best to seek out the professional opinion from an experienced attorney, such as those at Zellar & Zellar, Attorneys at Law, Inc.

Chapter 13 Bankruptcy allows debtors to come up with a repayment play to pay off a portion of their debt. If a person has regular income, the proposal will allow them to make installment payments to creditors have a period. Debtors cannot be contacted by debt collection agencies while in bankruptcy, so it will help relieve some stress from the constant collection calls. In 2017, there are numerous reasons why people filed for Chapter 13 bankruptcy. Here are the top 5 reasons why people filed for Chapter 13 Bankruptcy in 2017.

1. To halt ongoing collection efforts: When a person files for Chapter 13 Bankruptcy, all collection efforts must cease. This includes lawsuits, foreclosures, and wage garnishments. By filing for Chapter 13 Bankruptcy, debtors could be able to save their home from foreclosure, so long as the case is filed before the Sheriff’s Sale.

2. Obtain a fresh start: For whatever reasons, many people make huge financial mistakes that can put a major strain on an already tight budget.  It is so easy to get into debt; however, it can be almost impossible for individuals to get out of debt. By filing for Chapter 13 Bankruptcy, debtors can have the opportunity to start over. After the Chapter 13 plan is completed, individuals can start over and hopefully make better decisions.

3. To eliminate debts that cannot be discharged with Chapter 7 Bankruptcy: Individuals can find a way to pay tax debts, legal debts, or student loans.  This is known as the Chapter 13 “Super Discharge.”

4. More lenient qualifications: Chapter 7 Bankruptcy has certain requirements that people must meet, such as specific income requirements, while Chapter 13 bankruptcy has less stringent requirements. Meeting the requirements for Chapter 7 Bankruptcy are much stricter. With Chapter 13 Bankruptcy, there are no maximum income requirements, so debtors can qualify easier.

5. No liquidation requirements: With Chapter 7 Bankruptcy, people might be required to see their car, home, or stocks before the debt is discharged. Chapter 13 Bankruptcy allows debtors to keep their property and slowly pay off a portion of the debts they owe.

Chapter 13 Bankruptcy can be a tedious and stressful process. People who think bankruptcy is the best option for them need to find an experienced bankruptcy lawyer, such as those at Zellar & Zellar, Attorneys at Law, Inc. They can then get the fresh start they deserve and look to a much brighter financial future.  Contact our office today to schedule your free consultation with one of our experienced attorneys.

© Zellar & Zellar, Attorneys at Law, Inc., 2017; All Rights Reserved.

How often can I file for Chapter 7 and 13 Bankruptcy?

How often can I file for Chapter 7 and 13 Bankruptcy?

Generally, a person can file for bankruptcy as many times as they want in their lifetime. However, there are time restrictions for how often a person can file for bankruptcy relief. The different time limits between filings depend on whether the debtor files for Chapter 7 or Chapter 13 bankruptcy and the chronological order in which the person chooses to file. The disposition of a previous bankruptcy filing may make a difference as well, because a problem with a prior bankruptcy may prevent a debtor from filing again.

Filing for relief after a Chapter 7 Bankruptcy Discharge:

Ohio Bankruptcy LawyersIf a debtor previously filed for Chapter 7 bankruptcy relief and a court discharged debts on their behalf, they have an eight (8) year waiting period before they can successfully file for Chapter 7 again. If a debtor filed a Chapter 7 case previously and needs additional relief after filing but before 8 years, chapter 13 is an option.  A person can file chapter 13 just 4 years after their bankruptcy discharge under chapter 7, and still receive a discharge of a portion of their unsecured debts in a chapter 13, just like in a 7.  Chapter 13 can be an excellent remedy to consolidate secured debt payments into one easy monthly payment at reduced rates of interest, often only 4% in the plan for vehicles and other secured debts.

A person is ineligible for any relief under any chapter for a period of at least 4 years from filing, when they have filed under chapter 7 and received a prior discharge.  A chapter 13 discharge is available after 4 years from the prior chapter 7.  It is a great way to get a fresh start and discharge of usually 90 percent or more of one’s unsecured debts just like in a 7, and buy your vehicles or other items like furniture at a reduced rate of interest in the plan, usually only 4 percent. .

Filing Again after a Chapter 13 Bankruptcy Discharge:

A person must wait two years after a Chapter 13 filing in order to receive another discharge in a subsequent Chapter 13 filing. It’s important to keep in mind that a Chapter 13 plan usually includes three to five  years of payments under the terms of the plan. If a person needs relief prior to the expiration of two years from the date of filing of the prior chapter 13 case, a subsequent Chapter 13 case can be filed, so long as the debtor understands that no discharge will be issued upon completion of the case, if filed within the two year waiting period.

The waiting period for filing a Chapter 7 after a Chapter 13 is six years. The date that matters is the date that the debtor filed their Chapter 13 case. There are, however, important exceptions to this waiting period. That is, if the debtor pays 100% of their unsecured debts or seventy percent or more of unsecured debts as part of a good-faith repayment plan, the six year waiting period doesn’t apply.

Court restrictions:

If a person doesn’t fulfill the requirements of a bankruptcy filing, the court may dismiss their case with prejudice. This can happen when a person takes steps to delay creditors, fails to comply with court orders or otherwise unfairly tries to take advantage of the bankruptcy laws. Usually, this results in a dismissal of the bankruptcy and a six-month waiting period before refiling of any kind. In cases of fraud, the court can bar a future bankruptcy for a longer period, or they can prevent the debtor from ever discharging certain debts.


© Zellar & Zellar Attorneys at Law, Inc., 2017.  All rights reserved.

How Filing For Bankruptcy Will Improve My Credit And Quality Of Life?

How Filing For Bankruptcy Will Improve My Credit And Quality Of Life?

Most people choose bankruptcy as a last resort. They often have been harassed by creditors, are low on funds, and have experienced some other major obstacle in their life. However, filing bankruptcy can improve the credit score and the overall quality of life. Sure, there will be a mark on the credit file that will remain for 7-10 years, but as soon as a person receives a discharge, they can immediately start rebuilding.

The Court’s Protection Is Invaluable

A Chapter 7 Bankruptcy is the most popular petition to file. Many people have more money going out in monthly bills than they have coming in with income. A Chapter 7 case wipes the slate clean allowing the debtor a fresh financial start. On the credit report, each creditor will have a note beside their account that states “Included in Bankruptcy.” These accounts still hold some precedence to the scoring, but they are no longer held against the debtor. In as little as six months from the date of filing, a debtor can begin rebuilding and obtaining new credit.  There are certain requirements in order to qualify for a Chapter 7 bankruptcy, so it is best to consult with an experienced attorney at Zellar & Zellar, Attorneys at Law, Inc., to review your specific set of circumstances.

New Credit Is Available Almost Immediately

Before the discharge is issued, most people will begin getting flyers and pre-approved offers from car dealers and credit card companies.  While it may seem like all is lost during the bankruptcy process, it is just the beginning. Those who ask the court for help get a chance to start over. These new creditors will help to establish good accounts. Those who could not get financed before bankruptcy can certainly find plenty of loans afterward.  It is important to remember not to get in the same credit trouble as before. It is also easy to overspend or get loans that have a high – interest rates and unsavory terms.  A debtor is only able to file a Chapter 7 bankruptcy case every eight (8) years, so it is important to make sure that any new debt obtained after the bankruptcy is affordable based on the debtor’s current budget.

The FICO Score Will Improve Gradually

Some say that their credit scores start improving almost immediately. When the new credit is established, it is ranked higher than old, outdated accounts. It is possible to have a credit score that reaches the 650-700 range within a couple years after the discharge. Of course, it is imperative to have good credit management skills and to be selective about obtaining new loans. The FICO range is from 300-900. Most people find that filing bankruptcy brings their average score out of the 400-580 range. It is the first step in rebuilding.

Bankruptcy Provides Peace of Mind

There is nothing worse than being harassed by creditors. Even though it is against the law, many creditors use scare tactics to try to get debtors to pay. Not only can an experienced bankruptcy attorney, such as the attorneys at Zellar & Zellar, Attorneys at Law, Inc., help to stop creditor harassment, but they can also file the paperwork and be a support system through the whole ordeal. There is nothing better than wiping the slate clean and starting over. However, many find that the Meeting of Creditors and the voluntary petition is all a bit overwhelming. It is imperative to have bankruptcy attorneys working in a person’s best interest.  Having an attorney assist a debtor through the bankruptcy process will often insure critical mistakes are not made, which could cause the case to be dismissed.  Please contact Zellar & Zellar, Attorneys at Law, Inc., to schedule your free initial consultation with one of our experienced attorneys.

© Zellar & Zellar, Attorneys at Law, Inc., 2017; All Rights Reserved.


What should a client look for in a probate attorney in Ohio

What should a client look for in a probate attorney in Ohio

The decision to hire a probate attorney in Ohio is not something to take lightly. Having suffered a significant loss, it is often difficult to move forward with probate after a loved one has passed away.  A great deal is at stake when it comes to retaining an estate planning attorney. With this in mind, there are certain points to consider when the need to hire a probate lawyer arises.

Background in Ohio Probate and Estate Law

A key consideration to bear in mind when contemplating which probate attorney to hire is experience. This may seem obvious, however, the focus must not be on whether or not a lawyer has some experience in the probate and estate arena, rather, the examination of lawyer’s credentials must be on what aspects of probate or estate law an attorney has been involved with in the past.  Additionally, each county in Ohio has different rules and procedures, so hiring experienced attorneys, like Zellar & Zellar, Attorneys at Law, Inc., who are knowledgeable about the law in a specific county is invaluable.

For example, has a particular lawyer been more involved in drafting estate-related documents or are they more of a probate litigator? A selection needs to be made of a probate or estate lawyer that is ideally suited to the task at hand.  The attorneys at Zellar & Zellar, Attorneys at Law, Inc., are experienced in handling a variety of probate legal matters, from simple estates, to complex probate litigation, such as Will Contest actions and Concealment actions.

Fee Structure Used by an Estate Planning Attorney

Another key element to take into consideration when a person seeks a probate lawyer is the fee structure utilized by a particular estate planning attorney. A person  needs to fully understand what his or her financial commitment is going to be for services rendered by an attorney.

Generally, an estate attorney charges an hourly fee. This typically applies to situation in which a lawyer is preparing documents and handling all aspects of a probate matter.  There are also situations in which an attorney is paid a percentage of the value of assets in some types of estate case.  Attorney fees in an estate are not payable until the end of the case.  The attorneys at Zellar & Zellar, Attorneys at Law, Inc., can discuss fee arrangements as it relates to the county in which the case is to be filed.

If an attorney is engaged to manage a trust, that lawyer may receive a percentage of income earned by the estate during an annual time period.

Schedule an Initial Consultation with an Ohio Probate Lawyer

A primary step in the process of obtaining representation from an estate and probate attorney is scheduling an initial consultation. An initial consultation permits a person the ability to obtain an overview of what a lawyer can provide in the way of legal representation.  Contact Zellar & Zellar, Attorneys at Law, Inc., today to schedule your free initial consultation.

© Zellar & Zellar Attorneys at Law, Inc., 2016; All Rights Reserved.

Top 5 reasons people filed for bankruptcy in 2016?

Top 5 reasons people filed for bankruptcy in 2016?

All too often people struggle with consuming debt for reasons out of their control.  While most individuals are aware bankruptcy exists, they are often unsure if they will qualify.  Often individuals wait far too long to seek an experienced attorney like Zellar & Zellar, Attorneys at Law, Inc., for guidance and advise as to what options are available.

Why Do People End Up in Bankruptcy?
Here are the five most common reasons why people find themselves seeking the assistance of an experienced bankruptcy attorney:

1. Medical Bills – The most common reason people get into financial trouble is because of mounting medical bills. In most cases, people encounter this problem through no fault of their own. It might be because of an accident or the onslaught of a serious disease or disorder that starts the bills coming in the door. Even with insurance, there is no guarantee every aspect of treatment is going to be covered, especially with large deductibles and co-pays. In the worst cases, the only way out might be bankruptcy.

2. Loss of Employment – In a competitive job market, the loss of a job can be devastating. With a large stack of bills sitting on the table, the pressure to find a new job is often intense. The more time that passes without a regular paycheck coming in the door, the closer an individual is going to get towards having to make difficult decisions related to their overall finances.

3. Consumer Debt – It doesn’t take long for people, who may have difficulty managing their finances, to find themselves in over their heads. Credit cards are so easy to get and use. In the wrong hands, credit card spending beyond one’s means can turn into a nightmare of growing debt with limited resources to make even minimum payments. As stress builds, bankruptcy becomes an attractive option.

  1. Major Life Changes Like Divorce – Divorce is the perfect example of a life-changing event that tends to create havoc in every aspect of a person’s life. With so many changes going on around them, bankruptcy is one way they can eliminate financial issues, allowing them to focus on other problems.5. Unexpected Expenses That Overwhelm – In life, things happen that are beyond one’s control. A natural disaster is the perfect example of how a person’s life can be turned upside down in the blink of an eye. Again, as the pressure mounts across many aspects of their lives, financial issues can be set aside through bankruptcy proceedings.

    The reality is there are a number reasons why the bankruptcy courts handle a million cases a year. If any of these reasons sound familiar, it is best to speak to the experienced counsel at Zellar & Zellar, Attorneys at Law, Inc., for a free consultation to discuss how bankruptcy may be the best available option for debt relief.

© Zellar & Zellar Attorneys at Law, Inc., 2016; All Rights Reserved.

Why hire Zellar & Zellar, Attorneys at Law if you are considering filing for bankruptcy in Zanesville or Coshocton, Ohio?

Why hire Zellar & Zellar, Attorneys at Law if you are considering filing for bankruptcy in Zanesville or Coshocton, Ohio?

If you have substantial debt and feel overwhelmed with the pressure associated with that debt, you may want to consider filing for bankruptcy. While bankruptcy tends to have negative reputation, bankruptcy code was actually designed to provide debtors with much needed fresh start.  Bankruptcy is a complex legal process, so it is crucial to work with an attorney who is familiar in this highly specialized field of the law.  If you live in Zanesville or Coshocton, Ohio, the experienced team at Zellar & Zellar, Attorneys at Law, can provide you one-on-one legal counsel for all of your bankruptcy concerns.

Two of the most common forms of bankruptcy filings for individuals include Chapter 7 and Chapter 13.  Both Chapter 7 and Chapter 13 have income and budget requirements that must be met in order to qualify.  The attorneys at Zellar & Zellar, Attorneys at Law, offer a free initial consultation to determine a debtor’s eligibility.  After the initial consultation, a detailed interview is scheduled with the attorney to ensure proper disclosure of all assets and liabilities prior to the filing of the case.

The most common misconception about bankruptcy is that you are likely going to lose all of your assets in order for your debts to be repaid.  By law, you are permitted to have certain assets exempt from collection. Ohio has its own specific list of exempt property that you are entitled to keep protected.  The attorneys at Zellar & Zellar, Attorneys at Law, will be able to identify that exempt property and can help you protect those assets from the bankruptcy. The purpose of these exemptions is to allow you to maintain sufficient property to provide for yourself after the completion of your bankruptcy case, so it is important to take advantage of all possible exemptions.

The bankruptcy process requires strict compliance with various rules and procedures. If you fail to follow these rules and procedures, you may run into serious problems, which could result in dismissal of your case. An experienced bankruptcy attorney will be well versed in these areas and can help ensure that your bankruptcy is filed and pursued correctly.

Both Chapter 7 and Chapter 13 cases require at least one court appearance.  Court can be intimidating for some, so having an experienced bankruptcy attorney in your corner can help provide greater peace of mind. A bankruptcy attorney will work with the Judge, Trustees and various creditors on your behalf to try to resolve your case as efficiently as possible.  The experienced attorneys at Zellar & Zellar, Attorneys at Law, are available to assist those who are considering bankruptcy. They can provide you with advice about whether bankruptcy should be considered in your circumstances. Call to schedule your free initial consultation today.


© Zellar & Zellar, Attorneys at Law, Inc., 2016; All Rights Reserved.


Can Chapter 7 Bankruptcy Get Rid of My Credit Card Debt?

Can Chapter 7 Bankruptcy Get Rid of My Credit Card Debt?

Ohio Bankruptcy LawyersChapter 7 bankruptcy affords a person a “fresh start” that discharges most of the individual’s debt. Some debts are not discharged in Chapter 7 though. Many people are aware, for example, that student loan debt cannot be discharged in bankruptcy as well as tax liabilities that are recently incurred.  Intentional acts that cause injury are potentially not dischargeable as well as embezzlement and theft in fiduciary capacity.   Credit card debt, medical bills and utilities as well as other general unsecured debts are a different matter, where several rules apply.

In general, credit card debt can be discharged in Chapter 7, unless it is jointly held and then the other person liable on the account must pay the debt to avoid collection.  Thus, co signed obligations are dischargeable but not to the co signer, who is then subject to collection for non payment.   Bankruptcy courts also may hold the petitioner responsible for debt associated with luxury purchases or large cash advances that are incurred shortly before the bankruptcy filing.

Credit card debts for luxury goods valued at over $650 and purchased within 90 days of filing are not automatically dischargeable and are subject to scrutiny, as are large cash advances prior to filing.   The creditor has the right to challenge those charges. If the debtor can show the “luxury” item was not really a luxury purchase, then the debt will be discharged. Also, if the petitioner can prove they intended to repay the debt, the debt can be discharged.   However, they may have to defend themselves in a lawsuit in the bankruptcy case if the creditor sues.  It may be better to just wait to file until the charges are over 90 days old.

The definition of a “luxury purchase” is left vague but certain common sense should indicate what meets the definition and what does not. Charging a transmission repair for example, and making a couple of payments, is different from ordering high-end winter clothing and missing the next two credit card payments.   The place where the charge is made (ie.,  Sachs 5th Avenue as opposed to Auto Zone) may also subject the charge to scrutiny as to the need for the particular item.  Likely designer clothes will never be a “need” prior to filing.

Large cash advances on a card may or may not be discharged in bankruptcy. An advance of more than $1000 made within the 90 days prior to filing for bankruptcy might not be discharged, unless the petitioner can show proof that they intended to pay off the debt. As with the luxury credit purchases, the law does not specify what counts as proof of intention to pay the credit card bill.

In short, most credit card debt can be discharged in bankruptcy. Petitioners who hold credit card debt jointly or who engage in certain buying behaviors will find their debt is not dischargeable in Chapter 7. In other rare cases, like a joint credit card, the debt may survive Chapter 7 as well.

If you are considering personal bankruptcy, we invite you to contact Zellar & Zellar Attorneys at Law to schedule your free consultation with an experienced Bankruptcy Practitioner who can fully assess your situation and advise you about your options concerning bankruptcy.

© Zellar & Zellar, Attorneys at Law, Inc., 2016, All rights reserved.

How can filing for bankruptcy improve your quality of life?

How can filing for bankruptcy improve your quality of life?

Bankruptcy is a major financial decision that will have a significant impact on the life of the Debtor and those who are jointly liable on their debts.   While it does impact those who are jointly liable on debts with the Debtor who files for bankruptcy, if they are repaid according to terms the impact is minimal.  This is especially so in light of the significant benefits that can be derived from a timely filed bankruptcy.  Below we will discuss a number of ways the life of the debtor and his or her dependents can be improved through debt relief under the bankruptcy code.

Stop Constant Collections Calls and Other Credit Harassment including Garnishments

When a person is overwhelmed with Debt and unable to pay their bills on time or in full they are besieged with collection calls on a robo dialing basis from the computer every few minutes all day long at home and at work and on their cell phones.  Often family members are also harassed who were listed as references on the credit application.  The harassment is disruptive to life and to work and is relentless from morning until night.  This is very stressful, as are lawsuits to collect and garnishments from your paychecks or banks accounts to pay the debt involuntarily.  Then a person has not enough to pay the monthly living expenses and disaster strikes financially.  Fortunately the bankruptcy code offers relief from all that .  The filing of a bankruptcy case invokes the Automatic Stay and prevents further creditor calls and or harassment including garnishments.   Debt collectors have to stop calling as soon as someone files for bankruptcy.

Have More Money at the End of Each Month

Bankruptcy can improve the quality of life by allowing the household to have increased monthly disposable income for living expenses and other costs of life.  Struggling to pay bills every month can force some people to go without necessities such as prescription medications that are important but costly. It might not be possible to buy food, pay for heating fuel or maintain a car when all the money goes to back debts or debt service. This causes everyone in the household to suffer the consequences of the debt including families and children.  It will become possible to start budgeting normally again and lead one to an improved standard of living through increased disposable income to pay expenses.  This may create income for activities for children or school related expenses such as field trips they would otherwise have to miss out on due to debt service.

No Threats of Wage Garnishment or Legal Action

Ongoing garnishments, judgment liens and the embarrassment of employer notification of a wage garnishment can jeopardize employment and destroy one’s peace of mind in addition to wreaking havoc on the monthly budget.  Creditors can take 25% of a persons net take home pay or ¼ of their net wages every pay for a wage garnishment.   This type of stress can lead to depression and anxiety and can cause one to lose their job by the disruption of their work routine and the constant calls and harassment.  Filing for relief under the  bankruptcy code  will stop these aggressive collection tactics by creditors and collection attorneys.  After the filing of a bankruptcy a person will not have to worry about wage garnishments or lawsuits to collect pre petition debts.

Start Rebuilding Personal Credit

Credit is very important today as it affects the interest rates you pay for credit and the amount you pay for car and homeowners insurance over your lifetime.  . Bankruptcy will allow someone to start rebuilding credit again which is why is it called a “fresh start.”   This can greatly improve the quality of life over time. Improving credit responsibly after the bankruptcy filing by timely paying debts makes it possible to  borrow money again on reasonable terms and maybe buy a new house or car. Good credit could even lead to higher paying jobs, lower insurance rates and better interest on credit cards.

Prevent Foreclosure and Keep the Home

A final way bankruptcy can improve quality of life is by preventing a foreclosure on a home or providing the borrower the chance to catch up on the mortgage arrearage or delinquency through chapter 13 reinstatement. The threat of losing a home and becoming homeless can be devastating. Filing for bankruptcy will stop banks from foreclosing on a house as it stays creditor activity during the case pendency. Chapter 13 allows them to reinstate and chapter 7 allows them to pay and keep it or surrender it and walk away.  Modification is still available.   The automatic stay stops the foreclosure while the case is open and chapter 13 allows reinstatement over time to stop the foreclosure.