Determining whether or not you should file a bankruptcy depends on many factors. During your free consultation, we will primarily discuss:
1. Your assets and liabilities
2. Your income per month in relation to your monthly living expense
3. Who you owe, how much you owe, when you incurred the debt, if you are in arrears and whether the
creditor is secured, unsecured, or a priority creditor
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no-obligation consultation to get started making decisions about your situation.
Bankruptcy will not look good on your credit. However, many people tell me they keep making payments and the debt never goes down or they have no real prospect of paying the debt off. In that regard a bankruptcy will give you a fresh start. A bankruptcy will appear on your credit report for 10 years. Other alternatives to a bankruptcy would include contacting the creditors and trying to make payment arrangements, either personally or through an authorized counseling agency.
Call me to learn more about your bankruptcy options.
One of the first questions I am always asked is if a home or car can be kept – generally the answer is yes, but it depends on the amount of equity in each item. The court expects people who file bankruptcy to keep certain items. The court realizes that a person needs transportation and even a house to live in, however, the court imposes dollar limits on what can be kept. They expect you to have a car but not a Mercedes Benz, for instance, and they expect you to have a house but not a mansion. The court looks at the value of the property minus any loans on that property to compute your equity. Even if you are over the equity limits you still will not lose your home. It simply means you will have to pay your creditors what you are over in a Chapter 13.
Home – A person can keep a home they reside in provided their equity does not exceed $22,975 per person or $45,950 if both husband and wife own the house. For example, if a husband and wife own a home worth $100,000. and they owe $70,000 on a mortgage the court will allow them to keep their house because it is within the $45,950 exemption ($100,000 value minus 70,000 mortgage equals $30,000 in equity). Although again, even if you are over the allowed exemption you still won’t lose your house.
Motor vehicles – Motor vehicles can be kept provided the equity does not exceed $3,675. If the value of the automobile exceeds this, we may still keep the car it if we are able to use exemption number 5.
Furniture – Household furniture and supplies including audio and video equipment up to $12,250 may be kept, though no single item should be worth more than $575.
Jewelry and furs up to $1,550.
$1,225 plus up to $11,500 ($12,725) any exemption that was not used in number 1.
Up to $22,975 from a personal injury case.
Up to $2,300 for tools of your trade.
Even if you exceed any of the above limits it does not mean that you will lose the property. At the worst you will have to file a Chapter 13 payment plan bankruptcy where you will have to pay at least as much as you exceed the limits to the creditors, giving you up to 60 months to pay. For example, if a husband and wife have a house where the equity is $41,900, this exceeds the courts allowance by $5,000 ($41,900 – $36,900). They can still keep their house by paying the court $5,000 in a Chapter 13 bankruptcy by paying $145 per month for 36 months.
Read through some of our frequently asked questions or give me a call today for a free, no-obligation telephone consultation to discuss your specific situation.