Legal Services - A.V. Legal Center

Bankruptcy is a legal process that can help individuals and families to gain control of their unmanageable debt. In many cases, falling behind on credit card, mortgage, car, and other payments can result in an inability to catch up, leaving you sinking further and further behind, deeper into debt. Bankruptcy or the various alternatives to bankruptcy that are available may be a workable solution to the financial problems you are experiencing. The goal of a bankruptcy filing varies from one debtor to another, and depends on whether a chapter 7, 11 or 13 bankruptcy is being filed. We understand our client’s needs and seek to provide quality service at an affordable price for our clients to file bankruptcy and get out of debt. We want to make your Bankruptcy process seem simple and easy, you can rely on us to get the job done quickly. We are here to answer all your questions and make sure you understand the bankruptcy process. Most importantly, we want to teach you how to build back your credit.

In a Chapter 7 bankruptcy, all of your dischargeable debts are eliminated. This includes credit card debts and personal loans. If your tax bill is over three years old and you filed those taxes at least two years ago, many federal and state income taxes are dischargeable as well. Secured creditors, such as your mortgage and car loans, must continue to be paid if you plan to keep the property. You have to option of surrendering even secured properties if you choose you don’t want to keep them. You can exempt up to $175,000 in home equity. Bankruptcy establishes a legal status wherein an individual or business is no longer able to pay off its debts. Once a person files for bankruptcy that person(s) is protected from creditors making harassing phone calls and collecting on monies owed. Law suits are also “stayed” by filing for bankruptcy, thus, creditors in pending litigation against you cannot proceed and most likely once the debt is discharge the pending litigation will be dismissed. When you hear the word bankruptcy many people think of a Chapter 7 bankruptcy is. A Chapter 7, or straight bankruptcy, can provide families and individuals with debt relief in approximately 3 months. We make sure the process is not stressful and simplify each step for you to be comfortable with the peace of mind that everything will go smoothly. Many people assume that by filing bankruptcy they will lose everything they own. These uncertainties are often exaggerated. In fact, many people don’t realize that in a chapter 7 bankruptcy you could keep any debt you want by a simple reaffirmation agreement. That means you can keep your house, your car or even a credit card at your discretion so long as the property is exempt from bankruptcy.

A Chapter 13 bankruptcy case is referred to as a reorganization bankruptcy, wherein a payment plan is created and you agree to repay your creditors a certain percentage of your debt. This type of bankruptcy and the repayment plan last approximately three to five years. The benefits of this type of bankruptcy is you can often structure a lower payment, lower interest rates on your mortgage and other loans and sometimes eliminate or reduce principle amounts owed. This type of bankruptcy appeals to individuals who want to keep their property such as their homes or cars. Additionally, It is the only option for individuals who don’t qualify for chapter 7 bankruptcy because they may make too much income per the bankruptcy code or have conventional income wherein their income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts. Even if your taxes aren’t old enough to be dischargeable in bankruptcy, you can still pay them through a Chapter 13 plan and have a lower payment than with an IRS installment agreement. Chapter 13 bankruptcy is much different than a chapter 7 as the bankruptcy court can generally impose a requirement on the mortgage company to let the debtor pay past due debts in any particular fashion. Therefore, if keeping your home is a priority, and you have a regular income, Chapter 13 bankruptcy may be the right option for you to keep your home without the risk of foreclosure.

“Wage garnishment” is the process through which a creditor garnishes your wages (takes part of your paycheck) to pay down debt. Most creditors must obtain a judgment against you before they can garnish your wages. Governments, however, are generally not required to obtain a judgment to garnish wages to collect on debt owed for unpaid taxes. Typically, the sheriff serves paperwork on your employer that forces your employer to withhold a portion of your wages that is then sent to the sheriff. The sheriff then sends the money to a creditor, or creditors, who use(s) the money to pay down your debt. Garnishments based on ordinary debt are generally limited to 25% of your pay (after taxes and after ‘mandatory’ deductions); but garnishments for some debt, such as unpaid child support, can be as high as 60%. In any case though, a garnishment may not leave you with a weekly amount of less than 30 times the hourly minimum wage. A wage garnishment can remain effective until the entire amount of the judgment is paid off.

There are mainly three ways to stop wage garnishments. 1) You can pay the judgment debt in full (or pay an amount that the creditor agrees to accept as payment in full). 2) You can file an exemption claim with the sheriff, in which you must show that your wages should not be garnished because you need your entire paycheck just to provide the necessities of life for you and for your family. However, if the judgment creditor objects to your claim, a hearing will be set and a judge will decide whether or not your wages should be garnished; and the garnishment will continue until your case is heard and the judge rules. 3) You can file for bankruptcy. Upon filing bankruptcy, you will serve the sheriff and the creditor with a notice of the bankruptcy filing. The sheriff will then issue a release to your employer, and the garnishment will stop.Then, provided you receive a discharge of the debt* in bankruptcy, the debt will be wiped out and the garnishment will not be re-instated. (*Some debt, such as debt arising from unpaid child support, may not be discharged in bankruptcy. In this case, the garnishment may resume after your case is over or sooner if the court grants leave to the child support creditor.) Like wages, bank accounts may be garnished by creditors. In most cases, filing bankruptcy will also stop these actions. Bankruptcy will even stop garnishments by the IRS, the Franchise Tax Board, and student loan collectors. However, in addition to filing for bankruptcy, you must: file a Notice of Stay with the court that issued the garnishment order, and notify the creditor, the creditor’s lawyer, and the sheriff or other garnishing agency if applicable.