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Are the phone calls never ending? Do you worry that you are going to lose your car, your home or your paycheck to creditors or worse, that you will never be able to pay off all that you owe?
Our office has been helping the people of Arkansas take back control of their financial future. Put our over 35 years of combined legal experience in consumer bankruptcy to work for you.
We can show you how bankruptcy can help restore the peace of mind that creditors have stolen from you. Bankruptcy is not a bad word. Members of our own families have had to file for bankruptcy. We understand your concerns and your needs and we are here to help.
We will take the time to give you the best legal advice possible. You will leave our office with restored hope for the future and the weight off your shoulders. Let us help you get a fresh start!
FREE Initial Consultation - we take the time to provide you sound and thorough advice on all of your legal options. After our visit you will walk away with a relief and peace of mind you have not had in a long time.
Put our years of experience to work for you. Call us now: 501-753-7400.
What is Chapter 7? Who Can File? What are the exemptions?
What is Chapter 7 bankruptcy? Chapter 7 is one of the two types of bankruptcy that is available to most individuals; the other is Chapter 13. Chapter 7 is what is commonly referred to as a "liquidation" or "straight" bankruptcy. In simple terms, a person who files Chapter 7 is saying that they can no longer afford their bills and they are asking from relief of them all subject to other provisions of the law. In essence, when you file Chapter 7, you list your debts and your assets and it is assumed that you are requesting discharge of all of your debts. On certain secured debts, like a home or vehicle, you have the option of surrendering the property and being forgiven of the debt or keeping the property and paying per the terms of the contract. If you keep the property, you may be required to enter into a reaffirmation agreement which states that the contract will continue as if you had never filed bankruptcy as to that debt. Unsecured debts that are dischargeable will be discharged and you will no longer be required to make payments on them.
Who can file Chapter 7 bankruptcy?
The new bankruptcy laws put certain limitations on who may file Chapter 7 based upon household income. There can be other restrictions on who may file for relief under Chapter 7, but Chapter-7 is far from dead as reported by many news agencies on the eve of the bankruptcy laws changing in 2005. In our practice estimations, at least 85-90% of those individuals/couples who could have filed under Chapter 7 under the old law still can. However, in some cases the calculations that are involved in what Congress calls the "means test" are so complicated that special software is required to determine whether someone is eligible to file for Chapter 7 or not. Two general requirements for bankruptcy are that you must have received qualified "credit counseling" and have filed taxes, if you are required to, for the past four (4) years.
Chapter 7, unlike Chapter 13, is not a repayment Chapter. Other than the fees and costs you pay to file the case, you do not make payments to a Trustee as you do in Chapter 13. In Chapter 7, you pay the fees and costs set forth by your attorney and then you will only be making payments on secured debt that you are keeping and your living expenses thereafter. One of the primary advantages of Chapter 7 is that the entire case is usually completed within six (6) months of filing. There can be other advantages, but they are case specific and that information can be given to you during your free initial consultation. If you are several or more payments behind on a car or home that you wish to keep, it is generally not advisable to file a Chapter 7 generally as it does not enable you to catch the payments up over time as a Chapter 13 does.
In either Chapter 7 or Chapter 13 a "Trustee" is appointed to oversee your case. In Chapter 7 the function of a Chapter 7 is to insure that you have met basic filing requirements, that your bankruptcy documents are truthful and accurate and, if there is property that is not protected by law, to sell property to pay unsecured creditors. In my estimation, in over 90% of the Chapter 7 cases we file there is no property that is not protected by law. The Federal law gives rather generous "exemptions" in many different kinds of property. An exemption is created by the law saying that there is a certain amount of value in property that you are allowed to retain. For instance, currently the Federal Exemptions allow you to protect up to $20,200.00 in home equity ($40,400.00 for married couples). This means that if you have a $90,000.00 home with $62,000.00 owed, you can protect the full $28,000.00 in equity if married, but if you were an individual, you would have $5,800.00 that is not protected which the Trustee could access for sale. There are many other exemptions for household goods, clothing, tools, vehicles, retirement accounts and more. Please remember as I said before, most people do not exceed the exemption levels and you will need to speak with a qualified attorney for complete advice on the subject. It is our job to help you arrive at fair values from property and to determine to what extent the law allows you to protect the property.
Chapter 13 is one of the two types of bankruptcy that is available to most individuals; the other is Chapter 7. Chapter 13 is what is commonly referred to as a "restructuring" or "wage earner" bankruptcy. In simple terms, a person who files Chapter 13 is saying that they have some ability to repay creditors, unlike Chapter 7, but cannot repay all of their debts as they are currently situated. In Chapter 13 your debts are reorganized into one, more affordable payment. Secured debts on things like vehicles, furniture and other property are repaid under terms proposed by your case rather than the terms of the contract.
For example, if you have 33 months remaining on a car note that is set at 14% interest, that debt will be restructured under a bankruptcy plan that will be from 36 to 60 months in length and the interest rate will be a bankruptcy specific interest rate that is at current no higher than 10.25% and is frequently lower than that. Unsecured debts like credit cards or medical bills, unless required by law, typically do not receive a specific payment or percentage that they are to be paid. Your home debt can be left out of a Chapter 13 payment if you are current on the home, otherwise it will be paid through the plan and a certain portion will be paid each month to catch up missed payments.
Typically, people who choose to file under Chapter 13 are doing so because their income mandates that they must or they are trying to reorganize their secured debt and prevent a foreclosure, repossession or garnishment. Chapter 13 will also freeze interest and penalties on tax debts and allow you to repay them through the Chapter 13 plan. Because most creditors receive something under Chapter 13, some creditors have a "preference" for this type of case and the law certainly has a preference for it. One of the major thrusts of the most recent change in the law was to force more people to file under this Chapter. Chapter 13 is extremely useful for averting foreclosures, repossessions, garnishments and tax levies.
What your specific payment would be in Chapter 13 is entirely dependant on your individual circumstances and the facts of your case. The absolute minimum monthly payment available is around $75.00 per month for 36 months at this time. Of course, to determine your payment, what you are trying to pay for and how much disposable income you have left each month after reasonable living expenses. Our firm has focused on this area of law for years and we can usually pinpoint very accurately what you payment will need to be to successfully complete the case. All or most of your attorney's fees are typically paid through your set, monthly payment.
In Chapter 13, a Trustee is appointed by the government to take your monthly payment and disburse the funds to the creditors in the order they are entitled to funding. In addition to processing your monthly payments, the Trustee will also verify that you have completely and accurately filled out your bankruptcy paperwork as well as verifying that you have met other filing requirements.
One of the three primary reasons people seek out my firm for help, along with foreclosure and repossession, is a pending garnishment. Garnishments are most commonly generated by a civil court judgment, although certain tax problems can also result in a payroll garnishment. (If you are interested in tax garnishments, please see that section of this website.) If you have failed to pay on a medical bill, credit card or other contractual arrangement and the creditor has sued you, then, if you do not successfully defend the lawsuit, the creditor will receive a judgment issued by a state court judge. The creditor can "execute" on the judgment by having a Sheriff come to your home to collect and sell property or, more commonly, they will have a writ of garnishment issued by the judge.
A writ of garnishment is a legal document that allows the creditor, under Arkansas law, to forcibly take from your employer up to twenty-five percent (25%) of your pre-tax wages. This means if, for example, you earn $1,000.00 gross per paycheck and normally take home about $800.00, then the creditor will take the first $250.00 of the paycheck leaving you with a gross check of $750.00 with taxes then being taken out as if you had been paid $1,000.00. This means that the garnishment will be more than 25% of your take home pay.
In addition to the payroll or wage garnishment, the creditor can also garnish your checking account, savings account or other similar deposit account. Unlike the 25% limitation on payroll garnishment, there is no limit to the amount of funds they can take from your checking account during a bank account garnishment except that they cannot take more than they are owed. Most people are aware or have heard that Social Security benefits cannot be garnished. However, this is only partially true. Creditors cannot seize a Social Security benefit check, but once that check is deposited in a bank account and co-mingled with other funds, that creditors can seize all of those funds from the bank account.
Chapter 7 & Chapter 13 bankruptcy STOP GARNISHMENTS cold. Both forms of bankruptcy remove the garnishment from your payroll and prevent the garnishment from ever being reissued upon receiving your discharge from whichever Chapter you file under. A discharge is what a person receives from the successful completion of a bankruptcy. The discharge is a Federal Court Order that says that the creditor may NEVER again attempt to collect from you.
One of the three primary reasons people seek out my firm for help, along with foreclosure and garnishment, is a pending repossession. Repossession is a legal process whereby, most commonly, a creditor who has lent you money to purchase a vehicle seeks to sell your vehicle to repay the loan after you have become delinquent in loan repayment. Most commonly, it is a car or truck repossession that people are facing; although, a boat, ATV, RV or any other piece of collateral in which the seller retained a lien can be repossessed. The "repossession" of a home is called a foreclosure; please see foreclosure for more information on that topic.
When you borrow money to purchase a vehicle, the creditor has you sign a promissory note and then affixes a lien against your automobile. The lien secures the promissory note in the event that you fail to pay. It is this lien that allows the creditor to repossess the vehicle when you fail to pay. If they did not have the lien, the collateral would be owned by you and they could not repossess the property. The terms of when a creditor can or will repossess are usually determined by your contract and/or their own business policy.
One of the major reasons that people file a Chapter 13 reorganization in Arkansas is to stop repossessions. A Chapter 13 repayment plan allows you to "restructure" your car note over a 36 to 60 month period of time and can help you to stop repossession when you have fallen behind in payments. When you purchased the vehicle, the creditor set an amount that was being financed and an interest rate and the "amortized" the payment. Amortization is a mathematical process of determining how much the payment will have to be to pay a certain debt amount at a certain interest rate over a certain period of time. When you file Chapter 13, typically your vehicle is re-amortized over the length of your bankruptcy or is given its regular payment depending on your Chapter 13 plan length and budgetary needs. Chapter 7 can stop repossession, but only temporarily and you will normally have to cure the defaulted payments in full in a short period of time to be able to keep the vehicle.
Please note, pursuant to Arkansas law, a bankruptcy can stop a repossession and sale of your vehicle. However, once the creditor has repossessed and sold the vehicle, it can only help you with any deficiency balance owed on the debt. Typically cars are sold at auction for very little money compared to what is owed and the deficiency can be substantial.
One of the three primary reasons people seek out my firm for help, along with repossession and garnishment, is a pending foreclosure. Foreclosure is a legal process whereby, most commonly, a creditor who has lent you money to either purchase, improve or build a home seeks to sell your home to repay the loan after you have become delinquent in loan repayment. In Arkansas, a creditor can either go through Judicial or non-Judicial foreclosure. While there are differences as far as the creditor and attorneys are concerned, there is little practical difference to the average Arkansan.
When you borrow money to purchase, improve or build a home, the creditor has you sign a promissory note and then affixes a lien against your property. The lien secures the promissory note in the event that you fail to pay. It is this lien that is being "foreclosed" when the creditor initiates a foreclosure process. Typically, a creditor will send notice to you prior to initiating a foreclosure proceeding, but they do not always do so. They are required by law however to notify you once the process has begun. Their notice should tell you the date and time of the sale and let you know by when you must cure the default. If you have multiple mortgages, any of the mortgage holders can initiate foreclosure if you fail to pay.
One of the major reasons that people file a Chapter 13 reorganization in Arkansas is to stop foreclosures. A Chapter 13 repayment plan allows you to continue to make your regular mortgage payment on your home note while paying another amount spread out over 36 to 60 months to cure the arrearage on your home mortgage note. A person can also use Chapter 13 to gain some time to sell their property and pull their equity out of their home rather than losing the equity through the foreclosure sale or simply to obtain a little more time to move before relinquishing the property to the creditor. Either Chapter 7 or Chapter 13 "stop" a foreclosure, but only Chapter 13 allows you the opportunity to cure the defaulted payments by a payment plan. Chapter 7 only stalls the sale and it will eventually be sold if you do not cure the default.
Please note, pursuant to Arkansas law, a bankruptcy can only stop a foreclosure if the bankruptcy is filed prior to the foreclosure sale date. The preparation and filing of a bankruptcy can take up to 10 days if your case is complicated or you are not prepared for the process. Once the sale date has passed, the home no longer belongs to you and a bankruptcy cannot stop the sale, but it can still help you with a deficiency if the home sold for less than was owed on the home.
As you may can imagine, especially if you have seen our T.V. ads, the harassing phone calls and never ending abuse of collection agencies is one of the major complaints of a broad section of our clients. As much as anything that creditors do in attempting to collect overdue debts, harassing, constant and sometimes vicious collection calls will drive even the most level-headed person over the edge. I don’t know of a single thing that leads to more stress and sleepless nights for someone with credit problems than the never ending calls; the only other factor that comes close may be the fear of losing a home or car.
Quite often the first question clients ask of me is: "When will the calls stop?" The calls will stop very shortly after a bankruptcy case is filed. Please understand that merely coming to see an attorney cannot stop the phone calls, a case must actually be filed in Order to actually stop the creditors from calling. Our authority to stop that ringing phones comes from the Federal District Court in which your bankruptcy case is filed and the authority given by the United States Bankruptcy Code.
When a bankruptcy is filed, the Court imposes an "automatic stay" upon collection activities. In simple terms, a stay means exactly what it sounds like; it makes a creditor stop in their tracks and any and all further collection action must pass through the bankruptcy Courts if the action will be allowed at all. The ringing phone has usually grown silent within a matter of days of the bankruptcy filing. This is because the Court has mailed notices to these creditors telling them that further collection activities may result in large fines. Even the most ignorant and abusive collection agent will stop calling within a week to 10 days of the filing – unless they just enjoy being hauled in front of a Federal Judge and being berated.
Please remember that, given the extensive documentation needed to file bankruptcy pursuant to the law changes enacted in 2005, the filing process can take anywhere from 1 day to 2 weeks depending on how prepared you are to file and how quickly you do what we ask you to do. If your phone is ringing off the wall and the stress is eating at you, stop the abuse.
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Documents that are needed to properly process your bankruptcy:
1. Copies of Tax Transcripts or Tax Returns. The Bankruptcy Code requires that everyone who files a bankruptcy must present evidence that they have filed tax returns for the most current year and the three years immediately preceding. As of the time of the writing of this page, that would be the 2006, 2005, 2004 & 2003 tax years. If you are not required to file taxes because you did not earn enough in a particular year or for some other reason, we can prepare an affidavit to file with the Court to that effect. A Tax Transcript is a printout of the information from your actual return that is provided by the IRS. You can obtain your free copies of those years by calling 1-800-829-1040. We recommend that you call to order these as soon as possible. The call and the transcript are free. They can fax them immediately or mail them and you will have them within 7-10 days typically. Please bring copies of your actual returns if you don't have transcripts prior to your appointment.
2. Payroll stubs for the most recent six months of income ending in the month prior to the month your case is filed. Payroll stubs for most people are the actual stub you get from your employer each payroll period. A printout of them works if it itemizes the income by pay period and accurately itemizes all deductions. This information is needed to complete the means test that helps to determine which Chapter you can file under and what your payment will be if you are in Chapter 13. This applies to all income received. For example: Child Support, Alimony, Food Stamps, Housing Assistance, Disability, Social Security, Unemployment, et al.
3. A copy of the most recent statement from any and all creditors to whom you owe money. You must bring us copies of each person or company to whom you owe money regardless of whether you wish to keep paying the debt or not. All persons to whom you owe money must be listed. That said, you will often have the ability to determine what happens to that debt after filing. That kind of information is why you come to us. If you don't have a statement, please write down the name and address of the creditor, account number, total balance due and (if this applies) monthly payment. If you are being sued, a copy of the Complaint filed against you or other document that shows who is suing you, the Court in which it was filed and the attorney for the moving party will be needed. Please remember that willful failure to list all creditors in a bankruptcy filing is punishable by severe fines from the bankruptcy Court.
We will always need copies of the most recent statements you have showing the balance due on your home notes and vehicle notes (vehicles include cars, trucks, atv's, rv's, boats, motorcycles, etc.). Finally, a recent credit report is always helpful. If you do not have one, we can run one for $30.00 for an individual or $50.00 for a couple.
4. We will need to make a copy of your driver's license (or other picture ID) and Social Security Card (or other government document with your Social Security Number) to verify that we have confirmed your identity when consulting you. The government is checking this much more closely as identity theft has become a major problem.
5. You will need to complete as fully and completely as possible the client information sheet prior to your office visit. Filling this form out ahead of time will help to reduce the amount of time that your office visit will take. Also, please follow these links to the official bankruptcy Schedule of Income & Expenses and Statement of Financial Affairs. Completion of these schedules (either by filling in the blanks or writing/typing your answer on a separate page) will also help greatly speed up the processing time for your paperwork.
6. Anything else you find concerning. Please do not hesitate to bring in anything that concerns you whether you think it applies to bankruptcy or not. Let us decide whether it applies or not. If your name is on the deed to someone else's property or you co-signed for someone else's car, that matters and we need to know so that you can best protect that person (if that is a concern to you).
7. Copies of Divorce Decrees.
8. The name and address of anyone to whom you (or your spouse) pay child support or alimony or any other kind of Court Ordered Support payment.
This list is not all inclusive and we may need more or less documentation depending on what we discuss in your consultation. However, I hope this helps you to understand how detailed we have to be in preparing your paperwork and why bankruptcy has become so complicated that you need an experienced law firm to handle your case. If you have questions about anything on this page, please do not hesitate to call or email.
Please don't let this list deter you from coming in though. The preparation of your paperwork is our job, we just need the best information possible to do the best job for you.
What is a bankruptcy discharge?
A discharge is the primary reason why people file a bankruptcy case. Upon the successful completion of a bankruptcy, you will receive a "discharge" of your debts. This discharge prevents creditors from ever trying to collect the debt again. There are certain types of debt that are not usually or ever discharged and some types of debt for which the discharge has only a partial impact. There are of course other reasons to file a bankruptcy, such as the opportunity to catch up payment on secured debts, but discharge is the primary "reward" for filing. Discharge prevents creditors from collecting, but it does not prevent you from voluntarily repaying the debt if you so choose. Discharge binds the creditor, not you.
What can be discharged in a bankruptcy?
Typically, although circumstances may vary, all credit card debt, medical bills, service contracts, taxes over three years old (subject to circumstance and nature of tax debt) and most other forms of "unsecured" debt are discharged by a bankruptcy. You can also discharge "secured" debts, such as vehicle debt, home debt and other debt for property purchased, IF you are willing to surrender the property. You cannot keep a home or car and not pay for it. A bankruptcy discharge only discharges you of debt for property that you are not keeping. Of course, your individual circumstance and the facts of your case may have an impact on this information.
Which debts are not discharged?
The primary debts that are not discharged that affect many people are debts for child support, alimony, taxes that are less than 3 years old and student loans. Other types of debt can be non-dischargeable as well. The facts of each case vary and you will need to consult with a qualified, experienced attorney to be certain.