5 Important Questions You Must Ask A Bankruptcy Lawyer BEFORE You Hire Him/Her To Handle Your Case

Transcription

1 5 Important Questions You Must Ask A Bankruptcy Lawyer BEFORE You Hire Him/Her To Handle Your Case Attorney Jack Morrison Law Offices Of John P. Morrison, P.C 5/9/2011

2 DISCLAIMER Legal Notice:- This digital ebook is for informational purposes only. While every attempt has been made to verify the information provided in this report, the author does not assume any responsibility for errors or omissions. Any slights of people or organizations are unintentional and the development of this ebook is bona fide. The trademarks, screen-shots, website links, products and services mentioned in this ebook are copyrighted by their respective owners. This ebook has been distributed with the understanding that we are not engaged in rendering legal accounting or other professional advice. We do not give any kind of guarantee about the accuracy of information provided. In no event will the author be liable for any direct, indirect, incidental, consequential or other loss or damage arising out of the use of the information in this document by any person, regardless of whether or not informed of the possibility of damages in advance. The author may be considered by law to be a debt relief agency, helping people to file for bankruptcy using the U.S. Bankruptcy Code. This may be deemed by state law to be legal advertising. This EBook is copyright protected 2011 The Law Offices of John P. Morrison, P.C. Jack Morrison, Esq. Law Offices of John P. Morrison, P.C. 27 West Mountain Street Suite B1 Worcester, MA jack@jackmorrison.com 2

3 Table of Contents Disclaimers... 2 Introduction... 4 Questions: 1. Do I Qualify To File Bankruptcy? Are There Certain Things That I Don t Have To Include When I File Bankruptcy? Can I Keep A Credit Card And Not Include It When I File Bankruptcy? Can I Keep My Car If I File Bankruptcy? If I m Behind On My Mortgage, And Can t Do A Loan Modification, What Can I Do To Keep My Home? Special Offer To Readers Of This E Book

4 Introduction Families experiencing overwhelming debt and considering Bankruptcy, should ask these 5 Questions to every Bankruptcy lawyer they intend to interview to handle their matter. It s tough enough to be in your situation You re vulnerable and looking for help. Don t make a quick decision and get locked in with the WRONG Bankruptcy Lawyer. These FIVE questions will give you a good basis to determine if the lawyer you re interviewing has a basic knowledge of bankruptcy. Also, listen to the answers you get from the various Bankruptcy lawyers you interview. Are they looking out for your best interest or just looking to get you in the door and sign you up. Don t be afraid to ask questions. The more questions you ask tells the lawyer that you ve done your homework. You want to pick an experienced attorney to handle your matter. If you want more information, please contact our office at (508) Or visit our website at Look at page 13 for the Special Offer to readers of this EBook. 4

5 Question #1 Do I Qualify To File Bankruptcy? ANSWER: I get this question a lot. Do I qualify to file Bankruptcy? Everyone qualifies to file Bankruptcy because it s not whether you qualify, is more about what you could lose if you file Bankruptcy. Let me explain. When you file Bankruptcy you don t lose everything that you have. You get to keep certain things and they call those things exemptions. There are 2 types of exemptions Federal and State. The State exemption is based upon where you live. You have to select either one when you file. Exemptions are things that you get to keep when you file Bankruptcy. You make the selection based upon what assets you have and which exemption type provides you more protection for your assets. I ll explain it another way. Think of chairs around a conference table as exemptions. Each of the chairs/exemptions is labeled with different categories. One chair/exemption is household furnishings... another chair/exemption is equity in a home another chair/exemption is equity in a car. With each of the chairs/exemptions there are caps or limits on them. For the Federal Exemption the household goods exemption is now $ 11,525; the equity in a home is $21,625 and the equity in a car is $3,450. The Federal exemptions change every 3 years. The Federal exemptions have a wildcard that allow assets over the limits to be protected. The State (Commonwealth of Massachusetts) exemption recently changed on April 7, It has been a long time since Commonwealth 5

6 of Massachusetts exemption statute was changed. The household goods exemption is $15,000, and the equity in a home is up to $500,000 if certain conditions apply and the equity in a car is $7,500, if the debtor is disabled or elderly the exemption is $15,000. You can see that there are differences between the Federal and State Commonwealth of Massachusetts- exemptions. Generally speaking, most individuals will select the Federal exemptions unless there is equity in their homes is GREATER THAN $21,625 individually or $43,250 combined husband and wife). If the equity in your home is over $21,625 individually or $43,250 on a joint filing husband and wife, and you want to keep their home, then the selection of the State - Commonwealth of Massachusetts- exemptions will protect up to $500,000 equity in your home if certain conditions apply. These are just some of the exemptions an experienced Bankruptcy lawyer has to look at your assets to see if you have too much equity in any one item. If all of your possessions fit into the chairs/exemption, then you get to keep all of the assets, and there s no problem. If your possessions don t fit into the exemption or exceed the exemptions, then you have a problem. The Trustee has the right to take that asset and sell it and pay you the value of the exemption. That s why I said earlier that anyone can file Bankruptcy. If all of your assets fit into the exemption categories, then you re OK you can file Bankruptcy and get rid of your debt without losing any of your property- assets. It s only if your assets are over the exemption limits that you have to weigh the benefit of filing Bankruptcy verses loosing those assets. Only you can decide if it s worth it. 6

7 Questions #2: Are There Certain Things That I Don t Have To Include When Filing Bankruptcy? (i.e. I don t want my house or my car included) Answer: No, you must include ALL of your assets and liabilities when you file Bankruptcy. By doing so, that doesn t mean that you re going to lose those assets. It goes back to questions #1 above, can the exemptions you select protect those assets you want to keep. Most people have a common misunderstanding when it comes to filing Bankruptcy, you can separate what you want to keep and let go all the rest. Not true, entirely. It has to do with the equity you have in your assets and whether the exemptions you select protect those assets. For example: Your home. If you are current with your mortgage payments and you want to keep your home, and as long as the equity in your home is protected, (selecting the Federal Exemption or the State (commonwealth of Massachusetts Exemption) you can keep you home. Yes, you have to include the asset, your home- in your schedules when you file Bankruptcy. Your mortgage company will know that you filed Bankruptcy. If you re current with your mortgage payments at the time of filing your Bankruptcy petition, your mortgage company CANNOT TAKE YOUR HOME. I ll repeat the last sentence. If you have continually paid your mortgage and at the time of filing your Bankruptcy petition, you are current with the mortgage payments, your mortgage company CANNOT TAKE YOUR HOME 7

8 Question #3 Can I Keep A Credit Card And Not File Bankruptcy Against It? Answer: NO, you must include all of your debt when you file bankruptcy. Legally, you have to include all of your debt. By keeping one credit card, you have arbitrarily elected to pay one creditor and not pay all of your other creditors. The Bankruptcy Code does not allow this. Let me tell you why you don t want to keep any credit card if you file Bankruptcy. First of all, when your credit card gets notice that you filed Bankruptcy, there re not supposed to extend or give you other credit. If you kept your card and filed Bankruptcy, you would soon realize that you can t use your card the company will not extend credit to you. You re left with a bad situation a credit card that you didn t include in your Bankruptcy petition and you now owe the money and you can t use the credit card because the company stopped extending credit. You should include ALL of your debt. You can always start over financially once you obtained your discharge. With credit cards, even after you file Bankruptcy and receive a discharge, you will be solicited by credit card companies to use their cards. 8

9 Question #4 Can I Keep My Car If I File Bankruptcy? Answer: It depends. It depends upon the equity that you have in your vehicle. Again, it goes back to question #1 and the equity you have in your car. Equity is obtained by getting the market value of the vehicle and subtracting any loan balance. You can get a market value of the vehicle by going to You have to get average retail value. Once you determine the equity you have in your vehicle, you then have to look at the exemptions for vehicles. The Federal exemption is $3,450 as of the date of this report. In Massachusetts, the exemption law changed April, 7, 2011 the new exemption is $ 7,500. Let s use an example. Suppose you own a 2003 Ford Explorer with 80,000 miles. You look up the value on and find the car has a private sale value of $7,425. Table 4A Auto Exemptions With No Loan Balance Using Federal Exemption Using State Exemption Market Value $7,425 $7,425 Loan Balance $ 0.00 $ 0.00 Equity $7,425 $7,425 Exemption Allowance $3,450 $7,500 Amount unprotected $3,975* $

10 Looking at Table 4A, under the Federal Exemptions, you are allowed $3,450 equity in a vehicle. Since there is no loan on the vehicle, there is $3,975 as unprotected equity in the car. Under the State Exemptions, there is a $7,500 exemption in a vehicle. Since the market value of the car is LESS THAN the State Exemption, the car is exempt meaning you can keep your car using the State Exemptions. The fact that you need a car to go to work is NOT the important factor when considering whether you keep a car or not. It s just the equity that you have in the car. On the other hand, if you have a car loan and the balance you owe on the loan is MORE than the value of the car, then as long as you keep paying on your auto loan, you can keep the car. Same numbers as previous: 2003 Ford Explorer, 80,000 miles market value $7,425. In this case, there is an outstanding loan balance of approximately $5,800. See the difference in Table 4B. In each of the cases, Federal and State, you get to keep your car since there the equity is LESS THAN the exemption amount. Table 4B Auto Exemptions With Loan Balance Using Federal Exemption Using State Exemption Market Value $7,425 $7,425 Loan Balance $5,800 $5,800 Equity $1,625 $1,625 Exemption Allowance $3,450 $7,500 Amount unprotected $ 0.00 $

11 Question #5 If I Am Behind On My Mortgage And Don t Qualify For A Loan Modification, What Can I Do To Keep My Home? Answer: File a chapter 13 Bankruptcy. A Chapter 13 Bankruptcy is a re-payment plan. How does a Chapter 13 Bankruptcy work? Suppose that you are 10 payments behind on your mortgage and your monthly payment is $2,000. That means that you have to pay $20,000 to get caught up on your mortgage payment. The mortgage lender tells you that you don t qualify for a loan modification. Your lender wants to foreclose. You want to keep your home. What can you do? Most people don t have $20,000 lying around to get caught up. By filing a Chapter 13 Bankruptcy, you can get caught up by paying $20,000 over 3 years or 5 years. That $555 per month or $333 per month respectively. Once you filed a Chapter 13 Bankruptcy case, you would have to make your normal monthly mortgage payment each month directly to your mortgage company. In addition, you would pay into the Chapter 13 Trustee, the monthly amount you owe your mortgage company plus a 10% dividend to the Chapter 13 Trustee. Again, let s use the same example as above: A family pays $2,000 per month in mortgage payments and is 10 months behind. The family 11

12 files a Chapter 13 Bankruptcy on May 9, 2011 with a 5 year Chapter 13 plan what are their payments? The family has to make their normal monthly mortgage payment that s due, June 1, 2011 on time, and in the amount of $2,000 to their mortgage company. Within 30 days after filing, the family has to pay the Chapter 13 Trustee approximately $370. ($20,000 / 60 months = $333 X 10% = $370). As long as the mortgage payment and the Chapter 13 Trustee are paid monthly, the family can keep their home. This is an OVERSIMPLIED example used to illustrate how a Chapter 13 Bankruptcy works. An experienced Bankruptcy Lawyer can analyze your particular situation and provide specific direction to achieve your financial goals. 12

13 Find Out EXACTLY What You Need To Do To Qualify For Bankruptcy Without Guessing Or Leaving It To Chance Experiencing Severe Financial Debt is Humiliating, Depressing, and Overwhelming. There is a lot of information online and published on Bankruptcy but, it s not easy to get the answers you need, or solutions to your specific situation. What are you to do? If Only There Was Someone Who Could Tell You EXACTLY What You Need To Do To Qualify For Bankruptcy. For Massachusetts Residents experiencing Severe Financial Distress and Unable To Pay All their bills, A COMPLIMENTARY Telephone consultation is offered to discuss your situation. The telephone consultation takes place at a conveniently scheduled time. You don t have to come into my office. You can discuss whatever you need to know to resolve your financial situation. There is no cost of obligation for the telephone consultation. Contact our office, Law Offices of John P. Morrison, P.C. by telephone (508) and ask for Melanie. Melanie will schedule a time to discuss your situation with Attorney Jack Morrison If you are unable to contact Melanie directly, send an mel@jackmorrison.com to her with a good time for Melanie to contact you, please provide Melanie with a telephone number to call you back. If you re experiencing severe financial debt, you re not living, you just exist. Until you can resolve your debt, you ll struggle needlessly to achieve the life you want or the life you deserve. Call now (508) to get the FREE telephone consultation. 13