Common Myths About Bankruptcy

Common Myths About Bankruptcy

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(part two)

We are continuing our series on debunking common myths about bankruptcy.  Our previous article emphasized the importance of disclosing all of your debts to your bankruptcy attorney.  We also discussed certain debts that are often not eligible for discharge including child support, alimony, tax debt and liens.  Today, we will look at two more myths surrounding bankruptcy.

Eliminates All Debt

Not all debts are necessarily forgiven in a bankruptcy.  As we mentioned in our previous article, most tax debt is not forgivable and liens have certain stipulations associated with them. Debt not declared in your bankruptcy, criminal fines, and debt arising out of a DUI injury or death are among the debts not eligible to be eliminated through bankruptcy. Your bankruptcy attorney can explain which of your debts are eligible for discharge.

Student Loans Forgiven

In most cases, bankruptcy does not eliminate the responsibility of paying back student loans.  There are some circumstances where you may be granted undue hardship, but this is not common. If you have student loans, be sure to discuss options with your bankruptcy lawyer.

Considering bankruptcy? Charleston residents and those in surrounding areas throughout the Lowcountry have counted on the Drose Law Firm to handle their bankruptcy and creditor/debtor needs for three decades. Our bankruptcy attorney will carefully evaluate your situation and make a recommendation as to the type of bankruptcy that best suits both your immediate needs and long term goals.  When it comes to financial matters, not all bankruptcy lawyers are alike.  We invite you to experience the Drose Law Firm difference today!

What Debts Can Bankruptcy Eliminate?

What Debts Can Bankruptcy Eliminate?

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One question bankruptcy lawyers are often asked is, “what debts can bankruptcy eliminate?” While the exact answer depends on the type of bankruptcy being filed and your overall situation, in many cases, bankruptcy will discharge most types of unsecured debt.  Let’s take a closer look:

Various Types of Unpaid Bills

Unsecured debt is debt that is not backed by any assets. Bankruptcy can discharge unsecured financial obligations such as medical bills, overdue utility and phone bills, and memberships.  Your bankruptcy lawyer can clarify which debts are unsecured and eligible for discharge through bankruptcy.

Personal Loans

Any personal loans made to you by another individual that are not secured by collateral may be discharged through bankruptcy filings.  Be sure to disclose all personal loans to your bankruptcy attorney.

Unsecured Credit Card Balances

Balances on unsecured credit cards may also be discharged during a bankruptcy.  Your bankruptcy attorney will be able to determine whether or not your credit card debt is secured or unsecured.

Some secured debt such as mortgages, auto loans, etc. can also be eliminated provided you relinquish and return the property.  It is extremely important to disclose all of your debts and financial obligations to your bankruptcy attorney so we can examine everything. It is also important to note that debt not listed on your filing will not be eligible for discharge. Remember, not all lawyers handle bankruptcy.  Charleston residents and those in surrounding areas have trusted the Drose Law Firm to handle their bankruptcy and creditor/debtor needs for 30 years. Give us a call to learn more today!

Debunking Common Myths About Bankruptcy

Debunking Common Myths About Bankruptcy

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There are many myths about bankruptcy.  While it does eliminate the burdens of most debt, some debt is exempt.  The Drose Law Firm is comprised of bankruptcy attorneys who are direct and up front when discussing the different types of bankruptcy options with clients.  Our next series of articles will debunk some common myths about bankruptcy.

If I File Bankruptcy, I Will No Longer Be Responsible for Child Support or Alimony

A good bankruptcy lawyer should be up front and honest about the fact that child support and alimony will not be discharged in your bankruptcy.  You will still be responsible to fulfill those obligations after you’ve filed bankruptcy.

Bankruptcy Will Resolve My Tax Debt

In most cases, you will still be responsible for your tax debt after filing bankruptcy.  However, there are some circumstances where bankruptcy attorneys can help you get relief for outstanding tax debt that needs to be resolved. If you have unpaid taxes, be sure to discuss all options with your bankruptcy lawyer.

All My Liens Will Be Forgiven If I File Bankruptcy

While filing bankruptcy will discharge you from some debt, if you have any liens or unsecured debt, creditors can still seize your property to recover some of what is owed.  Let’s say you owe the bank $4500 on your car loan.  Bankruptcy will eliminate that debt, but, you will not be able to keep the car.  The property and/or collateral attached to the debt will go back to the creditor. You should discuss any pending liens with your bankruptcy attorney.

Our next article will debunk more myths about filing bankruptcy.

When it comes to bankruptcy, Charleston residents call on the Drose Law Firm to help free them of their debt burdens.  Remember not all bankruptcy lawyers have your best interests in mind. We serve clients throughout the Lowcountry and look forward to helping you achieve the freedom you deserve.  Give us a call to schedule an appointment with a qualified and experienced bankruptcy attorney today!

Cases in Review: February, 2015

Cases in Review: July, 2018

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“Cases in Review” highlights recent cases that may by of particular interest to consumer bankruptcy practitioners   It is brought to you by Consumer Bankruptcy Abstracts & Research and the National Consumer Bankruptcy Rights Center.

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Scam Targets Bankruptcy Filers

Scam Targets Bankruptcy Filers

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Phone scammers are targeting bankruptcy filers in several states, using personal information from filings and posing as attorneys to get intended victims to immediately wire money to satisfy a debt.

The National Association of Consumer Bankruptcy Attorneys issued a warning that “Under no circumstances would a bankruptcy attorney or staff member telephone a client and ask for a wire transfer immediately to satisfy a debt. Nor would the bankruptcy attorney and staff ever threaten arrest if a debt isn’t paid.”

Bankruptcy filers in Vermont and Virginia reportedly have received calls. Vermont’s Attorney General says scammers use software to “spoof” the Caller ID system so the call appears to be originating from the phone line of the consumer’s bankruptcy attorney. Typically the calls come late in the evening or during non-business hours to make it difficult for intended victims to verify the call by contacting their attorney.

Consumers receiving this kind of call are advised to hang up and contact their bankruptcy attorney as soon as possible. Do not give any personal or financial account information to the caller.

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source:  uscourts.gov

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Can any Taxes be Forgiven in a Chapter 7?

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Yes.  The interplay of the tax codes and the Bankruptcy Code is complex, but in somewhat oversimplified terms, if a tax return creating a tax debt was filed more than three years before the filing of the Chapter 7 petition, the tax debt can be discharged. Stated another way, if a Chapter 7 petition is filed within three years of the filing of the tax return creating the tax debt, the tax debt cannot be discharged, and the Debtor will still owe the taxing entity when the Chapter 7 is completed.  Certain taxes, such as employer withholding taxes, will not be forgiven, however, even if they are older than three years, and if you have not filed your income tax returns, even older taxes may not be forgiven.  Even then, however, a Chapter 13 filing can allow more time to pay in accordance with a plan, without additional penalties and interest to accrue.

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Why is Chapter 7 the Best Option for Some People

Why is Chapter 7 the Best Option for Some People

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Sometimes people simply cannot repay their creditors, no matter how good their intentions.  A Chapter 7 forgives a Debtor of most, if not all, of their debts.  A few exceptions are:

  • most taxes
  • child support and/or alimony
  • most student loans
  • court fines and criminal restitution
  • debt arising out of personal injury caused by driving drunk or under the influence of drugs
  • debt relating to money or property received by fraud

These exceptions either do not apply in a Chapter 13, or the debt that cannot be forgiven can be repaid in the plan of reorganization.  That is discussed in more detail below.  If a creditor has a mortgage on your house, or a lien on your car or other property, it is a secured creditor.  Chapter 7 seems to work best for those people who have their secured creditors under control, who are willing to give up property attached to debt that they cannot afford, or who have very little secured debt, but who cannot pay their other creditors.  A Debtor may struggle every month to pay the only secured creditor, the bank holding title to the Debtor’s vehicle, but after paying living expenses, may have no money to pay to finance companies and unsecured creditors. Under Chapter 7, the Debtor would be required to continue paying the regular payment on the car loan, but would have all other debts discharged. If the Debtor did not want to keep the vehicle, or could not continue making the regular payment, the car would be returned to the secured creditor. This creditor would then hold an unsecured claim which would be discharged (forgiven).

Cases in Review: February, 2015

Cases in Review: February, 2015

in

“Cases in Review” highlights recent cases that may by of particular interest to consumer bankruptcy practitioners   It is brought to you by Consumer Bankruptcy Abstracts & Research and the National Consumer Bankruptcy Rights Center.

open document