Keeping Track of Companies You Owe Money To

When you run into financial problems and bills begin to mount, it can sometimes be hard to keep track of what companies you owe money to. You might receive calls from multiple collection companies and they often do not identify who they are collecting for. In order to eliminate your debts in bankruptcy it is important to list all of your creditors.

What can you do? You can start by pulling credit reports.  There are three nationwide credit reporting bureaus and you can pull free credit reports from all three credit bureaus at www.annualcreditreport.com.  Credit reports will typically show credit card debts, bank loans, and other types of debts with financial institutions. The credit report may show collection agencies that have purchased delinquent debts or are collecting them on behalf of another company. Credit reports typically do not show medical debts unless they are with a collection agency.

If you come to see me, I can pull a three bureau merged report for you.  If you are not sure what medical debts you have, you may want to call the hospital or other medical provider and ask them for the amounts owed.  If you have medical insurance you could contact your insurance company. It may be able to give you a list of what amounts were covered by insurance and what amounts you still are responsible for.  When you have this information, you have the ammunition you need to eliminate your debts and get a fresh start.

WHAT WILL MY FRIENDS AND RELATIVES THINK OF ME?

You might be worried about what friends and relatives will think of you if you file for bankruptcy protection.  You can relax.  Your friends and relatives want what is best for you.  For example, one of my clients was borrowing heavily from his parents in order to keep up with his credit card debt.  His brother suggested to him that it would be better to file bankruptcy and eliminate his credit card debt, instead of borrowing money from his parents that he might never be able to repay.  He filed a bankruptcy case and eliminated all of his credit card debt.  He didn't lose anything that he owned.  He had a lot of fears about bankruptcy that all turned out to be false. 

Many of my clients are referred to me by concerned friends and relatives.  I have had parents bring me their sons and daughters. I have had sons and daughters bring their parents. Sometimes its hard to see a solution when debt problems mount.  The worry and stress can paralyze you.  A concerned friend or relative can sometimes take a more detached view and help you see that there can be a reasonable solution.   Many times, the solution is bankruptcy. Don't let fear stop you from solving your debt problems.

Discover the Difference Between “Debt Management Plans” and Filing Bankruptcy

Credit counseling companies were originally created by the banks to collect debts for them.  They offer "debt management plans" where by people can consolidate their debts and pay them off in full over a period of five years.  They try to negotiate lower interest rates for the credit cards so that they can be paid off over a reasonable period of time.

Even though they may be able to reduce the interest rates on some credit cards, the monthly payment under a debt management plan is usually larger than the combined minimum payments on all of a person's credit cards.  For this reason, debt management plans are not feasible for most people who are struggling financially.   They offer budgeting advice that can sometimes be useful.  However, the advice is frequently to get a second job (i.e., work yourself to death).   It is very difficult to get credit while you are in a debt management plan.  One couple who paid into a debt management plan came to see Minnesota bankruptcy attorney Greg Wald after they made payments under the plan for two years.  They wanted to buy a house, but the mortgage company told them they could not have a mortgage because they were still in a debt management plan.  The mortgage company told them it was too bad they didn't just file a bankruptcy instead.  The FHA will qualify people for mortgages two years after they complete a bankruptcy case.  They realized at that point that they made a big mistake and eliminated their debt immediately with a Chapter 7 bankruptcy.

Avoid a “BIG” mistake!  Contact Minnesota bankruptcy attorney Gregory Wald at (952) 921-5802 or visit them on the web at bankruptcyminn.com.  Discover the difference between “debt management plans” and filing bankruptcy before it’s too late.

Debt Management Plans VS Filing Bankruptcy

The banks have spent millions of dollars on lobbyists and were able to get Congress to pass a law that everyone who wants to file bankruptcy must first complete a briefing (counseling session) with a consumer credit counselor.  If the idea was to steer people into debt management plans, then the new law hasn't worked out well for the bankers.  Almost no one who completes the pre-bankruptcy briefing goes on to enter into a debt management plan. However, the counseling session is not all bad news. Many people do feel that they received useful information on budgeting and saving money from the counseling session.

Avoid a “BIG” mistake!  Contact Minnesota bankruptcy attorney Gregory Wald at (952) 921-5802 or visit them on the web at bankruptcyminn.com.  Discover the difference between “debt management plans” and filing bankruptcy while you are still able to make an informed decision between the two processes.

Can a Person Filing Bankruptcy Exclude Debts They Want to Pay?

I am often asked whether a person filing bankruptcy can exclude debts that they want to pay.  When you file a bankruptcy petition, you must give the court a complete list of your debts.  You are not allowed to leave anything off.  However, it is possible to repay debts that you have listed in your bankruptcy.  You might not be required to repay the debt, but you still can pay it voluntarily if you wish.  For instance, if you have a car loan or home mortgage, you can continue to pay these debts in order to keep your home or car.  If you have a debt to a relative, you can repay them what ever is left owing to them after you complete your bankruptcy case.   Occasionally, a creditor might request that you sign a "reaffirmation agreement".  A reaffirmation agreement is an agreement that you will not discharge (eliminate) a debt in your bankruptcy case and that you will be legally bound to pay it. Your attorney can help you decide if a reaffirmation agreement is a good idea.

How Often Can I File Bankruptcy?

When a person has filed bankruptcy in the past, they may want to know how long they must wait to file bankruptcy again.   If a person has filed a Chapter 7 bankruptcy petition and received a discharge of their debts, they must wait 8 years before they can file another Chapter 7 petition.  However, the waiting period to receive a discharge in a Chapter 13 case after a previous Chapter 7 case is only 4 years.  Sometimes unfortunate circumstances create a need for a second bankruptcy in less than 4 years after the filing of a Chapter 7 case.   You can file a Chapter 13 case less than 4 years after filing a Chapter 7 case and receive court protection from your creditors, but you won’t receive a discharge of your debts.  It sometimes makes sense to file such a case to prevent foreclosure of a residence or to receive court protection from creditors.

The waiting period to file a Chapter 13 case after a previous Chapter 13 case is only two years from filing date to filing date.  Since the typical Chapter 13 case lasts for three years, there is rarely any waiting period for filing a Chapter 13 case after a previous Chapter 13 case.  The waiting period to file a Chapter 7 petition after a Chapter 13 petition is 6 years.

HOW TO PAY FOR BANKRUPTCY

One of the most common questions about bankruptcy is:  How do I pay for my lawyer?

Chapter 7 bankruptcy allows a person to eliminate most types of debts completely, while allowing a person to keep all assets that are exempt from creditors.   The court filing fee and attorney’s fee for Chapter 7 bankruptcy must be paid in advance.  If a person wants Chapter 7 bankruptcy and is not in a big hurry to file, in many cases it makes sense for them to stop making payments on their debts and use the savings to make monthly payments toward the attorney’s fee.  I can accept monthly payments and file the case when all of the fees are paid.  Sometimes a family member gives my clients a gift or a loan of the funds.  Sometimes my clients have enough in savings to cover the fee or they are able to borrow the funds from their 401k plan.

Sometimes, the funds cannot be borrowed from a family member, the person’s wages may be subject to garnishment or their money in the bank has been seized by creditors.    Should they need to file bankruptcy right away, they might consider a Chapter 13 case.  Chapter 13 allows a person to consolidate their debt and pay a fraction of the debt in monthly payments over three to five years.  The debt is not normally required to be paid in full, but only whatever is affordable in the person’s budget. For Chapter 13, I need the court filing fee paid in advance, but most or all of the attorney’s fee can be consolidated with the other debts and does not have to be paid in advance.  Chapter 13 can be a good way to get immediate protection from the bankruptcy court, even if you don’t have the funds for attorney’s fees up front.