Do I Have To Keep Paying Creditors After I File Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Do I Have To Keep Paying My Creditors When I File Bankruptcy

One of the benefits of filing bankruptcy is the protection it offers from the actions of your creditors. The second we file your petition with the bankruptcy court, creditors can’t take any collection action. They can’t call you, sue you, or garnish you.

What this means is that, if you haven’t already, you can stop paying your unsecured creditors (such as credit cards, medical bills, and payday loans) when your case is filed.

If you have any secured creditors (for car loans and mortgages), and you want to keep your car or home, you should continue to pay them after your case has been filed. Since they are prohibited from taking any collection action, most will stop taking automatic withdrawals from your bank account. You will need to monitor your bank account to see if they have taken a payment. If they haven’t, you should contact them as soon as possible to make a payment. Otherwise, you could face penalties, such as extra fees.

If you want to surrender your car or home, you can also stop paying those creditors.

You should keep paying your regular bills, like utility bills, cell phone bills, and student loans.

You can learn more about the bankruptcy process during a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. To make an appointment, call 303.331.3403. You can also make an appointment by using our online scheduling system.

We are Denver, Colorado bankruptcy lawyers. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

How Does Chapter 13 Bankruptcy Work?

Written by Peter Mullison, Colorado Bankruptcy Attorney

If you would like to learn more about how Chapter 13 bankruptcy works, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290

 

Can Bankruptcy Help Me After I Have Been Scammed?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Scams and Bankruptcy

Talk to any bankruptcy attorney who has been practicing long enough, and she’ll tell you that there are three main reasons someone turns to bankruptcy to straighten out their financial affairs: unemployment, divorce, and overwhelming medical debt.

Of course, there are exceptions. I had a consultation recently that reminded me that people turn to bankruptcy for a variety of reasons. This woman was born in Mexico, but had long ago migrated to the U.S. She still has a great deal of extended family there and makes frequent visits. A few years ago, her 18 year old son made a trip down there alone. The day he was supposed to return, this woman went to the airport to pick him up, but he wasn’t on the flight he was supposed to be. Eventually, the woman got a call from her son. He told her he had been kidnapped.

Unsurprisingly, this woman and her husband didn’t have the cash to meet the kidnappers’ demands, so they resorted to taking out a large loan. Who can blame them, given that their son’s life was on the line. Although it was a hardship at the time, they were able to make monthly payments on the debt. But then the woman lost her job and was unemployed for many months. Nowhere else can the domino effect be seen in starker demonstration than in household finances when someone loses his or her job.

I have also helped victims of pyramid schemes and online con artists. While these cases are rare, they always remind me that anyone’s finances can be thrown into chaos through unforeseen events. The woman whose son had been kidnapped was extremely embarrassed to be considering the possibility of filing bankruptcy, but I doubt anyone else, no matter what their financial situation, would have given a second thought to taking out loans to save their son’s life.

Bankruptcy is sometimes the best, if not only, option when it comes to recovering from a devastating change in financial circumstances, no matter what the reason.

If you have questions about how bankruptcy may help you recover financially, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by clicking here.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Should I Close My Bank Account Before I File Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Should I Close My Bank Account When I File Bankruptcy?

One of the questions I ask my clients as they prepare to file bankruptcy is if they owe any money to the bank or credit union where their checking or savings account is.

If the answer is yes, I advise them to open another checking or savings account with another bank or credit union where they don’t owe any money. My experience, especially with Wells Fargo, is that the bank or credit union may freeze any funds that are in the account on the day the bankruptcy is filed. As you can imagine, this can create a hardship for someone who is trying to make ends meet.

Changing banks can require some planning and may delay the bankruptcy filing by a couple of weeks, especially if your paycheck is being direct deposited. Your employer will need some time to make sure the check is deposited in the new account.

This issue is just one example of the planning that has to be taken into consideration when filing bankruptcy. Oftentimes, people come into my office wanting to file right away. Usually, they are being garnished. But it’s important to take into consideration many factors. For example, if they file at the beginning of the year before they get their tax refund, they’ll lose that tax refund. Delaying their filing by a few weeks will allow them to use the refund to pay for essential living expenses and not having to surrender the refund to the bankruptcy trustee.

If you have questions about the bankruptcy process or are wondering if bankruptcy is a good option for you, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy lawyer. You can make an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Zombie Debt – Dirty Tricks By Debt Collectors

Written by Peter Mullison, Colorado Bankruptcy Attorney

Zombie Debt

By Tara Gaschler Salinas

This week I received a panicked email from one of our clients. Her bankruptcy was discharged over 18 months ago. Since then, she has been working hard to rebuild her credit and manage her budget successfully. Her recovery from bankruptcy was well on track, so I was surprised to hear from her and even more surprised at the question she asked.

“Can they really do this?”

A debt collector was threatening to have her arrested unless she contacted them immediately to arrange payment. This was a debt listed in her bankruptcy which was discharged. Fortunately, the email was a complete fraud and I was able to reassure our client with a quick reply. Unfortunately, this is an increasingly common problem for people who have filed bankruptcy. Many end up paying debts that were covered in their bankruptcy discharge.

What is Zombie Debt?

“Zombie” or “Junk” debt is old or uncollectable debt that has been sold or assigned to a collection agency for pennies on the dollar. The collection agency can often score big if it is successful in convincing a consumer to pay the zombie debt. Because of this potentially big payoff, an agency dealing in zombie debt will often use underhanded and illegal tactics to convince you to pay. The threat of arrest is common, along with threats of garnishment, foreclosure, notifying your employer and family.

How Can You Protect Yourself?

  1. Don’t admit you owe the debt! Chances are, this isn’t a debt you owe. Don’t agree to a payment plan or make any statements acknowledging that this is your debt. Request the collector mail you validation of the debt, as required by the Federal Fair Debt Collection Practices Act.
  2. Be suspicious!   Listen carefully and read the fine print! A quick read of the email sent to our client revealed disjointed and nonsensical language that indicated the collectors were probably based overseas. Often the timeline for making a decision or a payment arrangement will be less than 24 hours. This should be a huge red flag. No one can pursue legal action in that short of time – the quick deadline is intended to make you commit before you have a chance to check out the collector and the debt.
  3. Contact your attorney! If you filed bankruptcy and believe the debt was included, check with your attorney before responding to any demand for payment. Many attorneys have form letters that they will either send for you or give you to send off to creditors. If a creditor doesn’t stop attempting to collect, a suit could be filed against the creditor for violation of the discharge injunction.

The best defense against zombie debt collection is being aware that it exists. Knowing that a creditor may try to collect a debt you are not obligated on will help to protect you and your finances going forward. Bankruptcy offers excellent relief, and we are here to help you protect it!

If you have questions about Chapter 7 and 13 bankruptcy, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

The Bankruptcy Advice You Don’t Want To Hear May Be The Bankruptcy Advice You Need

Written by Peter Mullison, Colorado Bankruptcy Attorney

The Bankruptcy Advice You Need

Not all of my consultations go well. In fact, I had one this week that ended with a potential client quickly scooping up the documents she had brought in off my desk and rushing for the door. She couldn’t seem to get out of there fast enough.

She didn’t like what I had to say. She had called me in the morning and asked if she could come in later that afternoon. She said she was ready to file. She said she had everything she needed. We scheduled an appointment for a few hours later. She was there on time, and she was ready to get down to business.

Of course, I knew nothing about her. I’m always pleased when someone wants to hire me, but I’m also wary of someone who wants to hire me without spending any time with me and learning about the bankruptcy process. I launched into consultation mode and began asking her the same questions I ask all potential clients.

That’s when the trouble started.

She had recently received a very large tax refund. I asked if any of the money was left, and how she had spent it. Yes, there was still quite a bit left. She had paid some bills with some of the money. But she had also given a large portion of it to her grandmother to repay a loan. She began getting flustered and didn’t understand why I needed to know anything about her tax refund.

I explained that if she still had a large portion of the refund when we filed her bankruptcy petition, there was a good chance that she would have to turn it over to the bankruptcy trustee, who would distribute it to her creditors. I could tell that she was not enjoying our conversation. I explained to her that the bankruptcy rules only allow certain assets to be protected, and that unprotected assets may have to be turned over. Tax refunds for the year in which the bankruptcy case is filed are unprotected in Colorado.

I also asked her if she was being garnished. In fact, she was. That was the big reason she was in such a rush to get filed as soon as possible. To stop the garnishment.

After I went through all of my questions, I let her know that there were some issues that she should be prepared for if she filed.

First, filers are required to disclose certain financial transactions. One of those transactions is the repayment of any debts to family members within the twelve months of filing. I let her know that she was going to have to disclose the payment to her grandmother and that there was a chance that the trustee would want to recover that money, either from her grandmother or from her.

Next, I let her know that the trustee would ask whoever had been garnishing her paycheck to return the money to him so it could be distributed to all her creditors. And since he was going to do that, the trustee would also ask her to turn over 25% of any wages she was due on the day the case was filed.

Altogether, I told her that she may have to turnover a portion of whatever wages her employer owed her on the day we filed, the money she paid to her grandmother, and any remainder of her tax refund if she hadn’t spent it before we filed.

This was too much for her. She was not prepared for the idea that she may have to pay any money to her debts in bankruptcy. She also had no idea that she was going to have to meet with the trustee. She thought that she would drop off the account statements from her debts and that I would take care of the rest. She didn’t realize that she would have to answer any questions at all.

Suddenly, she wanted nothing to do with me or the bankruptcy process. She grabbed her things and rushed for the door. I barely had time to get out of my seat. But to be honest, I didn’t try too hard. My job is to help people through the bankruptcy process, but it requires their cooperation. They have to be willing to give me answers to the questions I ask. They have to be willing to tell the truth. In return for full disclosure, they’ll be relieved of most, if not all, of their debts and get a fresh financial start. She wasn’t prepared to do that.

If someone who files bankruptcy decides not to tell the truth, they can’t expect any assurances. They can’t expect that when the truth inevitably comes out that there won’t be any consequences.

So, while I was sorry to see her so unhappy about the information I was giving her, it was probably best for the both of us that she left without hiring me.

If you’d like to learn more about the Chapter 7 and Chapter 13 bankruptcy process, we hope you’ll come in for a consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
Phone: 303.331.3403
Fax: 303.261.8290

What Happens If Someone Objects To My Chapter 13 Bankruptcy Plan?

Written by Peter Mullison, Colorado Bankruptcy Attorney

What Happens If Someone Objects To My Chapter 13 Plan?

When you file Chapter 13 bankruptcy, you have to propose a plan that shows the court, trustee, and your creditors who will get paid during the course of your plan. The court will mail out the plan, along with the notice of your bankruptcy, to all of the creditors that you list on your petition.

As a bankruptcy attorney, my job is to reduce my client’s payment to unsecured creditors to as little as possible. The trustee’s job is to get the payment as high as possible. Secured creditors want to make sure that their collateral is protected.

Given the varying interests involved, it’s normal for Chapter 13 plans to receive at least one objection, usually from the trustee. The trustee may object to the amount of a monthly expense the filer has taken or that priority debts, like taxes or child support, haven’t been fully taken care of.

Objections to the plan are due about a month after the case is filed. It’s my job to address all of the objections. Resolving an objection may take as little work as providing documentation that supports a monthly expense or it may involve arguing to the court that such an expense is allowable, or that the objection is not supported by the facts.

From time to time, an evidentiary hearing may be required to resolve an objection. That can sometimes require a filer to testify in court. While rare, I would expect that only an experienced attorney can tell you whether or not you can expect that in your case.

Once all objections are resolved, another plan must be sent to creditors who then have another chance to object to the amended plan. Hopefully, all objections have been resolved, but it can sometimes take two, even three, amendments to fully address all of the objections. This is a normal part of the Chapter 13 process, and you shouldn’t be too concerned when the court issues an order denying the confirmation of your original plan. Again, an experienced attorney should be able to prepare you for any bumps in the road she expects.

If you have questions about the Chapter 13 bankruptcy process and whether it might be a good option for you, we hope you’ll come in for a free, confidential consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events and help them get on the road to financial recovery.
3773 Cherry Creek North Drive, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

How To Avoid Bankruptcy: Get Rid Of Your Toys

Written by Peter Mullison, Colorado Bankruptcy Attorney

How To Avoid Bankruptcy - Sell Your Toys

I recently met with a couple who came in because they were finding it harder and harder to make ends meet, even though, together, they make almost $100,000 a year. They have three children. They began their story by explaining that a recent hail storm had caused them to rack up a significant amount of credit card debt to make repairs. Their high insurance deductible meant that they would have to pay for a large portion of a replacement roof and windows out of pocket, and they didn’t have any savings to pay for the repairs.

As our consultation progressed, I asked them about their vehicles. Both of them were driving relatively new vehicles, but they had had to roll a previous loan into one of the car loans, which meant they were paying significantly more on a vehicle than what it was worth. Their monthly car payments were already a stretch for their budget.

I asked if there were any more vehicles. There were. They also had a boat and a motorcycle, both of which had loans on them and, again, were straining their budget. Although they were prepared to surrender the boat, the motorcycle was almost paid off, and they were hoping to keep it.

This couple had pushed their household to the limit with these luxury purchases, and when the hail storm hit, they found themselves overextended. Unfortunately, at this point, they may have no other option than to file bankruptcy to handle their debt. Even if they surrender the boat, the lender will likely want them to pay any deficiency left on the loan after it auctions the boat for sale. And, of course, the credit cards have already been maxed out.

Sometimes I wish I would have been able to meet with my clients a year or two before they actually come into my office. You’d be surprised by how much can change in that short of time. Had this couple come into my office a year earlier, we could have talked about other solutions besides bankruptcy. I would have told them to get rid of their toys. After all, that’s what the boat and the motorcycle are. They aren’t necessities and the debt was stretching their household budget thin, leaving no room for unforeseen events, like a hail storm.

Before you decide to make a purchase like a boat, motorcycle, timeshare or other luxury item, take into consideration whether or not you can manage that debt and an unexpected major expense, whether it’s a home repair or medical emergency. Taking that time may help you avoid bankruptcy.

If you have questions about whether bankruptcy is the right option for you, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Do I Have To Tell My Ex-Spouse That I Filed Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Do I Have To Tell My Ex Spouse I Filed Bankruptcy

Do I Have To Tell My Ex Spouse I Filed Bankruptcy?

One of the most common questions I get from people who are divorced when they file bankruptcy is whether or not they have to tell their ex-spouse. They are reluctant to notify their spouse of their having to file bankruptcy, usually out of embarrassment.

As is the case to so many legal questions, the answer of whether the ex-spouse has to get notice of a bankruptcy is often, “it depends”.

There are three circumstances that require you to give notice to an ex-spouse. The first is if you owe him or her child support or alimony. Second, if your ex-spouse is a co-signer/co-debtor on any of your debts, you’ll have to send them notice. The most common such debts are mortgages or auto loans. Third, if you owe your ex-spouse a debt, you must notify him or her of your bankruptcy. These kinds of obligations can arise from a division of property in a divorce.

Remember that your overarching obligation in bankruptcy is to disclose all of your income, assets, debts, and expenses. If you refuse to fully disclose that information, you could find yourself facing a dismissal action, which would leave you without the protection of the bankruptcy court.

If you are filing bankruptcy and don’t want your ex-spouse to know, the better course is to be up front with him or her. Consider telling them before you file instead of having them get notice from the bankruptcy court without any word from you.

If you have questions about who will find out about your bankruptcy, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's events get back on their feet and on the path to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290

Some Private Student Lenders To Offer Loan Modifications

Written by Peter Mullison, Colorado Bankruptcy Attorney

Private Student Loan Modifications(Photo from Flickr user thisisbossi used under Creative Commons license)

If you have been researching your repayment options for student loans, you probably know that only federal loans offer modification options, such as income based repayment. Historically, most private lenders have not offered any sort of modification and have a reputation for not working with customers who are having difficulty repaying their loans.

That may soon be changing. Two private lenders, Wells Fargo and Discover Financial Services, have announced that may soon be offering modification options to customers who are dealing with financial hardship.

Wells Fargo has said they will consider lowering the interest rate for someone who is having financial trouble. They have also said that the loan doesn’t need to be in default to qualify for a modification. The reduction of interest may be temporary or permanent.

Other lenders have also stated that they will start offering modifications. You can read more here.

If you have questions about how to deal with student loan debt, including how bankruptcy may be able to help, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.

 

We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek Drive North, Suite 575
Denver, CO
80209
US
Phone: 303.331.3403
Fax: 303.261.8290