BANKRUPTCY

         We are bankruptcy attorneys!  Meaning bankruptcy law is our primary practice.  We pride ourselves on our knowledge of this relatively complicated area of law, and we are good at what we do. Bankruptcy is a federal court proceeding that has real consequences. It is important that you choose to work with attorneys who have real experience practicing bankruptcy law.  Experience cannot be stressed enough! We file hundreds of chapter 7 and chapter 13 bankruptcies each year.  Because we are a small, specialized firm, we can offer lower prices than most St. Louis area attorneys without sacrificing service.  We charge the same price for everyone.  When you call our office you will only speak with an attorney, and when you come in you will sit with an attorney.  We can answer most of your questions over the phone and we'd be happy to.

WHAT IS BANKRUPTCY?

          BANKRUPTCY IS, IN ESSENCE, ASKING THE FEDERAL COURT (I.E. THE GOVERNMENT) TO RELIEVE YOU OF YOUR DEBTS.  Based on your current financial situation the court will grant you the relief you are eligible to receive under the bankruptcy laws. 

THE 2 TYPES OF BANKRUPTCY

          There are two types of bankruptcies that individuals and married couples (i.e. consumers) may file - CHAPTER 7 and CHAPTER 13.   They are simply named after the chapters of the United States Bankruptcy Code where the laws are written.  Which chapter of bankruptcy relief you qualify for depends on your income, your household size, your assets, your expenses, the types and amount of debts you have, prior bankruptcy filings, etc. - and you must disclose all of this information to the court going back several years. 

          If your income is below the median income for your household size, and you do not have assets at risk, you may qualify for a CHAPTER 7 bankruptcy, the simple discharge the debts you can discharge and be done form of bankruptcy.  If your income is above the median income to qualify for a chapter 7, or you have assets you could potentially sell but cannot or do not want to, bankruptcy relief comes in the form of a CHAPTER 13 bankruptcy which may require you to pay back some of your debts before discharging the rest.  For some a chapter 13 bankruptcy may be used to catch up on debts, or may be designed to pay debts over time that cannot be discharged in bankruptcy, at reduced rates, through a monthly payment designed to be affordable.  

 

          The reason there are the two types of bankruptcies is because the court wants to make sure you truly need the relief, which really means to protect your creditors.  The court wants to make sure you do not make enough money to pay your debts without help, and that you have no assets you could potentially use or sell and use the proceeds to pay your debts.  If you have a certain income the court assumes you can contribute some of that to your debts.  If you have too much money in the bank the court's position is if you can bank money then you have the ability to pay some of your debts.  If you own an asset you could potentially sell and put towards your debts, such as expensive jewelry, collectibles, or a car with no loan on it, the court's position is either sell it first before you file, or we can sell it for you (liquidation in chapter 7), or you can keep it but pay over time to your creditors the amount you would have received from selling it (chapter 13 payback plan).

          Chapter 7 and chapter 13 bankruptcies are filed for different reasons and have different costs.  One type of bankruptcy will always a better option than the other, or may be the only option you qualify for.  The easiest way to look at it is you should file a chapter 7 if you can, you would file a chapter 13 if you cannot file a chapter 7, or if a chapter 7 does not make sense given the debts you have.  Which type of bankruptcy to file is legal advice only a lawyer may help with.  The goal of this website is to provide you with enough general information about both types of bankruptcy that you can at least get a rough idea what your options might be.

REASONS TO FILE BANKRUPTCY

          Bankruptcy should be the last resort when debt becomes overwhelming.  It is a way to start fresh and put you in a position to rebuild your credit.  For many it is a way to walk away from current debts and start with a clean slate (CHAPTER 7) For others bankruptcy allows you to pay certain debts over time (debts that you cannot discharge in bankruptcy and that you will have to pay anyway), without penalties, at reduced interest rates, through a monthly payment you can afford, while not having to pay other debts (CHAPTER 13).

          There are benefits to bankruptcy that debt relief or debt consolidation programs, negotiations, and other approaches to debt relief simply cannot offer as they do not come with the authority of the U.S. Government, including:

  • DISCHARGE OF DEBTS

    • Bankruptcy allows you to discharge certain debts.  A discharge is a federal court order that says that your debts are no longer collectible.  A discharge is the goal of most bankruptcies.  Please see list of dischargeable debts.

  • STOPPING FORECLOSURE OF YOUR HOME

    • Filing a bankruptcy can stop a foreclosure sale if filed at least 24 hours before the sale is scheduled.

    • If you are keeping your home you would file a chapter 13 and pay the arrears over up to 48 months.

    • If you will be walking away but need a some more time a chapter 7 can buy some more time before the sale eventually gets rescheduled.

  • STOPPING REPOSSESSION (CHAPTER 13 ONLY)

    • Filing a bankruptcy will stop an impending repossession, or force an already repossessed automobile to be returned to you if filed within 10 days of the repossession or before the vehicle is sold.

    • Understand you still may have to show that the vehicle is insured, and you still may have to pay a tow or storage fee before receiving the vehicle back!

    • In this scenario you would file a chapter 13 and pay the car in full over 36-60 months at 4.75% APR.

  • STOPPING GARNISHMENTS AND LEVIES

    • Garnishments stop when a bankruptcy is filed (all garnishments not related to child support or criminal restitution).  Bank account levies may also be canceled if a bankruptcy is filed before the money is actually seized (your bank usually warns you of the date funds will be seized on the levy notice). 

    • A garnishment may take a week to actually be stopped by the attorney who started it, so the next paycheck you receive after filing a bankruptcy might still be garnished! 

  • STOPPING LAWSUITS & PREVENTING JUDGMENTS

    • Filing a bankruptcy will stop current lawsuits from proceeding, preventing judgments from being entered, which is important for your credit, and will prevent further lawsuits from being filed against you for anything that happened prior to the bankruptcy.

    • You are only being sued if you have been served a summons with a court date.

  • AVOIDING LIENS ON REAL ESTATE​

    • If you own real estate then any judgment from any lawsuit that takes place in the county where you own the real estate has the potential to become a judgment lien (called a transcribed lien) on it!  A judgment lien cannot be used to force the sale of the real estate, but will have to be paid if the real estate is ever sold, and will reduce available equity.

    • Many times judgment liens can be avoided entirely in bankruptcy if they are liens on your home, it depends on the equity in your home.

  • AVOIDING SECOND MORTGAGES & HELOCS (CHAPTER 13 ONLY)

    • In chapter 13 only it may possible to avoid or partially avoid a second mortgage or a home equity line of credit on your home.  It depends on the equity in your home.

  • CRAM DOWN OF MOTOR VEHICLE LOAN (CHAPTER 13 ONLY)

    • In a chapter 13 only, when you have owned a vehicle for at least 910 days and still have a loan balance on it, you may reduce what you owe on the loan to the current NADA value if the NADA value is lower, and that amount at 4.75% APR what you will have to pay to the lender to receive the title. ​

    • This is called a cram down on a 910 vehicle.

    • This may also be done with title loans and a few other types of loans on personal property, which may only be required to be owned a year instead of 910 days.

  • STOPPING COLLECTIONS & HARASSMENT

    • Creditors, including collection agencies, cannot contact you at all or try to collect debts from you once a bankruptcy is filed.  They must deal with us or the court from then on, they have no choice.

  • STOPPING DEROGATORY REPORTING (AND ALL REPORTING) TO THE CREDIT REPORTING AGENCIES - TRANSUNION, EXPERIAN, EQUIFAX, & INNOVA

    • Filing a bankruptcy prevents creditors from further reporting to the credit bureaus regarding your debts.  This means no more reported missed payments, late payments, or charge-offs.  Open accounts with debt must be marked as closed or included in bankruptcy, and will no longer continue to negatively affect your credit score moving forward, essentially leaving you with a cleaned slate.  The downside to not reporting to the credit bureaus is that if you keep your house or car and keep making the payments, most likely your future on-time payments will not positively affect your credit score either.  You will have to obtain some other form of credit after you file a bankruptcy to help rebuild your credit score.

  • FORCING CREDITORS TO ALLOW YOU TO PAY BACK CERTAIN DEBTS OVER TIME AND AT REDUCED INTEREST RATES (CHAPTER 13 ONLY)

    • In a chapter 13 only certain non-dischargeable debts, such as priority tax debts, and child support or alimony arrears, i.e. debts that you cannot discharge and you cannot cram down, which you will have to pay back regardless of filing a bankruptcy, you are be able to pay back over time, at a lower or even 0% interest rate, through a set monthly payment to the court that is designed to be affordable.

 

THE AUTOMATIC STAY

          The protections of bankruptcy take effect the moment you file.   Bankruptcies are filed online at our office.  When you file a bankruptcy the court imposes what is called the automatic stay.   This is the legal term for the court stopping the current actions of your creditors and preventing them from doing anything further to try to collect debts from you.   The automatic stay is what stops foreclosure sales, stops garnishments, stops levies, stops lawsuits, stops harassment, forces creditors to accept lower monthly payments, forces creditors to let you pay your delinquencies over time, etc. 

         You can only receive this legal protection by filing bankruptcy, no debt relief program comes with this protection, or any protection really.  In fact such programs have the potential to do more harm than good to your credit score through non-binding negotiations and charge-offs, whereas the Automatic Stay prevents your current debts from being further negatively reported and affecting your credit score.  No creditor is ever legally bound by any agreement made in any debt relief program, and many creditors will not even agree to participate in such programs (such as Discover)!  No matter what any debt relief program represents to you, if you participate in a program that pays less than the minimum payments on your debts each month it will result in derogatory marks on your credit report and negatively impact your credit score.

          The automatic stay remains in place the entire time you are in a bankruptcy, and ends when the bankruptcy is over.  The discharge order takes the place of the automatic stay after that.  This means that debts that were not discharged in a bankruptcy can be collected again once the bankruptcy is over, such as student loans.

ATTORNEY'S JOB

          When you hire us as your attorney we walk you through the process from start to finish.  Our job is to: inform you of the law and what your options are under the law, counsel you as to what we believe is in your financial best interest (not ours), help you strategically plan prior to filing, prepare all of your paperwork for you (no packets or forms to fill out), collect documents from you, and walk you through the entire process from consultation to court appearance to discharge!  We try really hard to offer a different experience as attorneys.  No packets to fill out!  We are casual and easy to reach.

          We are also direct and we will tell it to you like it is whether you want to hear it or not.  Our time is important to us.  We have no desire to trick you, or to answer your questions vaguely or optimistically just to get you in our door - we'd prefer to answer your questions by phone and only meet with people who qualify to file bankruptcy and actually need to file!  If you don't need to file you don't need to file, bankruptcy isn't always the way to go.

YOUR JOB

         Bankruptcy, chapter 7 in particular, is mainly paperwork and filing things with the court.  As attorneys we do 99% of the work for you.  Your job is to: answer our questions honestly, and get us the documents we ask you for.  Again, no packets to fill out!

IS BANKRUPTCY THE RIGHT CHOICE?

          The decision to file bankruptcy is yours alone.  You should consider the cost of filing compared to the amount of debt you will discharge.  You should consider the impact of filing on your credit score, and how it will impact your ability to get credit and financing in the future.  Is your current debt situation causing you hardship or hurting your credit?  If you have a large amount of debt but it is not affecting your life or your credit, and you are not being sued or garnished, or if you are collection proof - meaning your source of income cannot be garnished, such as Social Security, then filing bankruptcy might not be the right choice for you financially.  Bankruptcy is a serious step, not a decision to be talked into by a lawyer, and should ultimately be the last resort.

          Call (314) 896-1999 if you have any questions or to set up a free consultation!

LAW OFFICES OF KIMBER H. BARO - EXPERIENCED ST. LOUIS BANKRUPTCY ATTORNEYS - CHAPTER 7 & 13

LOCATED IN FLORISSANT - SERVICING ALL OF ST. LOUIS, ST. CHARLES & JEFFERSON COUNTY