Bankruptcy

Are you someone who can’t fall asleep because of worrying about your finances? Do you wake up in the middle of the night stressed about your debts and obligations?  You might benefit from a free consultation regarding the possibility of bankruptcy. Bankruptcy may not be the best alternative for everyone, but it is a helpful and important tool in dealing with debts that are overwhelming. The goal of Stephen E Robertson Law Firm is to help you navigate your debts and figure out the best method going forward.

The Bankruptcy Code was established to allow persons (whether individuals or businesses) to gain control over their debts and allow for the restructuring and/or discharge of those debts.  The Code provides businesses a method to liquidate their assets and stop operating or, if they can, reorganize to go forward with a better handle on their finances.  It offers individual debtors a fresh start.

Bankruptcy/Types of Debts

SECURED DEBTS: Most people have obligations or debts that are secured by property, such as a mortgage or a car loan.  If you are making payments on an item of property, you have typically agreed that the property will serve as collateral for repayment of the debt.  If you don’t make your payments as scheduled (default on the payment), the creditor (or lender) has the right to repossess or take the property and sell it.  These obligations are called secured debts.  There are two separate parts to a secured debt:

1. Personal Liability. You are personally obligated to pay the money that is owed just as with all other types of debt.
2. Security Interest. In addition to and separate from the personal obligation to pay, the creditor has a legal claim (lien or security interest) on the property that serves as collateral. The lien is what gives the creditor the right to repossess the property or force its sale if you don’t pay the debt.

UNSECURED DEBTS: All other forms of debt.  This includes most types of credit cards, personal loans, outstanding utility bills, medical debts, student loans, and alimony or child support.

Property in Bankruptcy

The purpose behind a bankruptcy is it is supposed to give you, the honest but unfortunate debtor, a fresh start.  Such a start would be impossible if you are sitting on the side of the road with nothing.  Thus, Congress and the state legislature have created exemptions.  Exemptions are a way for you to keep and protect important to your assets.  Only when there are “nonexempt” assets, or assets that are unable to be protected by the available exemptions, do your risk potentially losing assets.  However, in the majority of cases, bankruptcy cases are “no asset” cases.  Or cases where there is nothing to be lost and nothing available to go to the creditors.

The amount of exempt property you may protect is typically based on state law.  Every state is different, and which set of laws depends on your residence in the five years prior to filing bankruptcy.  In most cases, exemptions are based on dollar amounts and not a set list of property because while a single person might only need a dining table with 2 chairs, a family of 5 kids will need a much larger table and with many more chairs.  Exemption dollar amounts take into consideration whether you are single or married, have dependents (children or others you are supporting) in your home, or splitting your children between households due to custody share agreements.