Bankruptcy

Bankruptcy: How it Affects your Spouse

in Bankruptcy

Marriage means much more than just living with someone, it means sharing a life together and that life includes your finances. Still, sometimes one spouse may need to declare bankruptcy to get out from under their debts, even if husband or wife does not. There are any number of reason why this may be the case.  The filing spouse may have racked up credit card debt as a college student or may have incurred medical expenses that the other spouse isn’t liable for. If you are married, you often can file for bankruptcy without your husband or wife. Even when you file and individual bankruptcy case, it may still have a profound effect on your non filing spouse.

How Bankruptcy can Affect your Spouse:

Generally speaking, if you are filing for an individual bankruptcy case, it will not have much of an effect on your spouse in many cases. One of the areas in which it may have an impact is If you have joint debts discharged in the bankruptcy. By doing this,  the bankruptcy may appear on your spouse’s credit regardless of whether they have filed.

Also, when you file for bankruptcy, it only eliminates your personal debt, but your husband or wife is still obligated to pay back their own debts and any joint debts that they may be on with you. Your creditors can pursue legal action against your spouse to collect your joint debts once you have filed for bankruptcy. While this past statement is true if don’t life in a community property state, if you do live in a community property state and discharge the debts you owe jointly with your spouse, the creditors cannot pursue collections against your marital community property after your bankruptcy. In this case, your spouse benefits from discharge of your joint debts.

Filing for Chapter 13 bankruptcy protection can protect your spouse from creditors with the Co-Debtor stay. A Co-Debtor protects the debtor against almost all types of debt collection activity by virtue of you having filed for protection yourself. A chapter 13 also prohibits creditors from pursuing your co-debtors during the course of your bankruptcy. However, in a chapter 7 bankruptcy, the co-debtor stay is not included. At that point a collector will not be able to collect the debt from you, but it can collect it from your spouse.

Finding Financial Freedom:

Filing for bankruptcy is a last resort for many and a challenging process for everyone, especially if affects your loved ones. Understanding what your options are helps you both make good decisions that can get you back on the road to financial prosperity and security. If you are considering filing bankruptcy, contact our experienced bankruptcy attorneys today so they may explain the different options you have available to you under the law. Harmon and Gorove has helped thousands of families recover from difficult financial situations over the course of the last 35 years.  Contact our office today for a free, no obligation consultation.

Why does Bankruptcy Exist?

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Why does bankruptcy exist?  I can tell you from more than 10 years of legal experience, that is the question most often asked by creditors who are baffled as to why they lose out when someone files bankruptcy against a debt that is owed to them.  While it can be unfortunate for the creditor, for the person needing protection that bankruptcy offers, the choice is stark.

First, let’s look at a little bit of the history of bankruptcy.  For hundred of years, if you couldn’t pay back your debts, your assets were often seized to satisfy those debts and if you didn’t have enough assets to cover the debts owed, you’d be thrown in jail.  While this doesn’t make much sense, being that if you’re imprisoned you can’t exactly work to pay off your debts, it was the law in Great Britain and even in colonial times here in America. This all changed with the Financial Panic of 1837.  This was the first time that debtors were able to file for bankruptcy protection voluntarily. Changes have occurred over the past 180 years that have made bankruptcy fairer for the debtor and the creditor.

At times, a person’s debts can become so overwhelming that they become paralyzing.  Debts can feel like a type of financial bondage that steals a person’s hope for future prosperity and ability to take care of his or her family.  From my ten years of experience, I have found that none of my clients actually want to file bankruptcy and all of them desperately want to have the financial capacity to repay their creditors. Unfortunately, they have reached a point in their life where they feel that this is simply impossible.

This is where bankruptcy becomes a type of safety net.  The reasons for bankruptcy are numerous. First, bankruptcy serves to provide a debtor with a fresh start and renewed sense of hope.  The Supreme Court has stated that this fresh start is the “essence of modern bankruptcy law” and that debtor is provided with special protections in bankruptcy called exemptions “to ensure that bankruptcy will provide a fresh start.” Local Loan Co. v. Hunt, 292 U.S. 244 (1934).

From the perspective of macroeconomics, bankruptcy is an essential part of capitalism. In an economy without bankruptcy protections if a business fails you’re out of luck but in our country bankruptcy can serve as a fail safe.  Without this fail safe what business person would ever take a risk with his or her money? It is obvious that no one starts a business just to file bankruptcy, bankruptcy itself provides for an invaluable safety net that will allow a person to take the debts from the past and move forward into a brighter future.

Many creditors often ask, what about me?   While it is not obvious why bankruptcy would benefit creditors, creditors are protected by the law as well.  First of all, we assume that a person who is looking at filing bankruptcy has exhausted all other financial options.   For the most part, debtors generally don’t have much more than their household goods and furniture, a car, and a home, if they’re lucky. The reality of the situation is, no one is going to get paid back in full. By assuming bankruptcy is unfair for creditors, must also acknowledge that the alternative probably wouldn’t be better either.

Understanding all this we realize that bankruptcy is an equalizing force among creditors. Creditors are broken up into roughly three different classifications: The first is secured creditors like your mortgage or car loans, the second is a priority creditor like alimony or child support, and the third is just unsecured like a credit card or medical bill.  An example of this works would be a situation like this. A debt collection law firm is attempting to collect on a credit card issued by a bank and the debt collection law firm pursued a garnishment suit against the debtor in magistrate court. They won and got a judgment, and started garnishing the debtor’s paycheck to the fullest extent allowed by law.  By doing this the debt collection law firm collected $1,500.00 in three months for the bank.  The problem with this is that there is a section of the bankruptcy law that says that if an unsecured creditor is paid more than $600 within 90 days of the debtor filing bankruptcy (even if it’s court ordered), that creditor was given preferential treatment.  This means that the bankruptcy trustee can force the bank to turn over the $1,500 so the trustee can distribute that money to the unsecured creditors in equal shares. So, from that perspective, even creditors may benefit by some equalization under the bankruptcy code.

With all this said, I hope I’ve answered the question, Why does bankruptcy exist. It exists for both the creditor and the debtor.  It helps to ensure fair treatment of the creditors and to help the debtor get a fresh start. If you feel that you may be in need of a consultation with a bankruptcy attorney give the caring and compassionate attorneys at Harmon and Gorove a call to schedule a free, no obligation consultation with an experienced bankruptcy attorney. With our expertise you may be able to regain your financial freedom and start down the road to prosperity.

Stopping Creditor Harassment

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Not much is more stressful that feeling the heavy burden of unmanageable debt. When you add the prospect of non stop harassment by creditors on top of the burden of debt the situation becomes unbearable.  People who have been victims of creditor harassment and bill collectors know how uncomfortable it is when the phone rings, especially when it keeps rings all day long. A number of people assume there isn’t a way around being constant creditor harassment, there are provision in the law to make it stop.

What you have to do first is to realize that doing nothing will not fix the problem. The sad reality of it is that collection agencies have hundreds of staff members whose sole job is to make phone calls and harass you into paying a debt that you may not even owe. The question is, how do I make it stop?

Creditor Harassment: know your rights

You DO NOT have to accept being bullied by collection agencies. One thing you have to understand is that while they may be rude to you and harass you, you are not under their control. Don’t ever scream at them, lose your temper or threaten them; always keep a level head.

You must remember that you have rights that they absolutely must respect. There are a number of things that collectors can’t do when attempting to collect debts. They are not allowed to call before 8 a.m. or after 9 p.m. unless you have given them permission to reach out to you at those hours. You should always establish boundaries on the very first phone call. You also have the right to tell them they are not allowed to contact you at work or reach out to your family. Finally, and most importantly, if you wish for the calls to cease, you can tell them not to contact you.  Once you have completed the phone call send a follow up letter via certified mail asking for proof that you explained to them how they should contact you in the future. Under Federal law all notices must be in writing to retain full legal effect.

You are protected by the Fair Debt Collections Practices Act. Under the Fair Debt Collections Practices Act, creditors are not legally allowed to do the following:

  • Repeatedly call you
  • Call you at unreasonable hours or late at night
  • Call your employer if you’ve told them not to
  • Call without identifying who they are
  • Contact your friends, family or neighbors unless you give them permission
  • Employ deceptive tactics
  • Threaten you with child custody, arrest, or loss of welfare benefits
  • Threaten with self-help repossession when not authorized by the law
  • Use derogatory, obscene, or insulting remarks
  • Directly contact you after you’ve told them to call your lawyer instead

Always make sure you receive proof of debt

Don’t just assume that you owe a debt to someone just because a debt collector has called you. The cold hard truth is that you should never pay the collector anything until they can prove that you actually owe the debt. Debt collectors often try this tactic to scare people into paying a debt by mistake. If the company calling you is unable to provide you with real proof of the debt you can simply tell them to stop calling you. .

I would even go so far as to say that even if you are pretty sure that you owe the debt, make them prove it to you anyways. As I have previously stated, sometimes debt collectors try to collect on fraudulent debt. Additionally, third party debt collectors often buy debt without ever receiving proof that someone owes it. This situation gives you a huge leg up and can often times result in you not having to pay the debt.

You should always be honest. If there isn’t any way you can pay the debt tell the person who called you the truth. If you think there may be a time when you’ll have some money then give them an estimated time when you might be able to pay. By doing this you could eliminate the incessant phone calls.

You can try to make a deal

There are some creditors that are not impossible to work with.  They may be inclined to make a deal with you. Some companies may allow you to make small payments over time or they may forgive a portion of the debt they say you owe if you’re willing to pay right then.  Generally speaking, third party companies are usually more willing to work with you since they often buy debt in bulk for much less than it was previously worth.

If all else fails, see a lawyer

If you feel you’re a victim of creditor harassment and you can’t find a way to get them to stop contact the Attorneys at Harmon & Gorove today.  We can assist you in filing bankruptcy so that your creditors will stop harassing you, ruining your credit and garnishing your wages.

Someone Told Me I Can’t File Bankruptcy…

in Bankruptcy

Today, so many people are worried that once they have decided to seek help someone might tell them they can’t file bankruptcy.  Whether it is the judge, a trustee or a creditor, They fear that someone might reject their bankruptcy petition all together or tell them they can’t file bankruptcy and put the right back at square one.  The long and short of it is that the chances of this happening are very very slim. This is why you hired an attorney to begin with. Trying to file a case “pro se” might lead you down a road full of serious legal problems, but filing with an attorney is definitely the right choice.  Your attorney’s job is to guide you through the process and make sure that your situation is fully vetted. The attorney will know your entire situation so that when your bankruptcy petition is filed with the court you will be in full and complete compliance with the bankruptcy code and the local rules set out in each judge’s courtroom. Whether it is a Chapter 7 or a Chapter 13 bankruptcy, your attorney will make sure that it is smooth sailing through the bankruptcy process.  

Like I stated earlier, the road is usually smooth and clear when you hire an experienced Newnan Georgia Bankruptcy Attorney. The only time you might find yourself facing problems in your bankruptcy is when you don’t disclose your entire financial history up front to your attorney and the court.  Your mother probably used to tell you that honesty is the best policy and if she did, she was right. That proverb holds true in Bankruptcy as well. You have to tell your attorney everything that’s going on in your financial life.  Whether you had a car accident and have the potential to recover money from it, you’re going through a divorce or you are being sued for something that you may be liable for, you have to disclose this to your attorney from the start.  Your attorney is best able to serve you when they have to complete and total picture of your financial situation. When that is the case, your attorney can almost always guarantee smooth sailing all the way through your bankruptcy case.  

If you are behind on your bills, being harassed by creditors or just feel like there’s no way you’re going to get ahead, make an appointment today with one of our compassionate and experienced bankruptcy attorneys at Harmon & Gorove. We will work with you to get you a fresh start in your financial life and get your credit back on track after bankruptcy.  

Savings Rate in America is Scary

in Bankruptcy, Credit and Credit Cards

The average American family is struggling with savings.  While as much as 70% of people agree that the economy is humming along at a record pace, many people often do not see the real benefit that Wall Street is reaping in their own bank accounts.  Here in the United States, the economy may be doing well but the savings rate reaches has reached a new low.

 

A recent study by the Federal Reserve says that the average American consumer is unable to cover a $400 emergency expense without tapping credit or having to sell some possessions. Many attribute this to the rising cost of living and the recent uptick in consumer debt and student loan debt which are both having a negative effect on the savings rate.  Student loan debt in America now tops 1.4 Trillion dollars and is causing many people to not be able to purchase homes and cars and is even blamed for delaying marriages and keeping people from starting families.

 

Another disturbing trend in the savings rate in America is the fact that more than 50% of people have less than 1,000 dollars in savings.  Despite the fact that more Americans are feeling confident in the economy, a full 57% of Americans don’t even have 1,000 dollars saved. This is disturbing because many people still expect to retire at or around 65.  The average social security check people receive in retirement is approximately 1,400 per month.  While that will continue to increase as time goes on, it is a sobering thought that many people who are late to get into the savings game may have to finance their retirement on just under 17,000 dollars per year.  


As we stated earlier, most people are feeling more financially secure but they are failing to save.  You can make that savings easier if you contribute to employer funded or matched retirement plans which save your money for you, keeping you from ever getting your hands on it.  If you work for an employer that does this, we highly recommend you using this. If you are having to save on your own and you keep finding it harder and harder to put money away you may be a good candidate for bankruptcy.  Bankruptcy can be a positive thing for your finances and it can help you eliminate may of the unnecessary debts that are holding you back from creating a savings plan. If you are struggling with creating a savings plan, give us a call.  The attorneys at Harmon and Gorove have decades of experience helping people out of debt and making meaningful financial changes in their lives.  

Positive Aspects of Bankruptcy

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Bankruptcy has the ability to solve a bevy of financial problems but it is often associated with negative thoughts and reactions.  When the prospect of filing bankruptcy appears on the horizon, it is easy to only see the negative. If you have determined that bankruptcy is your only way out, it is important to focus on the positive impacts that bankruptcy can have on your life.  Remember, the night is always darkest just before the dawn and there are many positive aspects of bankruptcy protection.

Yes, there are negatives to Bankruptcy

Filing for Bankruptcy protection will often stay on your credit report for a minimum of 7 years and may hang around for as long as 10 years. There is also the very real possibility that bankruptcy could make it more difficult and expensive to finance a car or a home for a few years. It likely also will be difficult to get unsecured lines of credit like personal loans and credit cards for a time after your bankruptcy. Some people also feel embarrassed for having filed bankruptcy and many put it off because they feel shame by having to resort to bankruptcy.  Let me remind you though, if you find that bankruptcy is your only way out, you should not wait to file.  There are many circumstances where bankruptcy isn’t appropriate for you and your situation but until you contact a competent Newnan, Georgia Bankruptcy Attorney, you won’t have the right information to make your decision.

But there are also many positive aspects of Bankruptcy

First things first, filing for bankruptcy will allow you to discharge your debts if you follow the bankruptcy plan. In the majority of situations, you will also be able to retain most of your property if you want to keep it.  Once you have eliminated your debt you will be free to chart your new financial future in your own way. A lot of people learn significant life lessons from the bankruptcy process and it allows you to adjust your priorities in the least painful way possible.  Bankruptcy also allows you to stop collections action through the Automatic Stay. This keeps creditors from harassing you over unpaid debts and allows you to devise a plan to tackle your debts and re-organize your life around your new financial reality. There is even the possibility that you could improve your credit score by filing for bankruptcy. In the end, perhaps the most positive aspects of bankruptcy is peace of mind and knowing your finances are getting back on track and you’re able to successfully plan for your goals and your future. Filing bankruptcy puts you back in control of you life and protects you from the actions of unscrupulous creditors.