While many individuals can easily be determined a good fit for a Chapter 7 or 13, a great deal of clients who contact us require a careful analysis to determine which one would be the best solution for them. Chapter 7 should be the default for eligible consumers. Chapter 13 should be filed by those who are ineligible to file Chapter 7, or trying to accomplish things that can’t be done in Chapter 7 such as curing mortgage arrears, reducing or eliminating certain tax liens, etc. No matter what your attorney recommends, determine if any of the following scenarios apply to you:
a) Your attorney says you need to file Chapter 13 because your household income is too high to file Chapter 7. In this scenario, a Chapter 7 is more likely to be contested, which means a lot of work for your attorney. Filing a Chapter 13 in these situations is less work and more money for your attorney. Contact our office to get a second opinion on whether you are still a good candidate for Chapter 7 or if Chapter 13 is indeed a more suitable solution.
b) Your car is worth a lot less than the loan balance (car is upside down).
- Chapter 7 – you may be eligible to file a motion to redeem the vehicle by paying its retail value in full in a lump-sum. If you can’t afford the lump sum payment, it is sometimes possible to re-negotiate the terms of your existing car loan. Reducing your loan balance and/or interest rate can save you thousands of dollars, but not all attorneys offer or agree to provide these services because they can be time consuming. Ask your attorney if these are viable options for you and contact us to schedule a free consultation to find out what we can do for you.
- Chapter 13 – you may be eligible to pay the retail value of your car under a five-year plan, possibly at a reduced interest rate. While you could save a considerable amount of money, it’s rarely a good enough reason alone to choose Chapter 13 over Chapter 7. That is because the savings are often times offset by higher attorney’s fees, trustee fees and certain restrictions associated with being under an extended active bankruptcy, in addition to delaying the ability to get your credit back on track.
c) Garnishments. If you have any garnishments they should automatically stop when your case is filed, and you may be eligible to recover some or all of that money back. Some attorneys take credit for stopping garnishments when in actuality, they are not doing anything, and don’t attempt to recover garnishment funds for their clients, ultimately losing the opportunity to get hundreds or possibly thousands of dollars returned to them. At Square One Legal, we go out of our way try to recover garnishment funds for our clients, and in many cases use them to cover part or all of our fees. This allows many of our clients to file with minimal upfront payment. If your attorney refuses to attempt to collect your garnishment funds, please call our office to schedule a free consultation.
d) Taxes. Did you know that some older tax obligations can be discharged in bankruptcy? For certain individuals, eliminating or reducing their taxes can simply be a matter of waiting to file the case at the right time. In most cases, determining eligibility does not take a lot of time or effort, but hastily filing a case without proper due diligence may cost you thousands of dollars in savings. Therefore, if you owe taxes ask your attorney about discharging them in bankruptcy and call our office to schedule a free consultation.
e) Creditor Violations. From the moment you file Chapter 7 or 13 most of your creditors are barred from communicating with you in any way. And if you receive a discharge, this protection usually lasts forever. Some creditors violate this restriction, but not all attorneys are willing to pursue these violations, which not only expose their clients to unnecessary harassment, but potentially deprive them of potential compensation from the creditor for the violation. At Square One Legal we’ve got you covered, forever. Even if your case was closed a long time ago, we will be here to protect you from your creditors.