As readers know, our office has a significant bankruptcy practice (more bankruptcy information is available there). Below are some frequently asked questions and Mr. Schlissel’s answers. For help with Bankruptcy, or any other matter, you can always contact our office.
Q: Have you seen a lot of new bankruptcy filings due to the economy?
A: Yes, there has been a significant increaes in bankruptcies, but it is important to understand that the bankruptcy law was amended during the Bush administration. It is more complex, time-consuming and more expensive to file for bankruptcy since the law changed several years ago.
The basic changes were that before filing bankruptcy, one must take an online course. After they file, they must take a second course. The filing requirements are a little more complicated and more detailed as well. For instance, one must have filed tax returns for the last two years in order to file bankruptcy. the record keeping and bookkeeping circumstances of hte filings are also more detailed.
In addition, if individuals have a high income or high expenses, there are detailed requirements that sometimes prevent those individeuals from filing a Chapter 7 bankruptcy. In such cases, they’ have to file a Chapter 13 Bankruptcy instead.
The purpose of the amendments to the bankruptcy statute was ostensibly to prevent bankruptcy abuse, but the reality of the situation was that the statute was written by the banking industry for the purpose of preventing or making it more difficult for consumers to file bankruptcy. It was basically an anti-consumer statute. It makes the process more difficult, more time-consuming and more expensive than it used to be.
Q: What does it generally cost to file for bankruptcy?
A: The cost could be anywhere from $1,500 and up.
Q: How would someone pay for a bankruptcy when they don’t have any money? Isn’t it a Catch 22?
A: Very often lawyers will tell their clients to stop making certain payments. For example, if you have a mortgage on a house and you fall behind, the bank will generally accelerate the debt, meaning that the whole remaining balance becomes due and you can’t make your mortgage payment. At that point in time, the individual is basically saving their mortgage payments because the bank won’t accept their payments.
The same can be true for credit card payments. At some point, it doesn’t make sense to make the payments, so a debtr should just acumulate the money, stop making the payments, use it to pay the administrative expenses of filing the bankruptcy and pay the attorneys’ fees. Also many attorneys will accept payment plans from their clients.
Consumers should know that there is indeed a way out. They should speak with an attorney who will be able to educate them on how to accumulate money even while they’re in debt in order to file the bankruptcy.
Contact us anytime for bankruptcy help.
Picture courtesy of Adam Stradt.