The role of any bankruptcy attorney is to analyze the debt obligations of the debtor and assess what is the best financial course of action for the debtor. The attorney will review a potential Chapter 13 case and determine if a Chapter 13 bankruptcy case is a feasible alternative for the debtor. They will also determine whether a single or joint filing is appropriate.

The bankruptcy attorney will then ensure that the debtor competes the necessary pre-bankruptcy requirements. The attorney will assist the debtor in obtaining pre-bankruptcy budget briefings and mandatory credit counseling. In the aftermath of the counseling, the attorney can help the debtor create a budget.

A Chapter 13 bankruptcy attorney will also evaluate secured creditors’ liens and security interests to determine whether they are valid or whether they can be avoided. The attorney will also create a way to handle these secured creditors.

One of the attorney’s biggest tasks will be helping the debtor develop a Chapter 13 plan. The Chapter 13 plan is significant because it will dictate the schedule which the debtor must repay his or her debts. If the debtor does not repay the debts according to schedule the bankruptcy may be dismissed and the debts will be immediately due. As a result, it is important that the attorney devises a plan that is suitable for the needs of the debtor client, and is acceptable to the court.

Preparing the required bankruptcy forms and filings seems like an easy task, but given the strict bankruptcy rules, it can be complex. An experienced and qualified bankruptcy attorney will assist the debtor in completing the forms according to the appropriate rules to ensure that the bankruptcy is filed properly without any unnecessary delay.

The attorney will also make sure the appropriate Chapter 13 forms and pleadings are filed with the court, in a timely fashion. Along with filing documents with the court, the attorney will attend the meeting of creditors and any other court hearings which are required in the particular case.

If the plan provides to strip a lien or junior mortgage, the attorney will prepare the appropriate motion and seek court approval.

Additionally, the attorney will aid the debtor in gaining approval of a Chapter 13 plan, negotiating with the Chapter 13 Trustee and/or creditors to resolve any objections and obtaining a discharge upon the completion or termination of the plan.

Proposing a workable Chapter 13 plan and getting it confirmed by the Court is a complicated process with several pitfalls for the inexperienced. Very few people who have never been through the process are able to handle everything on their own. You should always have the help of an experienced bankruptcy attorney if you plan to help you put together an appropriate plan. Fortunately, because a Chapter 13 case includes a payment plan, you can usually pay most of the costs through the plan and spread out the attorney fees over 36 to 60 months. This often means that the upfront costs of filing a Chapter 13 case are less than for a Chapter 7 filing.

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Most new debt that is incurred after filing for a Chapter 13 bankruptcy must be paid outside the plan. The bankruptcy plan will generally only include debt that was accrued before the filing and included in the bankruptcy forms for the bankruptcy filing. Additionally, the debtor must obtain the permission of the Chapter 13 Trustee to incur any additional voluntary debt during the course of the plan.

Some courts disapprove of new debts incurred after filling for Chapter 13 bankruptcy. Courts worry that the debtor will not pay off their Chapter 13 plan if new debts are steadily arising. As a result, some courts may issue an order prohibiting the debtor from incurring new debts until the Chapter 13 case is over, unless the Chapter 13 trustee has previously approved the new debts.

However, it is to be expected that you will incur some debt during the Chapter 13 case, which generally lasts three to five years. If you have filed Chapter 13 bankruptcy and plan on incurring new debt, it is important that you seek the approval of the Chapter 13 trustee before incurring such debt or credit after the case has been filed. Certain debt does not have to have the prior approval of the bankruptcy trustee. Debts that are incurred as a result of regular and basic living, such as telephone bills and utility bills, do not require prior approval.

In a Chapter 7 bankruptcy case, new debts cannot be added to a Chapter 7 bankruptcy petition to be discharged. They cannot be included in an amended petition. Only debts incurred prior to the filing of the petition can be included. The debtor will remain responsible for paying post petition debts.

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In bankruptcy, the debtor is unable to afford debt obligations and has filed a bankruptcy petition with the court to seek relief. The creditors are the entities that have loaned money to the debtor and have not been paid as of the date of the bankruptcy filing. Bankruptcy claims include a right to payment or a right to a court-ordered remedy.

Secured debt is debt that is backed by some sort of collateral such as property or a lien. Unsecured debt is not backed by any collateral. Unsecured bankruptcy claims are repaid with available money (if any) in the estate in the order of priority.

Before any debt is repaid, debtors are allowed to claim certain exemptions, which vary depending on the state. In Colorado, debtors may keep certain necessary property up to a certain value, and keep this property away from the bankruptcy liquidation process. For example, the debtor is allowed to exempt up to $60,000 of equity in their homestead ($90,000 if the debtor is over 60 years old) and each debtor is able to exempt up to $3,000 in value of household goods.

After the exemptions are claimed and approved, the remaining assets (if any) are used in the liquidation process to repay the creditors. Claims are paid in order of priority. Claims with higher priority are paid in full before lower priority claims are paid.

A superpriority claim is superior to other claims. These claims have priority over most other unsecured claims. To protect the value of the creditor’s interest, adequate protection will be required. Adequate protection may require the debtor to make cash payments or provide an extra lien or a replacement lien that will result in the creditor’s property interest being adequately protected.

Adequate protection is necessary to protect the creditor’s interest from a decrease in value interest during the bankruptcy process.

In order to prove a superpriority claim, creditors have to prove that they truly possess a claim that should be given priority to the court. A creditor must show that the trustee provided adequate protection, the creditor has an allowable claim, and the claim arose from the stay of action, the use, sale or lease of property, or the granting of a lien, in order to qualify for superpriority claim status.

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Chapter 13 bankruptcies may only be filed by those with regular income, whose debt does not exceed a certain level, and who are unable to repay all of their debts. The Bankruptcy Code provides a means for these individuals to repay their debts under a repayment plan over three to five years under Chapter 13.

Debtors with a regular source of income are good candidates for Chapter 13 bankruptcy. Debtors should calculate their future income including wages, commission, child support, spousal support, worker’s compensation, disability, social security, unemployment, retirement, dividends and any other income.

Next, the consumer should determine how much of the income is available to repay debts after the consumer pays for the basic necessities in life. Basic necessities may include rent, mortgages, car notes, utility bills, food and clothing. These regular living expenses should be subtracted from the anticipated income. The resulting number is the amount of money the consumer has available to contribute to a Chapter 13 payment plan to pay down debts.

It is in the consumer’s best interest to think honestly and realistically about future income potential. It is entirely possible that after the living expenses are subtracted, there will not be sufficient income left over to repay the debts within the three to five year time period. In this case, the debtor may be eligible for a partial payment plan, which is known as a “best efforts” plan. Under the partial repayment plan, the consumer repays the debts up to the amount that the consumer’s income will permit. At the conclusion of the plan, the balance of the debt will be wiped out.

Chapter 13 plans allow the debtor to come up with a manageable plan to make the payments smaller. This way, consumers can avoid property garnishments or repossessions.

Proposing a workable Chapter 13 plan and getting it confirmed by the Court is a complicated process with several pitfalls for the inexperienced. Very few people who have never been through the process are able to handle everything on their own. You should always have the help of an experienced bankruptcy attorney if you plan to help you put together an appropriate plan. Fortunately, because a Chapter 13 case includes a payment plan, you can usually pay most of the costs through the plan and spread out the attorney fees over 36 to 60 months. This often means that the upfront costs of filing a Chapter 13 case are less than for a Chapter 7 filing.

If you are considering filling for bankruptcy, you should seek a qualified and experienced bankruptcy attorney. An attorney can help you determine which chapter of bankruptcy is best for you, and tell you what debt will be eliminated under each Chapter.

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When people need extra funds to cover their debt they search for money anywhere they can. Eventually, people contemplate dipping into their retirement money. However, cashing out a 401K plan is generally ill advised.

401K plans are the result of your hard work. They provide a certain level of financial security and stability. If you cash your 401K plan out to pay your debts, you are continuing the cycle of losing your financial security.

Further, 401K plans are generally safe from bankruptcy proceedings. However, once the 401K plan is cashed out, creditors can go after these funds to pay their debts. Funds removed from the plan can be seized or garnished by judgment creditors and are subject to seizure by the bankruptcy trustee to pay your debts if you end up filing bankruptcy. In addition, the government will tax you on the money you cashed out and add a penalty if you have not reached retirement age. When you are having financial problems, you do not want to accrue more taxes.

401K withdrawals may also be used to determine whether you qualify for a Chapter 7 bankruptcy plan. As a result, 401K funds withdrawn within six months of filing bankruptcy have to be listed on your bankruptcy filing forms. If you would otherwise pass the means test because you do not make enough money or do not have little enough debt to be able to afford a Chapter 13 bankruptcy, the 401K withdrawals could be added to your income level and could make it so you do not qualify to file a Chapter 7 case.

If you are not actually thinking about retiring any time soon, you should consider filing for bankruptcy as an alternative to cashing out your retirement. Bankruptcy wipes out all your debt. After bankruptcy, you can be debt free and still have your hard earned retirement money and financial security so that you avoid financial problems in the future.

Filing for bankruptcy will leave a negative mark on your credit score, but the impact is not nearly as severe as people think. The bankruptcy stays on your credit for a finite period of time, and most lenders will be willing to extend credit to you after the bankruptcy. Some creditors will take solace in the fact that you have cleared up your financial debt and realize that you are in a better financial situation, which will give them more security in deciding to lend to you.

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There are various consumer credit counseling agencies. These agencies offer services through local offices, the Internet, or via the telephone. Consumer credit counselors’ services may include budget counseling, savings and debt management classes, debt management planning, and providing educational material.

Some credit counseling agencies are legitimate. Many are non-profit organizations that genuinely want to work with you to help you improve your financial situations. However, not all non-profit credit-counseling agencies are legitimate. Some charge high fees which may be hidden. Some agencies also encourage or pressure debtors to make voluntary contributions to the organization, which only puts the debtor further in debt.

Many of these organizations are basically collection agencies that are largely controlled by credit card companies. Some of them run scams where they require the first month’s payment to go directly to their company as opposed to the consumer’s debts. The company ultimately ends up not doing anything for the consumer, as the debt is never reduced.

If you feel like you need credit counseling, it is important to do some due diligence and search for a reputable company. A reputable company will send you information about the company without requiring information from you upfront. Seek referrals from family members, friends, and co-workers who may have used a credit-counseling agency previously. If possible, find an organization that offers in-person counseling.

Ask the agency what services they offer, if they offer free educational materials, what their fees are and get a price quote in writing, what are the consequences if you cannot afford to pay their fees, assurance that your personal information will be kept confidential, and whether they are licensed to offer service in your state. Also inquire about how their employees are compensated. If they are paid based on commission from consumers signing up or making contributions to the organization, you should find another agency. They will likely be more concerned with you signing up than with helping you eliminate debt.

Bankruptcy is a reasonable alternative to credit counseling. Credit counseling agencies are often unregulated and full of misrepresentations that will leave you in a worse financial position than you were in when you came to them. Moreover, they can only help you reduce the interest on your credit card debt. They cannot reduce payments on your other bills including your medical bills, tax bills or other debts, which can be wiped out by bankruptcy. As a result, you will still be in debt after credit counseling, while bankruptcy offers a fresh start.

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Chapter 7 bankruptcy discharges all qualified debts. The debtor’s non-exempt property is liquidated and the proceeds are used to repay unsecured creditors in an equitable fashion. In Chapter 13 bankruptcy, debts are not immediately discharged. Instead, a repayment plan is developed and the debtor must make timely payments according to the schedule created. These payments are used to pay your debts in order of their priority. Costs of the case, mortgage arrears, taxes, and secured debts such as car loans are paid first and then payments are made to unsecured debts such as credit cards, medical bills and student loans if (and only if) there is money left in the budget before the plan ends.

Once debtors make the decision to file for bankruptcy, most want to have debts discharged without a payment plan. However, in order to file for Chapter 7 bankruptcy, debtors must pass the “means test”. In order to past this test, debtors must not have enough income or little enough debt that they could afford to pay a Chapter 13 repayment plan.

There are some reasons why a debtor may elect to file for a Chapter 13 bankruptcy repayment plan even if they would otherwise qualify for a Chapter 7 bankruptcy. If the debtor owes debts that are not dischargeable in a Chapter 7 bankruptcy, such as taxes, child support, student loans or fraud judgments, and they need time to repay those debts; they may elect to file Chapter 13.

Debtors may also choose Chapter 13 bankruptcy if they fall behind on car or home payments but want to keep their property. Chapter 13 bankruptcy will give them the chance to keep the property and catch up on their payments during the repayment period. A Chapter 13 plan may also allow secured debt such as car loans to be paid back at a substantially lower interest rate. Also, if the debtor’s assets are worth more than the exemption limits allowed in the relevant state under a Chapter 7 bankruptcy plan, Chapter 13 may be the preferred option.

Bankruptcy laws also prevent a debtor from filing a second Chapter 7 filing within eight years of filing one previously. If this is the case, the debtor may seek a Chapter 13 repayment plan if they filed a Chapter 7 within the previous eights years.

Finally, a Chapter 13 plan may be preferable if the debtor has a second or third mortgage on their property which is unsecured by the value of the home. Such liens can be stripped in a Chapter 13 plan, but cannot be removed by a Chapter 7 filing.

Most Chapter 13 plans do not require payment in full for all of your debts. In many cases, debtors who could qualify for a Chapter 7 will be able to file a Chapter 13 plan which discharges most of the debt that would have been discharged in a Chapter 7 filing without having to pay on it. Instead, plan payments are directed at mortgage arrears, car loans, court costs, and other debt which wouldn’t be addressed in a typical Chapter 7 case.

If you are considering filing for bankruptcy, seek a bankruptcy attorney who can advise you on which bankruptcy chapter is best for your individual situation.

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If a homeowner has fallen behind on mortgage payments and is unable to make future payments, filing for bankruptcy may be a suitable option.

Filing for bankruptcy begins the automatic stay. The automatic stay prevents creditors from using collection efforts against the bankrupt debtor. Thus, the automatic stay stops lenders from beginning or continuing any potential foreclosure proceedings against the debtor for as long as the stay remains in place. This allows the debtor the opportunity to get his or her finances in order.

If the debtor’s financial situation is such that the debtor will not be able to make future payments, a Chapter 7 bankruptcy may be the best option. With a Chapter 7 bankruptcy, the debtor has the opportunity to completely eliminate debts. The debtor will have a few months to get his or her finances in order while the case is pending. In many cases, the debtor may live in the home without making any mortgage payments for the majority of the time. During this time, the debtor can save up money to move to a new home.

If the debtor will be able to keep up with the mortgage going forward, but needs help catching up back payments, the debtor may elect to choose a Chapter 13 bankruptcy. A Chapter 13 bankruptcy will give the debtor an opportunity to catch up by developing a repayment plan with payments that are feasible for the debtor. Under a Chapter 13 plan, the debtor will have approximately three to five years to cure the defaults on the loan.

In order to make a Chapter 13 plan work, the debtor will need enough income to cover current mortgage payments while paying down the arrears. If all payments are made according to the plan, the arrears will be cured and the debtor will be able to stay in the home while avoiding foreclosure.

Filing for a Chapter 13 bankruptcy may also help the debtor eliminate second and third mortgages. First mortgages are secured by the entire value of the home. However, since the debtor may no longer have any equity left in the home, second and third mortgages may get downgraded to unsecured debt, which are given the lowest priority in Chapter 13 cases.

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Hostess Brands, Inc. (Hostess) has had a long run as one of the leaders in bakery goods. Hostess is the creator of the classic and popular Twinkie and Wonder Bread. According to the Wall Street Journal, the company is seeking Chapter 11 bankruptcy protection.

Hostess currently has around 19,000 employees and operates in 49 states. According to the company’s website, annual sales are about $2 billion.

The company is citing pension and medical benefits obligations, increased competition and, of course, tough economic conditions as the reason for the bankruptcy filing. A predecessor company, Interstate Bakeries, filed for Chapter 11 bankruptcy protection in 2004 and reemerged in 2009. Hostess states that this effort did not provide sufficient relief to continue to allow the company to be viable and operate at a high level.

According to bankruptcy documents, Hostess owes its biggest unsecured creditor, Bakery & Confectionary Union & Industry International Pension Fund, approximately $944.2 million. The company lists its assets at an estimated range between $500 million and $1 billion and its estimated debts at more than $1 billion.

The company will continue operating and making bakery products. It received a $75 million financing commitment from Silver Point Capital LP lenders, which will allow the company to remain open. As a result, the company does not anticipate any disruption in deliveries. The entire line will still be available including Drake’s, Ding Dongs and Ho Hos.

Meanwhile, the company is revisiting its collective bargaining agreement with employees in an effort to restructure pension plans in a way that is more conducive to the current economic times. The company is confident it can do so in such a way that they will make a strong recovery following the bankruptcy.

Just like large companies file bankruptcy to obtain a fresh financial start, individuals have the same opportunity by filing for Chapter 7 or Chapter 13 bankruptcy. Bankruptcy protection is a legal way to eliminate debts that the honest consumer is unable to repay. Bankruptcy offers relief and a way for companies and individuals to move on and have a second chance to rebuild a stable financial future.

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People facing bankruptcy generally cannot afford to pay off the debt they have accrued. Before filing for bankruptcy there are some steps debtors can take to try to improve a bleak financial situation.

If you can only afford to keep up with some bills, pay off the secured debt and stop paying the unsecured debt. Unsecured debt is debt that is not secured by any lien or property, such as a home or car loan. These debts are dischargeable in bankruptcy. Unsecured debt should be the first debt you stop paying because if you do not recover financially, those can be completely wiped out in bankruptcy.

It is important to note that if you do stop paying any creditor, they will start calling you and sending you letters to recoup the money. They can also sue you to obtain a judgment against you for the money they are owed. Once a judgment is entered, the court can grant a wage garnishment where the creditor can take a portion of your paycheck or a garnishment which can empty your bank account. However, if you file for bankruptcy, the automatic stay will prevent creditors from seeking any collection efforts against you.

Because the implications of stopping payment can be complex, you should consult an attorney before making any decisions on which debt to stop paying. Of course attorneys cost money too. Nonetheless, if you file for bankruptcy, you will no longer be paying debt because it will be discharged in bankruptcy. As a result you will have more free funds to pay an attorney to make sure your financial future is protected. Additionally, an attorney can add attorney’s fees to the bankruptcy case.

If at all possible, you should keep up with debts that are not dischargeable in bankruptcy, like student loans and taxes. Student loans are rarely dischargeable in bankruptcy proceedings. There is a very high threshold that must be met in order for the court to dismiss this debt. Skipping student loan payments will only increase the interest owed, thereby making the money owed over the life of the loan much greater. Similarly, the Bankruptcy Code only provides for very specific taxes to be discharged in bankruptcy.

Continue making payments on secured debts, such as your car and home. These creditors have the ability to seize the property from you if you stop making timely payments. As a result, these bills should be the last bills you stop paying.

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