| Brooks Cotten | 0 Comments | Bankruptcy Law

We’ve Got Your Back in These Hard Times

This virus is hurting some people much more than others, and no one really knows when (or if) their own financial situation will turn around. We know that many people are hurting financially, even though creditor collection activity is way down… at least for now. Foreclosures are down, suits and garnishments are down, and repossessions are down. However, people are in trouble because so many aren’t paying their bills… because they can’t. This non-payment ripples throughout the economy. Lenders and landlords have payroll to meet too, and their own bills to pay. Everyone is intent on getting back to normal, including creditors. It’s getting urgent. 

The courts are still in business, but it’s been different in recent months.  Courts, including the Bankruptcy Court, are avoiding in-person hearings to avoid spreading the virus, and are conducting telephonic hearings instead. This actually works well. It is quicker and it’s not painful, and it allows people to avoid unnecessary travel. People who are out of town for one reason or another can participate in their hearings as if they were attending court in person. 

The pressure is building though. Sooner rather than later, creditor collection activity will probably pick up again dramatically. In that case, you may need the kind of help with your debt that we offer. 

When you file either Chapter 7 or Chapter 13, the Automatic Stay has an instant effect, and prohibits collection calls, suits, garnishments, repossessions and foreclosures. This is a matter of federal law, and it supersedes contrary state law

that usually forms the basis for collections. Violations of the Automatic Stay by creditors are punishable by court-awarded damages. The Automatic Stay freezes creditors’ collection activity until the legal process can work its way out. 

The basic idea in Chapter 7 is that general unsecured debt (credit cards, bank loans, medical debt, repossessions, old tax debt, and the like) are “discharged” (wiped out) without payment. This should free up your disposable income so that you can pay the debt that you might want to keep (like co-signed debt or debt secured by cars or houses), and debt you can’t get rid of, like student loans, recent taxes, and domestic support obligations.  

In most Chapter 7’s, debtors can choose to keep and continue to pay for high priority secured debt like mortgages and auto loans. This is called a “reaffirmation”, and it requires creditor consent. If the debtor is current in his payment on those debts, creditors are almost always agreeable, because they make money on performing loans, and lose money otherwise. In Chapter 7, when a creditor takes back collateral, he can’t collect on the “deficiency” if the collateral is resold for less than the debt that was owed to him, as he might be able to do at state law in the absence of a bankruptcy. 

In both Chapter 7 and in Chapter 13, all of your debt is “listed” (disclosed).  Then, your Chapter 13 Plan or your Chapter 7 Statement of Intentions is used to inform all parties about which items you want to keep and continue to pay for. You do not lose property just because you list it.  

Chapter 13 is a “reorganization” case that usually lasts three to five years. It

is voluntary, so if you come to believe that the burdens outweigh the benefits to you, you can get out of it. In Chapter 13, you do not necessarily have to pay your unsecured debt in full. This can make your monthly debt payments much cheaper.  Moreover, in Chapter 13 you can force secured creditors to accept reduced payments on secured debt like auto loans, and you can cure mortgage defaults over time… even if the loans are in default, and even if the creditors do not consent.  Each case is different, so you have to explore what this means to you personally with an attorney. 

Bankruptcies provide instant relief, and can be used for temporary or permanent relief from problems that can’t be solved any other way. The economy is being impacted dramatically by the virus, but the negative impacts are inconsistent, and are changing over time. The government has helped some people, but not others. It is not shameful to need help, and it is not shameful to explore your options to get a more specific understanding of the best path for you. 

We have nearly 50 years of combined experience in this field.
Call us at 770-683-3303 for a consultation. We’ve got your back.

| Brooks Cotten | 0 Comments | Bankruptcy Law

Bankruptcy and Your Credit

It seems like you’re drowning in debt. Until now, if you’ve been a little
short, you’ve just borrowed money to pay that last bill. Now you are nearing or
exceeding your credit limits, and you can’t get the money to satisfy all of your
creditors. Maybe you’ve received polite calls about when you intend to pay, or
maybe one or two have threatened to refer their debt to collections, file lawsuits,
repossess collateral, or foreclose. If you pay the most aggressive creditor, you
might not have enough money left to pay the other ones that you can handle, or even
have enough to pay for the roof over your head, for your ride to work, the insurance,
the utilities, or even the grocery bills. Is this your situation?

Everyone needs credit to buy and keep cars and houses, and people also rely
on credit to get out of debt trouble. Credit cards, loans, and family members can be
a source of credit. Nobody wants to hurt their credit. People with good credit say
that filing bankruptcy will destroy your credit, which is a reason why most people
don’t consider bankruptcy until after they’ve tried everything else first. The truth is
that in some situations, filing bankruptcy is a cost-effective option that opens doors
that are closing, and it can be a life saver.

To understand the effect of bankruptcy on credit, you need to know how
credit scores are calculated. At the margins, the three credit reporting agencies
consider many complicated factors to fine tune their scoring. However, as a
practical matter, there are two factors that influence your credit score more than all
the others combined: 1) your credit history, that is, whether you are paying your
debt on time, and 2) your credit utilization ratio, that is, how much of your
available credit is left. Slow payments and maxing out credit hurts the score.

For one reason or another, at some point paying your bills on time may not
be an option that is available to you. You can be caught in a downward spiral. If
bills become delinquent, that alone hurts your credit, and delinquencies can lead to
garnishments, repossessions, and foreclosures which hurt your credit severely if the
debt collection process goes that far. If your credit is not good enough to allow you
to borrow your way out of trouble, then maybe it is time to consider the benefits of
filing for bankruptcy.

There are two types of consumer bankruptcy, Chapter 7 and Chapter 13.
When you file either one, the protection of the Bankruptcy Court is instantaneous,
so that state collection actions are automatically suspended until the legal process
has time to work itself through. Since state collection actions like lawsuits damage
credit scores, avoiding those actions helps credit.

Chapter 7 will wipe out general unsecured debt. If you can afford to keep
paying for secured debt, like houses and cars, you can usually keep those things in
Chapter 7. As for credit, wiping out debt in Chapter 7 actually improves your “debt
utilization ratios”, because after some of your debt is wiped out (“discharged”), a
greater percentage of your income will be available to pay the debt that remains.
Almost all people who file for Chapter 7 will receive a discharge within three or
four months, with very little going on in the meantime.

Chapter 13 is a court-protected reorganization plan that can take up to five
years to complete. In Chapter 13 you can force secured creditors like mortgage
lenders or auto lenders to allow you to cure defaults over time whether the creditor
wants to work with you or not. It is also possible in some plans to pay little or
nothing on unsecured debt, which can make Chapter 13 plan payments much more
affordable.

After filing Chapter 13, a Debtor may not incur additional consumer credit
without first seeking court permission. Although approval is not automatic,
reasonable proposals to refinance or buy houses or cars can be, and usually are,
accomplished by filing a motion with the court. The first step is to talk to the
bankruptcy lawyer for advice about finding an appropriate lender.

Filing Chapter 7 is not a legal impairment to using credit. Whether a lender is
willing to lend is a separate question, and it varies by lender. After bankruptcy,
credit applications just keep coming anyway, and the best decision may be to turn
them down. You may buy cars before your discharge, and some lenders are
specifically set up to lend to bankruptcy debtors. To get a government backed
mortgage, you need to wait about two years after a discharge. However, there are
no time limits imposed by law, and conventional lenders may not require any such
time restriction. In any event, according to a 2019 study by the U.S. government’s
Consumer Financial Protection Bureau, median credit scores increase steadily from
year to year after filing a bankruptcy petition.

Filing bankruptcy is not a financial alternative that people choose if they have
better options. However, financial recovery without it may be next to impossible,
and financial recovery with it is certainly possible. Every case is different. Call us
at 770-683-3303 to discuss your unique situation.

| Brooks Cotten | 0 Comments | Bankruptcy Law

The Effect of Filing Bankruptcy On Evictions and Foreclosures: Updated 2020

The Supreme Court of Georgia declared a “judicial emergency” on March 14, 2020, and
ordered a suspension of jury trials because of health concerns over the spread of the virus. The
judicial emergency also affected many debt collection procedures, including evictions and
foreclosures. The initial Order only lasted about a month, but it has been extended several times
since then. As of the date of this blog, it has most recently been extended to Tuesday, August 11,
2020, at 11:59 p.m. The Order is clear that safety is an overriding concern, so other extensions
are certainly possible.

However, these Orders don’t change the law, and ultimately, they will not wipe out debt,
or prevent landlords, banks, mortgage companies, and other creditors from exercising their
traditional debt collection powers in the event of default. The emergency just delays the exercise
of those rights.

So how can filing bankruptcy stop an eviction or foreclosure? With regard to rent, if you
default on your rent, the landlord’s remedy is to declare the lease to be terminated, and to recover
possession of the property by filing a “Dispossessory” in state court. This is an accelerated
procedure that the renter will usually lose– unless he or she brings the rent current, or unless
some consensual agreement is reached with the landlord. A Dispossessory normally only requires
seven days to accomplish. If it is granted, the landlord can put your furniture and possessions out
on the street under the protection of the police over your objections.

If a state court has granted a Dispossessory before a bankruptcy is filed, neither Chapter 7
nor Chapter 13 will not stop an eviction, even though Chapter 7 will wipe out any debt that is
still owed as the result of the pre-bankruptcy default. A Chapter 13 is different. It is a debt
consolidation plan, and can actually stop an eviction– but the “plan” must provide for monthly
payments to the landlord that are enough to “cure” the default during the remaining part of the
lease. Thus, if you have six months left on your lease, and if you are $600 behind, your plan
would need to pay at least $100 per month to the landlord catch up that default within the
remaining lease period as you continue to make regular rent payments. Curing a rent arrearage is
usually a short term fix in Chapter 13, because the bankruptcy court will not force the landlord to
rent to you beyond the term of the original lease, even though the plan may last much longer. Of
course, the landlord could agree to another lease period voluntarily. It is very helpful to make
landlords happy, because they have real power in this situation.

As for foreclosures, a Chapter 7 will delay, but not prevent them. However, if you have
enough equity in your property, you may be able to protect tens of thousands of dollars that
would otherwise be lost in foreclosure. Chapter 13 is the tool used to stop foreclosures
permanently, and allow you to cure mortgage arrearages over a period of years while you
continue to make regular monthly mortgage payments. Chapter 13 can reduce what you pay on
car notes or unsecured debt, and make it affordable for you to cure mortgage defaults over time.
Chapters 7 and 13 are different tools that require planning and discussions with a bankruptcy
lawyer to get a clear idea of what can be done for you in your unique situation.

Call us for a free consultation at 770-683-3303, and stay safe.

| Brooks Cotten | 0 Comments | Bankruptcy Law

COVID: YOU ARE NOT ALONE. WE’RE THE MOST EXPERIENCED CONSUMER BANKRUPTCY FIRM AROUND. FULL STOP.

Everyone is affected by this disease and by this economy, but it affects some
people more than others. All people are not “equal” in the way life treats them, and
luck isn’t equally distributed. If you have the prospect of drowning in debt, you
may need help in choosing the best path forward. We’ve been practicing
bankruptcy law locally since 1990. Consultations with an experienced attorney are
free. We can work through your situation with you, whether it seems simple or
overwhelmingly complex.

We’re in a changing world, and it is not changing for the better for everyone.
Debt strategies need to look to the future. Your future. Have you lost income
because of furlough, job loss, divorce, or medical expense? Are you being sued,
threatened, or harassed? Do you expect things to turn around on their own soon?
Call us so we can listen to you describe your situation in your words.

Chapter 7 and Chapter 13’s are different tools that are suitable to meet
different needs in different situations. You may want to wipe the slate clean, or you
might want to stop a garnishment, repossession, or foreclosure and resume paying
your debt under the protection of the court. We know these tools, and how to
maximize the benefits to you under the law. The key is to fit your needs to what
those tools can do. We know the lay of the land.

If you want the best service for the best price with flexible payment arrangements,
call us now with no obligation at 770-683-3303. You are not alone, and we are here
to help.