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Debt Consolidation or Bankruptcy–Which Is Right for You?

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Bankruptcy and debt consolidation are tools for different financial situations. See which is right for you.

Financial difficulties are a fact of life for many people in Auburn and Opelika, AL.

If anything has brought this to light, the COVID-19 pandemic has. 

In 2020 the United States lost a total of 9.37 million jobs–that’s nearly 4.5 million more jobs than we lost during the 2009 financial crisis.

When financial markets crash, businesses shut their doors, and jobs are not to be found, bills still have to be paid. 

Through massive government stimulus many Auburn and Opelika residents were able to receive checks that have helped to keep the lights on in the house and food on the table for the kids, but this governmental help will not last forever.

Eventually Americans will have to pay their bills and settle their debts with lenders on their own dime.

This will inevitably put many Alabamians in financial trouble once again. They may come to the conclusion that some kind of debt rearrangement is necessary for their survival, but which is right?

Today, we will discuss the benefits of debt consolidation and bankruptcy for individuals and which might be right for you given your situation.

First we’ll describe the basics of both bankruptcy and debt consolidation in Alabama. Then, we’ll give a bit of guidance as to how each might help you depending on your circumstances.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

Bankruptcy

Bankruptcy is a legal process by which debtors can legitimately find relief from their debts.

Though it is often characterized as a life-ending step this is not true.

American greats like Abraham Lincoln, Walt Disney, and Willie Nelson all declared bankruptcy at one point in their lives and it didn’t stop them.

Essentially bankruptcy works by an individual going to the courts willing to do what it takes to get out from under their debts. This is a tedious and time consuming process that requires giving judges, counselors, and creditors very extensive financial records like income, assets, debt amounts, and more.

Then the courts and counselors (your bankruptcy attorney) create a plan to pay off as much of the debt as possible given the individual’s assets.

Individuals seeking relief through bankruptcy will also receive much court-mandated guidance on how to avoid another incident like bankruptcy in the future.

Once the payment plans and debts are settled through the bankruptcy process the individual who filed is once again financially independent.

Depending on your income level and amount of secured and unsecured debts, you may choose to file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Learn more about filing Chapter 7 Bankruptcy in Auburn and Opelika, AL.

Learn more about filing Chapter 13 Bankruptcy in Auburn and Opelika, AL.

Debt Consolidation

Debt consolidation works by rolling your existing debts into a lump sum payment.

This payment is a smaller total amount than the sum of your individual debts because it is a loan with a smaller interest rate.

Debt consolidation is helpful for individuals because it gives them a more manageable payment amount each month.

The downside of debt consolidation, however, is that those who choose to consolidate their debt will have to make these smaller payments for a longer period of time. In the end, he or she will pay more than he or she would have paid if he or she had been able to make the original payments.

Which Is Right for You? It Depends on Your Situation

Debt Consolidation

Debt consolidation may be the better option if there still seems to be some light at the end of the tunnel, so to speak. If you believe that you can eventually pay off your debts, then you may want to choose debt consolidation.

Debt consolidation can give debtors a bit of “breathing room” in order to manage their monthly payments a bit better. 

However, if you are not willing to practice more conservative spending habits, then debt consolidation will just put the problem off until a later date and make you pay more than you would have with the original loans.

Bankruptcy

If you have gotten so deep into debt that you see no possible way out, then bankruptcy may be the best option for you.

Are you seeking debt consolidation or bankruptcy in Opelika or Auburn, AL? Contact David S. Clark, Attorney at Law. David has years of experience helping Auburn and Opelika residents escape financial stress through bankruptcy and debt consolidation.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Photo by Bob Fitch

Fred Gray–An Alabama Attorney for Integration

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During black History Month, America reflects on the particularly important role that African-Americans have played in our history.

Alabama residents have a rich opportunity to think about the work that our fellow Alabamians have played in fighting legal segregation in our state and working toward the full civil rights of all in our state regardless of race.

Civil Rights in Alabama–A Legal Battle

Many of the most influential players in the Civil Rights Movement were attorneys. Dr. Clarence B. Jones who provided legal counsel to the Rev. Dr. Martin Luther King, Jr., Thurgood Marshall who served as the first African-American Justice from 1967 to 1991, Barbara Jordan was a Texas attorney who was the first woman to be elected to the Texas Legislature are some names that often come to mind when thinking of influential black attorneys.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark
Photo by AP Photo

Fred Gray–Alabama’s Civil Rights Attorney

Fred Gray is an Alabama-born attorney that played a massive role in ending legal segregation in our state.

When Gray opened up his Montgomery law office at the age of 23 in 1954, he was one of very few African-American Attorneys in Alabama. 

By representing Rosa Parks and Claudette Colvin when they were charged with disorderly conduct for refusing to give up their bus seats to white passengers in Montgomery, Alabama, Mr. Gray was thrust into the spotlight of history.

Although Mrs. Parks was eventually convicted of disorderly conduct and violation of a Montgomery ordinance, this case started the pivotal Montgomery Bus Boycott.

During this boycott, Gray served as a legal advisor for the Montgomery Improvement Association.

In 1956 he was the lead counsel in the Supreme Court case Browder v. Gale. This case upheld the lower court’s ruling that segregation on city buses is unconstitutional and illegal.

Gray also provided legal counsel for the National Association for the Advancement of Colored People (NAACP) while it fought to overcome an effective outlawing done by the then Alabama State Attorney General, John Patterson. After 8 years of legal struggle, the NAACP was once again allowed to operate in the state.

Mr. Gray served on Dr. Martin Luther King’s defense team when the reverend was accused of tax evasion in the State of Alabama in 1960. Gray and his team successfully argued King’s case before an all-white jury and achieved acquittal for Dr. King.

The list of Mr. Fred Gray’s legal contributions to racial equality in America are too numerous to mention in a brief post. 

However, one of the most notable achievements that Mr. Gray accomplished in his career as an Alabama attorney was his work ending segregation in Alabama schools.

In 1963, Gray represented Vivian Malone and James Hood in their efforts to attend the University of Alabama which sparked Gov. George Wallace’s infamous stand in the schoolhouse door.

He was also the plaintiff’s attorney in the case Franklyn v. Auburn  which led to the integration of Auburn University.

Gray did not stop his legal work here, eventually through lawsuits that he filed, all public colleges and universities in Alabama and more than 100 public schools were integrated.

Mr. Gray has not stopped the fight for the equal rights of all Americans. In the years since the Civil Rights Movement, he has used his position as a prominent African-American lawyer as a cause for good. 

In 1970 Gray, along with Thomas Reed, became the first African Americans to be elected to the Alabama state legislature, in 1985 he served as president of the National Bar Association, in 2002 he became the first African-American president of the Alabama Bar Association, and in 2017 he was awarded a Lifetime Service Award from HOPE International (this is a just a snapshot of his lifetime awards and accomplishments).

As an African-American lawyer, Fred Gray has served the people of Alabama with passion and commitment. We are glad to honor him as a hero of Alabama during this Black History Month.

David S. Clark is an Auburn and Opelika, AL attorney who works to help his clients, no matter their creed or color, overcome financial difficulty through bankruptcy. Contact David S. Clark today for a free consultation!

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Why Choose a Local Bankruptcy Attorney

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One way to lower the risk of hiring an attorney who will work for him or herself rather than to help you overcome your financial hardship is to hire a local bankruptcy attorney like David S. Clark.

During financial crisis threats of repossession and collection calls from creditors often seem to come daily. Foreclosure of your home because of the inability to pay back your loan and falling prey to the payday loan cycle can feel like rock bottom for many.

The scary decision to file for bankruptcy or restructure your debt through debt consolidation may be the best way forward for those who find themselves in such economic turmoil.

Hiring an attorney to help you navigate these muddy waters can be a lifesaver, but hiring the wrong attorney can be more harmful than helpful.

One way to lower the risk of hiring an attorney who will work for him or herself rather than to help you overcome your financial hardship is to hire a local bankruptcy attorney like David S. Clark. Here are a few reasons why:

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

It’s Easier to Know Local Bankruptcy Attorneys

Lawyers that have central offices across the nation or throughout the state are often located in distant urban centers.

This can make it difficult for them to empathize fully with their clients.

A local attorney, however, is focused on a much more focused area. They live in the same area that you do. Their children go to school with yours. You go to church with them. You see them at the park or at a restaurant downtown.

They are accessible and approachable.

This adds a level of transparency to an attorney because the people that he or she would represent are able to know him or her on a far deeper level than just how many millions of dollars have been won in settlements or how many successful bankruptcy declarations he or she has had.

Local Bankruptcy Attorneys Are Invested in Their Communities

This investment is both financial and social.

When you pay your local lawyer for the services they provide, that money is going to be used to pay bills including groceries for their family, a house payment on a loan from the local bank, tuition for their kids at the local community college or university, and charitable giving to local non-profit organizations.

This is an investment in the improvement of your community.

If you were to hire a lawyer who is part of a law firm that is centrally located in a distant city, then the money that you pay for legal representation may go to several different places. The community that you live in, however, will not likely be where this money ends up.

Local Bankruptcy Attorneys Know the Local Courts and Financial Services

The journey to financial freedom through bankruptcy is one that involves several meetings with financial counselors, standing before judges, and negotiating with creditors. 

Much of this involvement with bankruptcy happens at the local level.

A local bankruptcy attorney will be able to help you navigate these institutions better than almost anyone because they interact regularly with the same individuals in these organizations.

This interaction builds a natural bond of trust between your local lawyer and these institutions. As one who is represented by a local lawyer, that trust may then extend to you and give you more favorable conditions from which to work for financial freedom.

If you are a resident of Auburn, Opelika, or East Alabama and are looking to file Chapter 7 or Chapter 13 Bankruptcy, contact David S. Clark, a local bankruptcy attorney, today!

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

What Is Chapter 7 Bankruptcy?

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If you feel lost when researching Chapter 7 Bankruptcy, this quick guide is for you.

Chapter 7 Bankruptcy is defined by bankruptcy that relieves a debtor from his or her debts through the liquidation (the exchange of valuable assets like a home, car, television, etc. for cash) of assets and subsequent distribution of these assets to creditors.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

Who Can File Chapter 7 Bankruptcy?

Individuals, partnerships, corporations, or other business entities can qualify for Chapter 7 Bankruptcy. However, not every individual, partnership, and corporation can file for bankruptcy.

In this post, we will focus only on individuals and how Chapter 7 Bankruptcy can affect them. 

There are a few requirements and restrictions on what an individual must do in order to qualify for Chapter 7 Bankruptcy:

  • First, someone seeking relief through Chapter VII Bankruptcy must be subject to a means test.
  • Secondly, a debtor must appear before the court and comply with court orders at least 180 days before the debtor wishes to file. Failure to do so will result in the case being dismissed without relief to the debtor.
  • A person who wishes to seek relief under Chapter 7 Bankruptcy must also receive professional credit counseling from a credit counselor that is approved by the court. This must happen at least 180 days before the debtor files. Failure to do this will result in the debtor’s case being thrown out and he or she will receive no relief.

How To File Chapter 7 Bankruptcy

An individual begins the process of filing Chapter 7 Bankruptcy by submitting a petition to the local bankruptcy court (click here to view an official bankruptcy court map). In addition to this, the person seeking relief must fill out several forms disclosing the entirety of their financial situation and history. These form include:

  • Schedules of assets and liabilities.
  • Schedule of current income and expenditures.
  • Statement of financial affairs.
  • Schedule of executory contracts and unexpired leases.

The debtor will then have to pay several court and service fees for filing. This is mandatory for everyone seeking debt relief under Chapter 7 Bankruptcy unless the individual’s income is less than 150% below the poverty level as defined by Bankruptcy Code.

If the debtor is married, he or she will have to fill out this information for his or her spouse regardless of whether or not they are filing jointly.

21 – 40 days from the date of petition, the case trustee (an impartial individual who is assigned by the state or federal government to administer the case and liquidate the debtor’s nonexempt assets) will meet with the creditors of the debtor. Here the trustee will subject the debtor to an oath and then the creditors will be able to ask any questions regarding the individual’s financial matters and property.

Helpful Chapter 7 Tips

It is very important that the debtor cooperates fully throughout the bankruptcy process with the bankruptcy court and the trustee assigned to the debtor’s case. This is especially true when the trustee calls the meeting of creditors.

Though the questions that will be asked will be difficult, complicated, and can sometimes be embarrassing, the debtor must submit fully to his or her oath of honesty. This will be to the ultimate benefit of the debtor and will hopefully end in his or her financial relief.

Additionally, If the debtor then recognizes that a different chapter of bankruptcy is more applicable and beneficial to the situation, he or she may be able to convert the case to the appropriate chapter so long as it has not already been converted from another chapter.

Filing for Chapter 7 Bankruptcy can be a scary process added on top of an already tumultuous time. Hiring a bankruptcy lawyer who is competent and compassionate can help relieve your stress during the filing process and can help you get the financial relief that you need. Contact David S. Clark today and get started on the road toward financial freedom!

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

How To Escape the Payday Loan Debt Cycle

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Given that Alabama has a 7% usage rate for payday loans, paying back these loans is a concern for many in our state. With the COVID-19 pandemic these loans are only expected to increase. 

Everyone has seen payday loan centers advertised on commercials with smiling people who have cash stuffed in both hands. These commercials suggest payday loan businesses are centers for getting back on your feet financially.

The reality though is a very different picture.

Payday loan use is a recurring practice for many of its victims; 80 percent of loans were taken out two weeks after a previous loan was paid.

The state of Alabama has a higher concentration of payday loan storefronts than 47 states. These payday lenders charge an average of 461 percent APR on their loans. 

Given that Alabama has a 7% usage rate for payday loans, paying back these loans is a concern for many in our state. With the COVID-19 pandemic these loans are only expected to increase. 

We want to help you understand what the payday loan debt cycle is and how you can get out of it.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

What Is the Payday Loan Debt Cycle?

The payday loan debt cycle describes the oftentimes detrimental debt process that many people in dire financial circumstances find themselves.

It frequently starts with an individual needing cash quickly. They may need this cash to pay rent, keep up with a car loan payment, or even to buy groceries for their family.

Payday loan companies will then lend the individual an amount of money (not usually exceeding $500). It is usually mandated that these loans be paid no later than 30 days after the loan is made. The harmful aspect of these loans to the debtor is that the interest on these loans is often extremely high. In fact, the interest payment on average is higher than the amount of the original loan.

After the money becomes due, many individuals find themselves in a financial bind once again. Though they have yet to pay the original loan interest payment, they seek another loan from payday lenders. These are often the only options that these individuals have to get cash because no other lenders will lend to them because of poor credit history.

Thus, a cycle of debt to payday loan companies begins.

How to Escape the Payday Loan Cycle

When solving a debt problem, the solution is often found only by getting to the root of the problem.

Why did you seek out a fast money loan? You were low on income, of course!

So, how do you remedy this?

Find some type of employment.

Though it is often difficult to find the exact job that you want, there are countless opportunities for work. You may need to work a job for which you feel overqualified  and underpaid. However, some income is better than none and any little bit will help you pay off your debt and manage paying your expenses.

Next, pay off your debts.

We suggest using the “debt snowball” method developed by Dave Ramsey.

Begin by ordering all of your payday loan debts from smallest to largest. Then, make the minimum payment on all debts except the smallest. As you begin to pay off each debt little by little you will build momentum.

If you are struggling to come out of the payday loan debt cycle and can’t see a way out, call David S. Clark. Our attorneys not only cover bankruptcies, but also assists clients with other financial matters like payday loans.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

What Is Chapter 13 Bankruptcy?

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In our last blog post we learned that Chapter 13 bankruptcy is known as ““Adjustment of Debts of an Individual With Regular Income.” Let’s explore a bit more what exactly that means and how it can help you regain control of your financial situation.

A Brief History of Chapter 13 Bankruptcy

In a previous article entitled, “How Bankruptcy Law Has Changed” we gave a more in depth recounting of the bankruptcy story.

Some of the facets of Chapter XIII Bankruptcy go back in the American experiment to the drafting of the Constitution (One could make a strong argument that American bankruptcy originated in English Common Law in the 16th Century).

Chapter 13 Bankruptcy, however, became a specific category of debt relief with the passage of The Chandler Act of 1938.

Since then, it has been one of the most common avenues for Americans to obtain debt relief.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

How Does Chapter 13 Bankruptcy Work?

After deciding to file Chapter XIII, a debtor must file a petition with the bankruptcy court of the area in which he or she has a domicile (legal address) or residence.

After filing the initial petition a debtor must also file schedules of: liabilities and assets, current income and expenditures, executory contracts and unexpired leases, and a statement of financial affairs.

Debtors then have to provide the court with proof that they have received financial counseling from a court certified counselor along with a few other miscellaneous documents listed here.

Then, the debtor must give the Chapter 13 case trustee with his or her tax returns or transcripts, this must also include returns filed during the case.

The debtor will then have to pay a charge of $235 for a case filing fee and a $75 miscellaneous administrative fee. This, fortunately, can be paid through installments.

Next, the debtor must compile:

  1. A list of all creditors and the amounts and nature of their claims;
  2. The source, amount, and frequency of the debtor’s income;
  3. A list of all of the debtor’s property; and
  4. A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc. (Source: Chapter 13 – Bankruptcy Basics)

Then, the trustee will call a meeting with the debtor and all creditors. The debtor will be placed under oath, then be subjected to a series of questions from the trustee and creditors. During this meeting the actual disbursement plan is completed.

Following the trustee and creditor meeting, the court will hold the bankruptcy hearing.

After a confirmation of the plan by the bankruptcy court judge, the Chapter 13 plan will be implemented and it is up to the debtor to see that it is carried out to full success.

*Note that married couples can file jointly or separately.

Who Can File for Chapter 13 Bankruptcy?

Chapter XIII is fairly inclusive as to who can apply for it.

Here are the basic qualifications:

  • Debtor must have proof of regular income.
  • Unsecured debts can be no greater than $394,725.
  • Secured debts can be no greater than $1,184,200.

Benefits of Chapter 13 Bankruptcy

  • Because of the development of a legally binding debt payment plan with Chapter 13 bankruptcy, debtors are allowed to keep certain assets out of reach from creditors.
  • It allows a debtor to pay past-due payments like taxes, child-support, and alimony while protecting co-signers and allowing you to reduce debts like student-loan debt.

If you are considering filing for Chapter 13 bankruptcy, contact David S. Clark today!

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Questions To Ask Your Bankruptcy Lawyer

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Filing for bankruptcy is usually a journey into the unknown for many. So when beginning, you should have a few questions ready to ask your lawyer so that you can get started in the right direction.

What Type of Bankruptcy Should I File?

Not all bankruptcy is created equal. 

There are so many different forms of bankruptcy. Figuring out which specific type, or chapter, you should file for can be a daunting task.

You should ask your attorney which type of bankruptcy is right for your situation. The offices of David S. Clark deal with Chapter 7 and Chapter 13 bankruptcy cases.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 Bankruptcy is also known as “Entitled Liquidation.” 

This means that a court supervised trustee takes over the assets of a debtor’s estate, turns them into cash (liquidates them), then distributes funds to creditors. In Chapter 7 the debtor has rights to make certain assets exempt.

Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 those seeking Chapter 7 Bankruptcy must undergo a “means test” to determine whether or not they qualify. There are income thresholds that, if a debtor exceeds, will disqualify the debtor from being able to declare Chapter 7 Bankruptcy.

Chapter 13 Bankruptcy is also known as “Adjustment of Debts of an Individual With Regular Income”

This is usually a more desirable avenue for debt relief than Chapter 7 because it enables a customer to keep certain valuable assets out of a creditor’s reach. The debtor then proposes a plan to repay creditors over a reasonable period of time.

Does Your Attorney Have a History of Success for His or Her Clients?

There are countless bankruptcies lawyers offering their services, but that does not necessarily mean that they have proven experience actually helping to get clients back on their feet.

Ask your lawyer about their case history. They should be able to provide you with a list of past clients that can reference how your lawyer worked with them.

Should I Even File for Bankruptcy?

While bankruptcy can be a helpful tool to help you get out of crippling debt, it may not be the right thing to do in your situation. 

There are several other ways to climb out of the hole of debt and your attorney should be able to give you adequate information about those.

Some of these other options include:

  • Debt Consolidation
    • This involves “rolling” all of your existing debts into one lump sum and is  helpful if you are able to refinance it at a lower interest rate and keep the rate low.
  • Foreclosure
    • This is selling an asset in order to pay back a creditor.
  • Wage Garnishments
    • This is where a person’s earnings are withheld by an order of the court to go directly to repaying debts.

The answers to these questions are not always clear. 

They are sometimes difficult to navigate. 

So having an attorney that will know in which direction to point you is crucial during a time of financial difficulty. What’s more is the importance of having an attorney who will take the time to listen to you and your situation, then inform you on what the best path forward for you is.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Hiring a Local Attorney vs. a National Attorney

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Hiring an attorney can often add undue stress to an already fractious time. Bankruptcy cases are no different. 

Often those looking for legal assistance are bombarded with countless advertisements from national lawyers promising a huge settlement for their client. Too often, though, these attorneys are motivated not by genuine concern for their clients, but by personal fortune. This leaves the client harmed and disillusioned with the entire legal process.

How do you lower the chances of hiring a lawyer who doesn’t care for you or your case? Hire a local lawyer. Here are two big reasons that hiring a local attorney is better than hiring a national attorney:

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

Local Attorneys Know the Right People

If you are filing for bankruptcy, the court that will likely handle your case is the United States Bankruptcy Court that is nearest to you. 

For Opelika, Alabama residents this is the Federal District Court in Columbus, Georgia. A local bankruptcy attorney daily works in their local district courts. Local attorneys know the district judges. They know what makes them tick. They know what to say and what not to say. 

The judges also know local attorneys, and you can be assured that they know when an attorney is truly working for the welfare of his or her client.

Local Attorneys Are Invested In Their Communities

A local attorney’s life is wrapped up with the community in which he or she practices law.

These attorneys have a vested interest in the welfare of the people that they represent. Because local attorneys are part of the community, they will benefit if you succeed and be harmed if you fail. 

This is not just because they are doing business with you. It is also because they live in your neighborhood. They buy groceries at the same farmer’s market as you. They might even be a customer at your struggling small business.

National attorneys are from outside of where their clients live. If you or any of your neighbors do not come out of bankruptcy in a better financial position, a national attorney will not necessarily be worse off because of it. This fact can sadly cause an attorney not to work as vigorously for your success as their client.

Not only do local attorneys have a greater incentive to work diligently on behalf of their clients, but hiring a local attorney also means that you are investing in your community. 

It is a simple economic concept that a dollar spent by an individual inside a community will give more practical benefit to that community than a dollar spent outside of the community. So, hiring local lawyers is investing your money into your community.

Are you thinking about filing for bankruptcy and not sure where to start your search for bankruptcy attorneys?

Start local. 

Choose an attorney who knows the landscape of the courts in which he or she will be representing you. Choose an attorney who is personally invested in your well being. Invest your money into your community. Hire a local attorney.

Contact David S. Clark, Attorney At Law, an Opelika attorney, and get your free consultation today!

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

How Bankruptcy Law Has Changed

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How Bankruptcy Law Has Changed

What you need to know about the history of bankruptcy in America 

Bankruptcy law in America has a long, storied history. It would take a whole section in the Library of Congress to give a full description of that history. So, we are going to summarize that information for your convenience.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

When It All Started

1787.

This is the year that the United States Constitution was drafted and signed by all 13 states. Bankruptcy is enshrined in the U.S. Constitution (Article 1, Section 8). It gives congress the right to establish “uniform Laws on the subject of bankruptcies throughout the United States.”

Developments Over the Next 150 Years

As with all political matters, bankruptcy policy was subject to years of troubled debate. In 1800, Congress passed the Bankruptcy Act. This gave district judges the authority to create commissions to help oversee bankruptcy cases. However, too much power was given to creditors in this act. Because of corruption and high expenses, this act was repealed only 3 years later. For 30 years after, states took up the responsibility to regulate bankruptcy law.

In 1839 a development took place which was very favorable to those in large amounts of debt. A federal law outlawed imprisonment for debt. Can you imagine that? Without this law those looking to file bankruptcy would have the added stress of possible imprisonment for their debt!

In 1841 Congress passed a new Bankruptcy Act. This act was very similar to the Bankruptcy Act of 1800. This law, though, gave significantly more rights to those in debt than the original act gave. Some of these included:

  • Allowing those who owe money to file for bankruptcy, rather than just the creditors initiating a bankruptcy case
  • Allowing personal assets to cover as collateral for debts
  • Allowing debtors in any type of industry to file for bankruptcy

This act, though, was repealed only 2 years later.

Two more Bankruptcy Acts were signed into law over the next  50 years.

Each of these acts essentially stipulated more protections and rights for debtors in bankruptcy cases. Each of these acts were relatively more successful than their predecessors in that they survived as law for a combined 111 years.

This success was due in large part to the lessons learned in bankruptcy law in the early days of our Constitutional experiment. 

The Chandler Act of 1938 was another factor that helped the latter Bankruptcy Act to last for so long.

This act categorized previous reorganization amendments to the 1898 law into “Chapters”

  • Chapter X for corporate reorganizations
  • Chapter XI for arrangements
  • Chapter XII for real property arrangements
  • Chapter XIII for wage earner plans

The Bankruptcy Reform Act of 1978

When signed into law bankruptcy was further federalized. The president was given the responsibility of assigning bankruptcy judges to serve 14 year terms. It also consolidated Chapter X, XI, and XII Bankruptcy into Chapter XI bankruptcy.

This act stood only for about 15 years.

The Bankruptcy Reform Act of 1994

Simply put, this act gave the district bankruptcy courts more legal authority to investigate proceedings by creating appellate panels.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

The 2005 law is still in effect today, so it is the most important for those seeking bankruptcy to understand.

This act substantially altered the 1978 and 1994 acts by:

  • Creating a means test for debtors
  • Mandating credit counseling for relief plans
  • Requiring financial management training for Chapter 7 and Chapter 13 debtors
  • Permitting immediate dismissal for failing to file required documents

There were also several other revisions to the law, but the aforementioned are the most pertinent to those seeking bankruptcy today.

Although bankruptcy has been a part of our nation even before the U.S. was a one, it has evolved throughout the centuries into an institution that is capable of helping anyone out of many seemingly lost financial situations. For the most part, the changes that have occurred have been with the debtor in mind. Bankruptcy today is for you.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

What to Avoid When Filing for Bankruptcy?

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Common Mistakes When Filing Bankruptcy

What to Avoid When Filing for Bankruptcy?

Bankruptcy is a solution to changing your financial situation and alleviating current debts. To make bankruptcy a positive experience, understand what to avoid when you decide to go through the bankruptcy process.

DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.

Need Bankruptcy Help? Call David S. Clark

Filing for Bankruptcy

Bankruptcy can be a complicated process that entails careful consideration of your finances and a clear understanding of rules that should be followed. Whether a mistake is made by accident or through innocence, a bankruptcy court may hold you responsible and it could hurt your case. Before filing bankruptcy, contact a local attorney to guide you through your case and help you understand some common mistakes to avoid.

Not Consulting a Local Attorney

A common mistake people make is not considering how long and complicated the bankruptcy process may be and underestimating the benefit of hiring a local attorney to help navigate the process. Bankruptcy laws are consistent among every state, but each state may have exemptions. If filing in Alabama, a resident can avoid errors with filing and understand how to benefit from their state’s exemptions by consulting an attorney who is familiar with local laws rather than filing on their own. 

Transferring Assets

There is no easy way out of debt when filing for bankruptcy. It is best to be completely honest about what assets you may own rather than transferring them to different accounts or family members. Placing a car title in a spouse’s or child’s name will not protect that asset from a bankruptcy court’s decision. Making transfers of assets is a red flag for courts since it can be viewed as dishonest or fraud. Bankruptcy does not mean total loss of assets and your attorney will be able to advise you on managing assets during a bankruptcy case. 

Giving Away Assets 

There is a misconception that giving rather than transferring an asset to a friend or family member during bankruptcy may be acceptable. This is a warning sign to bankruptcy courts that you are engaging in dishonest activity and will negatively impact your chances of being able to keep that asset. 

Use of Credit Cards 

When filing for bankruptcy, credit card use should be suspended. As a bankruptcy case proceeds, the court may view the use of credit as acquiring more debt. When this happens, the credit card company has to be listed as a creditor on your paperwork or you may be accused of fraudulent borrowing during your bankruptcy case. Consult with an attorney on how to pay normal living expenses with a debit card and minimizing or eliminating the use of credit cards. 

Using Retirement Funds 

During the bankruptcy process, retirement funds will be exempt and an attorney will guide you on how to protect those assets. Many assume the best way to use a retirement account is to start draining the money to pay off debts. Paying off certain debts is not permitted when you have filed for bankruptcy. It will cause more legal trouble for you and the loss of money that would have been protected otherwise. 

Failing to Understand the Bankruptcy Process 

Bankruptcy is a process that should be left to attorneys who specialize in these cases. Not all debts can be solved by filing for bankruptcy and even when they do, it may not be the right time to file for bankruptcy. In the state of Alabama, those planning to file for bankruptcy are responsible for meeting certain requirements, gathering paperwork, and considering your assets. Consulting with an attorney before you begin to file, ensures you understand bankruptcy and what you will need to do to go through the process. 

If you are considering filing for bankruptcy, contact a local bankruptcy attorney to understand what errors to avoid before filing and receive the best guidance for your case.

DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.