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Understanding Bankruptcy

Jul 12
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How to Rebuild Credit After Bankruptcy

By Financial Tips, Personal Finance, Understanding Bankruptcy No Comments

Unfortunately, life after bankruptcy isn’t easy. You have a fresh start, but you also have a lot of repair work to do with your credit, which has most likely taken a huge hit during the process. The good news is that any Auburn or Opelika resident has the ability to not only rebuild but fully recover from bankruptcy. 

Here are some financial tips from David S. Clark, an experienced Auburn & Opelika bankruptcy attorney, on how you can improve your credit score after filing for bankruptcy. 

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

Understanding Your Credit Score

The first step to rebuilding your credit is understanding what your credit score really is. In the most basic of terms, a credit score is a number that reflects your trustworthiness with lines of credit. This number is calculated using the total amount of debt owed, payment history, any and all credit history, amount of credit lines, the amount of diversity in credit, and more. 

It is important to know the state of your debt and finances so you can carefully consider any decisions you make regarding your credit. Knowing where mistakes have been made and how to avoid future mistakes can greatly help the rebuilding process after bankruptcy. 

Check Your Credit Report for Inaccuracies

Credit reporting companies, also known as credit bureaus, collect and store financial data about you that is submitted to them by creditors, such as lenders, credit card companies, and other financial companies.

Many of the major lenders provide access to this information for free in the form of credit reports. It is important to note that there are a few different major lenders, so reporting from each can vary.

After receiving your credit report, check that the items on the report are accurate. While most of the financial information will be correct, lenders can make inaccuracies that lead to unfairly low credit scores.

If you’re an Auburn or Opelika resident seeking help, David S. Clark is an experienced bankruptcy attorney that can not only walk you through your credit report but help assist you in disputing any inaccurate information. 

Apply for New Lines of Credit

An important step to take after filing for Chapter 7 or 13 bankruptcy is to apply for new lines of credit. It might be difficult to be approved for a new line of credit, and interest rates may be higher than before, but do not be discouraged!

New lines of credit can help lenders see that you are someone who is responsible for the money you borrow, despite your previous financial history. These new lines of credit can rebuild trust and confidence in your ability to repay debt. 

Be On-Time With Payments

Now that you have your new lines of credit, you will need to prove that you are responsible for them. One way to do this is to make your payments in a timely manner. This means avoiding late fees and generally paying your bills on or before their due date.

Keep Balances Low

Keeping your credit card balance low gives you a low credit utilization ratio. This ratio is an important factor to lenders when assessing your eligibility for lines of credit and especially when assessing your credit score. 

A low credit utilization ratio means that you are not using your line of credit up to its limit. This gives lenders confidence that you will not max out credit cards and be unable to pay them back. 

David S. Clark, A Local Bankruptcy Attorney

David S. Clark is an experienced bankruptcy attorney who understands the complications of life after bankruptcy. If you need help navigating Chapter 7 or 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.

May 04
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Dischargeable vs. Nondischargeable Debt

By Understanding Bankruptcy No Comments

There are many types of debts that bankruptcy can discharge, but not all debts are created equal. 

Most Auburn and Opelika residents seek bankruptcy to wipe out their debts and get a fresh start. While bankruptcy allows for a large elimination of debt, certain obligations (called nondischargeable debts) will survive your bankruptcy discharge. When it comes time for you to file bankruptcy, it is important to know the difference between dischargeable and nondischargeable debts. 

If you have found yourself in difficult financial times, then hiring a qualified Auburn bankruptcy attorney like David S. Clark to guide you through a financial crisis may be exactly the help you need.

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 are Dischargeable Debts?

Dischargeable debts are obligations that can be wiped out by your bankruptcy discharge. When you receive your discharge at the end of your case, you are no longer legally required to pay any of these debts and creditors cannot come after you to collect them. 

Examples of Dischargeable Debts Include: 

  • Credit Card Debt
  • Medical Bills
  • Payments on Motor Vehicles
  • House Payments
  • Debts Related to Your Business
  • Personal Loans

Timing Matters For Dischargeable Debt

Depending on what type of bankruptcy you’re filing, there might be changes in your dischargeable debt. For example, slightly more debts are available to discharge in a chapter 13 case than in a chapter 7 case. 

The timing of your bankruptcy can also affect which debts are discharged, and which ones are not. 

Pre-Filing Debt

Pre-petition debt is any debt incurred before the day that you file for bankruptcy. At the end of your case, the bankruptcy court will discharge all qualifying pre-petition debt. 

Post-Filing Debt 

In contrast, any debt that builds up after you submit your bankruptcy paperwork is known as post-petition debt. The court will not discharge this debt, and you remain responsible for paying any balances that you incur after the initial bankruptcy filing date. 

What are Nondischargeable Debts?

Nondischargeable debts exist because Congress decided, because of public policy reasons, that allowing debtors to eliminate their responsibility for certain debts would not be beneficial to society. Ultimately, the benefit to a creditor and society as a whole outweighs the benefit that the debtor would gain if their debts were completely discharged. 

Examples of Nondischargeable Debts Include:

  • Student Loans
  • Child Support
  • Personal Injury
  • Taxes
  • Fines

There are other debts that cannot be dischargeable, but only if someone files a lawsuit against you and the bankruptcy court decides that the debts must be nondischargeable. This includes debts incurred by a divorce, fraud, embezzlement, or by a malicious/willful injury. 

However, if you file a case and the creditor of these debts never files a lawsuit, these will automatically be discharged by a bankruptcy court. 

This is not true for the previous list of nondischargeable debts, which will automatically be nondischargeable. 

If you are an Alabama resident looking for an Auburn bankruptcy attorney that can help you work through a variety of financial options to help you overcome your debt crisis, contact David S. Clark.

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.

Apr 12
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Debt Consolidation vs. Bankruptcy – How to Settle Your Debt

By Bankruptcy Law, Understanding Bankruptcy No Comments

Learn to settle your debt with either Debt Consolidation or Bankruptcy. 

Alabama’s total state debt is nearly $9 billion. If an institution such as the State Government of Alabama is not always in the green financially, then it is no wonder that its residents often find themselves in positions of repaying debts.

While some debt isn’t bad—a mortgage can help you achieve the goal of owning a home and may help you ultimately build wealth, student loans can help you obtain a college degree, and a moderate amount of debt, if paid off in time, can help you build credit–the wrong kind of debt can lead to financial ruin.

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

There are several tools that debtors can use which can help someone recover from an extensive amount of debt. The number of these, though, can be overwhelming if you are not sure which option is best for you.

Two of the more common options are debt consolidation and bankruptcy. When choosing between debt consolidation and bankruptcy, it is important to know the benefits and to determine which option is best for you based on your unique financial situation.

Debt Consolidation 

Debt consolidation refers to the act of consolidating multiple lines of debt into a single, bundle debt payment. This payment usually has a lower interest rate, and, therefore, a lower monthly payment.

If you have multiple student loans, credit cards, or other liabilities with high monthly payments because debt consolidation can simplify things for you, it may be the best choice.

While the interest rate and monthly payment may be lower on a debt consolidation loan, it’s important to pay attention to the payment structure. Typically, with a smaller monthly payment that debt consolidation provides, debtors will pay on their loans for a longer period of time. This means that you will end up paying a higher amount than you originally would have paid.

If, however, this means that you are able to make your payments, then it will be a good option for you.

Bankruptcy

Many Alabama residents consider bankruptcy as a financial boogeyman to be avoided at all costs. Yet, if you have taken on an unimaginable amount of debt, bankruptcy exists to help you. 

Bankruptcy is a legal process where an individual who cannot repay debts to creditors may seek relief from part or all of their debt. This can be an extremely long process that requires granting judges and creditors extensive access to financial records, among other things. 

In deliberation with your bankruptcy attorney, the court will put together a plan for you to pay off as much as your debt as possible. They will also provide court-mandated guidance on how to avoid another incident involving bankruptcy in the future.

With the extensive paperwork, financial documentation, laws, and local procedures present in a bankruptcy filing, hiring an experienced bankruptcy attorney to represent you in bankruptcy is very important. 

David S. Clark and his team have been helping Auburn and Opelika, AL residents settle debt through debt consolidation and bankruptcy for years. 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.

Dec 09
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Financial Tips From an Opelika Bankruptcy Attorney

By Attorneys & Lawyers, Personal Finance, Understanding Bankruptcy No Comments

One of the most common reasons that individuals fall into a financial crisis and decide that bankruptcy is the best option for them is poor financial stewardship, specifically when it comes to credit.

Though medical expenses and job loss are ranked higher than poor personal finance for reasons that people file for bankruptcy, those two issues are far more dependent on outside forces than personal financial responsibility.

Given that each person is the most important player in their own financial stewardship, we want to give our clients, potential clients, and readers practical tips about how they can make better financial decisions in order to avoid bankruptcy.

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

Tip #1: Control Your Spending on Credit

People incur credit when making a purchase that either costs more than the cash they have on hand or more cash than they want to spend at one time.

Incurring debt through credit is not always a bad thing.

For example, one of the most effective ways that Americans build personal wealth is through home ownership. Most people don’t just casually have $300,000 sitting in their bank accounts, so they take out a mortgage and purchase their home on credit.

Many, however, incur debt less strategically than for the purpose of building long-term wealth. They often incur debt on purchases that are much less important than a home–expensive cars, a TV, clothes, the newest iPhone, etc.

One of the major problems with excessive spending on credit is that people begin to run up credit card bills and have no realistic plan to pay off the debt in the coming months, years, or decades. Eventually, they default on the loan or miss one too many credit card payments and creditors come ready to make them pay their debts.

The best way to avoid finding yourself neck-deep in debt with unending calls from creditors is to manage your spending from the beginning. Unless you have a clear plan to pay back your debts and the discipline to stick to that plan, don’t purchase using credit.

Tip #2: Avoid Quick Loans

Often when individuals are short on cash and a bill comes due, they see no other option, but to go to quick loan, payday loan, title loan, etc. business in order to get the money needed to pay the expense.

The problem with borrowing money from these predatory establishments, though, is that they lend at extremely high interest rates. These companies usually lend to individuals who are already financially vulnerable. When these individuals begin to pay off the massive interest on the relatively small loan, they quickly realize that borrowing from a quick loan company was a mistake.

For more information on payday loans read our article, here.

A Few Alternatives to Quick Loans

Churches & Non-profits

For expenses like grocery bills, one-time rent payments, bus fares for a job interview, etc. local churches, other faith-based organizations, and community non-profits are often willing to help fit the bill.

Here is a list of Auburn/Opelika Churches.

Family Loans

Though it may take a bit of humility to ask, assistance from responsible family members can be one of the safest ways to borrow money and often at no or very little interest.

Alternative Sources of Cash

Now more than ever there are alternative ways for individuals to make a quick buck honestly and with no strings attached, like high interest rates.

Companies like Uber, DoorDash, and TigerTown To Go (an Auburn/Opelika company) are making quick, occasional sources of cash from actual work much easier to find.

David S. Clark, An Auburn/Opelika Bankruptcy Attorney

If you have followed these tips, yet still find yourself in a financial crisis, bankruptcy may be the best option for you. David S. Clark is an Auburn & Opelika bankruptcy attorney who helps clients throughout the entire bankruptcy process.

We can help you determine whether Chapter 7 or Chapter 13 bankruptcy is the best option for you. For a free case consultation, contact David S. Clark, Attorney at Law 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.

Oct 05
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CARES Act Reduced Chapter 13 Bankruptcy Payments & Modified Plans

By COVID-19, Understanding Bankruptcy No Comments

Don’t miss this opportunity for additional relief with Chapter 13 Bankruptcy from the CARES Act.

COVID-19 has changed the world in numerous ways from putting entire countries on strict lockdown to taking the lives of millions to changing the way many companies do business. Many of these effects, like so many other world events, disproportionately negatively affect those who are struggling through difficult financial times.

Individuals who have declared bankruptcy have still had to make payments that were specified in their debt resettlement agreements. Thanks to the CARES Act, though, those who have outstanding Chapter 13 payments may be able to reduce their monthly payment amount.

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

Disposable Income Amendments

Any payments made under federal law relating to the national emergency declared by the President cannot be counted as “current monthly income” or “disposable income” when considering the debtors repayment plan.

This provision will benefit those who are currently paying off bankruptcy payments and future Chapter 13 bankruptcy pursuants.

Payment Plan Modifications

The CARES Act permits debtors to seek payment plan modification if they can prove that they have suffered a “direct or indirect” hardship due to the COVID-19 pandemic.

The law does not give extensive definitions for “direct or indirect” hardships caused by the pandemic, so pursuants will have to make a verifiable case that they suffered financial difficulties because of the coronavirus pandemic.

It is unclear the extent to which debtors will be able to alter their original payment plans. However, the law allows for debtors to seek modification in their favor, so debtors should take advantage of this opportunity.

How Long Will This Last?

These amendments were originally put into law on March 27, 2020 and were scheduled to sunset, or expire, on March 27, 2021. However, due to the continued economic uncertainty from the pandemic, these amendments were extended until March 27, 2022.

If these amendments are not extended past the latest expiration date, then debtors have about six months to take advantage of these helpful provisions for Chapter 13 Bankruptcy.

David S. Clark Can Help

Having helped people file for and carry out Chapter 13 Bankruptcy plans for over 20 years, David S. Clark has had to adjust to changes in the law, changes in the larger culture, and countless other changes relating to his clients’ bankruptcy cases.

These recent changes are intended to help debtors. David S. Clark can help walk you through taking advantage of this opportunity, rather than failing to make your payments because of additional financial hardships caused by the COVID-19 pandemic.

Call David S. Clark today for help with the CARES Act reduced Chapter 13 Bankruptcy payments and modified payment plans.

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.

Sep 14
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How Not to Think About Bankruptcy

By Attorneys & Lawyers, Understanding Bankruptcy No Comments

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

As a bankruptcy lawyer in Auburn, Alabama, David S. Clark counsels numerous Lee County residents through shaky financial times. Over the years, he has encountered many different client responses to the fact that they need to declare bankruptcy. Some responses have been healthier than others and when clients have an unhealthy outlook on their situation, it can lead to a more difficult process and additional future financial hardships.

So, as a bankruptcy law firm in Auburn, we want to warn Auburn residents who may be considering bankruptcy about a few ways you should not think about 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

“I am incompetent with finances and there’s no hope for me to learn.”

If someone chooses to declare bankruptcy, then there is inevitably a serious disconnect between income and expenses in the actions of the client. This disconnect can occur for a number of reasons other than incompetence on the part of a client.

A sudden loss of income due to losing a job, unexpected expenses like hospital bills, or a miscalculation from the onset of a major purchase that leads to interest payments the client is unable to pay are all examples of events that can cause someone to declare bankruptcy.

There are mistakes that are made in all of these situations and others like them, but there is a fundamental difference between making a financial mistake and complete financial incompetence.

Everyone is able to improve their financial skills.

Don’t believe the lie that because you now have to declare bankruptcy and need help from a bankruptcy lawyer, you are financially incompetent.

Instead, take advantage of the resources provided to you during the process of bankruptcy like financial counseling and learn how not to find yourself in this situation again.

“Bankruptcy will solve all of my financial problems.”

Bankruptcy is a mechanism within our legal system by which debtors can find relief from debts that they can no longer pay.

It is not, however, a cure all for financial problems. 

Often the issues that cause bankruptcy cannot be cured with the relief of debt at one time. Foundational problems need to be dealt with by solutions outside of the scope of bankruptcy in order to avoid another financial catastrophe.

Debtors usually need counseling about healthy spending habits. They often need to begin taking more personal responsibility for the situation they are in. They sometimes need to find a more steady stream of income than they currently have.

Though a bankruptcy lawyer cannot directly “fix” any of these problems, he can point clients to other people and groups that can help.

“My debts are someone else’s fault.”

Bankruptcy can be an extremely painful and humbling time for debtors. Your finances are laid bare before creditors. You openly admit that you cannot make the payments you are obligated to make. You are subjected to numerous meetings in which others tell you how you must act in order to overcome your debt.

These are humbling, sometimes humiliating processes. Nevertheless, debtors respond to these processes with obstinate pride, insisting that they are not really the ones responsible for the situation that they are in.

A complex situation like bankruptcy often has complex causes. So, during the process of bankruptcy it may be revealed that several individuals and groups share some of the blame for a debtor’s situation. However, for a debtor to take little blame or worse yet, no blame at all, is detrimental to the likelihood of long-term financial recovery.

Admitting there is a problem within yourself and your actions, that this problem has played a major role in getting you into such a bad financial situation is key to your bankruptcy being a success.

Let David S. Clark Help You Think About Bankruptcy

David as an Auburn bankruptcy lawyer and his team of professionals have years of experience helping clients get out from under their debts by helping them to rightly think about bankruptcy and walking with them through the whole process.

If you are looking for a bankruptcy lawyer in Auburn, contact David S. Clark today for a free case evaluation.

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.

Apr 20
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How COVID-19 Is Affecting Bankruptcy Law in Alabama

By Bankruptcy Law, COVID-19, Understanding Bankruptcy No Comments

Seeking bankruptcy in Auburn or Opelika will look a bit different after the COVID-19 pandemic. Make sure your bankruptcy attorney knows about these changes and is prepared to help you understand them.

There seems to be no area of society that the COVID-19 virus has not affected. 

One of the most significant effects and hotly contested issues is the role that this pandemic has played in the economic downturn that our entire country has experienced.

One thing that is certain, though, is that COVID-19 has made many people in Alabama suffer financially.

As an avenue for financial relief during personal economic crises, Chapter 7 and Chapter 13 Bankruptcy have, unsurprisingly, had some rules changed

Residents of Auburn and Opelika who are seeking to file bankruptcy should be aware of these changes so that they can take advantage of their benefits to debtors seeking relief.

Under the CARES Act and the Consolidated Appropriations Act of 2021 here are some of those changes:

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

Chapter 13 Payment Extension

If debtors can prove to their local bankruptcy court that they have endured a financial hardship due to the COVID-19 pandemic, then they may qualify for an extension to the payment plan for seven years.

Waived Original Signature Requirement

Because the entire country has been in lockdown at some point during the pandemic, some bankruptcy courts have decided to waive the requirement that a bankruptcy attorney must get a “wet signature” from his or her client on the bankruptcy petition.

This is simply the original signature from the debtor on the petition to file bankruptcy.

Debtors and their bankruptcy attorneys can review the necessary documents virtually rather than meeting in person.

This allows for the bankruptcy process to move forward without the physical contact that was previously required.

Section 341 Meeting of Creditors

Regardless of whether or not a debtor files for Chapter 7 or Chapter 13 Bankruptcy, he or she will have to attend a “meeting of creditors.”

This is where the debtor faces all of his or her creditors alongside the court-assigned trustee and discusses every relevant detail of what is owed so that everyone can have a unified, realistic expectation of what needs to be paid back.

Stimulus Money Cannot Be Counted as Income

When filing for bankruptcy, debtors have to list their income to submit to the courts.

With the stimulus checks that were given to many Americans, some people’s income drastically increased. If a debtor had to claim this as income, this could misrepresent the true financial situation of him or her.

In order to prevent this misrepresentation, the debtor is able to leave any money received from a stimulus check related to the coronavirus pandemic out of consideration when adding up income.

This list is a good start in the search for information on how the coronavirus pandemic has affected bankruptcy, but it is by no means exhaustive.

If you are an Auburn or Opelika resident who is considering filing for bankruptcy, you should consult an Auburn/Opelika bankruptcy lawyer who can explain in depth how bankruptcy law has been affected by recent COVID-19 legislation.

David S. Clark is a bankruptcy attorney who has represented numerous residents of Auburn, Opelika, and Lee County. Contact David S. Clark today for a free evaluation on your bankruptcy 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.

Mar 10
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Debt Consolidation or Bankruptcy–Which Is Right for You?

By Attorneys & Lawyers, Understanding Bankruptcy No Comments

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.

Nov 18
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What Is Chapter 7 Bankruptcy?

By Bankruptcy Law, Understanding Bankruptcy No Comments

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.

Sep 29
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What Is Chapter 13 Bankruptcy?

By Attorneys & Lawyers, Bankruptcy Law, Understanding Bankruptcy No Comments

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.

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