A business or individual can declare bankruptcy once it has been determined that debts are due faster than they can be paid. Filing bankruptcy can give you a chance to start over, as most of the debts are discharged or eliminated. The most common forms of consumer bankruptcy petitions are Chapter 7 and Chapter 13 of the United States Bankruptcy Code.
Chapter 7: your financial estate i.e., your property (assets) and your debts (mortgages, loans, etc.) are liquidated. You're allowed to claim certain assets as exempt under applicable law. You may choose to negotiate with certain creditors to reaffirm certain debts and keep the property securing the debt (your house, your car), the remainder of your property is surrendered. Any debts not reaffirmed are wiped out and discharged in bankruptcy. Click the blue play button to hear Verner's explanation of Chapter 7.
Chapter 13: your "financial estate" is reorganized. You are allowed a reasonable budget for food, phone, utilities, insurance & necessary expenses out of your monthly income. All remaining funds after payment of necessities are required to be placed in a plan providing repayment of your debts in accordance with the bankruptcy code. This is ideal for those who are behind on home mortgages, car loans or other secured debts and do not want to lose their property to foreclosure or repossession.
Click the blue play button to hear Verner's explanation of Chapter 13
A major concern for those in financial hardship is losing a car due to repossession (repo). This often happens when you fail to make regular payments and the lender exercises the right to take back the collateral; sometimes with little or no warning. But after your car is gone, isn't the debt also gone? No. In fact, you may actually owe more money. Although the loan balance would be reduced by the car's selling price at auction, you are now liable for all collection costs including towing, storage, attorney fees, auction expense, late penalties, and interest. It is not unusual to have a $10,000 balance, the vehicle auctions for only $2,500, and you would still owe the $ 7,500 difference plus the collection costs. Forcing you to make payments on a car you no longer have. If you are behind and repossession is likely, you must take action immediately. Repossession and all collection activities will stop immediately upon filing bankruptcy papers with the court. The Law Offices of T. Verner Smith can advise if bankruptcy is the right solution, or if you have other options.
Unemployment, divorce, personal tragedy, and rising interest rates are just a few of the many reasons people cannot afford their mortgage payments. As a result, home foreclosure in Jackson and West Tennessee is at an all-time high. What can be done?
The most important question to answer is this: if you could instantly catch-up on your mortgage today, can you truly afford the regular monthly payments going forward?
For some clients, it may make sense to give up the house and file a Chapter 7 bankruptcy if the house is no longer affordable. This should wipe out the mortgage deficiency and buy you some time (1-3 months) before you are forced to move out. Each individual's case is different, so consultation with our experts will be necessary in order for your particular situation to be clear.
For others who just need a little time to catch up, a Chapter 13 bankruptcy could stop the foreclosure and possibly save your home. If preventing foreclosure is your best option, you would continue to make your regular monthly payments and set up a Chapter 13 plan for repaying the deficiency. Finally, it may be possible to strip off a second or third mortgage that is completely unsecured. This is often done when the value of your house is worth less than your primary mortgage balance. By not having to pay the "unsecured" second and third mortgages, you may then be able to afford the house.
When should you contact a bankruptcy attorney? If you are soon facing foreclosure, you need to call today. Even if you are working with a mortgage broker to try and refinance the debt, contact The Law Offices of T. Verner Smith. The sooner you act, the more time and options you'll have to prevent the foreclosure. You'll also be able to minimize foreclosure expenses and determine if filing bankruptcy is right for you.
Are you about to be sued? Have you already given up because you can't afford to defend yourself? If you feel like you have run out of options, there are measures you can take to erase the debt and make all civil lawsuits stop. T. Verner Smith can negotiate with your creditors outside of the bankruptcy process to stop lawsuits and negotiate a payment plan or lump sum payment to compromise all of your debts. In most cases, the filing of a bankruptcy petition acts as an injunction against all of your creditors and stops all lawsuits, wage garnishments and collection efforts immediately Don't passively assume there is no hope. Many measures can be taken to assure that you come out on top. With the knowledgeable counsel of The Law Offices of T. Verner Smith, you'll be aware of your options and well represented.
Debt collectors don't always play by the rules. Threatening letters & harassing phone calls can force you to pay a bill that is unfair and unaffordable. Unreasonable collection costs, late fees, and interest penalties are usually added to extract even more money from you than the original debt owed. In the hands of a debt collector, a $2,000 credit card obligation can quickly balloon to $4,000. You can put an end to the harassing phone calls and non-stop collection letters. The Law Offices of T. Verner Smith has helped countless clients in Jackson and West Tennessee understand their rights under the Fair Debt Collection Practices Act. We will help you improve your financial situation and make the phone calls stop. If it becomes clear that bankruptcy is needed our firm will carefully go over your entire financial picture and show you whether a Chapter 13 or Chapter 7 would be in your best interest.
It was never a matter of "not wanting to pay", but rather an "inability to pay." Between a poor economy and an already tight budget, you doubt whether you could pay this debt back in a lifetime. You've explained your situation many times, but the creditor isn't interested in working with you. It doesn't take long before you're sued and the creditor gets a judgment against you and your property. If you are dealing with judgments, The Law Offices of T. Verner Smith can give you straight answers to tough questions. He can begin the process of getting that "monkey off your back" on the first visit!
Not all debts are created equal. Some require more diligence to discharge. Back-taxes are one such category. The good news is that federal bankruptcy laws allow you to potentially discharge certain income tax owed to the IRS, or state division of taxation if they are more than 2 years old. This means you may never have to pay it back. Additional rules apply. Aside from the discharge question, ALL tax garnishments must stop instantly the moment your bankruptcy is filed. Not only will your take-home pay increase, but you are in a better position to arrange a payment plan (Chapter 13 case) for any tax debts that may not be dis-chargeable. Bankruptcy can also stop interest and penalties from accruing. Clearly, tax problems must be handled effectively, or they will never go away.
Past Due Taxes? The IRS is ramping up its back-tax collection efforts. "Revenue Officers" are a new tool employed to go after you. They often get you to reveal personal information to make it easier to take over your bank account, attach your wages, or put liens on your property. They don't care about you, your family budget, or what you can afford; they want payment now. The costliest mistake you can make is dealing with the IRS without proper counsel. You do have options. It may be possible to stop wage attachments, remove tax liens, offer a compromise, or prepare a workable installment plan. If you are feeling squeezed by overdue taxes, The Law Offices of T. Verner Smith can help.
It doesn't take much to ruin your credit. Downloading all three credit reports may help you begin to understand the problem. An automobile repossession, a late mortgage payment, a bounced check, or even one missed credit card payment can cause damage. Unless you take action now, your credit can stay bad for a long time.
Bankruptcy protection, however, can erase the debt and provide a financial Fresh Start. By stopping the aging of your delinquent bills, you can prevent the past from ruining your future. After the debt is gone, your debt to income ratio improves and you are a much better candidate for future credit.
T. Verner Smith's clients are quick to say how very happy and satisfied they are with the results.
Memphis office: (901) 730-4567 ~ Jackson office: (731) 423-1888 - Brentwood office: (615) 371-6136