Bankruptcy & Debt Resolution
Julie Kreutzer is an experienced Boulder bankruptcy lawyer, serving
the Boulder and Denver metro areas in Colorado. Julie handles Chapter
7 bankruptcies and debt resolution through negotiation with creditors.
Chapter 7 bankruptcy wipes out debt entirely and is appropriate
in many cases. When that is not appropriate, it is possible
to reorganize debt through a Chapter 13 bankruptcy* or through debt
negotiation. When there are a small number of creditors and
the client can come up with a lump sum to resolve debt, negotiation
with creditors to obtain the most favorable resolution of the debts
may be the best option. When there is a considerable amount of debt,
no lump sum available and a larger number of creditors, bankruptcy
options are evaluated with the client.
Helpful Information
A Chapter 7 bankruptcy wipes out most debts (child support can't
be wiped out, student loans and maintenance and some legal judgments
are difficult or impossible to wipe out). Chapter 13 reorganizes
the debt into a debt payment plan that is to be paid for several
years and either retired or the debt is forgiven. A Chapter 11 bankruptcy
is for businesses.
Recent Changes In Bankruptcy Law
Bankruptcy law changed recently and has become much less favorable
for consumers. That does not mean that consumers cannot get relief
from bankruptcy but it is important to carefully evaluate eligibility
before filing.
Bankruptcy FAQ
I need help but how can I afford an attorney?
The cost of attorney assistance is typically a one-time
flat fee that is not that expensive and can be handled in one of
two ways. The first is that if you are eligible for bankruptcy (most
people are eligible for Chapter 7 or 11 or failing that, Chapter
13) then you can potentially stop paying debts you will soon discharge
through the bankruptcy and instead use the money to hire counsel
and file. If you file promptly, you will have the protection of
the bankruptcy court by way of avoiding garnishment and other issues
of concern. To find out if this option will work, schedule a consult
to find out if you are eligible for bankruptcy and what bills should
be paid if you are filing bankruptcy. If you have already stopped
paying most debts and still have no money, you can consider the
second option. This would involve getting a temporary loan from
friends or family for the flat fee. If you look at your balance
sheet your current obligations, once you have gotten rid of dischargeable
debt, it is fairly typical you can repay the loan once your debts
are discharged because you have more available funds.
Is my only remedy a bankruptcy?
No, in fact, you should review your debt or debts with an
attorney because in some instances a debt may be fraudulent or overstated.
In such cases, you, or your attorney, can resolve your debt problem
by getting rid of the debt or reducing it to a manageable size.
If the debt and amount sought is legitimate, there may still be
opportunities to negotiate with creditors or strategies for debt
payment that will work for you.
I’ve heard I’m not eligible for bankruptcy, how can I deal
with my debt?
Even if your income or assets make you ineligible for a
Chapter 7 or Chapter 11, you are usually eligible for a Chapter
13, which will protect you from creditors and deal with your debt
(this is true even if you have filed for bankruptcy in the last
eight years or have significant earnings and/or assets). Most people
are eligible for some form of bankruptcy protection unless they
have committed fraud or have some other unusual circumstance. In
the unlikely event you are not eligible for any form of bankruptcy,
there are still options, such as negotiation with creditors.
What are the risks of doing a Chapter 7 bankruptcy by myself
to save money?
Because of the changes in the law, there is a lot more paperwork
and a new set of requirements that trip up the inexperienced. If
you miss one of the requirements or deadlines you can have your
case dismissed (which means you need to pay to refile and you are
unprotected till you do), you can be criminally charged for fraud
(sometimes due to an oversight or error on your part), or you may
need to correct documents or have your 341 hearing continued because
your record is not accurate or complete.
What
is the advantage of having an attorney compared to filing myself?
Attorneys familiar with bankruptcy law recognize early in meeting
with you what the unique aspects of your case are that might cause
trouble with your filing. Before they file your case, they work
with you to be sure that the problems are resolved or are something
that can be dealt with effectively. Also, they are familiar with
the paperwork and other procedural requirements, which can save
you a great deal of time and trouble.
If you take a look at the Petition and Schedules required for filing,
they will remind you of a particularly long and difficult IRS form.
It is safer and easier to have help with documents of this kind
unless you are particularly organized and familiar with such forms.
Also, attorneys are fairly comfortable with hearings because they
know the types of questions that are likely to be asked, the burden
of proof necessary to succeed and how the process is supposed to
work. They are also usually familiar with the trustees. Having an
attorney go with you to the hearing means that you have someone
on your side to assist you in the hearing; that can be quite important
depending on what the Creditors or Trustee might want to know or
concerns that they might have.
If I do a Chapter 7 personal bankruptcy, how long does the
process take and what do I need to do?
The process takes roughly ninety days from the day you file
to the date your debt is discharged, if you get your information
to your attorney in a timely fashion. (You’ll need to get copies
of items like paystubs, bank statements, tax returns, etc.). You
need to answer quite a few questions and provide a number of documents.
You will also need to do a consumer budget and credit counseling
course (this is cheap and does not take much time).
The information gets entered into a blizzard of paperwork that
is then filed with the Court. You are assigned a 341 Meeting of
Creditors Hearing date in less than a week and are likely to be
in court for that hearing within a month. After the hearing, you
need to complete a financial management course (again, inexpensive
and does not take much time) and deal with any remaining questions.
At this point, the debt is discharged.
What are my options to save my house if a Loan Modification
or a Refi isn't working?
Because President Obama's program for these items are so
new, it can take awhile to get an answer from your lender. However,
if it appears you aren't eligible, Chapter 7 or Chapter 13 may allow
you to save your home. It is worth attending a free seminar for
more specifics or a free 1/2 hour consult one-on-one to look at
your specific facts including: the equity in your home, the level
of debt on the home and other debts you have to see if either of
those options might work.
What can I do if I can't pay my student loans?
Student loans aren't dischargeable in Chapter 7, however,
you can discharge other debt to make it possible to pay off student
loans. There is an 'undue hardship' clause for Student Loans but
it is virtually worthless because the cost of putting on an evidentiary
hearing for the bankruptcy court is beyond the means of most debtors
and the criteria is very strict. Chapter 13 can include student
loans but after it is concluded, you are still stuck with whatever
balance is left over. However, there are some ways to deal with
the student loan debt outside the bankruptcy process such as private
hardship discharge that are more practical. Because each student
loan situation depends on whether there is hardship, whether there
is other debt and how much, etc., it is highly fact-specific, so
it is best to get advice one-on-one; our office provides free consults
for up to a half-hour to review your situation. However, a seminar
will provide more detail on the criteria for items like private
hardship discharge.
What are my options for credit card debt?
If you have enough of a stable income that covers your immediate
expenses and you are able to maintain payments on all cards with
some money left over, you can take a strategic approach to paying
off the debt based on interest rate of various cards, size of balances
and other types of debt you have. Over time, you will have a more
manageable debt and you will dig out of the debt. However, if you
don't have the income for this strategy, you can file a Chapter
7 to eliminate all of this debt outright or a Chapter 13, which
creates a plan to eliminate this debt over time in manageable chunks
while protecting your assets. To explore which option is more appropriate,
it is important to determine your eligibility for Chapter 7, as
well as any benefit or risk to Chapter 13. A seminar will give you
detailed information on these options or you can schedule a one-on-one
session; both are free.
Important Do's and Don'ts
If you are in financial trouble:
- Do not use your credit cards unless you must for necessities.
If you use your cards 90 days before you file it is presumed to
be fraudulent because the Court presumes that you must have known
you would need to file and could not pay the loan.
- Do not try to protect assets by selling them to friends or family
or by giving them away or transferring them. You will be asked
about it in your filing and the trustee will probably do an asset
search. (Example: Don't give your car to your son.)
- Do not try to pay a favored creditor $600.00 or over. If you
do, the trustee will call that person and make them refund the
money to the Trustee even if it was a legitimate debt that you
owed. It is called 'preferential treatment of a creditor' and
is not permitted.
- Do not refinance your house to pay your debts unless you are
certain you can pay them all off and that this will end your financial
problems. At least part of the equity in your home is protected
under bankruptcy law. If you refile and still need a Chapter 7,
you will have lost all or most of the equity in your home to no
purpose.
- Do not liquidate your retirement accounts! They are
usually protected under bankruptcy law! Get legal advice before
you consider liquidating those monies!
- Do not sign up with any debt resolution company unless you have
carefully checked their plan. If they are charging you to manage
your debt and have a debt repayment plan, can you afford their
monthly payment? Are they negotiating down your debt? Is there
any room in their plan for emergencies such as repairing a car
or a doctor bill? If not, you might spend several months and thousands
of dollars only to discover that you are still deep in debt and
your situation has not improved.
- Don't sign any agreement to resolve a debt until you have evaluated
that agreement in light of your other debts. Is it practical given
the other debts?
- Don't panic! If you find you are losing sleep and can't focus
on your daily activities schedule a consult with an attorney to
determine how best to solve your financial problems. Most attorneys
charge for a consult but paying them a $100 or more to get an
accurate view of your options is the best start to resolving your
problems. (Our office does not charge for an initial consult
of a ½ hour but most attorneys do, so ask in advance about
the fee and be prepared to pay if you go to a different firm.
If you retain that firm, usually the consulting fee is applied
to the overall cost of the bankruptcy.)
- DO be certain to bring a list of your outstanding debts that
includes the overall debt and monthly minimum payment. Also, bring
bills, letters from collection agencies and attorneys and any
legal paperwork you have received. Bring information as to your
account balances for bank accounts, IRAs and assets. It's important
to relate the whole picture to the attorney who is advising you
since they will not give you good advice if they are missing a
piece of the puzzle.
- DO know that the past year is also important in terms of income
and sale or transfer of assets. (For example, a client once neglected
to mention that they had recently sold two businesses. It took
a fair amount of work to resolve that oversight.)
Chapter 13 Bankruptcies
We do not do Chapter 13 bankruptcies. However, we think highly
of the following attorneys who provide this service and who specialize
primarily in bankruptcy law:
Bart Balis of Balis and Bartlett, P. C. 303-443-6924
Sylvia Lovisone 303-776-7212.
Disclosure
We are required to label our firm as a ‘Federally Designated Debt
Relief Agency’ pursuant to bankruptcy law. However, what we do is
assist people with their debts through various means including bankruptcy.
The information contained on this site is intended to provide general
information to the public but is not a substitute for providing
individuals with solutions appropriate to their needs. Readers are
strongly advised to consult with an attorney before attempting any
solutions to their debts since individual circumstances require
individual solutions.
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