Bankruptcy

Here at the Law Office of Peter C. Edwards LLC, we understand that you would not be reading this page if you were not thinking about the bankruptcy option. Imagine what a relief it would be if we could stop those harassing phone calls, annoying letters, garnishments and save your house from foreclosure immediately. In some cases you can also discharge your second mortgage and keep your house. Yes it is true!

What you need to understand is that bankruptcy is not a bad thing. There are many negative stereotypes out there about bankruptcy in Missouri, but in reality filing bankruptcy is a business decision and should not reflect negatively against you. I see many people from the four-state area that are forced into bankruptcies by high medical bills, credit card debts with high interest rates, people who are laid off, people who incur debt while in transition between jobs, people who are left with substantial debt as the result of a divorce.

We proudly offer some of the best personal attention that we feel every client deserves. We service the whole State of Missouri, as well as Northeastern Oklahoma and Southeast Kansas, so it does not matter if you live in Joplin, Neosho, Miami or Pittsburg. The road to your financial success and freedom is only a phone call away. What do you have to lose by calling us for a FREE bankruptcy consultation today? You will not be speaking to a secretary, but a real licensed attorney who will patiently explain the whole process to you either by phone or in person in everyday English—No legalese.

Bankruptcy Basics
Bankruptcy cases are filed in the federal judicial district in which the debtor resides, or with a corporation, its place of incorporation or where it does business. Every person filing bankruptcy is entitled to keep some exempt property. Each state has different exemption amounts. You can gain a better understanding of what property you will be able to keep in greater detail during an office consultation. Upon filing bankruptcy, all of a debtor's assets create a bankruptcy estate. This estate consists of anything you own or have an interest in on the date of filing. It is up to the bankruptcy trustee to review all of the assets and to determine whether there is anything available for distribution to creditors. In general, assets and wages received after the bankruptcy are not part of the bankruptcy estate.
One of the main reasons to file bankruptcy is because of lawsuits, garnishments, foreclosures, and harassing phone calls. When a bankruptcy petition is filed, the court enters an automatic stay, which is an order to stop creditors from continuing collection activity on debts. This includes foreclosure, garnishment, lawsuits, letters and phone calls.

People file bankruptcy to get rid of their debt—this is called the bankruptcy discharge. When the case is finished, a debtor gets a "fresh start" which is one of the fundamental goals of the bankruptcy process. Sometimes a creditor objects to the discharge by filing a trial proceeding before the bankruptcy court. There must be certain legal grounds for a trial and these can be discussed during your initial consultation. Some debts cannot be discharged and these include alimony, child support, and often student loans. Federal and state income tax debt can be discharged under some circumstances, generally if the tax debt is over three years old. However, there are specific guidelines that apply and the final determination of the dischargeability of tax debt should be made by a licensed attorney.

No one looks forward to filing bankruptcy. Sometimes bad decisions or bad luck leave no choice. It could be extremely high interest rates on credit cards, a surgery or other emergency that was performed without health insurance that left substantial medical bills, a single parent that is overwhelmed with the high cost to raise a family, or a loss of a job that forces someone into bankruptcy. Whatever the circumstance, bankruptcy may be an option for you.

Bankruptcy Filing and General Questions

"What are exempt assets?"
State and Federal law permit individuals (debtors) to retain certain types and amounts of property when they file bankruptcy. The property debtors can retain is called "exempt property". Exempt property or "exemptions" enable debtors to start over financially with some property after bankruptcy and, hopefully, reduce the likelihood that debtors will be forced into financial trouble in the future.

"Will creditors and bill collectors stop calling me after I file bankruptcy?"
Yes. One of the most important provisions of the Bankruptcy Code is called the "automatic stay". This part of the Code prohibits creditors from calling, writing, suing, or taking any other action against a debtor in an effort to collect a debt. If creditors persist in contacting a debtor after filing bankruptcy, the Court may sanction the creditors by ordering the creditors to pay compensatory and/or punitive damages, plus attorneys fees incurred by the debtor in bringing the matter before the Court.

"Who notifies the creditors that I filed bankruptcy?"
The Bankruptcy Court sends a notice to all creditors listed on your bankruptcy petition, schedules, statements and mailing matrix. You are required to provide the Court with an accurate list of your creditors for the Court to perform this function. The notice alerts the creditors of the bankruptcy filing, invites them to the meeting you have with the Trustee, and instructs them to take no further steps to try to collect their claims against you.

"Must I list all my creditors when I file bankruptcy?"
Yes. It is critical that you list every creditor to whom you owe money when you file, even family and friends. Even if you do not believe you owe the creditor money, but the creditor believes you owe money, you should list the creditor to resolve any potential issues.

"Can I negotiate a settlement of my debts with creditors without filing bankruptcy?"
Yes, it is possible to negotiate a settlement of debts with creditors, provided that the creditors are willing to work with you. Frequently, however, creditors will not agree to settle your debts because the debt was recently incurred (within the past year), or the creditors will insist upon payment settlement terms which you cannot meet. For example, creditors may require that a settlement be paid in cash immediately upon reaching an agreement with you.

If you do not have access to enough cash to pay the settlement, you may lose the opportunity to settle. Creditors also move accounts from one collection agency to another while they try to collect from you. Simply because you can reach an agreement with one collection agency for settlement doesn't mean you can reach that same agreement with the subsequent collection agency if you are unable to come up with the cash to complete the deal initially.

Finally, creditors who settle with you frequently send you a 1099 form at the end of the year which will label the money you did not pay them in the settlement as income to you. Example: If you owe a credit card company $10,000, and the company agrees to settle with you for $7,000, the company may send you a 1099 form at the end of the year showing that you had income of $3,000. You may have to pay both federal and state income taxes on that income.

"Will my bankruptcy filing be in the newspaper?"
Bankruptcy filings do not typically appear in the local newspapers, but do appear in some local business publications.

"How long will it take for me to re-establish my credit after bankruptcy?"
In the past, it took years before a person filing bankruptcy could get credit again for cars or home loans. Today, the credit markets are much more willing to allow a person who just filed bankruptcy to obtain a car loan or mortgage immediately after receiving their bankruptcy discharge. We have had clients who bought new vehicles days after receiving their discharge, and buying houses months after their discharge. Of course, each person's situation is different and future lenders place considerable importance upon the stability of that person's employment and the amount of their income. Another reason why creditors are willing to provide new credit so quickly after an individual files bankruptcy is that you can only file a Chapter 7 once every 8 years. You can file Chapter 13 much more frequently, which is why Chapter 13 can be a safety valve for individuals who experience repeated financial problems.

"What happens if I fail to list a creditor on my bankruptcy schedules?"
You will not be able to discharge that debt if you don't list the debt. This rule applies in both a Chapter 7 and Chapter 13. In certain situations, a case can be reopened to add a creditor.

"What is a discharge?"
The purpose in filing bankruptcy is to eliminate debt. At the end of every bankruptcy that is successfully completed, a debtor receives an order from the Bankruptcy Court known as a "discharge". The one page discharge order is the paper every debtor seeks through the bankruptcy process. If a debtor files bankruptcy and does not receive a discharge, the experience will probably have been an expensive waste of time since creditors will be able to pursue and collect the bills after the bankruptcy is completed.

"Must I list all my assets when I file bankruptcy?"
Yes. It is very important to list all of your property when you file bankruptcy, no matter what Chapter you file, and no matter where the property is located or the nature of your interest in the property. Your failure to accurately list your property could cause you to lose your right to a discharge, and also cause you to be criminally prosecuted by the U.S. Attorneys Office in Federal Court.

"If I do not want to discharge a debt, may I continue to pay it?"
At the end of a bankruptcy, even if a debt is discharged, you may continue to pay it, if you wish. The discharge simply legally prohibits the creditor from forcing you to continue the payments.

If you have secured debts (such as a house mortgage or car loans), and you wish to retain the house or vehicles, and you file a Chapter 7 bankruptcy, you can enter into a written "reaffirmation agreement" with the creditors that must also be signed by your counsel and approved by the Court. If you reaffirm such debts, they will survive the bankruptcy and you will legally owe the debts, just as if you had never filed bankruptcy with respect to the debts. Bankruptcy Courts are careful about debtors seeking to reaffirm debts because the Court does not want a debtor to stay in debt over his or her head by reaffirming too many secured obligations.

Chapter 7 Bankruptcy

"Who can file a Chapter 7 bankruptcy?"
Any individual or business entity unable to pay his, her, or its debts as they come due can file a Chapter 7 bankruptcy. There is no debt ceiling or threshold for a Chapter 7 bankruptcy. For some people, owing a few thousand dollars is more than they can financially handle, while others do not file a Chapter 7 unless their debts exceed tens or hundreds of thousands.

"What role does the Trustee play in a Chapter 7 bankruptcy?"
In Chapter 7, the Trustee is charged with the responsibility of reviewing the debtor's documentation filed with the Court, meeting with the debtor and debtor's counsel at the meeting of creditors, liquidating any non-exempt assets, and distributing the funds to creditors under the supervision of the Court.

"What must I do to receive a discharge in a Chapter 7 bankruptcy?"
If a debtor accurately lists his or her debts, assets, income, and expenses, correctly answers the questions posed on the Statement of Financial Affairs, cooperates with the Trustee in providing any additional information requested, and likewise is honest and forthright with the Court, the debtor will receive a discharge. If a particular creditor believes that a certain debt should not be discharged because of the nature of the debt or the conduct of the debtor before filing bankruptcy, the creditor can request the Court to not allow the debtor to receive a discharge with respect to that debt. Even if the creditor is successful in convincing the Court that that one debt should survive the bankruptcy, all the remaining debts will be discharged.

Chapter 13 Bankruptcy

"Who can file a Chapter 13 bankruptcy?"
Any individual who is a wage earner or operating a sole proprietorship can file a Chapter 13 bankruptcy, provided that their unsecured debts do not exceed $336,900 and their secured debts do not exceed $1,010,650. In simple terms, an individual or married couple who have enough disposable income to fund a Chapter 13 plan and who do not qualify for a Chapter 7 bankruptcy based on their income level.

"What role does the Trustee play in a Chapter 13 bankruptcy?"
A Chapter 13 Trustee usually does not liquidate property for distribution to creditors. Instead, the Trustee collects the funds paid by the debtors over the three to five year payment plan and distributes the funds to creditors on a monthly basis. The Trustee also reviews the debtors' documents filed with the Court, meets with the debtors and counsel, and monitors the debtors' progress with the payment plan. If debtors are unable to comply with the payment plan, the Trustee makes a report to the Court, and/or requests the Court dismiss the case or convert it to a more appropriate chapter (such as Chapter 7).

"What must I do to receive a discharge in a Chapter 13 bankruptcy?"
For a debtor to receive a discharge in Chapter 13, not only must the debtor perform the same tasks listed above for a Chapter 7 discharge, but the debtor must have successfully completed the three to five year payment plan by making all payments to the Trustee during the required time period and otherwise followed all of the other requirements of Chapter 13 by reporting changed income, filing income tax returns on time, and staying current on bills that come due after the filing of the Chapter 13 bankruptcy.

"If I am behind on my mortgage payments or car loan payments, which type of bankruptcy might help me keep my house and car?"
The only type of bankruptcy that can assist you to retain a home or vehicle when you are behind on your payments is Chapter 13. The three to five year payment plan can cause you to catch up on your mortgage payments and pay for your vehicle during the time you are in the plan. In some cases, a Chapter 7 can stop a foreclosure or repossession and allow you enough time to get caught up on your payments.

Violations of Stays and Injunctions

"Will creditors and bill collectors stop calling me after I file bankruptcy?"
Yes. One of the most important provisions of the Bankruptcy Code is called the "automatic stay". This part of the Code prohibits creditors from calling, writing, suing, or taking any other action against a debtor in an effort to collect a debt. If creditors persist in contacting a debtor after filing bankruptcy, the Court may sanction the creditors by ordering the creditors to pay compensatory and/or punitive damages, plus attorneys fees incurred by the debtor in bringing the matter before the Court.