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It’s not unusual for an individual who is suffering from financial hardship to fall behind on payments to his creditors. For instance, if you miss a payment on a credit card debt, the company will most likely call you the next day asking for money or if you don’t pay on a doctor’s bill, the medical office will start sending letters. Likewise, when you are unable to make a car payment, the creditor will threaten repossession.

To begin with, the reason why a car creditor has the right to repossess your automobile is because it is a ‘secured’ debt. What makes it secured (as opposed to ‘unsecured’) is that there is underlying collateral (i.e. the car). This means that if you stop making payments, the creditor is allowed to come and take back (or ‘repossess’) the collateral.
So what happens once the car is repossessed? Well, if the goal is to get the car back, one route you could take is filing a St. Louis Chapter 13 bankruptcy. When such a case is filed, the creditor is ordered to give back possession of the car to you. And while you are inside the Chapter 13 payment plan, you’ll have the chance to make monthly payments on the car through a Trustee (usually with a much lower interest rate).

But there is a catch: Once the car is repossessed, you’ll only have a limited period of time before the creditor will sell it, and once it is sold, the chances of getting it back are extraordinarily slim. Typically, you will have between ten and twenty days after the repossession to get the bankruptcy petition filed and take back possession of the car.
Of course, if the car is repossessed and you are unable to file a case before the creditor sells it, the creditor will undoubtedly come after you for the deficiency on the loan. A loan deficiency occurs when the creditor sells the repossessed car after the 10 to 20 day period, but is not able to sell the vehicle to cover the balance of the existing loan. So for instance, let’s say that you owed $10,000 on your car when it was repossessed. And the creditor sells the car, but is only able to get $5,000 for it. This in turn means that a deficiency of $5,000 (the difference between the loan balance and the amount it actually sold for) is created, and the creditor can demand that you cover that deficiency. In this type of situation, it might be better to look at a St. Louis Chapter 7 bankruptcy, in which all unsecured debts are discharged (because the deficiency you owe on the repossessed car is now considered ‘unsecured,’ since there is no longer any collateral).
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Congratulations! You have received your bankruptcy discharge. Your debts have been wiped out and you are on your way to a fresh start. Still, your work is not over yet.

I always tell my St. Louis bankruptcy clients to obtain a copy of their credit reports within two months after receiving their bankruptcy discharge. Federal law entitled you to a free copy of your credit report every twelve months from the three main credit reporting agencies. You can get your free credit report by going to annualcreditreport.com.

You will want to get a copy of the report from each of the big three agencies. After receiving the credit reports, check them carefully for errors. Any debt discharged by your Chapter 7 bankruptcy or Chapter 13 bankruptcy should be listed as “discharged” and should show a zero balance. There should not be any negative reporting showing up post filing, meaning the date you filed your bankruptcy case. Additionally, any debt on which you reaffirmed should still be getting reported to the bureaus. This is important because you want your on-time payments to be reported so that you can rebuilt your credit post bankruptcy.

My St. Louis bankruptcy clients often file Chapter 13 bankruptcies in order to save their house from foreclosure. Other times, individuals files Chapter 13 bankruptcy because their household income is above the median income for their family size. For instance, if you are a household of one and make over one hundred thousand dollars a year, you make more than the median income and make too much to file for Chapter 7 bankruptcy relief.

For purposes of this article, let’s say you are in the first category, and are someone who is trying to save their house from a foreclosure. You and your wife bring in a total of $53,000 per year. In this situation, you would probably file a Chapter 13 to stop the foreclosure, but you would be below the median income level (which means you could have filed a Chapter 7 instead).

I have had several clients in the past who fit this set of circumstances. They are below the median income for their household size and would normally be a straightforward Chapter 7, but for the fact that they wish to keep the home. After being in the Chapter 13 for a while, they find it difficult to make payments to both the Trustee and the mortgage company. At that point, they might wish to go ahead and surrender the house and convert to a Chapter 7.

What makes it easy to convert to a Chapter 7 from a Chapter 13 is the fact that the client was from the very beginning a below median income household (meaning, they could have been a Chapter 7 filing from the start). You don’t lose that status, even though you filed a Chapter 13 first.

A more complicated scenario arises when someone files a Missouri Chapter 13 because they are above the median income level for their household size and can afford a repayment to their creditors. Then after being in the Chapter 13 for a while, the Debtor loses his or her job or their income is otherwise drastically been reduced. In such a scenario, there is a possibility of converting from a Chapter 13 to a Chapter 7 in light of these new facts. if documentation can be provided showing the loss of income, then a conversion can usually still be managed.
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My St. Louis bankruptcy clients often question whether it is better to file for St. Louis Chapter 7 or simply negotiate a settlement of their credit card debt. In this economy, it is not unusual to see credit card companies offer settlements on the debts you owe them. The idea behind this kind of offer is pretty straightforward: You owe a large sum of money to the creditor; they recognize that you are having difficulty paying the monthly amount and have fallen behind as a result; they figure that if they offer a lower amount in lieu of the current balance, you will jump at the deal.

Sounds good, right? Well, let’s take a closer look at the proposition. For example, assume you have a credit card balance of $10,000.00, and your monthly minimum payments are $445. You are having trouble making ends meet, so you stop paying on it. They credit card company calls you every single day, multiple times per day, for the next several months in an attempt to collect, but you are simply unable to make a payment to them while putting food on the table for your family. Finally, the creditor calls you one day and says that they want to propose a settlement. Instead of you paying $10,000.00, they will accept $5,000.00 and write off the other half.

Your ears perk up, you sit up straight in your chair, and you tell them that you probably would be interested in something like that. But the next thing you learn brings you back to Earth. They explain that since they are offering this one time settlement, they can no longer accept monthly payments. Oh and if you want to accept their offer, they need the entire lump sum of $5,000 by Friday afternoon.

Once that dream is shattered, you sit back in your chair and rub your forehead and wonder, “If I can’t make a $445.00 monthly payment, how in the world am I supposed to give these guys $5,000.00 by the end of the week?!” You explain this dilemma to them, but the only thing you get in response is a glowing description of how nice they are for making the offer in the first place.

Most people do not have an extra $5,000.00 lying around the house. If you did, wouldn’t you have been making the minimum payment all along? This is the kind of ‘settlement’ that they offer.
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There is a fair amount of paperwork that needs to be filled out in order to properly file a Chapter 7 or Chapter 13 bankruptcy petition. The best way to make sure that your paperwork is properly prepared and filed, is to work with an experienced St. Louis bankruptcy lawyer.

The court is interested in your complete financial status. They want to know all about your current employment or other sources of income. They want to know all about your assets, personal property, debts, and other obligations. Other areas of interest involve where you spend your money, charitable donations, tax burdens, creditor information, and whether or not you have sold or given away anything in the last two years.

Let’s take for example your creditors: The law states very clearly that all of your creditors have a right to be notified upon the filing of your bankruptcy petition. In order to satisfy this rule, your Missouri bankruptcy attorney will undoubtedly run a credit report for you, which will in turn provide a history of your creditors and debts that are currently owed. However, not all of your debts may show up on the credit history report. Sometimes the creditors assembled on the report represent only a partial listing of the debts that you actually owe. Some creditors simply do not report the debt to the credit bureau (frequent examples of such creditors include hospitals and doctor’s offices). So even if you run the three big credit reporters, those debts will not be listed. As a result, most bankruptcy attorneys will ask that you write out all of your creditors by name, and include the amount owed, account number, and mailing address. This way, there is a much greater likelihood that all of your creditors will receive proper notification.

Another example would be the valuation of your personal goods. Unless you are really good friends with your bankruptcy attorney, and he/she is a frequent guest in your home, the attorney is most likely not going to know what sort of personal property you own or the value of said property. The court requires that you provide a value (usually ‘garage sale value’) for all personal property, so as to get a sense of your other assets. Unless your attorney has access to this valuation, he/she cannot exempt the property so as to ensure that you keep it.

All of this information resides with you. Which means in order for your attorney to successfully file your case, he/she will need you to fill out some paperwork that will provide him/her with the necessary information. It’s a lot of busy work, but if you can commit an entire afternoon to the project, you should be able to have it completely within a few hours.

In addition, the court requires that you disclose certain pieces of information in documented form. For instance, the court will want to know about all sources of household income for the six months prior to filing for bankruptcy. The best documented proof of this income is in the form of pay stubs (sometimes called ‘pay advices’) from your employer which shows things like gross income, deductions, certain exemptions, and net income. Once your bankruptcy attorney has these documents, he/she can enter it into the so-called ‘Means Test’ calculation (the formula which ultimately determines whether you qualify for a bankruptcy filing).
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This is a frequently asked question by many of my St. Louis bankruptcy clients, which makes sense. Filing a Chapter 7 bankruptcy is a much easier route than that of a Chapter 13 bankruptcy. The length of time is much shorter, the expense much smaller, and the discharge from debts is received much more quickly. So if a Chapter 7 bankruptcy is the easier path, then how do you know if it is right for you?

Well, the most straightforward way to answer that question is to begin with a discussion about whether you qualify for a St. Louis Chapter 7 bankruptcy. According to the standards set by the state and federal governments, there are certain median income levels for each household. For example, the median income for a household of one in the state of Missouri is: $39,332.00. If your income far exceeds this amount, then there is a good chance that you will not qualify for a Chapter 7 bankruptcy. However, if your household income is near or below that level, a Chapter 7 would most likely be something for which you would qualify.

There really isn’t a ‘typical’ Chapter 7 client, but if there were, he or she would look something like this: large amounts of unsecured debt (credit cards, medical bills, payday loans, utility bills, etc.); rents an apartment, and does not own real estate; owns an older car; not much, if any, tax debt; and has not filed bankruptcy before.

Does that mean that unless the individual fits into the criteria described above that they cannot file a Chapter 7 bankruptcy? Of course not. That’s why it’s important to understand that there are several different scenarios under which a person can file for bankruptcy. There is not ‘fixed’ model. The St. Louis Chapter 7 bankruptcy attorneys at The Bankruptcy Company have filed Chapter 7 bankruptcies for people who are above the median income level (because there are mechanisms that good bankruptcy lawyers can be used to decrease the amount of disposable income that appears in the forms that are filed with the court), who have multiple pieces of real estate (because in this market, it is rare to find a home with any equity at all), own brand new cars (because the car creditor undoubtedly has a large note secured against it anyway), and have thousands in unsecured debts.

Each case is independent of every other one, and every person’s situation is different. However, the threshold question, the one that can make or break, is whether you are above or below the median income level for your particular household size.
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As a St. Louis bankruptcy attorney, the question I am asked the most is, “How much does it cost to file bankruptcy?” When you are in dire financial straits, you don’t normally have a lot of extra cash laying around. The creditors are hounding you for a payment, you are struggling to keep the lights on, and then there is that minor thing about having to eat everyday. When money is tight, money is tight.

But let’s put this into perspective: Say you have approximately $20,000.00 in credit card debt; another $4,000.00 in medical bills; some outstanding payday loans in the amount of $1,500.00; and that car company is still after you for the deficiency on a repossession from last year of $14,000.00. As you can see, the debts can start to add up quickly. And this isn’t including things like penalties, interest, fines, and all the creditor’s attorney fees.

At this point, you begin looking into filing for bankruptcy. Let’s say that the average fees for a Chapter 7 bankruptcy is $1,000.00 (although our St. Louis Chapter 7 bankruptcy lawyers charge $700.00). If the total amount of debt that you owe to your creditors is somewhere in the range of $50,000.00, then it really comes down to a cost/benefit analysis. In other words, is it worth paying an attorney $1,000.00 to file a St. Louis Chapter 7 or St. Louis Chapter 13 so that you can get debt relief to the tune of $50,000.00. The benefit is clear.

Also keep in mind that the fees do not have to be paid all at once. Most bankruptcy attorneys will allow you to make payments over time, so that you can spread things out a bit. For instance, if you are paid bi-weekly at your job, you could pay a portion of the fees with every paycheck that you receive. Before you know it, you’ll be paid in full, and the case can be filed.

Ultimately, the goal of the bankruptcy is to discharge all the unsecured debt that you are carrying around. Once that debt is discharged, it is gone forever, and the creditor can never hassle you again. For most people, paying an attorney to make sure that happens is worth the fees he/she charges, because once your case is complete, you will have a fresh start / clean slate, and a chance to head in a new direction in life.
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No, it is necessary that your spouse file a joint bankruptcy with you. And in fact, it may sometimes be more beneficial to file solely based on the situation at hand and the types of debts that exist.

First, let me start by describing when a joint bankruptcy (either Chapter 7 or Chapter 13) between you and your spouse may be best. The most common situation would be when a husband and wife own most of their debts jointly. For instance, if the credit cards, personal loans, mortgage, car notes, and business debt are in both of your names (and therefore you are both jointly liable for the underlying debts), then it is probably advisable to file the bankruptcy jointly. You can still file an individual petition, in which case all the debts would be discharged that run to you, but your spouse would still be on the hook for all the money that is owed. In this scenario, even though you have gotten out from underneath the debts, it is still going to end being a problem since the creditors will simply go after your spouse. But if you both file, the debts are discharged jointly so that the creditors cannot come after either one of you.

But sometimes, it is preferable to file a bankruptcy individually without your spouse. Many examples come to mind, so let me describe a couple. The most obvious example would be a case where you are the only one who has amassed the debt, it is all in your name solely, your spouse has little or no unsecured debt, and your secured assets are separately owned (you have a car in your name, he/she has a car in his/her name). In this scenario, it would probably make more sense for you to file a St. Louis Chapter 7 or St. Louis Chapter 13 individually. This would also ensure that at least one member of the household will not have the bankruptcy filing show up on their credit report (which may be advantageous in the short-term while the filing spouse gets back on their feet financially).

Another example would involve a situation in which one of the spouses is not currently eligible for a discharge in a bankruptcy. The bankruptcy code states that an individual may not file two Chapter 7s within an eight (8) year period. So if your wife filed a Chapter 7 in May 2010, she is not eligible to file another Chapter 7 until May 2018. But if your debts have reached an unsustainable point, such that making even minimum payments is unfeasible, then you still might want to file an individual bankruptcy even though your wife cannot.
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Many of my St. Louis bankruptcy clients assume that by filing for bankruptcy, either their current employment will be harmed or that they will have a more difficult time getting a job in the future. To begin with, it is unlawful for an employer to discriminate against you because you have filed for bankruptcy. There are legal codes detailing what an employer can and cannot do in regards to an employee who has filed for either a Chapter 7 or Chapter 13 (see 11 U.S.C. §525).

Regarding a Chapter 7 bankruptcy, the only way that your current employer is going to know that you filed anything is if you tell them. Otherwise, it is highly unlikely that they would ever find out. Your debts will get discharged, you will continue to work, and life will continue apace (but with much less stress, since you will have gotten rid of all your creditors).

In a Chapter 13 bankruptcy, you will be placed in a repayment plan over the course of three to five years. The most common way in which the payments are made to the Trustee each month is by way of a wage order (through which your payroll department deducts from your paycheck the amount necessary to go to the court). Thus, your employer (at least your payroll department) will know about the bankruptcy. This may sound like an invasion of your privacy, but you would probably be surprised to learn just how many people you work with whom are currently in a Chapter 13 repayment plan in which part of their earnings go towards payment of debts, and you have been none the wiser.

However, if you have recently filled out an application for a job, you will notice that most have a question pertaining to whether or not you have filed for bankruptcy before. If you have filed in the past, you should answer honestly. There is no reason at all to lie. But the fact that you have filed a bankruptcy in the past cannot be the basis for why you were denied employment. The employer simply cannot use this fact as justification for not hiring you.

Occasionally, there are businesses and corporations that do in fact discriminate against someone because of a bankruptcy filing. But these entities are often sued and are required to compensate the individual for having violated his/her rights.
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Discharging income tax debt in bankruptcy can be difficult. The rules surrounding when income taxes can be discharged are quite complicated. However, income tax debt is eligible for bankruptcy discharge if certain conditions apply:

The tax debt is at least three years old.

To eliminate income tax debt in bankruptcy, the taxes to be discharged must have been “due and owing” for at least three years prior to the date the bankruptcy case was filed. For example, if you file a bankruptcy case on May 2, 2011, any income tax owed for tax year 2007 may be eligible for discharge, assuming other conditions are met. This is because any tax owed for 2007 was due and owing on April 15, 2008, which is more than three years prior to May 2, 2011. Some issues can arise that further complicate this rule, such as offers in compromise, so make sure to seek the counsel of an attorney before filing bankruptcy to discharge tax debts.