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Secured debt is essentially an extension of credit (e.g., a loan) that is secured by your property, typically through an agreement. Your property serves as collateral to secure the debt you owe to your creditor. Upon default, a secured creditor generally retains the right to seize that property to satisfy the debt. Unsecured debt, on the other hand, is not tied to any property. The extension of credit is based purely upon the creditor’s evaluation of your ability to pay them back. Mortgages and auto loans are among the more common examples of a secured debt. Credit cards, unsecured personal loans, and medical bills are the most common examples of unsecured debt.
Once your bankruptcy petition is filed with the Court, you will receive a notice of a scheduled creditors’ meeting, also known as a “341 Meeting of Creditors.” The creditors’ meeting is a short hearing conducted by the bankruptcy Trustee appointed to your case. Of course, an experienced bankruptcy attorney will prepare and accompany you at the hearing. At the hearing, you must answer the Trustee’s questions regarding your financial/debt situation (e.g., how you accumulated your debts, any actions you may have taken with your property, and general questions regarding the financial information you provided in your petition). Your creditors may attend the meeting and ask questions as well. Failure to answer truthfully can result in the petition being dismissed or, in extreme cases, a charge of perjury.
No. The debts that cannot be discharged vary slightly between the different chapters of bankruptcy. Generally, the following types of debt cannot be discharged:
Debts for taxes owed to local, state, or federal agencies
Debts for money, property, services, or an extension, renewal, or refinancing of credit, which were obtained fraudulently
Debts that were not in the initial list of debts or that the debtor waived being cancelled
Debts owed for alimony, maintenance, or child support
Debts owed for injury to another person or their property (as in a court judgment)
Debts for student loans
Debts for death or personal injury caused by drunk driving or from driving while under the influence of drugs or other substances
Debts incurred after the bankruptcy is filed
Any type of legal judgment
“Exemptions” allow an individual to keep certain kinds of property in bankruptcy. Federal and State laws define what assets are considered “Exempt,” but, typically, exempt property includes:
Home furnishings and clothing
Vehicles up to a certain amount
Equity in a home up to a certain amount
“Tools of the trade” (i.e., tools and equipment necessary for you to continue working
Social Security and certain retirement benefits
For specific information regarding YOUR property, call Hernandez & Associates Law Firm., PLLC for a free consultation with an experienced bankruptcy attorney!
As soon as you anticipate filing for bankruptcy, STOP USING YOUR CREDIT CARDS! Generally speaking, you may not use your credit cards to purchase “luxury” items within 3 months prior to filing for Chapter 7 Bankruptcy. However, trustees are thorough and the law allows the review of questionable purchases for potential fraud. Though certain non-luxury purchases may be allowed, a prudent attorney should advise you to completely refrain from using all credit cards within 3 months prior to filing.
Once your attorney files your bankruptcy petition, the Bankruptcy Court issues an “Automatic Stay” which immediately protects you from your creditors. CREDITORS ARE REQUIRED BY LAW TO STOP ALL COLLECTION EFFORTS AGAINST YOU. If a creditor attempts to collect your debt after the Automatic Stay has been issued, your attorney should immediately notify the creditor in writing that you have filed for bankruptcy and that they must stop any further collection attempts. In addition, that creditor may now be in violation of the Fair Debt Collection Practices Act (FDCPA).
Chapter 7: Can be filed every 8 years from a previous Chapter 7 filing, or 6 years from a prior Chapter 13 filing.
Chapter 13: Can be filed 4 years from a prior Chapter 7 filing, or 2 years from a prior Chapter 13 filing.
You must include all the debts you owe in your petition and schedules. However, you may opt to keep some debts by “reaffirming” the specific debt in a separate Reaffirmation Agreement.
Possibly. The factors that impact your ability to keep your home are:
The state you’re in and the exemptions allowed
The status of your loan (current or in foreclosure)
The amount of equity you currently have in your home
An experienced attorney will be able to advise you as to how YOUR home would be affected in bankruptcy. Call Hernandez & Associates Law Firm., PLLC for a free consultation today!
Generally, a bankruptcy remains on your credit report for 10 years.
The decision whether to grant you credit in the future is strictly up to the creditor. There’s no law that prevents anyone from extending credit to you immediately after your bankruptcy. Many debtors receive extensions of credit immediately after their unsecured debts are discharged through bankruptcy. The reality is that bankruptcy can give you a fresh start to begin rebuilding your credit score right away.
Our program is focused on dealing with only unsecured debts (credit cards, medical bills, unsecured personal loans). We cannot help you with debt that is secured by collateral (such as mortgages or auto loans). After completing the program, however, the money that you are no longer paying towards your unsecured creditors can now be used to pay down secured debts, as well as to save for your financial future. Not all consumers complete our program, and sticking with your monthly savings plan is the most important factor in determining your success.
No. Our debt reduction program is not a new loan. Some of our clients will use a consolidation loan in conjunction with Hernandez & Associates Law Firm., PLLC debt negotiation program, but most fund their settlements with a monthly payment into their settlement savings account over the program period. That being said, we do have a relationship with a lending company, and some clients who demonstrate a consistent pattern of saving their monthly draft amount on time may be eligible for a loan to pay off one or more of their settlements. Of course, this is never something that is required of any Hernandez & Associates Law Firm., PLLC client.
Absolutely not. In our Fresh Start Program, clients pay no fees whatsoever until and unless we resolve their debts. Once we settle a debt, only the fee associated with that debt is due. We will continue working to settle your remaining accounts. All fees associated with the program are included in the monthly savings amount that our account executives will quote you. Keep in mind that the amount of the fee may change depending on the state you reside in.
If you have one card with a low balance that you can quickly pay down to zero, then you may hold onto it for emergencies. However, the program will generally not work unless you enroll all of your high balance (greater than $500) credit card accounts. As you can imagine, it makes it difficult for us to negotiate with your creditors if they can see that you are negotiating on some accounts but not others.
You do. The bank account is set up in your name, and the money in the account is your money. The reason why we recommend keeping it in a new account, separate from your existing bank accounts, is that in our experience this separation dramatically increases (by a factor of 2-3 times!) the probability that you will succeed in the program. The program fees are deducted from this account on a debt-by-debt basis and only after each debt is settled, according to the Agreement you sign with us. However, the accumulated savings in the account are owned by you.
If you do not make the required minimum payments to your creditors, you may be breaking the terms of your agreement with them. Your actions will probably be reported to consumer reporting agencies as late, delinquent, charged-off or past due balanceS. This is true whether or not you enroll in a Debt Settlement Plan. Depending upon the condition of your credit report at the time of enrollment, a Debt Settlement Plan may have an adverse effect on your credit report and credit score. Our goal is to resolve your debt for the lowest cost, in the shortest period of time, without declaring bankruptcy.
There are federal and state laws designed to protect you from collection harassment. However, the fact is that most of our clients experience some collection calls. Hernandez & Associates Law Firm., PLLC goal is to get your creditors to call us and not you. We will work to minimize any calls that get through to you.
The IRS considers a forgiven debt as taxable income, so at the end of the year, they will expect taxes to be paid on the settlement. The IRS, however, has a form (Form 982) available for certain hardship situations that may exempt you from this tax. Please contact a tax advisor to discuss this issue further.
If you let your accounts go delinquent, your creditors will continue to add interest and late fees onto your balances. Typically, your balance will increase until a settlement is reached. Keep in mind that the interest is going to accrue regardless of whether you make minimum payments or not. Hernandez & Associates Law Firm., PLLC goal is to negotiate substantial reductions to the balances on your accounts, even after the interest and late fees have accrued.
Yes, you can. You can also do your own taxes and repair your own car, but most people choose to seek help. Most people prefer to leave these tasks to experienced professionals who earn their livelihoods as specialists in those lines of work. Our team of debt negotiation specialists has only one job – negotiating reductions on our clients’ unsecured debts, each and every day of the week. Our knowledge and experience puts us in a strong position to stand up to your creditors and fight for the best settlement possible. Together, Hernandez & Associates Law Firm., PLLC team of negotiation specialists are resolving approximately $40 million of debt each month.
Except when dealing with certain difficult creditors, we generally contact your creditors right away (typically within 1-2 weeks of you joining our program) to let them know that we have authorization to communicate and negotiate on your behalf and to request future collection calls come to us and not you. The actual negotiation activity is typically very limited until you have saved up enough in your settlement account to make reasonable offers to your creditors. Most (but not all) creditors do not want to spend time negotiating an account unless they know there are funds available. The first settlement typically happens in months 2-4 of a client’s program (this varies greatly and depends on your monthly savings amount and the number of creditors you have enrolled in the program, as well as the balance of each individual account). In some instances, it may take more than 6 months before the first settlement is reached.
Creditors do have the right to send debts to third party collection agencies and/or law firms in order to collect a debt. If this happens, we have a dedicated team that will negotiate on your account with the goal of resolving the debt for you. Based on our actual experience, it is a small percentage of enrolled debts on which lawsuits are actually filed. When this does happen, usually the purpose of the lawsuit is to force a settlement. We will continue to negotiate to settle the debt, although the percentages associated with settlements of debts in litigation are often higher than typical non-legal settlements. If a lawsuit is filed before you have saved up enough funds to negotiate a settlement, we may seek to resolve the account by putting it on a long term payment plan for 100% of the balance.
No. Every case is a negotiation, and there is no guarantee on how the negotiations will wind up. Furthermore, the success of our negotiations is highly dependent on your ability to save a specified amount each and every month that you are in the program.
No. We are not a credit repair company. Our goal is to negotiate settlements at less than face value on your unsecured debts.