Bankruptcy. No one wants to think about it. Unfortunately, more and more people are considering bankruptcy as a way out of their problems. I talked with William D. Schroeder Jr., a bankruptcy attorney in Colmar, to find out exactly what bankruptcy is and what someone should do if they are in financial difficulties.
Beverly A. Black What is bankruptcy exactly?
William D. Schroeder Jr. It’s a court ordered protection from all creditor action, an orderly administration of your debts. There are three types – chapter seven, chapter 11 and chapter 13, but generally individuals go through chapter seven or 13.
Chapter seven eliminates all credit card debt, utility bills, medical bills, and car repossessions. You will have to pay your outstanding taxes but you get to keep your car, your pensions and other retirement funds as well as your home. Chapter 13 is more of a repayment plan for your mortgage, credit card debt and secured debt.
BAB What happens when someone files for bankruptcy?
WDS First, if you’re having trouble paying your monthly mortgage, we can force a repayment plan on the mortgage company. They must accept this. Also, upon filing a petition, all creditor action against you must stop. That means the phone calls and letters will stop, all sheriff and constable sales will cease and your mortgage company cannot foreclose on you.
BAB There are lots of common myths about bankruptcy. For instance, if you go through bankruptcy you’ll lose everything and your credit will be ruined forever. Are these things true?
WDS No. First, as I mentioned, you generally get to keep your home, you car and your retirement funds. With careful planning, you can have excellent credit and be back on your feet in two years.
BAB When should someone contact a bankruptcy lawyer?
WDS If you’re struggling, it’s never too early to seek legal advice. You should call around and find an attorney you can trust who won’t charge outrageous fees. For instance, I offer a $50 consultation and there’s no pressure to hire our firm. We also offer reasonable rates if you do decide to choose us.
BAB What, if anything, should someone bring with them to that first consultation?
WDS Copies of their bills, monthly mortgage statements, recent pay stubs and their most recent tax return. That’s a good start and will give me an idea of your economic situation.
BAB Nowadays many people are trying to do legal actions on their own. Is bankruptcy something an individual can do without an attorney?
WDS It’s not recommended. The law was changed in 2005 and there are many misconceptions out there. We’ve been doing this for a long time and know exactly what needs to be filed and how. And, it’s nice to be able to say to your creditors, “Talk to my attorney.” That way you don’t have to deal with all the hassles anymore and you don’t have to worry about the technicalities and deadlines.
BAB What about all these easy debt consolidations letters people receive? They sound too good to be true.
WDS Exactly. I’ve had many clients who came to me after they had gone through that process and lost a lot of money. I think they’re a waste of time. You might want to try to deal directly with the credit card company yourself, but for peace of mind, I still think talking to