If you wish to file for bankruptcy, it is highly advisable that you hire a competent bankruptcy attorney instead of filing for bankruptcy by yourself. But as in any profession, there are good bankruptcy attorneys and there are bad ones. A good bankruptcy attorney is a dream to work with but a bad one…well, let’s just say you will wish you never met him.

Here’s what a bad bankruptcy attorney looks like:
1. Exorbitant fees
If the attorney charges sky high fees, it should raise a red flag with you. But that does not mean you should hire the cheapest lawyer in town. Most times, you get what you pay for. Attorneys who bank on undercutting their rates just to secure the most number of clients will not be able to give you the
necessary attention your case needs. The best thing to do would be to do some due diligence on what the general rates are among most bankruptcy attorneys and if you find one that is either way above or below the norm, you should avoid him or her.
2. Hidden fees
When discussing your case with the bankruptcy attorney, be sure to bring up the question of fees and ask him or her to explain a breakdown of the fees. You have a right to question what every charge is for. And you should avoid bankruptcy attorneys who are not upfront with how much they will charge you.
3. Pushy attorneys
If you come across a bankruptcy attorney who seems pushy and wants you to sign a contract as quickly as possible without giving you enough time to go through it, you should be wary of him or her. It is legally required of all bankruptcy attorneys to outline all parts of a contract to you so that you thoroughly understand it before you sign the dotted line.

4. Incompetent attorneys
Bankruptcy can sometimes get rather complicated. So if an attorney does not have enough experience handling bankruptcy cases, it would be better if you look for someone else. In your research, ask the attorney about his or her past cases. Look up his referrals of past clients and look through his credentials in independent attorney rating services like avvo.com.
If you need advice about bankruptcy or are looking for a competent bankruptcy call 718-263-6800

Number 4. You received a Summons and Complaint for foreclosure. Now you are being sued by your mortgage company and in danger of losing your property. You have a short period of time to respond, usually 30days or less in Illinois.
Number 3. You received a letter from a collection lawyer giving you a deadline to catch up your delinquent mortgage payments and threatening foreclosure. The next step the bank will take is to sue you.
Number 2. You receive a notice from your financial institution that your payments are in default. The next letter you will receive will be from the mortgage company’s lawyer.
Number 1. You know that you have not paid the mortgage, so why wait,
It’s time to call a lawyer
it is time to call a lawyer and plan a strategy to deal with the problem before it is too late.

One of the drawbacks to filing chapter 7 bankruptcy is that you may lose some of your stuff. Chapter 7 bankruptcy is a liquidating bankruptcy – meaning if you have assets that you own free and clear of any liens and that are not protected under one of Arizona’s exemption laws, then in chapter 7 you could lose them. For instance, in Arizona there is no exemption for ATVs. So, if you own a Yamaha Banshee (my favorite ATV), in bankruptcy the trustee could require that you turn the Banshee over, they will sell it and then give the money to your creditors.
Often there is a way for you to be able to keep your stuff and file chapter 7 bankruptcy. In Arizona many of the bankruptcy trustees will allow you to keep your asset if you will agree to pay the value of the asset so that it can be distributed to your creditors. So, with the example above, if your Yamaha Banshee is worth $3,000 you could offer to pay the trustee $3,000 (or some other offer I will help you come up with ) and keep the ATV. Most chapter 7 trustees in Arizona will even allow you to make that in payments.

But what if the idea of paying the trustee for the stuff you own doesn’t seem like a great idea to you? There are other options – you can sell the asset before your bankruptcy case is even filed. If you transfer any asset out of your name prior to filing bankruptcy you can count on that transaction receiving scrutiny. However, if you follow a few simple guidelines you can sell assets and still file chapter 7 bankruptcy.
#1 – You Can’t Give it Away.

Did you know that bankruptcy is mentioned in the United States Constitution? Bankruptcy laws, in one form or another, have been around for a long time. Because of this, any way you can think of to try and hide an asset has been thought of by many people before you and the bankruptcy laws have evolved to prevent such behavior. Not that you would/should ever think of hiding an asset (seriously, don’t ever try and hide an asset – it will not end well.)
The first important point is that you cannot give away assets prior to filing for bankruptcy. You cannot have your brother “hold” your boat while you go through bankruptcy by transferring the boat into his name. Such transfers must be disclosed and they will require your brother to return the boat so that it can be sold and the money used to pay your creditors. If your brother doesn’t return the boat the bankruptcy trustee will sue him to get it back. And nothing ruins future family reunions like a federal lawsuit between brothers.

You can’t give stuff away. Don’t do it. If there is an asset you are worried about, talk to your bankruptcy attorney. There are often other solutions. One of them is to sell the asset prior to filing your bankruptcy case…
#2- You Can Sell Your Stuff

If the thought of paying for your stuff twice (once when you bought it and a second time to the bankruptcy trustee)
doesn’t sit well with you, it may be a good idea to sell your asset prior to filing your bankruptcy case. You can sell things like cars, ATVs, boats, etc., so long as you sell them for fair market value and an actual sale takes place.

For example, if your Yamaha Banshee is worth $3,000 so long as you sell it somewhere near that price you will be fine. If you sell it to your brother for $500 that is not fine and will result in additional problems in your bankruptcy. You must sell the asset for approximately what it is worth.
Next, an actual transaction must take place. You must actually sell the item and cash must change hands. It must be a real sale. No trickery.
Now What Do I do With All This Money?

Asset is sold, problem solved. Right? Not yet. In Arizona you are not permitted to have more than $150 on the day you file for bankruptcy. If you have more than that the bankruptcy trustee will take it and give it to your creditors. So what do you do with the $3,000 you just got for the Banshee? That is something you and your attorney will need to go over. You can use it to buy general living items like groceries, tires for your car, car repairs, etc.. You can put it in a retirement account like a 401(k) or IRA. You could even pay your bankruptcy lawyer with it!

The point of this article is if you are needing to file bankruptcy – particularly if you are looking to file a chapter 7 bankruptcy – you need to meet with a bankruptcy lawyer to discuss all the details of your situation and how best to protect your assets while going through the bankruptcy process.

Bankruptcy can stop collection and eliminate tax debt in many situations. For more details on tax discharge see the article I wrote about Bankruptcy Tax Discharge on my personal site. While bankruptcy can be a very useful tool in dealing with the Internal Revenue Service and state collectors, it will not solve all problems. In many cases, a tax debt that would qualify for bankruptcy discharge is rendered non-dischargeable when the taxpayer fails to file a tax return and the IRS or state collection authority uses their statutory authority to assess. Some types of tax, such as employment tax, are not subject to discharge. Fortunately, there are other ways to stop or manage collection problems.

Some types of tax can not be discharged and can be collected by the IRS after the bankruptcy case is closed. Bankruptcy may not be available or appropriate for some delinquent taxpayers.
The IRS allows properly authorized professionals to represent taxpayers and help them get relief from enforced collection such as bank account and wage levies. Attorneys, CPAs, and Enrolled Agents are given special permission to represent taxpayers, can establish online electronic access to IRS taxpayer records, and can negotiate a resolution for a taxpayer with IRS collections. Tax professionals can also be authorized to represent taxpayers before most state tax enforcement agencies. Authorization is done with a power a power of attorney form 2848 for the IRS and similar documentation for state tax collectors.

While individual taxpayers can call the IRS directly and may be able to handle a tax problem themselves, tax practitioners are given access to a special telephone number to call the IRS and are assigned to specially trained personnel to help solve tax collection problems. In addition, the tax professional usually has experience in calculating payment agreements and is familiar with the regulations governing the tax collection process. If the collection officer oversteps or makes unreasonable demands, it is often difficult for an unassisted taxpayer to remedy the situation.

The term debt relief agency appears in a legal context for the first time in bankruptcy law in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 [The Act]. The first chapter of this new bankruptcy reform law can be found at Title 11 U.S.C. 101. This is the General Provisions chapter and it contains definitions of words of art used throughout the Act, and includes the term “debt relief agency”.
Debt relief agency office
Section 101(12A) defines the term debt relief agency to be any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer under section 110. Persons who fail to disclose this status are subject to penalties that could include payment of damages and attorney fees.

In Milavetz vs United States, the Supreme Court of the United States was asked to decide whether bankruptcy lawyers had to comply with the requirement to call themselves a debt relief agency. The Court ruled in a unanimous 9-0 decision that the debt relief agency provisions of the bankruptcy reform act applied to lawyers.
Although the phrase contains the word agency, the definition clearly refers to any person. You may see and hear media advertisements such as newspaper ads, radio spots, or internet ads where a person refers to oneself as an agency. While that appears to be grammatically incorrect, it is in keeping with the legal definition set forth in the new bankruptcy reform law.

An important note, the same section excludes certain types of persons or organizations from being a debt relief agency. including officers, directors, employees or agents. Also excluded are certain creditors, non-profit institutions, and some financial institutions. As are authors, publishers, and distributors of books excluded. A complete list can be found in the statute.

Once you file for bankruptcy, you get automatic stay which means your creditors are to leave you alone. However, at times you will still be harassed by a persistent creditor who either ignores the bankruptcy notice or was not informed of your bankruptcy and keeps phoning you or sending demand letters in the mail. Of course, this is illegal. In such a case, you have to take action and stand up for your rights.

What you should do is keep a record of all their attempts to contact you. Keep on file the letters of demand they send to you and the time and dates of their phone calls. These become evidence of law- breaking that you will use against them. The next thing to do is present all these evidence to your bankruptcy attorney. Your attorney will know what to do and how to bring this matter up to the attention of the bankruptcy court. You can initiate legal proceedings against your creditor(s) and sue them for breaking automatic stay and causing emotional harassment. In most cases, you will be successful as long as you can provide evidence.

Although automatic stay applies the moment you file for bankruptcy, there are certain exceptions. These exceptions come in the case of co-debtors. Some of your debts may be in two names such as a housing loan that is in joint names between you and your spouse. You and your spouse are co-debtors in such a case. All consumer debts (like housing loans) can have co-debtors. When you file for bankruptcy protection, your co-debtor may or may not be protected under automatic stay as well.

The difference comes in the type of bankruptcy you file. If you file for Chapter 7 (i.e. liquidation) bankruptcy, you will be granted automatic stay, but your co-debtor is not. However, if you file for Chapter 13 (reorganization) bankruptcy, then your co-debtor is also afforded protection under automatic stay until you are discharged from bankruptcy.

One of the most dreaded things anyone can face is the foreclosure of their home. This is because foreclosure threatens our basic need for security. But if debts are mounting and you fall behind in your mortgage payments, it is only a matter of time before your bank takes foreclosure action. Is there anything you can do about it? Yes. You can file for bankruptcy protection.

Depending on your situation, a bankruptcy filing may halt foreclosure proceedings. There are two types of bankruptcies for individuals. The first is Chapter 7 bankruptcy which is where your non-exempt properties are sold to repay your debts. Chapter 7 bankruptcy is useful if you are not behind in your mortgage payments but have run into unexpected financial problems like a huge medical bill that you need time to repay. Should you file for bankruptcy under such circumstances, there is a high chance that your Chapter 7 bankruptcy will stall your mortgage payments until you exit bankruptcy. After the discharge, your mortgage will continue as scheduled. This is how Chapter 7 bankruptcy can affect your mortgage and help you avoid foreclosure to your home.

The second type of bankruptcy for individuals is Chapter 13 bankruptcy or reorganization bankruptcy. Under this type of bankruptcy, your bankruptcy debts are put into a repayment plan that can stretch up to five years. Thus, your mortgage will be included in this plan. When you start repaying your bankruptcy debts according to the plan, you can avoid foreclosure. Chapter 13 bankruptcy will be more useful to you if you have fallen too far behind your mortgage payments and your bank has initiated foreclosure proceedings. But there is a proviso.

The bankruptcy court will only grant your mortgage to be included into your bankruptcy assets provided you are not too far into the foreclosure process. If the bankruptcy judge feels that you owe too much to the bank already and that the foreclosure process has gone on for too long, then he or she may strike out your mortgage from the rest of your bankruptcy assets. In such a case, there may be nothing you can do to save your home.

For the last few years, I have witnessed a steady stream of homeowners flowing through my office who are dumbfounded by their inability to get a mortgage modification. And for years, I have been telling them all the same thing:
YOUR SERVICER DOESN’T WANT TO MODIFY YOUR LOAN!

The truth of the matter is that, of all the options available to a mortgage servicer to deal with a distressed homeowner, mortgage modification is the least desirable for the servicer of your loan.

This phenomenon is discussed at length in a recent Washington Law Review article by attorney Diane E. Thompson entitled Foreclosing Modifications: How Servicer Incentives Discourage Loan Modifications, 86 WashLRev 755 (© 2011).

Ms. Thompson, who is Of Counsel at the National Consumer Law Center, adeptly dissects the servicer’s incentive to foreclose rather than modify a mortgage. She concludes:
The financial compensation and constraints imposed on and chosen by servicers generally lead servicers to prefer refinancing, foreclosures, and short-term repayment plans to modifications. Servicers recover all costs in a refinancing or foreclosure, without incurring unreimbursed expenses. Refinancing, where available, will always be preferred: the servicer incurs no costs in a refinancing, other than the staff cost of providing a payoff statement, and may gain some incidental float income from the prepayment. Moreover, if refinancing is available as an option, servicers are likely to be able to replenish their servicing rights and ensure a steady income.

Under the current rules, a foreclosure is the next best option. The servicer’s expenses, other than the costs of financing advances, will be paid first out of the proceeds of a foreclosure. Thus, the servicer will recover all sunk expenditures upon completion of the foreclosure. The servicer’s costs of financing those advances will not be recovered—but all other costs, including those services provided by affiliated entities, like title and property inspection, will be recovered.

The mortgage servicer is paid by the owner, investor or lender to service a mortgage loan. There is more servicing involved, and therefore more money to be earned, on a defaulted loan than a performing loan. And when that loan goes into foreclosure, the servicer makes even more dough. After foreclosure, the servicer gets paid in full regardless of whether the investor ultimately takes a huge loss on the foreclosed property.

When the mortgage servicing industry was bailed out by the U.S. taxpayer, servicers were genuinely afraid that they would be forced by our government to modify mortgages in exchange for taking TARP funds. However, when the Obama Administration unveiled HAMP as the solution to the foreclosure crisis, mortgage servicers breathed a collective sigh of relief.
HAMP has been universally described as a dismal failure, and the reason is simple. HAMP gives servicers a way OUT of modification because they only have to modify if that’s a better alternative for the investor than a foreclosure. But the servicer’s analysis is secretive and subject to no oversight. In short, HAMP expects the servicer to “do the right thing.”

Is Obama kidding me? Do YOU believe Bank of America, Wells Fargo, JP Morgan Chase, CitiMortgage, etc. are doing the right thing? Me either.

As Ms. Thompson concludes, “Only mandates on servicers to provide modifications and increased transparency throughout the modification process will increase modifications to a significant level.”

One of the concerns about filing for bankruptcy is that those folks will never be able to obtain credit again after filing for bankruptcy protection and assistance. Most times, nothing could be further from the truth as bankruptcy may actually improve folks’ credit score, according to my clients’ experiences (and as explained by Smart Money on their website). Every debt collection note on a credit report, every late payment, every negative notation affects a debtor’s credit score. Bankruptcy? It doesn’t add to the negative credit score; it replaces a number of negatives with ONE negative notation of “discharged in bankruptcy” with the account showing a “zero” balance. That act usually improves a debtor’s credit score. As my colleague Doug Jacobs stated in his article on this site, debtors should list all of their debts to insure that a financial fresh start is obtained. There are a number of other ways to improve your credit score.

Post-bankruptcy, acting carefully in making financial decisions improves a debtor’s credit rating according to Liz Weston of MSN Money. Jennifer Weston mentions eight credit repair tips in her blog:
1. after your bankruptcy is discharged, check your credit report for errors
2. check your report again
3. make a budget and stick to it
4. be careful when applying for new credit
5. use the automatic payment function on credit so that you won’t (ever) forget to make a payment
6. if you have student loans, make SURE you make those payments on time (this will help rebuild your credit)
7. apply for a secured credit card (where you deposit money against future charges)
8. when you do obtain new credit (and you will), do NOT max out the cards. Credit rating is affected by amount of credit available ratio to credit used.

Using the above tips, a diligent debtor will find that even a mortgage is obtainable quickly after filing for bankruptcy, according to Craig Andresen, my Minnesota colleague. Folks who educate themselves about the ways to protect themselves and who act wisely will find that their credit score improves rapidly.
Most folks are entitled to receive one free credit report each year. Those reports can be obtained through www.annualcreditreport.com or by going to each of the three credit reporting agencies:
Experian
Equifax
Transunion

In addition, there are three check/bank account reporting agencies:
Telecheck
Chex Systems
Early Warning Services

Debtors who have had returned checks or overdrawn checking accounts and who find themselves turned down for a new account should obtain a copy (also free) of their report from those agencies as well.

Buy a home after bankruptcy? Seems like a stretch for all but those who win the lottery once the discharge is issued. But play your cards right and you could be worrying about scheduling a closing date sooner than you ever thought possible.
After filing bankruptcy, you’re debt free. No more calls, no more lawsuits. Suddenly, the world feels a bit brighter and filled with possibilities. You start looking around your rental and thinking you might want to buy a home.
In order to buy a home after filing bankruptcy, you’re going to need to worry about two things. They are:
1. Your level of savings; and
2. Your credit score.

Your Savings Account (The Downpayment)
In order to buy a home, you must have a downpayment. Though the land of $0 down mortgages was wonderful for a time, it’s gone now. And if there’s a broker willing to do the deal for you, run the other way. When you don’t have a downpayment, you run the risk of going upside down on your mortgage the first time the Federal Reserve Bank chairman catches the sniffles. Definitely bad idea.

Spend the first year or so after filing bankruptcy focusing on your savings account. Sock away every spare dollar, and then some. Cut your cable or satellite television, consider ditching the landline phone in favor of the cell, and turn off your lights when you leave the room to save on electricity.

Clip coupons. Lots of them.
If you can, grow something useful in the garden rather than pretty flowers that can’t feed you.
If you want to buy a home, you need money. Lots of it. Save every dollar you can.

Your Credit Score
Going through bankruptcy will hit your credit score to the tune of about 150 points. Doesn’t sound like a lot, but when you remember your credit score tops out at 850 and seldom goes below 400 unless you’ve somehow lost your pulse, it’s pretty big.

You’re going to want to get to work on repairing the damage, and fast.
First thing to remember is that you must continue to pay your debts on time. If you’ve got student loans or a car loan, make those payments without fail. The student lender will report that positive payment stream, though the car lender may not unless you reaffirmed the debt. No reaffirmation? No problem – just keep copies of the cancelled checks and ask the finance company for a payment history before you go to the mortgage broker.

Next is that different mortgage companies may look to different credit reporting agencies – each of which may list different obligations. Some may list your utility payments, others may have the rent bill to the landlord. Keep on top of it all after filing bankruptcy to maximize the chances you can buy that dream home. You also want to check your credit reports after bankruptcy to make sure they reflect your debt-free world.

Finally, consider a single credit card after bankruptcy. Use it every month, then pay it off over a 2-month period to ensure that the payments show up on your credit report. That’s going to raise your score as well.
You can buy a home after filing bankruptcy, but the upshot is that you need to take some time to build yourself back up. Don’t rush it – Rome wasn’t built in a day. With hard work, however, you’ll get there just fine.