If you are burdened with excessive debt, let us help you find a solution and stop creditor harassment
We provide quality legal services to clients across the Front Range, helping individuals obtain debt relief and move forward without the stress and strain of constant financial worry. We’ll guide you through the bankruptcy process from start to finish, and help you achieve the best result possible.
Having Debt is Not a Hopeless Situation
Don’t let debt paralyze you. You are not alone– thousands of Colorado residents are burdened with insurmountable debt, whether from divorce, the loss of a job or business, illness or other circumstances beyond their control. Call us today and we can help you start a debt free future.
Bankruptcy may enable you to eliminate or reduce your debt while keeping important assets such as your home, car, and other personal possessions. We can give you the immediate debt protection you need and help you establish the best path to a brighter future.
Chapter 7 Basics:
Chapter 7 bankruptcy is designed for those in financial difficulty who do not have the ability to pay their existing debts. If your income is lower than Colorado’s median income, you can likely file for Chapter 7 bankruptcy. A few situations in which Chapter 7 bankruptcy may be a good solution include:
- High credit card debt or medical bills you are unable to pay.
- Vehicle loans or personal loans you are unable to pay.
- Wage garnishment has lowered your income.
- Creditors are constantly calling and may be threatening legal action.
In a Chapter 7, the debtor’s assets are sold to pay creditors in accordance with the provisions of the U.S. Bankruptcy Code. In exchange for this liquidation of assets, Chapter 7 discharges most unsecured debt, such as credit card bills, medical bills, and loans not backed by collateral.
Debtors in Chapter 7 are allowed to keep certain “exempt” property, such as a car, household items and insurance policies up to a certain amount. We’ll help you determine whether your assets are exempt or nonexempt and whether Chapter 7 is the best fit in your unique circumstances.
It’s important to know that certain types of debt are not dischargeable in Chapter 7 bankruptcy, meaning you must still repay these debts after bankruptcy, including student loans, criminal fines, penalties, forfeitures and restitution.
Chapter 13 Basics:
Chapter 13 is designed for those with regular income who would like to pay part of their debts in installments over a three to five year period, or those who do not otherwise qualify for a Chapter 7 bankruptcy. Under Chapter 13, you must file a plan with the court to repay your creditors all or part of the money that you owe them, using your future earnings. The length of time you have to repay your debts from 36 to 60 months depends upon your income and other factors. The court must approve your plan before it can take effect.
The advantage of declaring Chapter 13 bankruptcy is that you are able to force creditors, in a successful plan, to accept your terms. These terms may afford you relief from losing your home, risking an IRS or state taxing agency levy, wage garnishments, liens and other methods utilized by creditors to collect on debts. Once your payment plan period begins, creditors cannot charge interest on your debts. All payments go straight to the principal balance of each debt, enabling you to pay off your debts as quickly as possible. After completing the payments under your plan, all of your debts will be discharged except nondischargeable debts, such as domestic support obligations, certain taxes and student loans.
Alternatives to Bankruptcy
If you make too much money or have too many assets to qualify for either Chapter 7 or Chapter 13 bankruptcy, but you are still unable to meet your financial obligations, we can negotiate with creditors on your behalf to reduce debt balances, interest rates and monthly payments. Some alternatives to bankruptcy include:
- Debt Settlement – Debt settlement typically involves approaching a creditor and negotiating a lower payment on an outstanding debt. Lowering your payment may entail lowering the principal balance, lowering the interest rate, or negotiating a final figure that will settle the debt in one lump sum payment. Creditors often accept debt settlement if they stand to get nothing if you file for bankruptcy.
- Loan Modification – There are many government-backed loan modification programs available to overburdened debtors. For example, if you are employed, but you are still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP®), which will lower your monthly mortgage payments in order to make them more affordable and sustainable in the long-term.
While not all debtors need bankruptcy, obtaining debt settlements and loan modifications can be quite cumbersome and frustrating if you have more than a few creditors. This is because you must negotiate with each creditor individually, and you cannot be sure that every creditor will be open to bargaining with you. Furthermore, while you are negotiating with one creditor, another may continue to harass you with phone calls and mailings.
On the other hand, if you file for bankruptcy, the bankruptcy trustee brings all of your creditors together, and they are required to follow one court-supervised plan. Also, once the automatic stay goes into effect, creditors must end all debt collection efforts.
With all of these factors, it is important to talk to an attorney who handles bankruptcy, debt settlement and loan modification to ensure your case is handled according to your unique needs and goals. Many people face financial hardship?we take the time to thoroughly analyze your case and find the best solution for you.
We help consumers obtain relief from debt by using the protections afforded under bankruptcy law. As soon as a bankruptcy petition is filed, an “automatic stay” goes into effect, whereby creditors are no longer allowed to send harassing letters or make debt collection calls that threaten wage garnishment, repossession, foreclosure and other legal actions. If one or more of these legal actions has already been commenced, the creditor must stop proceeding in the action.
Once a debtor is under the protection of the Bankruptcy Court, he or she only has to deal with the court and the designated bankruptcy trustee, rather than with the creditors themselves. If a creditor continues to pursue collection efforts after being informed of the bankruptcy proceedings, the creditor may be liable for court sanctions as well as damages under the Fair Debt Collection Practices Act (FDCPA).
Stopping Bill Collector Abuse
The FDCPA also prohibits collection agencies and bill collectors from using abusive, unfair, or deceptive practices in their collection efforts, such as:
- Verbal abuse and intimidation, including threats and profane language
- Lying about the amount of money owed or the consequences for non-payment
- Calling on the phone repeatedly with the intent to harass, disturb, or annoy
- Publishing a person’s name as someone who refuses to pay debts
- Advertising the debt to coerce payment of the debt
In addition, the FDCPA prohibits collection agencies and bill collectors from contacting debtors before 8:00 in the morning or after 9:00 at night without consent, nor may they contact people at work if they are told calls cannot be received there. In fact, bill collectors must stop contacting a person altogether if they are told to do so.
Credit after Bankruptcy
Although bankruptcy can remain on your credit report for up to 10 years, you can start reestablishing your credit immediately. When lenders determine whether or not to lend you money, they examine your debt to income ratio, which is how much outstanding debt you have compared to your income. Often, lenders would rather loan money to a person who has already filed bankruptcy and has no remaining debt than to a person who has $20,000 in credit cards and could file bankruptcy at any time.
Some clients are able to purchase a vehicle on financing the day they receive their bankruptcy discharge. You will probably pay a percentage point or two higher than a person with unblemished credit, but ask yourself how low of an interest rate would you be able to get in your present situation. You should also be able to finance a home within two years after receiving a bankruptcy discharge, as long as you can provide a minimum down payment and show the ability to make the monthly mortgage payment.
Steps you can take to rebuild your credit after bankruptcy include repairing your credit report, using credit cards and staying current on all your accounts:
- Repair your credit report – First, ask the credit bureaus to correct any errors in your credit history. Second, ask for the addition of information such as current and previous employer, current address and telephone number. All this positive information will help repair your credit report and provide creditors evidence of stability.
- Utilize credit cards – Many consumer debtors receive credit card solicitations within months of receiving a bankruptcy discharge. Use your newly acquired credit cards every month for small purchases and then promptly pay the balance to avoid interest charges. If your credit card application is rejected, find a cosigner or apply for a secured card.
- Get and stay current on all your accounts – If you are behind on any of your accounts, creditors will send your accounts to collectors and this will negatively impact your credit score. If you fall behind on payments, contact your creditors or see a credit counselor and let them know your situation. This will give you a chance to work something out with the creditors, possibly delaying reports of delinquencies to the credit agencies.
If you have been avoiding creditors, or if you have been trying to work with them but are getting nowhere, we can help. Filing for bankruptcy or simply having an attorney represent you can stop collection efforts in their tracks, including repossessions, foreclosure actions and wage garnishments. Contact Rocky Mountain Bankruptcy today for a free initial consultation and take the first step toward becoming debt free.