Denver Chapter 7 Bankruptcy
Is Bankruptcy Right for You? We Can Help You Decide.
Bankruptcy shouldn’t be an emotional decision. It should be a practical business decision. If filing Chapter 7 or Chapter 13 bankruptcy would, on balance, benefit your family or your business financially the decision to file bankruptcy is the right one to make.
At Taggart Law Offices during a free consultation with an experienced bankruptcy attorney we help the people and businesses of Colorado discover whether bankruptcy is right for them . We offer a range of debt relief options to our Denver-area clients. Read on to learn more about two of our debt relief options: Chapter 7 and Chapter 13 bankruptcy.
Overcoming the Psychology of Bankruptcy
I have never met someone who awoke one day and declared it sounded like fun to consult a bankruptcy attorney or declare bankruptcy. It certainly is nothing anyone foresees or plans on. But things happen. No one can do much about where you are or where you have been…but we can do something about where you are going. If you are drowning in overwhelming debt, you need to look forward not backward; and stop assessing blame and assigning shame to yourself. Job losses, the bad job market, the housing bubble, drops in home values, huge medical bills and the belief things would turn around are certainly not your fault or your responsibility. What is your responsibility is the strategy you chose to get back on your feet.
I often ask people to look at their life as if it were a business… to take the personal element out of the equation. Is your debt at such a level that you cannot service it and still live like a human being? If so, in all likelihood, the smart thing to do is to file. Never forget, it’s business, not personal. Other questions to ask yourself in determining if bankruptcy is a viable option include:
• Do you need to save more for retirement?
• Do you need to save for your children’s educations?
• Is your debt to income ratio .25 or higher?
• Is your credit already damaged?
• Do you lack significant cash reserves?
• Do you have a foreclosure on your record?
• Do you want to buy a home someday?
• Are you dramatically upside down on your home and/or your car payments?
If the answers to some or all those questions are “Yes”, there is a good chance bankruptcy will be the smart thing to do. Many people fear about the long-term impact bankruptcy will have on credit. But remember this: By the time you finally reach out to an attorney, odds are your credit is already in pretty bad shape. Next, also remember that bankruptcy does not destroy your credit for 10 years. If you do the right things, you often can get your credit back to the 700s and often within two years. Never ever come to your own conclusions on whether or not bankruptcy is right for you. Perhaps it isn’t, but let a trained bankruptcy attorney analyze your situation first.
What Obligations Bankruptcy Can and Cannot Eliminate
While a Chapter 7 can be a fantastic way to get a fresh start, it cannot eliminate all obligations. Specifically, it cannot eliminate child support, court-ordered maintenance, most taxes, student loans in most cases, or court ordered restitution.
But it can eliminate credit card debt, medical bills, lines of credit, repossession deficiencies, business debt, personal loans and legal bills. It can also enable you to get your driver’s license back if your license has been suspended because you were in an accident and did not have insurance.
Stopping Garnishments, Foreclosures & Living Rent Free
Filing a Chapter 7 will immediately stop wage garnishments and will delay a foreclosure, sometimes up to nine months. How much time a foreclosure is delayed will depend on where you are in the process when you file your bankruptcy. If you can beat the last publication date, the bank has to start all over again… and that can take up to nine months. Meanwhile, you are living rent free and can save thousands of dollars to finance your next move or for whatever purpose you see fit.
Exempt, Non-Exempt property and Exemption limits
One of the most important things to understand in a Chapter 7 is the difference between exempt and non-exempt assets. Exempt assets are those that you are allowed to keep even though you are filing for bankruptcy. After all, you can’t get a fresh start if you don’t have a roof over your head. Non-exempt assets, on the other hand, are those assets not protected and subject to seizure. Limits on exempt property mean that while Bankruptcy Code can exempt certain property these protections are not absolute. For example, in Colorado, the exemption level for a car is $5,000 per filer. That means if you have over $5,000 of equity in your car, you have some non-exempt auto assets. And if you think about it, it makes sense….you simply can’t file BK with a paid-in-full Ferrari in the garage without losing it.
The following list sets out the most common exemptions in Colorado. Important to note : These numbers represent equity values at used sale prices. So, if you have 2007 Toyota Camry worth $20,000 but you owe $18,000 on it, you have $2,000 worth of equity. The most common exemptions per person are as follows:
Homestead (i.e. your primary home): $60,000 or $90,000 if over the age of 60
Automobile: $5,000, $10,000 if over the age of 60
Tools of trade (things you use in your profession): $20,000
Household Goods: $3,000 per Filer
Jewelry: $2,500 per Filer
Note: If you have lived in another state in the 2.5 years prior to filing these exemptions will not apply
Some of the more common non-exempt assets people have are: tax refunds, guns, boats and snowmobiles, land, timeshares, stocks, and campers.
What happens if you have non-exempt property? Well, a couple of things can happen. First and foremost, your attorney should develop a strategy for how to best to deal with it. Sometimes that means selling it; sometimes that means waiting to file; sometimes that means refinancing the item, if possible. While if there is non-exempt property, the trustee can sell it, the more preferred way is to set you up on a payment plan whereby you pay the trustee the value of the item over several months. For example, a client of mine had a very nice Harley and certainly wanted to keep it. After beating up the value as much as I could, it was still worth $7,000, or $2,000 over the exemption level. The trustee gave my client nine months to pay that $2,000. And my client kept the bike and discharged over $200,000 of debt.
Strategizing the timing of your Filing
One of the most critical aspects of any case is when to file. Some people need to file yesterday and some need to file in a couple of years. Very many factors can determine if you should wait or rush. If you file either too soon or too late it can cost thousands. An example or two illustrates the point. If you are getting a tax refund, I generally wait until it is received and spent before filing your case. Otherwise you will lose it. Another example: I had a client that had sold property to her boyfriend for half the real value. If we had filed when she came to me, her boyfriend would have had to give the trustee the amount of the discount. In this case, I had to wait 18 months. Don’t sell yourself short on an inexperienced attorney. Knowing how to spot these issues requires experience.
How Much Does Chapter 7 Cost?
Obviously, one of the most common questions I get is, “How do I pay for a bankruptcy if I do not have money?” I certainly understand this can be tough, but never forget that a good attorney can very often save you much more money in the long run than his fee. On the other side of the coin, an inexperienced attorney can cost you thousands.
Next, realize I am a businessman as well as an attorney. With an MBA in Finance from Ohio State, and years in investment banking, I structure my practice in a way that helps people get filed without breaking the bank. First, my retainers are usually between $100 and $200. Second, I put people on payment plans that are largely up to them. I buy as much time as I can, to give my clients time to accumulate the money. Third, I have a unique program that can get you filed for as little as $500 up front combined with payments after the case is filed. Very few attorneys offer this alternative and it a good alternative if you are facing garnishments and foreclosures. Without knowing the specifics of a case, it is hard to pinpoint a fee, but I am fair and competitive. Generally, the fees do range from $1,000 to $2,500, depending on the complexity of the case.