Consumer Bankruptcy

There's Nothing Like A Fresh Start

Consumer bankruptcy might be the right choice for you.

Allenbaugh | Samini | Ghosheh LLP’s lawyers and staff take great care and consideration in representing bankruptcy clients. Our attorneys and staff have assisted numerous clients get a fresh start and out from under mounting debt.

The current economic climate does not leave too many options available for a person with mounting debt and financial hardship. The government provides one method that gives each individual the opportunity to make a fresh start: Bankruptcy. Bankruptcy is the legal mechanism by which the United States Constitution gives people a way to deal with insurmountable debt and the potential loss of their home.

Millions of Americans file for bankruptcy each year. In this unprecedented economic situation, many are suffering from mounting credit card debt, adjusting mortgage payments, a home that is valued less than the loan amount, job loss, mounting medical bills, and other factors that are causing significant strife. Our attorneys and staff take great caution in assisting clients that are coping with the stresses associated with considering bankruptcy. Our clients quickly discover that our firm makes the entire process as easy as possible to yield the best results.

You do not need to live under the constant pressure of bill collectors and creditors. The law provides each of us with rights to stop the unrelenting pressure of debt and our attorneys can guide you through the evaluation process to determine whether bankruptcy is right for you. Simply stated, the law provides for a solution for people in situations not unlike yours.

What is Bankruptcy?

Generally, people are not well informed or knowledgeable about the use and benefits of bankruptcy. Thus, there are many misperceptions and mischaracterizations of the benefit and application of bankruptcy.

Consumer, or personal, bankruptcy is generally limited to two options: Chapter 7 and Chapter 13. Chapter 7 bankruptcy provides for an outright cancellation or “discharge” of many of your existing debts. Chapter 13 bankruptcy provides clients with an opportunity to restructure their debts and to pay back a portion of those debts over a period of up to 5 years. At the end of the repayment plan approved during a Chapter 13 bankruptcy, the remaining balance of the client’s debt is discharged.

Our attorneys and staff will help guide individuals who are looking for a solution to their debt problems. Allenbaugh | Samini | Ghosheh LLP will assist each client in determining if bankruptcy is right for you and guide you through the maze of achieving bankruptcy relief.

At Allenbaugh | Samini LLP, our attorneys will honestly and genuinely inform you of all of your available options, including the option of filing for bankruptcy. Unlike many other firms, our firm only represents individuals like you who do not know where to turn for help.

Chapter 7

Chapter 7 bankruptcies are typically what most people think of when they hear the word “bankruptcy.” A Chapter 7 bankruptcy involves the sale of one’s assets in order to satisfy one’s debts. At the most general level, the proceeds from the liquidation sale are used to satisfy the debts. The key is that many of the debts and their balances that remain following the sale are eliminated or discharged following distribution of the liquidation sale proceeds. The elimination of the remaining debt is known as a“discharge.”

Many do not know that not all of ones assets are sold in the liquidation sale. Bankruptcy does not require all property to be sold during the liquidation sale, but instead allows individuals to obtain the advantages of bankruptcy without losing all of their property. The law allows individuals to keep certain property within certain dollar limits. The property an individual is allowed to keep is known as “exempt property.”

Once the exempted property is identified, the remaining property is sold and the sale proceeds are distributed to the creditors. If any amounts owed to creditors remain outstanding, those amounts (with some exceptions) will be discharged.

Following a discharge, the individual is truly able to have a “fresh start.” Individuals can then resume their lives and rebuild their credit.

In certain cases, creditors will immediately begin to extend credit to those individuals emerging from bankruptcy with the knowledge that the individual is no longer weighed down by many of the debts that previously affected the individual.

The key for the individual following discharge is to take advantage of the “fresh start” by changing ones behavior so as to not fall into the same trap that caused the individual to file bankruptcy to begin with.

Chapter 13

For those individuals who continue to have a steady income but are still unable to pay down the debts they have incurred, the law provides for Chapter 13 bankruptcies.

Chapter 13 bankruptcies allow for an individual to construct a plan that will provide (i) for the repayment of a portion of past due amounts over the course of the next three to five years and (ii) the continued payment of all future obligations as they come due.

The key advantages of a Chapter 13 bankruptcy are that it (i) allows for an individual to keep all of their assets such as their home and vehicle and (ii) provides an opportunity to cancel certain contracts and obligations which the individual can not afford or are no longer necessary such as leases and car loans.

If an individual proposes a plan to pay back a certain percentage of their debts (not necessarily all of their debts) and makes all of the agreed upon payments on time, certain debts that remain outstanding upon completion of the plan will be eliminated or discharged.

A Chapter 13 bankruptcy can be a good way to get more time to pay back any past due debts and reorganize ones life in order to move forward.

How can bankruptcy help me save my home?

There is one key and immediate benefit to the millions of individuals looking to file bankruptcy (either Chapter 7 or Chapter 13). At the start of the bankruptcy process (upon filing), any creditor trying to collect a debt, enforce a lien/mortgage, or enforce a judgment must immediately stop all of their efforts pursuant to federal law. This is known as an “automatic stay.”

Not only does federal law immediately require all debt collectors to stop calling and harassing you at your home, but it also immediately stops all foreclosure proceedings. The automatic stay takes effect immediately upon starting the bankruptcy process (upon filing) and can stop a foreclosure so long as the foreclosure sale has not yet occurred.

We have found that many of our clients feel an immediate sense of relief simply knowing that the creditors calls have stopped and the foreclosure proceedings have been halted.

Bankruptcy can also provide you with a way to eliminate some of your existing debts so that you can focus on making your monthly mortgage payment. In certain situations there are ways within bankruptcy to free up money that would have gone to creditors allowing you to afford your current mortgage payment and allowing you to keep your home.

An added advantage of a Chapter 13 bankruptcy is the ability to strip a secondary mortgage on your home. This means that if you have a second mortgage on your home that is making it even more difficult to keep up with all of your other payments, you can request through bankruptcy to have that lien “stripped” or removed from your property. A lien strip does not work in all circumstances and its success is highly dependent upon the facts surrounding each client. Also, a lien stripper can only work if the property is worth less than the first mortgage. However, if successful, a lien strip can free up more of your money to pay your remaining bills.

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