People usually come here when they just can’t pay all their bills and it is usually after they have tried everything else. They might have already looked into debt management or debt settlement and may have even paid out money and tried it for a few months. They would have looked at trying to get loans or to cash out retirement plans or get 401K loans. Only after trying everything else will they come into my office and say it’s time to look at bankruptcy.
How Much Debt Does The Average Person Have, And Is There An Amount Too Low To Be Worth Filing For?
The amount of debt that causes enough trouble that somebody is losing sleep at night really depends on their particular situation. If somebody had less than $5,000 or sometimes even $10,000 in debt then they might want to look at other alternatives but there is no hard and fast amount.
There was a case where a person had $3,000 worth of debt and I told him it was really too low. He said that he had paid $250 a month for the past year on this amount but it had not gone down at all, so he had paid $3,000 in one year but the balance was still $3,000. I told him to go home and think if really wanted to do it but since he did not see any other way, it was an exception. Typically the amount for somebody going through bankruptcy is really dependent upon their income, and what they feel is the amount that is causing them to lose sleep. If they are losing sleep over it, then I’ll agree with them and that amount will be enough for us to file.
What Is The Most Debt You Have Ever Seen Anyone In?
Some people come in after being in some sort of business deal that had gone south so they are left with over a million dollars of debt. For instance, if a restaurant closed, then they would still be on the lease at the retail space, although that is an exception. There have been cases of consumer debt where the person is over a hundred thousand dollars in debt from credit cards and signature loans.
What Happens To People Before They Come To See You And Do They Constantly Get Calls From Creditors?
Nobody calls us until after they have been getting a lot of collection calls and are losing sleep over their bills. If they were current on their bills, then this would have been the first time they had ever been in default. They had just missed their first credit card payments and it was the first time ever or they just made their last round of credit card payments and they know they can’t make them anymore. So they want a solution before the first round of default comes. That is one end of the spectrum, but the other end is where they have not made payments in a long time and they have already tried everything else, but now they have begun getting a lot of calls at work, on their mobile phone, they are getting some threatening letters or some of them have even been sued on an old credit card debt.
Do A Lot Of People Come In For Foreclosure?
We don’t see many people coming for foreclosure because they get something worked out with the mortgage company or they realize they are so far behind that there is no way they can really start making the house payment again and they must make some extra payments to pay for all the missed payments.
What Are The Kinds Of Bankruptcies Available To People And How Do They Choose?
There are two forms of bankruptcy. The chapter 7 is the form of bankruptcy with no monthly payment to a trustee, and is for people who have no money left over to pay towards credit card signature loans and medical bills after they cover all their living expenses. They get to keep any of the debts they want to keep, like house payments and car payments. After all the living expenses are subtracted from their income, such as utilities, food, clothing, laundry, medical and transportation costs like gas, tires and brakes, and insurance, we see if there is anything left over to pay towards the credit cards or any personal loans that the person has. The person would probably qualify for a chapter 7 bankruptcy when the answer is no. In bankruptcy, a person only has to pay as much as they can afford and in chapter 7, it is zero because there is nothing left over to pay towards the credit cards and personal loans.
Chapter 13 is the form of bankruptcy where there is a monthly payment and that is for people who have money left over after they have subtracted the house and car payments and all the living expenses from their income. If there is more than $140 leftover, then they would probably qualify for a chapter 13 bankruptcy. They would not have to pay everybody in full, but would have to pay as much as they can afford so if there is money leftover, then they would have to use it to pay creditors. If they do not have any money left over, then there is nothing to pay.
How Does A Person Know How Much They Can Afford? Is There A Certain Amount Of Payment That Creditors Will Get Back For Their Cutoff?
The payment plan lasts for three to five years, and whatever is not paid at the end of that period is then discharged in bankruptcy. In chapter 7 bankruptcy, the discharge is granted upfront because there is nothing to pay and in chapter 13, the discharge comes at the end after all the payments have been made. The length of the chapter 13 bankruptcy is either three or five years of payments depending on whether the person is above or below median income.
What Is The Median Income Right Now?
The median income for a two person household is $57,730 a year, whereas it is $42,223 for a single person household, which is $3,519 a month.
In Chapter 13, If Someone Has $200 Extra A Month, They Would Make Either 36 Payments Of $200 Or Up To 60 Payments Of $200,But Anything More That Is Owed To Creditors They Are Just Not Going To Get, Right?
Somebody who is below median income would typically try to find a way to do the chapter 7 bankruptcy. If there is no way to make it work with certain changes like maybe living expenses like rent, then the person would do the chapter 13. Most chapter 13 plans last for 5 years because they are above median income.
How Long Does A Chapter 7 Last Until The Debts Are Discharged?
The case is only open for 90 days. We open a file and the person has to give the name, address, and account number for all their creditors. We enter it into our system and take all the information that the court requires in the form. When they come in, they read it and sign it so it can be filed. Once filed with the court, the case will only be active for 90 days and that’s it. The discharge is granted after that and they are debt free.
For more information on Filing For Bankruptcy, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling 210-930-7000 today.
