Back To Basics Education Series: Reaffirmation and Bankruptcy

by Jack Morrison on September 23, 2011

This is the third week in our special “Back to Basics” education series in honor of back to school. Understanding the four basic topics of bankruptcy covered in this series is important. As a Worcester bankruptcy attorney, these critical concepts are important to help my clients understand their financial situation and make decisions about moving forward. The topics are:

  1. Chapter 7
  2. Chapter 13
  3. Reaffirmation
  4. Life After Bankruptcy

Now let’s explore our next topic: Massachusetts bankruptcy and reaffirmation. 

Massachusetts Bankruptcy and Reaffirmation
When you file for bankruptcy and receive a discharge, it means that you’re not legally responsible to pay the debt listed in your petition. The discharge in Bankruptcy gives you a fresh start financially.

A Reaffirmation is a legal concept that re-establishes your obligation to pay, even after you file Bankruptcy and receive your discharge.

Let’s use an example to explain this.

In a Ch 7 bankruptcy process, if you have a car loan and can’t make your car payments, you have 2 choices: either you get current with your car payments, or you surrender the car. In either case, under a Chapter 7, you have no legal obligation to pay the debt. You can surrender the car and don’t have to worry about a deficiency ( a deficiency is when the auto loan company repossess your car, sells it, and sues you for any outstanding loan balance). IF YOU WANT TO KEEP YOUR CAR, YOU HAVE TO MAKE TIMELY PAYMENTS.  Otherwise, the auto loan company can ask the Bankruptcy Court for relief from Bankruptcy Court and repossess the car.

The reaffirmation is an agreement between you and your creditor that legally obligates you to repay the loan…even after you filed Bankruptcy. The creditor can’t force you to sign the reaffirmation agreement.   If you have an attorney representing you, your attorney must sign as well. The Bankruptcy Court has to approve all reaffirmation agreements.

I NEVER have a client sign a reaffirmation agreement.  It’s not in their best interest to do so. I always tell my clients, “if you want to keep your car, keep making regular timely monthly auto loan payments.”

Next week, stay tuned as we discuss life after bankruptcy.

Do you have questions about your financial situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

This week we pick back up with our special “Back to Basics” education series in honor of back to school. As a Worcester bankruptcy lawyer, I think it’s important we discuss four basic topics that are critical to understanding if bankruptcy is right for you:

  1. Chapter 7
  2. Chapter 13
  3. Reaffirmation
  4. Life After Bankruptcy

Now let’s delve into our next topic: understanding Chapter 13 bankruptcy in Massachusetts. 

Massachusetts Chapter 13 Bankruptcy
Chapter 13—in a nutshell—means that you are committing to repaying individuals or companies some or all of the money you borrowed from them. Your proposal, the Chapter 13 plan, pays your creditors over a 3 or 5 year term.  The payment amount is a specified amount, depending upon certain criteria.    At the end of the term, any remaining unpaid debt is discharged…meaning you have no legal liability to pay the debt.

Why is a Chapter 13 Bankruptcy helpful for you? Let’s use an example:

Suppose you owe $45,000 in credit card debt. The credit cards are charging an AVERAGE interest rate of 15%. The interest only payment on that amount is $562.50 per month.

Even if you pay $1,000 per month, only $437.50 goes towards the principal, at that rate, it will take you over 5 years to repay the debt. Over the course of the 5+ years, you will have paid $66,548 ($45,000 principal and $21,548 interest) to the credit card company.

Under a Chapter 13, if certain criteria were established where your disposable income was calculated to be $500 per month and the term is 3 years,  you would pay $18,000, in total, to the credit card company.

    • No interest accrues during the Chapter 13 plan period
    • At the end of the Chapter 13 plan term, any remaining debt is discharged.

One of the most common reasons for filing a Chapter 13 Bankruptcy is to keep your home. If you find yourself behind on your mortgage payments and don’t have the cash to get caught up, filing a Chapter 13 Bankruptcy can help you keep your home. You have to show you have the ability to make monthly payments AND have the ability to repay the missing payments over the 3 or 5 year term. The bank can’t refuse or deny your payments under the Chapter 13 plan so long as they are paid each month.

Another reason you may want to file Chapter 13 is if you owe taxes to the IRS or State that arise within 3 years or less. Those taxes are not dischargeable – meaning you have to pay them. You can keep the IRS and State Taxing Authority off your back over the 3- or 5-year timeframe if you include payments into your Chapter 13 plan. A key advantage is the interest and penalties do not accrue during the Chapter 13 plan.

The payment plan that you propose in Chapter 13 is based upon a set of standards. This means looking at what disposable income you have remaining after calculating income and expenses.

As a Worcester bankruptcy attorney, it’s my job to help you figure this out. Don’t worry if you can’t calculate this on your own.

For more information on a Chapter 13 Massachusetts bankruptcy, read this article on my website.

Next week, tune in as we discuss the basics of Reaffirmation.

Do you have questions about your financial situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

This month, in honor of back to school, we’re dedicating the next few weeks to a special education series, “Back to Basics.” As a Worcester bankruptcy lawyer, I think it’s important we discuss four basic topics that are critical to understanding if bankruptcy is right for you:

  1. Chapter 7
  2. Chapter 13
  3. Reaffirmation
  4. Life After Bankruptcy

Now, let’s delve into our first topic: understanding Chapter 7 bankruptcy in Massachusetts.

What It Means to File Chapter 7 Bankruptcy in Massachusetts
From my experience working with hundreds of clients experiencing financial difficulty, I know that making the decision o file bankruptcy is not done lightly. There is always an emotional stage you must go through—and come out of. The vast majority of people experience denial, and they think, “Hey, I got myself into this, I can get myself out.”

Unfortunately, by the time these people come to grips that they can’t climb out of the financial hole by themselves, they’ve wasted precious time, money and emotional energy.

Chapter 7 provides protection for individuals to give them a fresh start. Anytime I counsel a client, the one question I always ask is: “if you could pay your debts in full in 5 years or less without any problem at all, can you?”  If the answer is no, then Chapter 7 is an option worth exploring.

Chapter 7 Bankruptcy in Massachusetts is referred to as a “straight bankruptcy” because it entails a liquidation of all your assets in order to repay your financial obligations. As soon as your case is filed, you no longer owe any debt; and, creditors and collection agencies can no longer contact you trying to collect. The law allows you to “wipe out” your obligation to repay the money you borrowed from them. You walk away without being legally responsible to repay the debt. Read here for more information about Chapter 7 in Massachusetts.

Next week, tune in as we discuss the basics of Chapter 13.

Do you have questions about your financial situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

This week wraps up our Massachusetts bankruptcy foreclosure series. Did you catch our previous videos? If not, check out the links here:

Do I Qualify to File for Bankruptcy

Do I Have to Include My House and Car

Can I Keep My Credit Card When I File For Bankruptcy

Can I Keep My Car

YouTube Massachusetts Bankruptcy Video Series #5: What Can I Do To Keep My Home?

As a Worcester, MA bankruptcy attorney, I got the inspiration for this video from a common question that comes up from my clients: “If I’m behind on my mortgage and don’t qualify for a loan modification, what can I do to keep my home?”

 In this 1 minute and 40 second video, I’ll reveal the answer to this question and discuss the reasoning behind it.  We’ll also go over an example situation. Click below to watch now:

 

Thank you for joining us with our bankruptcy video series. Throughout September we’ll be featuring our special education series, “Back to Basics” and discussing Chapter 7, Chapter 13, Life After Bankruptcy, and more.

Do you have questions about your financial situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

 

Can I Keep My Car?

by Jack Morrison on August 25, 2011

This week we’re continuing our Massachusetts bankruptcy video series. Our previous videos discussed the answers to the following questions:

Do I Qualify to File for Bankruptcy
Do I Have to Include My House and Car
Can I Keep My Credit Card When I File For Bankruptcy 

This week we’re bringing you the answer to an often-asked question: can I keep my car after filing for bankruptcy? 

YouTube Massachusetts Bankruptcy Video Series #4: Can I Keep My Car?
As a Worcester bankruptcy attorney, my clients often ask if they can keep their car after they file for bankruptcy.

The answer is: it depends. It depends on the equity you have in your car. In this brief 2-minute video, we’ll share with you the answers to:

  • How is equity obtained?
  • How do you get the market value of your car?
  • What do federal and Massachusetts laws say about equity and exemptions?
  • What one thing do you have to do in order to keep your car?

We’ll also explore this further by giving you an example. Click below to watch now:

Again, thank you for joining us. Stay tuned for the final bankruptcy Q&A video you’ll see this month:

  • What Can I Do to Keep My Home?

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Can I Keep My Credit Card When I File for Bankruptcy?

by Jack Morrison on August 18, 2011

Thanks for joining us as we continue our bankruptcy video series. Did you catch our previous discussions, Do I Qualify to File for Bankruptcy? Or Do I Have to Include My House and Car? Today, we’re bringing to you a common question: Can I keep my credit card after I file for bankruptcy?

YouTube Video Series: Video #4 – Can I Keep My Credit Card?
In my Worcester, MA bankruptcy legal practice, many clients want to know if they can keep their credit card after bankruptcy. I tell them two things: 1) No, you cannot legally keep your credit card. You must include all your debt when you file. And 2) you don’t WANT to keep any credit cards when you file.

Want to know why? Then click below to watch our 2-minute video:

Stay tuned for the next two videos you’ll see this month:
Can I Keep My Car?
What Can I Do to Keep My Home?

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

 

 

 

Thanks for joining us as we continue our bankruptcy video series. Did you catch last week when we discussed, “Do I Qualify to File for Bankruptcy?” If not, catch that information here.

Below are the other videos you’ll see this month:
Do I Have to Include My House and Car?
Can I Keep My Credit Card?
Can I Keep My Car?
What Can I Do to Keep My Home?

Do I Have to Include My House and Car When Filing for Bankruptcy?
This week, our video discusses the answer to a common question I hear frequently as a Worcester bankruptcy lawyer: do I have to include my house and car when filing for bankruptcy?

The short answer is, “YES.” While you have to include all your assets and liabilities when filing for bankruptcy, this doesn’t mean you can’t keep these items. It all goes back to the exemptions and whether your assets fall within the guidelines.

Right around the 1:10 minute mark, we’ll discuss an example about what you need to do to keep your home after filing for bankruptcy. Watch this 2-minute video now.

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Welcome! We hope you’ve enjoyed the information we’ve provided on this blog for the past 8 months. As a Worcester bankruptcy lawyer, I’ve enjoyed sharing information to help Massachusetts residents overcome their struggles with finances and debt.

This month, we’ll be bringing you a video series. Below are the videos we’ll be bringing to you this month:

Do I Qualify to File for Bankruptcy?
Do I Have to Include My House and Car?
Can I Keep My Credit Card?
Can I Keep My Car?
What Can I Do to Keep My Home?

As always, don’t hesitate to reach out and let us know what questions you have.

Do I Qualify to File Bankruptcy?
The answer to this question will surprise you. Everyone qualifies – it’s an American right. But it’s not about whether or not you qualify. It’s more about what you could lose if you file and whether bankruptcy is best for you in your situation.

When you file, you don’t lose everything you have…you get to keep certain things. That’s why when you meet or talk to a Worcester bankruptcy attorney, we look at your assets to see if they fit into asset categories that are pre-determined by the state and federal government. Our blog post, Do I Qualify for Bankruptcy explains a few details and shows you an example.

Now, watch this 2 ½-long minute video that will provide you with more information whether or not you “qualify” for bankruptcy:

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

 

When you think of the word “bankruptcy,” what emotions does that stir up in you? Probably guilt, shame, embarrassment, frustration and pain.

I’m here to tell you: there is no shame in filing for bankruptcy. You should actually pat yourself on the back for taking positive steps to finally getting your life back on track. But you may not initially feel that way. If you’re considering filing for bankruptcy, fear of public scorn, embarrassment and scrutiny might make you hesitate and take a step back.

You may think bankruptcy is the worst possible thing you could ever do. This is simply not true. Think of it like you’re being financially reborn at 18 years old again. You’re establishing new debt. Filing for bankruptcy does not mean that you’ll never re-establish credit…or that you’ll be denied future employment…or that you’ll never receive a loan again. Starting over may be hard, but not impossible.

Ask yourself a serious question: is what’s holding you back from bankruptcy the shame of thinking of other people’s reactions? Don’t let anyone judge you— they’re not in your shoes. So letting shame affect what could be the smartest decision you’ve made in awhile is just senseless.

When you file for bankruptcy, my clients all tell me the same thing—a weight lifts off their shoulders. So if you’re burdened by the heaviness of struggling to pay your bills, avoiding harassing phone calls from creditors and tossing and turning at night, then you owe it to yourself to talk to a financial professional to see if bankruptcy is right for you and your situation. And, use bankruptcy as a positive step in your life: make sure you don’t duplicate what you did to get into this situation.

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Fear – it’s an extreme emotion that holds us back in life, whether we recognize it or not. In general, people don’t like change; they don’t like stepping outside of their comfort zone. It scares them. It’s uncomfortable. As human beings, we thrive off of normalcy, routine and knowing what to expect. It’s the reason we all drive the same way to work every day, visit the same restaurants and listen to the same music on the radio.

Without a doubt, one of the biggest things that holds people back from filing for bankruptcy is fear. Common fears about bankruptcy include:

  • Fear of the unknown: all you hear about bankruptcy is what friends, acquaintances and the media say
  • Fear of losing everything: you’re afraid of becoming destitute and not even being able to buy a cup of coffee on credit
  • Fear of making a decision: you don’t want to put yourself in an even worse situation than you’re already in
  • Fear of spending: you hate to waste even another dollar on something you don’t know is going to help

One way to conquer these fears about bankruptcy is understanding what’s in store, what to expect, and what happens in the process. Reading about what will actually happen in bankruptcy helps. Also, talking to an experienced Worcester bankruptcy attorney will help you discover how to bridge the gap between where your life is now and the road to financial recovery and freedom. Unfortunately, working out the nuances of bankruptcy is not something you can do alone. You need an expert, outside opinion about what’s the best thing to do in your unique situation.

Talking to someone will quiet the fear. And in the end, as Franklin D Roosevelt so eloquently said, we know that there is nothing to fear but fear itself.

Don’t continue putting a Band-Aid over an open wound. Get your financial situation resolved once and for all. If you’ve come to grips with the fact that financial matters are getting worse, not better, than sit down with a MA bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.