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Duration of Chapter 13

Chapter 13 bankruptcies have a minimum commitment period of three years and a maximum of five years. This means that the repayment plan in a Chapter 13 will last somewhere between three and five years. A number of considerations determine this.

The first consideration is whether a debtor is below or above the median income. The median income is the median income for the household size of the debtor in the state the debtor lives in. If the debtor is below the median income, the debtor can elect a three-year plan. If the debtor is above the median income, then the debtor must have a five-year plan.

If the debtor is below the median income, the debtor may choose to enter a repayment plan that lasts longer than three years. For example, if the debtor is filing a Chapter 13 in order to pay mortgage arrears and stop a foreclosure, then debtor may elect to file a five-year plan. The debtor may choose this to keep the payment in the Chapter 13 more affordable. All mortgage arrears must be paid back in full over the course of the plan. Stretching the plan over 5 years would allow for a lower payment in some circumstances. The debtor could also elect to have the plan duration be any number of months between 36 (three years) or 60 (five years).

 

By Kris Whelchel

I Received a Complaint Saying My Creditors Are Suing Me, What Do I Do Now?

If you received a lawsuit document indicating the creditor is attempting to sue you, it can be a worrisome situation. When you receive the initial complaint, it indicates a law firm is representing the creditor to further pursue their claim against you.

The first step in the process is for the creditor to serve you with a “Summons and Complaint” document indicating the nature of the lawsuit. In the paperwork, it will set forth the factual allegations and legal complaints against you. They can “serve” the lawsuit on you in one of two ways:

  • by delivering it to you personally or leaving it at your home with a person of suitable age and discretion; or
  • by mail, if you agreed in writing to accept service of the Summons and Complaint by mail and signs a form that indicates your acceptance.

 

If you wish to contest the lawsuit, you need to serve the creditor’s attorney with a form called an “Answer.” If you do not provide the Answer in the time period of 20 days, the creditor may enter a default judgment against you which allows them to take further action.

There are several defenses against the lawsuit; however, not being able to afford to pay the debt is not a defense. Some of the available defenses are: improper service, statute of limitations, FDCPA violations, lack of standing, proof of payment, fraud, mistaken identity and lastly bankruptcy.

Filing bankruptcy is a protection against a lawsuit served upon you and can be used as a defense to stop any further action. When you receive any lawsuit document, it is important to consult with an attorney who can give you advice about your specific situation. One of our experienced bankruptcy attorneys can sit down with you and review the lawsuit to give you the best advice towards your next steps.

 

By Ann Hagerty

My Credit Score After Filing Bankruptcy:

Your credit score will take a hit after filing a chapter 7 bankruptcy. If your score was low before you filed, the drop will not be as significant as if your score is high. The fact that you filed bankruptcy will show up on your credit score for about 10 years, but that alone is not going to keep you from getting that new car, apartment, house, etc. Needless to say, the fact that you filed and a drop in your credit score is not the end of the financial world. The key is what you choose to do after the bankruptcy. Rebuild.

Filing your chapter 7 bankruptcy will the stop the bleeding in the injuries caused by your debt. As soon as your case is filed the creditors stop calling, wage garnishments and bank levies come to an end, foreclosure or repossession actions come to a halt, and minimal payments are no longer required.  Once the stress of creditor harassment comes to an end, it is time to rebuild your credit. This is an endeavor we do not want you to undertake alone. Our office works with the 720 Credit Score program to help our clients rebuild towards their financial goals after filing. 720 Credit Score is a seven step program that guarantees your credit score will be 720 or higher within 12-24 months after receiving your chapter 7 discharge. Call us today to set up an appointment and learn more about this program.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Credit Counseling and Debtor Education

When going through the bankruptcy process, there are a few things that you must do; two of which are going through credit counseling and attending a debtor education course. The former must be completed before you file for bankruptcy and the latter must be completed after you have filed for bankruptcy. These two things are by no means optional, they are requirements by the government and you also must make sure you are going to the proper provider. This simply means that the provider who is putting on the credit counseling and debtor education course must be one that is approved within the judicial district you are filing bankruptcy in, as well as one that is approved by the U.S. Trustee Program. You can find a list of approved providers at your local bankruptcy clerk’s office.

As was mentioned above, you must go through credit counseling before you file for bankruptcy and must provide proof that you took the session. The session itself can vary based off of who you decide to do the program through, but most sessions have 3 basic components. The first will be going over your financial condition, then discussing any other options you may have other than bankruptcy, and finally creating a plan to manage your finances. Sessions usually run anywhere from 60 to 90 minutes and cost around $50 (unless you cannot afford to pay and fill out a fee waiver to waive the cost). After finishing your credit counseling session, the provider will present a certificate to you which can be used to provide proof of session completion.

Once you have filed for bankruptcy (and before your debt is discharged), you must then complete a debtor education course. Much like the credit counseling session, each course may vary by provider; they will, however, go over a couple key informational pieces that will be very useful for you after your debts have been discharged. Your course instructor should go over helpful ways to budget and manage your money, as well as how to properly use credit without abusing it. These courses will roughly run about two hours, depending on the provider, and can cost anywhere around $50-$100. There is a fee waiver you can fill out, too, if you are unable to pay for the cost of the course. After you have finished the course, you will be granted a certificate that will provide proof of completing the course.

Just remember, although these requirements may seem bothersome, they are only beneficial for you and your future. They will provide you will helpful tips that you can utilize well after completing bankruptcy.

https://www.consumer.ftc.gov/articles/0224-filing-bankruptcy-what-know

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What to Do: Bankruptcy or Debt Consolidation?

When facing issues with debts, there are a couple of ways to go about fixing it, two of which being more popular: bankruptcy and debt consolidation. Much like other decisions made in life, each one has its own benefits and consequences. However, filing bankruptcy is usually the better route to take when deciding between the two.

Unlike bankruptcy, debt consolidation does not completely discharge your debts. Instead, your credit counselor will need to try and negotiate with creditors to create affordable interest rates for you, lowered monthly payments, or help you obtain a larger loan to pay off credit debts. This is problematic because it does not wipe out your debts, but practically creates more being as you may need to take out a loan. Another pitfall of debt consolidation is the fact that not all creditors will want to make a deal with a credit counselor; nor do they have to be dealt with all at once. If your credit counselor so chooses, they can deal with your creditors one at a time which will both prolong the process and make you susceptible to problems with your other creditors who have yet to be dealt with. One more thing to keep in mind about debt consolidation is that credit counselors usually only help out with unsecured debts (credit cards, medical bills, etc.), not secured debts (mortgages, vehicle loans, etc.). Bankruptcy, however, does deal with both.

As you may have guessed after reading the previous paragraph, filing bankruptcy is most likely the best option to go with. If you were to file under Chapter 7, a large portion of unsecured debts will be discharged and unlike debt consolidation, all creditors must oblige by it. They cannot choose whether to be a part of the discharged debts or not. If you were to go the route of Chapter 13, you will set up an affordable payment plan with creditors to pay off debts with the additional benefit of protecting your secured assets from being repossessed (unlike in debt consolidation). One final thing to keep in mind is that debt consolidation has a tendency to cost more than bankruptcy, as well as have fewer benefits. Although every person’s situation is different and their solutions to debt may vary, filing bankruptcy should be considered before going through with debt consolidation.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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