The automatic stay is a feature of bankruptcy law that goes into effect immediately upon filing a petition. This forces creditors to stop all collection actions (like foreclosures, repossessions, garnishments, and evictions) against the debtor.  During this process, the collection and distribution of assets can occur according to a fair and orderly method as specified in the Bankruptcy Code.  Above all, filing Chapter 7 will give you the time to review your best options with a qualified attorney.

Individual debtors are entitled to keep certain assets free from the claims of creditors, under federal or state exemption laws. Typical exemptions are the homestead exemption (equity in personal residence), cash value of insurance policies, household  furnishings, clothing, and wages.  Tools used in the debtor’s job are also protected. The amount of the exemption depends on whether federal or state exemptions are available and or used.

Certain types of property are exempt, however, which means that the debtor can keep them. Exempt property can include:

• The equity in your home up to about $25,150 per person filing.
• Motor vehicles, up to a certain value.
• Reasonably necessary clothing.
• Necessary household goods and furnishings.
• Household appliances.
• Jewelry, up to a certain value.
• Pensions.
• Tools of the debtor’s trade or profession, up to a certain value.
• Home equity (a portion.)
• A portion of unpaid but earned wages.
• Public benefits, including public assistance (welfare), Social Security.

Generally, a discharge means that a debtor’s obligations are erased or wiped out. When a discharge is granted, it protects the debtor from personal liability on the discharged debt. A discharge is only available to certain debtors and for certain debts. For example, debtors that are not individuals cannot receive a discharge in a Chapter 7 Bankruptcy in {{lpg_city}} {{lpg_state}}.

The U.S. Constitution abolished debtor’s prisons in favor of a more workable solution. Instead of jail, you are discharged (or excused) from the majority of your debts. Congress enacted Chapter 7 Bankruptcy in {{lpg_city}} {{lpg_state}} as part of the U.S. Bankruptcy Laws in order to prevent increasing the ranks of the homeless, wageless, divorced, and depressed. Chapter 7 gives you a fresh financial start and 95% of the cases are finished in about four months.

You’ll be able to keep what you need to make a new start in life. Some of your property may be exempt, meaning creditors can’t take it, such as your house (if below a certain equity), furniture, clothes, tools of trade, cars, and jewelry. Not all property is exempt, but there’s usually a way so that the average person or family can keep most of their belongings. We can advise you of ways to keep the things you need.

A secured debt is one where your creditor has a lien or security interest in something you own. For instance, if you’re paying off your car or house, these creditors have a security interest in the house or car. In most cases you will be able to continue paying on the secured debts without losing them. You will also be given the opportunity to return these assets back to the creditor and erase all responsibilities for continuing to pay these debts.

The law encourages you to keep paying any obligations that you desire to pay. Your creditors will love you for it; they just can’t legally force you to keep paying.

You may be able to keep your home during a Chapter 7 plan if you are able to exempt the equity you have and if you can continue to pay the mortgage after bankruptcy. An exemption effectively means your equity is protected from being sold by the bankruptcy trustee to pay your creditors.

The bankruptcy code allows for debtors to utilize bankruptcy exemptions to the fullest extent. The federal bankruptcy rules allow for a home equity exemption of $25,150, which is double for married couples filing jointly. If these amounts are equal to or greater than the amount of equity you have in your home, then the trustee will not be able to sell your home.

However, if your mortgage exceeds the full value of your home and you have no equity, Chapter 7 can still be very beneficial. Without filing for bankruptcy, the lender would be able to foreclose on the home, and then sue you personally for the remainder of the debt. However, if you cannot afford to keep your home, you can surrender the property and the remaining amount owed will be completely wiped out in Chapter 7.

If you own your car when you file Chapter 7 Bankruptcy in {{lpg_city}} {{lpg_state}}, it will be protected from being sold if its value is less than or equal to the allowed exempt amount. Similar to a home, you can use the exemptions to maximize the property you can keep.

If you are being threatened with repossession of your vehicle, a Chapter 7 Bankruptcy in {{lpg_city}} {{lpg_state}} will stop repossession attempts immediately. If your car was recently repossessed, you may even be able to get it back if you act at once. Contact our Hawaii bankruptcy attorney immediately for more information if your car was repossessed.

There are several options available to help you keep your vehicle if you can afford it. Some lenders will allow you to keep your car and will release you from the loan in exchange for purchasing the car at its current value (called a redemption). Others will let you sign a new contract (called a reaffirmation) which may let you keep making the same payments you had before filing bankruptcy. These options have important consequences, so it is best that you first consult with a qualified bankruptcy attorney before entering into a redemption or reaffirmation agreement with a lender.

If a creditor attempts to collect a discharged debt from you after your Chapter 7 Bankruptcy in {{lpg_city}} {{lpg_state}} is over, they risk being held in contempt of Court. Furthermore, you may be able to sue that creditor for damages.

While the vast majority of the average person’s debts are forgiven in Chapter 7, some debts will remain. These typically include the last 3 years of federal and state tax debts, alimony, child support, student loans, and debts entered into under the pretense of fraud, embezzlement, and intentional injury. This list is somewhat simplified, so make sure a qualified Hawaii bankruptcy attorney can evaluate the factors in maximizing your right.

In both Chapter 7 and Chapter 13 bankruptcy, there’s only one mandatory appearance in front of your assigned trustee. The meeting will typically last five to ten minutes and there’s no judge, jury or courtroom.

It’s illegal for private or government employers to discriminate against those who have filed for Chapter 7 or Chapter 13 bankruptcy. Therefore, no governmental agency can refuse to grant you a driver’s license, a permit, student loans or similar governmental grant.

A fraudulent transfer is a transfer made by a debtor with the intent or effect of reducing the assets available to creditors. For example, a debtor might attempt to repay a loan to a friend or family member when those funds rightfully ought to be divided between all the creditors. This law exists both in and outside of bankruptcy. Most importantly, trustees have the power to undo or nullify transfers of the debtor made with actual intent to hinder, delay, or defraud creditors. 

There are several types of bankruptcy trustees:

The United States Trustee is responsible for oversight of the bankruptcy process as a whole. Trustee’s duties are to maintain and supervise a panel of private trustees to serve in Chapter 7 cases. 

A Chapter 7 Trustee is responsible for representing the interests of the debtor’s estate and creditors as a whole. Because of this, you will meet the Chapter 7 Trustee appointed to your case at the creditor’s meeting, the one simple, but mandatory hearing that you must attend with your attorney.

Prior law allowed their discharge once they had been in pay status for 7 years. However, the law changed in the fall of 1994. Subsequently, student loans are no longer dischargeable in any chapter of bankruptcy unless you can prove that repaying the loan creates an undue hardship on you or your family. 

In my experience, if you can walk and talk, you are probably going to have to pay back your student loans. Proving hardship usually requires showing that you can’t provide a minimum standard of living for yourself and your dependents if you have to repay the loan. In other words, chapter 7 filing should have no effect on such collections.

While your credit score will be damaged for 10 years, in most cases you’ll bounce back quicker than you think.

One of the free services we offer our clients is our 720 Credit Rebuild Program. We believe in complete financial rehabilitation, including credit score. Utilizing our 720 Program will guide you through the mechanics of returning to a 720+ credit rating within as little as 12 to 24 months after we’ve filed bankruptcy for you or completed a debt negotiation plan. 

Many of my clients can obtain financing for a vehicle immediately after their case is finished. For instance, income and income stability can help you obtain a loan. In fact, the mortgage lending industry will tell you that two years after your case is over you will usually qualify for conventional house loan. Don’t take it from us – call any mortgage broker and they’ll say the same thing.

Credit Cards and Bank Loans:

Most of our clients obtain credit cards and unsecured bank loans way before the ten year period expires. This is just the reality of aggressive lending policies that creditors practice today.

The cost of obtaining credit with less than a squeaky clean credit report profile results in the payment of higher interest rates on your borrowing. However, you must ask yourself what is the cost of not declaring bankruptcy, both economically and emotionally?

Debt can be frightening, and it’s difficult to know what affect it will have on your family’s future, but there’s no need to suffer the unknown. Having an experienced Hawaii bankruptcy lawyer can end the collection calls and put you on the path towards a new financial life. Contact our law firm today or fill out our questionnaire to take the first step towards freedom.