Articles Posted in Fresh Start / Clean Slate

Immediately. When you file for a Missouri bankruptcy, one of the nice things that you should be made aware of is the fact that you can begin to rebuild your credit rating and/or score immediately after the case is filed. Depending on how aggressive you are in doing so, regaining the type of score and/or rating you hope for can be done sooner than you may think.

The act of filing for bankruptcy is described as a ‘fresh start / clean slate‘. It is a chance to wipe the slate clean, and start over with a second chance. If a St. Louis Chapter 7 bankruptcy is filed, your unsecured debt (like credit cards, medical bills, payday loans, etc.) are discharged immediately. Once this discharge occurs, you can typically expect to see your credit score jump upwards by about 30 points. From that point on, it’s up to you how quickly you want the score to rise. For most people, buying a house at a decent rate can be done within two years of filing a Chapter 7; buying a car at a fair interest level can be done within six month so filing; and getting a new credit card can be done within weeks.

When you file a St. Louis Chapter 13 bankruptcy, you are put into a repayment plan. This plan is a schedule of how certain debts will be paid back over a period of three to five years. Each month, you make a fixed payment that covers these debts. The Chapter 13 Trustee then disperses the monies to the creditors that are listed in the plan. So by the time you finish your repayment plan, you will have made between 36 to 60 regular, monthly payments to creditors. This will have the overall effect of dramatically increasing your credit score, such that when you complete the plan, you will be in a fantastic position to make large purchases like a home or new car. In addition, once the repayment plan is complete, all unpaid unsecured debt is discharged (much like in a Chapter 7). This will in turn only improve your score even further.

No, they may not. There are very specific rules governing what a debt collector can and can’t do when trying to collect on a debt. They are limited in the types of things that can be done, and if the collection agency violates those rules, there are damages that may need to be paid for the infraction.

The area of law that governs the activities of a collection agency is the Fair Debt Collection Practices Act (FDCPA). This federal statute regulates how, when, and where they may collect. For example, Section 805 states that ‘… a debt collector may not communicate with a consumer in connection with the collection of any debt — (1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. This generally means that the collector can call between the hours of 8am and 9pm. So if a collection agency is calling you at 6am in the morning, or at 11pm in the evening, then they are violating your rights. Section 805 (2) states the collector may not attempt communication “if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address.” So if you tell the collection agency that you have an attorney on the matter at hand, and they continue to contact you anyway, they have violated the law and your rights. Section 805 (3) states that the collection agency may not make contact “at the consumer’s place employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.” This obviously means that if the collector calls you at your job, and you tell him that he can’t call you again because your boss will get mad, and the collector nevertheless calls you, your rights have been violated.

There is a fairly lengthy list of what the collection agencies cannot do when they attempt to collect on a debt. Even calling your cell phone is a violation of law (because you cannot be made to incur charges as a result of the collector’s activities, and most people have a plan with their cellular carrier in which they are charged for minutes used). But most people are unaware that such laws exist (of course, a great many of the collection agencies do not want you knowing that there are any consumer protection laws out there). If a violation can be shown to have occurred, then the debt collector must pay you $1,000 in damages. In addition, the debt collector must pay all of the attorney fees. What that means is that there will be no upfront cost to you for having your case filed by an attorney (most people get a wide smile on their face when I tell them that part).

Not if you want to keep it. Filing for a Missouri bankruptcy does not automatically mean that you will lose any of your assets (including your home). But there are certain pitfalls to be aware of, and a whole host of rules that you want to keep in mind.

When you file for bankruptcy, the court requires that you disclose all of your personal belongings (including personal property such as clothes, pots, pans, furniture, appliances, etc.), any real property or land holdings, and any other things in which you may have an ownership interest (like a contract, or stocks and/or bonds). Once this requirement is met, the court then gives you the ability to use certain governmental exemptions to exempt (or keep safe) these items so that the Trustee (the person in charge of overseeing you bankruptcy estate) cannot get his/her hand on them. One of these exemptions is specifically for your home. It allows you to exempt up to $15,000 of equity your home may have. So for instance, if you currently owe $100,000 on the balance of your mortgage loan, and you believe that the fair market value (i.e. the amount of money you realistically believe your house could sell for in the open market, as is, in this particular economy) of the house is $115,000, then on paper, there is no equity, and therefore nothing a bankruptcy Trustee can do with it (because the $15K exemption will cover the equity). In this type of situation (assuming all other requirements have been met), you can file a St. Louis Chapter 7 bankruptcy and not have to worry about whether or not your house is subject to liquidation. If you want to keep the home, you would simply continue to make the regular, monthly mortgage payments.

But if the fair market value of your home is closer to $180,000, then even after the $15,000 exemption is applied, there will still be significant equity left over (180,000 – 100,000 – 15,000 = 65,000 left over in equity). In this scenario, the Trustee in a Chapter 7 would most certainly be interested in liquidating your home (and using the proceeds to pay towards your unsecured creditors, like credit cards, medical bills, and payday loans). So if this is this case, and your goal is still to keep your home, the next best available option would be a St. Louis Chapter 13 bankruptcy. A Chapter 13 is described as a repayment plan over the course of three to five years, during which certain creditors are paid back amounts that are owed. But one of the main bonuses of the 13 is that all assets (whether it is a car, truck, or a piece of real estate) are protected from being liquidated by the Trustee. So if in fact you own a home in which there is equity in excess of the $15,000 that the government allows to be exempted, and you file a Chapter 13, the only consequence would be that you would have to guarantee that excess amount to your unsecured creditors in repayment (so in the example above, if there is $65K in equity beyond the exemption, then you would have to pay back up to $65,000 to your unsecured creditors; but if you only owe $10,000 in total to unsecured creditors, then obviously you would not have to pay any more than that). In this way, you can keep your home safe (regardless of how much equity there is in the asset).

Yes, you most certainly can. Although it is necessary to disclose all personal property (whether it is furniture, appliances, clothing, pots, or pans), there is a very slim chance that the Trustee would actually want any of these belongings. This is because of the governmental exemptions that can be used to cover such assets.

When you file for a Missouri bankruptcy, the court requires that you make the bankruptcy Trustee aware of the extent of your property. Individuals can own all sort of things: personal goods, clothes, books, stamp collection, guns, etc.) And the full range of these possessions must be disclosed in your bankruptcy schedules (i.e. the documents filed with the court that represent your bankruptcy estate). The primary way in which you disclose this property is by assigning it a value. Specifically, garage sale value. In other words, the amount of money that you honestly believe these items would bring at a garage sale. And if you think about it, that is probably not too much. Because you aren’t using the price that you originally purchased the item at (how many times have you bought something at a garage sale that is set at the same price as what you see in the store?); and you aren’t using ‘sentimental value’ either (because if we priced goods at a garage sale based on what they mean to us personally, we probably would never be able to sell a thing). Once the garage sale value is assigned, the proper state exemptions are applied. These exemptions are really just devices for keeping your property safe, and out of the hands of the Trustee.

So for instance, the Missouri state exemption for Household Goods is set at $3,000.00. Assuming that your household goods have a garage sale value of $3,000 or less, then all such belongings are exempted (i.e. they will be safe). And unless you have furniture that is gold-plated, and was bought from Tiffany’s of New York, then chances are you fall into that category. But if you in fact do have household goods that have a garage sale value in excess of $3,000, then it is possible that the Trustee may wish to have the items appraised so that he/she can make a determination as to whether this property should be liquidated in a sale.

Yes, filing for a Missouri bankruptcy more than once is possible, subject to a few specific rules. And although the thought of doing so may seem like a horrible idea, sometimes it is quite necessary (depending on the circumstances). The main thing to keep in mind is that a bankruptcy is supposed to serve as a ‘fresh start / clean slate.’ It is a chance to wipe the slate clean; to start fresh, start new. So long as you approach a St. Louis bankruptcy in this way, you will eventually reach your financial goals.

But to be more specific about the main question posed, let me start by saying that there are two main chapters of bankruptcy that either an individual or married couple may file: a Chapter 7, and a Chapter 13. A St. Louis Chapter 7 bankruptcy is commonly described as a liquidation / discharge. The discharge side is pretty straightforward; your unsecured debts (such as credit cards, medical bills, payday loans, overdrawn bank accounts, deficiencies from a repossessed car, etc.) are knocked out (i.e. discharged forever). The liquidation side is where the Trustee looks at your assets to determine whether or not there is any equity. If there is substantial equity beyond the governmental exemptions, then it is possible that the Trustee may wish to liquidate the asset, and pay the proceeds towards the unsecured creditors that are to be discharged. The bankruptcy code states that you may only file a Chapter 7 once every eight (8) years.

The other main option is the St. Louis Chapter 13 bankruptcy. This is described as a repayment plan over the course of three to five years, in which certain debts are paid back. Certain secured assets, like a car loan; arrearage on a house mortgage; tax debt; back child support; attorney fees; and in some circumstances, a portion of your unsecured debt. Chapter 13s have less stringent rules as to how often you can file for such a bankruptcy. Although there are a few specific rules as to whether or not you can receive a discharge of unsecured debts in a 13; if for instance you have filed a Chapter 7 within four (4) years of filing a Chapter 13, you may not receive a discharge at the end of the repayment plan. An additional rule states that if you file a Chapter 13 which subsequently gets dismissed (either voluntarily, or because of a failure to make monthly payments), and you wish to file a new 13 within one hundred and eighty (180) days after the last one was dismissed, then you will need to file what is a called a Motion to Extend the Automatic Stay. If that last sentence didn’t make any sense, then that is a pretty good indication that you definitely need an experienced attorney to handle such matters for you.

You most certainly do, and it well within your rights to demand it. This is a very important piece of information that you have the right to ask for, and the collection agency has a complete and absolute obligation to provide to you. And all you need to do is request it.

To begin with, there is very specific federal law out there that governs what a debt collector may and may not do when trying to collect on a debt. This law is known as the Fair Debt Collection Practices Act (FDCPA), and it regulates a broad range of activities. For instance, a collection agency is not allowed to contact you on your cell phone. Such activity is strictly prohibited, and is a violation of law (most people don’t realize that). Another example involves threatening or rude behavior. So if the collector says something like, “Hey, if you don’t pay. I’m going to garnish your wages!”, they have broken the law (because unless the original creditor has previously given express permission for the collection agency to do this, and the collector is prepared to make good on this threat immediately, it is a violation).

One very important right that you own as a citizen of the United States is to request that the debt in question be verified by the collection agency. By requesting verification, you are being given a chance to see if in fact this particular debt that you are being called about is yours. Because if it is not, then you will have a chance to dispute it. But frequently, when the collector asked to provide verification, they do not. The collector will say something like, “Verification?! I’ll give you verification. You owe the debt! That’s your verification. No pay up!!” This is a clear violation of law (for a number of reasons).

Yes, you will. Most rental companies will run a credit report after you fill out an application for a rental unit. But the main thing the company will be looking for is whether or not you have a steady source of income.

When you file for a Missouri bankruptcy, the unsecured debts that you have (credit cards, medical bills, payday loans, etc.) are generally taken care of by way of a discharge. This means that the court extinguishes these debts forever. As a result, the creditor can never again demand payment from you, and you are no longer obligated to pay on the debt. Once the discharge occurs, and debts are wiped clean from your credit report, you can expect to see a jump of about 20 to 30 points upward on your credit score. Thereafter, it depends on how aggressive you wish to be in reestablishing your credit score.

For instance, if you file a St. Louis Chapter 7 bankruptcy, the court provides you with what is called a “fresh start / clean slate.” It is the opportunity to start fresh and clean in life, a chance to start new and move forward with life. So taking out new credit cards, or running new lines of credit, or purchasing a new home or car, are all possible within two years of filing the bankruptcy. With this in mind, getting into a rental apartment (even if part of your bankruptcy involved discharging debt from a past rental agreement) is going to be easier than you might think.

Yes, so long as it is a fund and/or account that is recognized by the IRS as being for the purpose of retirement. Typically, people have retirement or pension funds to which both the employer and employee contributes. These contributions are normally in the form of a simple deduction from the employee’s paycheck, and held in trust by a third-party management company. When someone files a Missouri bankruptcy, the funds that have accrued in the retirement plans have to be disclosed (in other words, the individual must make the Bankruptcy Trustee aware of its existence). But so long as the accounts are properly recognized as retirement plans by the federal government, then they are exempt.

Gaining exempt status in a bankruptcy is a very precise process. Whenever someone files a St. Louis Chapter 7 bankruptcy or a St. Louis Chapter 13 bankruptcy, all of the person’s assets, debts, and income must be disclosed. Some of the more typical items of personal property would include kitchen appliances, pots, pans, dishes, furniture, clothes, jewelry, fire arms, etc. The government then provides you with certain dollar exemptions to cover these items. So long as the items in question are covered by the governmental exemption, then there is no need to worry about the Bankruptcy Trustee getting his hands on any of it. For instance, the government provides you with an exemption in the State of Missouri for Household Goods and Furnishings of $3,000.00 ($6,000.00 if you file jointly with your spouse). If the garage sale value of these items is less than $3,000 (and it almost always is), then there is nothing the government can do with your household goods and furnishings.

When we are talking about retirement plans and/or pensions (like a 401(k)), the government provides an unlimited exemption. This means that regardless of how much the value of your retirement fund is, the entire thing is exempt (i.e. the government can’t get their hands on it). The reason for this is simple: If you are filing for bankruptcy, one of the things that you are going to need to count on is a healthy retirement plan waiting for you.