Gibson Law Firm, PA, Anderson, SC – Bankruptcy

For people and businesses with debt problems, we file bankruptcy petitions, workout debt-repayment plans and renegotiate debts with creditors, assist in debt consolidations, negotiate with the Internal Revenue Service (IRS), and generally consult with clients regarding solutions to their debt problems.

• Annual Credit Report (Free once per year x 3 bureaus) - https://www.annualcreditreport.com/cra/index.jsp
• Bankruptcy associations
  • American Bankruptcy Institute - http://www.abiworld.org/
  • National Association of Consumer Bankruptcy Attorney - http://www.nacba.org/home.asp
• Bankruptcy Court: SC Bankruptcy Court - http://www.scb.uscourts.gov/
• Bankruptcy Basics (publication by the Administrative Office of the United States Courts - outdated, pre-bankruptcy reform)
• Consumer Debts
  • Influence of Total Consumer Debt on Bankruptcy Filings Trends by Year 1980-2003
  • Consumer Debts publication of SC Bar
• Credit Repair: Self Help May Be Best - http://www.ftc.gov/bcp/conline/pubs/credit/repair.htm
• Median Income
  • Department of Justice tables: https://www.justice.gov/ust/means-testing
  • State median income figures - http://www.census.gov/hhes/www/income/statemedfaminc.html
• Primer for Mortgage Foreclosures in SC - http://www.ftc.gov/bcp/conline/pubs/credit/repair.htm

1. Can I keep my house/car if I file bankruptcy? The answer is generally yes if you can afford them. There are exceptions to this, but we can generally know even at the initial free consultation whether this will be a problem. Note that even if you would lose them in bankruptcy, the fact is that these properties are in danger of being lost if you do not file bankruptcy. Bankruptcy does not make debts more affordable in most cases; it eliminates debt that is making the necessary debts harder to pay. To be more clear, if you get rid of all of the other debt, can you afford your house and car. If the answer is yes, then probaby you will keep the car/house but you need to discuss this with the attorney.
2. Do I qualify to file bankruptcy? The answer is generally yes. Anyone can file bankruptcy, even the richest people. Of course, it would not make sense for them to do so. The better question is whethe bankruptcy is beneficial to you. This is a question we can usually answer in the initial free consultation.
3. How do I know whether to file chapter 7 or 13 bankruptcy? This question is usually answered in the initial consultation. Some people who can pay some of their debts back, may be required to do so. If your income is over the median income in the state, based on your family/household size, you are more likely to be required to file a chapter 13 case rather than a chapter 7 case. In other cases you may be able to choose the chapter that suits your purposes. In that case, it is somewhat like "should I buy a truck or a car?" It depends on what you need. If you want to haul stuff, a truck may be better. If you don't need to haul stuff, a car may suit your needs.

Few people want to file bankruptcy. Most people do so as a last resort. They have been paying their debts for years and for one or several reasons cannot manage to make the required minimum payments on their debts any longer. Many people who file bankruptcy do so because they have incurred sudden, uninsured medical expenses. Other people have been through a divorce or marital separation and cannot afford their debts now that many of their living expenses have doubled. Some people suffer injuries that prevent them from working, such as car accidents. Some people lose jobs or have a sudden and steep reductions in income for other reasons. And yes, some people have simply taken on more debt than they can afford.

There are 5 different bankruptcy Chapters. Below you will find some general information on each chapter (except the rarely used Chapter 9, which is used by municipalities). Generally the debtor chooses which Chapter to file under depending on his or her objectives and needs. The debtor's rights are different under each chapter.

The main advantage of filing bankruptcy is the discharge of debt and protection from creditors. Discharge means that the creditors cannot harass you for payment of the debts. It is as if you never owed the creditor. The creditor cannot take your property and cannot sue you for the repayment of the debt. Not all debts are discharged automatically by filing bankruptcy and certain debts often must be repaid to retain secured property, as is the case in car loans and home loans.

The primary disadvantage to filing bankruptcy is that it is reflected on your credit history and in some cases can result in the loss of property. When people consider filing bankruptcy, they are often already in financial trouble and their credit history has already suffered. Poor credit references generally can be reported for 7 years, while bankruptcy can be reported for 10 years. Thus, in some cases filing bankruptcy will mean an additional three years of poor credit. On the other hand, people who do not file bankruptcy often take certain actions that extend the general 7-year time period. Additionally, if the creditor chooses to sue, the creditor can wait 3 years to sue and then attempt to collect the judgment for an additional 10 years. Thus, the total time period for people who do not file bankruptcy can easily be 13 years or longer.

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The United States Bankruptcy Code now requires that bankruptcy attorneys label ourselves Debt Relief Agencies and make the following statement: "We are a debt relief agency. We help people file for bankruptcy relief under the United States Bankruptcy Code." That statement is misleading. The Republican controlled congress, with the help of a few key Democrat senators and representatives beholden to the credit card industry, wanted to blur the distinction between attorneys and debt relief agencies. They did not want debtors to know who to trust. The credit card industry paid more than $100 million over several years to change the laws and rules in their favor. This is known as bribery in home town America; it is known as lobbying in Washington, DC. Bankrutpcy attorneys have an obligation to review your financial situation and advise you of your options. Debt management companies have no such obligation to you. In fact, most of them have an incentive to make you pay as much of your debt back as possible - even if they know your repayment plan will fail in the long run.

Despite the common perception that bankruptcy is new deal social program, the concept is actually very old. In England during the 1700's debtors' prisons fell into disfavor. The British discovered that putting people in jail for not paying their debts did not help pay back the debts and was a burden on the society. Therefore, the British eliminated debtor's prisons and developed the bankruptcy system. When the Constitution was written in this country, the Constitution's framers gave the power to the Federal government to write a uniform bankruptcy law for all of the States.

Through the years bankruptcy has changed though from its original form. The original bankruptcy law in the United States was primarily a creditor's remedy. It was designed to provide an efficient method for the creditors to seize the debtors' property and sell it to pay off the debt that is owed. Bankruptcy today is primarily a debtor's remedy in which the debtors seek protection from the collection activities of their creditors.

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There are options other than bankruptcy. Some people find that the Consumer Credit Counseling Service (CCCS) can help them get back on track. CCCS is a nonprofit agency that helps people develop a plan to pay back part or all of their debts. They may be able to lower or eliminate interest on credit cards and develop a plan to get the debtors current on their important debts. However, before getting into an arrangement with CCCS to repay your creditors, you should speak with an attorney so that you understand all of your options. Most attorneys will not charge for the initial consultation. The danger of not speaking with the attorney is that if you delay too long to obtain legal advice, you may lose property that you would otherwise keep if you file bankruptcy. Many people who attempt CCCS eventually end up filing bankruptcy.

In addition to CCCS, there are other private debt consolidation businesses. Many of our clients have expressed a dissatisfaction with these companies though I am sure that some people have found that they have helped. These private companies generally charge a higher fee than CCCS for essentially the same service. You should also understand that the creditors have no legal obligation to speak with these private debt companies. You may pay them a fee and the creditors may continue to harass you for the payment. Thus, any fee that you pay them could be wasted. Additionally, many of these credit management companies are outright scams bilking people out of millions before they are shut down by the authorities.

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Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Under Chapter 7, a trustee takes possession of all your property. You may claim certain property as exempt under governing federal or state law. In many or most cases, the exemptions shelter all of the debtor's possessions so that the debtor does not lose any property by filing bankruptcy. If the trustee takes property that is not exempt, the trustee will then liquidate (sell) the property and use the proceeds to pay your creditors according to priorities set by the Bankruptcy Code. The purpose of filing a chapter 7 is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, your discharge may be denied by the court, and the purpose for which you filed the bankruptcy petition will be defeated. Even if you receive a discharge, there are some debts that are not discharged under the law. Therefore, you may still be responsible for such debts including, but not limited to, certain taxes and student loans, alimony and child support, criminal restitution, and debts for death or personal injury caused by driving while intoxicated from alcohol or drugs. Under certain circumstances you may keep property that you have purchased subject to valid security interest.

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Chapter 9 is used by cities that must file bankruptcy protection.

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Chapter 11 is designed primarily for the reorganization of a business but is also available to consumer debtors. Its provisions are complex and any decision to file a chapter 11 should be made in consultation with an attorney. It is often more flexible than other Chapters. However, its complexity makes it much more expensive to file and successfully complete than the other Chapters.

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Chapter 12 is designed to permit family farmers to repay their debts over a period of time from future earnings and is in many ways similar to Chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family owned farm.

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Chapter 13 is a lot like a debt consolidation. It is is designed for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

Under Chapter 13, you must file a plan with the court to repay your creditors all or part of the money that you owe them, using future earnings. The Plan can provide that you pay the debts for 5 years (or a shorter time period if you pay 100% of your debts). Most Plans provide that the debtor will pay less than 100% of the debts. In fact, in many cases the Plan will provide for only 2-10% of the unsecured debts being paid. Your plan must be approved by the court before it can take effect.

After completion of payments under you plan, your debts are discharged except alimony and support payments, student loans, certain debts including criminal fines and restitution and debts for death or personal injury caused by driving while intoxicated from alcohol or drugs, and long-term secured obligations.

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Creditors often violate the law when collecting debts. Both South Carolina and Federal law regulate the collection of debts. In many cases, the debtor's attorney's fees must be paid by the creditors if the debtor sues and wins. Unfortunately, many creditors resort to lies, deception, and illegal harassment to get debtors to pay their debts.

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