Morrison Sherwood Wilson Deola PLLP

Bankruptcy

 

Bankruptcy

Bankruptcy Attorneys Serving the Helena, Montana Area

Filing for bankruptcy is never an easy choice.  But for many Montanans, it can be the right choice.  Whether you have mounting debt from medical bills, a divorce, or other unfortunate circumstances, bankruptcy can provide you a fresh start.

Our attorneys can advise you about your options, including whether you should file for chapter 7 or chapter 13.  We can also ensure your bankruptcy is done right.


Chapter 7

For most Montanans, chapter 7 is their best option because unsecured debt, like medical bills and credit card debt, are eliminated.  While it also provides less protection for your property, Montana law can protect your home or other valuable assets through property exemptions.  Our lawyers can make sure your petition uses these exemptions to best protect your property.

Most Montanans file either a Chapter 7 or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy has several advantages. For example, a debtor can discharge all or a portion of his or her unsecured debts, including medical bills and credit cards. A debtor has also options for secured debt, like homes and car loans. The debt can either give secured property back if the debtor can’t afford it, or he or she can keep it by reaffirming the debt. Once that happens, payments will continue under the contract.

The downside with the Chapter 7 is that the trustee can liquidate your assets to pay the creditor. But thankfully, Montana law also exempts many forms of property from being liquidated, including retirement accounts, home equity (up to $125,000 per individual), and vehicles ($2,500). You have to assert these exemptions for them to apply, and an attorney can maximize these exemptions to protect your property.

A Chapter 7 bankruptcy case begins when the debtor files a petition in bankruptcy court. On the petition, the debtor will list assets, liabilities, income and expenses, contracts and leases, and a statement of financial affairs. They will also file tax returns with the bankruptcy court. Once the petition is filed, most collection actions against a debtor are stopped. This means that creditors generally can’t start or continue lawsuits, wage garnishments, or phone calls or letters that demand payment. Those creditors are notified of the bankruptcy proceeding by a bankruptcy clerk.

After a Chapter 7 bankruptcy has been filed, the court will appoint a trustee who will manage your case. Between 21 and 40 days after a petition is filed, the trustee will hold a meeting (called the 341 meeting) with the debtor and the debtor’s creditors. For Helena residents, this meeting occurs in Butte. At that meeting, the debtor will be asked questions about his or her finances. The debtor will also be advised about the consequences of a bankruptcy. The trustee will determine whether the bankruptcy is being obtained fraudulently. The trustee will also watch over the case to see if there are any assets that can be sold for creditors. If you have an asset that has equity, and that asset can’t be exempted under state law, the asset can be sold to pay unsecured creditors.

In most cases, a bankruptcy discharge will be granted. If it is granted, debtors are released from liability for most types of debts. However, some types of debts (child support and student loans are two common examples) can’t be discharged in bankruptcy. As part of the bankruptcy, creditors will be allowed to seize the non-exempt assets.

Chapter 7 bankruptcies give people who have gotten in over their heads financially a chance to start over. Although bankruptcies can be damaging to your credit, they can be invaluable for some people


Chapter 13

Not all Montanans will qualify for chapter 7.  If your income is too high, the bankruptcy code will require you file for chapter 13 bankruptcy. Whether you qualify is determined by the “means” test.

Chapter 13 offers more protection for your personal assets, but it also requires that you pay back some of your debt over a 3 to 5 year time period.  If you are facing a foreclosure, filing a chapter 13 petition may provide you options for keeping your home. Our lawyers are experienced in fighting foreclosures, so call us today to see if chapter 13 might be a way to keep your home.

With a chapter 13, you must develop a re-payment plan that the Court approves.  This can be delicate process, and having a lawyer by your side ensures it can be done correctly.

A Chapter 13 is a type of reorganization bankruptcy. It allows debtors to protect some assets and to catch up on missed payments through a reorganization plan that pays back creditors over a period of time (a 3 to 5 years, depending on your circumstances). This plan is submitted to a bankruptcy judge and if approved, a court-appointed trustee will administer the plan. The trustee collects the funds from the debtor and distributes the funds to creditors.

A Chapter 13 starts when a debtor files a petition with the bankruptcy court, and a Trustee is then appointed to administer the case. Filing the petition will stop most collection actions, including foreclosures, which can be very helpful for debtors.

Between 21 and 50 days after a debtor files a Chapter 13, the Trustee holds a meeting of creditors. During the meeting, the Trustee and creditors can ask questions of the debtor, and the Trustee will determine whether the bankruptcy is being filed fraudulently.

Under a Chapter 13 bankruptcy, debtors propose a repayment plan to make installment payments to their creditors. This payment plan lasts between three and five years. But in order for the plan to work, the debtor must make regular payments to the Trustee. The Trustee will then make payments to the creditors. The creditors may receive less than full payment on their claims, depending on the plan. If the debtor can’t make the payments under the plan, the court may dismiss the case, or convert it to a Chapter 7 bankruptcy, which is a discharge.

A Chapter 13 can only be filed by individuals with sufficient income to pay the creditors. There are also limits on the amount of debt an individual filing a Chapter 13 can have. Upon completion of all the payments under the plan, the debtor will receive a Chapter 13 discharge. The discharge will release the debtor from all debts provided for by the plan. There are several types of debts which aren’t included, such as alimony and child support, taxes, mortgages, and student loans.


Debt Settlement

For some people, bankruptcy is not the right choice. Depending on your circumstances, you may be better served by negotiating down your debt with your creditors. Our lawyers can help you through this process if debt settlement is the right option for you.