BANKRUPTCY
"I've got all the money I'll ever need if I die by four o'clock." Henny Youngman
"It is said that the world is in a state of bankruptcy, that the world owes the world more than the world can pay.” Ralph Waldo Emerson (1803-1882)
“The worst bankruptcy in the world is the person who has lost his enthusiasm.” H. W. Arnold
Lets hope you never need the services of a bankruptcy lawyer, but if you ever do or fear you might (and let's face it, during the last recession New Hampshire led the nation in Chapter 7 bankruptcies) please contact Attorney Timothy Wheelock at (603) 431-3430 for a free consultation to discuss your options.
A layoff, illness, serious accident could push most of us over the financial edge. (Medical bills are the single leading cause of Chapter 7 bankruptcy.) Then interest obligations compound themselves and, each bill is replaced by a new and bigger one accompanied by increasingly nasty collection notices. Unfortunately, particularly because of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), this area of the law is extremely complicated. While a lot of bankruptcy law can generally be described as federal law, the answers to many questions turn on state law. (You will be happy to learn that under New Hampshire law, RSA 511:2, for example, the following property, among other property, is exempt from attachment by your creditors: household furniture to the value of $3,500; provisions and fuel to the value of $400; the uniform, arms and equipments of every officer and private in the militia; the Bibles, school books and library of any debtor, used by the debtor or the debtor's family, tools of the debtor's occupation to the value of $5,000; one hog and one pig; one cow; a yoke of oxen or a horse, when required for farming or other actual use; the debtor's interest in one pew in any meetinghouse in which the debtor or the debtor's family usually worship; the debtor's interest in one lot or right of burial in any cemetery; one automobile to the value of $4,000; jewelry owned by the debtor or the debtor's family to the value of $500. You no doubt are especially relieved to learn that contrary to your cynical suspicions, your legislature has been hard at work protecting your interests in one hog, one pig, one cow and either a yoke of oxen or a horse (take your pick, they won't let you keep both).
Whether you hire a lawyer to handle your debtor-creditor (predator) problems, as I recommend, or attempt to handle them yourself (and he who represents himself has you know what for a lawyer) you need to be alert to the difficulty of applying the law in this area. A word on terminology, while laypeople frquently use the term bankrupt to describe anyone whose finances have gone belly up, in the law that term means a liquidation proceeding under Chapter 7 of the Code as opposed to a Chapter 13 which lets you hang on to your possessions and satisfy your obligations out of your current income - usually paying on a revised schedule, with some reduction in the amount owed - in accordance with a detailed, court-approved plan.
A Chapter 7 bankruptcy, on the other hand, discharges your legal obligation to pay most or all of your debts. It is designed to provide a debtor with a "fresh start." Chapter 7 requires you to give up property which exceeds certain limits called “exemptions” (some of which described above) so the property can be sold to pay your creditors. In addition to the above, there are exemptions that allow you to retain equity in your home, car, household goods and retirement accounts. There are also exemptions that permit you to retain certain benefits such as social security, unemployment compensation, veteran’s benefits, public assistance and pensions.
Generally, secured creditors with can repossess collateral if you don't pay your secured debts. (A secured debt is a debt that creates a lien on the property until you make all of the payments promised.) The most common types of secured debt are car loans and mortgages. An unsecured debt is a debt that has no lien on collateral. An unsecured creditor generally has no right to reposess a debtor's property to satisfy a debt. The most common unsecured debts include credit cards and medical bills. (Store cards are sometimes secured and sometimes not.) Most unsecured debt remains dischargeable under BAPCPA with the standard exceptions, such as, debts for child support, alimony, student loans, taxes, and most criminal penalties.
And while the Bankruptcy Abuse Prevention and Consumer Protection Act, passed in 2005, has made the question of discharging credit card debt, much more confusing, discharge of credit card debt is still generally available under the new law (for lower to median income earners in particular). There are, of course, a few exceptions to the general rule. If your credit card debt was obtained through fraud or to pay taxes, it may not be dischargeable. Under the Bankruptcy Abuse Prevention and Consumer Protection Act, fraud is presumed if you take $750 in cash advances within seventy days before filing for bankruptcy or the debt is for “luxury goods or services” costing $500 or more and charged to a single creditor within ninety days before filing for bankruptcy. Credit card companies can also object to the discharge of credit card debt arising from "false pretenses" if they allege that money, goods, or services were obtained on your credit card with no intent to pay. That issue can arise if you use your credit cards for an unusual buying spree, travel or cash advances shortly before you file for bankruptcy protection. And finally, credit card debt acquired to pay federal, state, or local taxes is usually non-dischargeable in a chapter 7 bankruptcy but may be dischargeable in a chapter 13 bankruptcy.