05.22.2015 | by Kenny Steinberg
I met with a nice, hardworking, married mother of three young children today. She and her husband own a modest house in a good neighborhood with a mortgage.They have an older pickup truck and a not-so-new SUV, both with reasonable payments. Both husband and wife are working now, though the husband’s prior unemployment had put them behind the eight ball financially: They have almost $75,000 in unsecured credit consisting of loans and credit cards. They are not paying the debt at this time, and they are being hounded. Since they are not paying the debt, I was curious as to how much money was coming into the household every month. The total is over $6000 net, that means after all the deductions that come out of their paychecks for taxes, insurance, and retirement. I know what you are thinking: Over $6,000.00? That is a lot of money. So I looked at their typical monthly expenses, not including the credit cards and loans above. And it turns out that after those typical expenses, there is about $600.00 per month left over to pay on this debt. Of course, the minimum monthly payment on these debts was over $1,500.00 per month, so there was no way that they could afford to pay anywhere near that. After reviewing the numbers with them, I gave them an option: how about filing a Chapter 13 bankruptcy? Under Chapter 13 bankruptcy, we could get those payments down to $600.00 per month, a savings of $900.00 per month from the $1,500. 00. It would also save them tens of thousands of dollars over the course of the five year plan. What a wonderful idea! At least, I thought so. But my clients didn’t. They wanted a way to avoid paying back these creditors. Further, it turns out they had filed for bankruptcy twice before. Some attorneys or law firms might fudge the client’s expenses to try to show that they have no money available to pay back their creditors when in reality they do have $600.00 per month available. Seeing that, I would not fudge. The reason? I believe that people who can pay a significant amount of the money owed to their creditors without hardship should do so. Most of the people we see aren’t lucky enough to be able to afford that $600.00 per month. They would gladly latch on to an opportunity to try to pay back those creditors who were there for them when they needed help, if they only had the money. For these people, and there are many, Chapter 7 bankruptcy is the only way out, and we are very pleased to help them. This is the way most people are in Northwestern and Southwestern Pennsylvania: hard working, honest, people who feel badly enough about needing our help to ease their burden. I love coming in everyday to give these moral, ethical people my best. It is the least I can do.
05.19.2015 | by Kenny Steinberg
I’ve been helping people with their financial issues for over three decades. So sometimes I take for granted what I think people may know about filing for bankruptcy. But it seems like
every day one of my potential clients says to me: “You mean I can keep that?” They seem surprised when I say “Yes.”
And I say that often. In fact, I say that almost always, no matter which type of bankruptcy might be the best solution, Chapter 7 or Chapter 13, even Chapter 11. So if you file for
bankruptcy, what are you allowed to keep?
Before I go there, a little background is necessary. Chapter 13 and Chapter 11 are reorganization-type bankruptcies that normally result in the client making payments on part or all
of their debt over a period of several years. Clients may have lots of things that they own, a house, cars, motorcycles, pension plans. And in almost all cases, our prepared Chapter 13 or Chapter 11 Court plan to pay back the creditors allows the clients to keep everything.
Chapter 7 is the type of bankruptcy where you eliminate unsecured debt without having to pay it. There are limits to the amount of property you can retain, but the limits, here in
Pennsylvania, are reasonable. It is possible that your situation may differ, and you may actually be allowed to keep more than I am about to write about, or (rarely) less, so it is always best to call
us at Steidl and Steinberg and speak with us directly about your circumstances.
So what can you keep in a Chapter 7? Start with equity in a home that you live in up to about $23,000 for each owner of the home, or $46,000 per couple. Equity is determined by
looking at the actual value of your home, that is, what someone would pay for it in today’s market, and subtracting the amount owed on the mortgages, home equity loans and lines of
credit, and any other liens that are against the house.