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Bankruptcy and Insolvency We guide you to the light at the end of the tunnel Our Bankruptcy Practice At Foster Law Offices we have a committed, friendly and highly skilled bankruptcy practice team focused on the quick and efficient resolution of debt and financial hardship. By leveraging our knowledge and experience under the new bankruptcy laws, we deliver successful debt solutions to Washington individuals and businesses in cities throughout Washington State. Our bankruptcy practice proudly represents individual and business debtors in Chapters 7, 11, and 13 bankruptcy cases, as well as bankruptcy litigation and out-of-court creditor workouts. In addition, we prosecute and defend claims and actions in the United States Bankruptcy Court. Our sole focus in our bankruptcy practice is to protect your assets while eliminating or reorganizing your debt. In addition to filing over a thousand bankruptcy cases and achieving great success for our clients, attorney Jeffrey E. Foster is an active member of the American Bankruptcy Institute. The ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to bankruptcy and insolvency law. We represent clients in wide variety of bankruptcy cases and legal matters in the federal bankruptcy courts in all Federal Bankruptcy Courts. Below you will find useful information on the various types of bankruptcy and an overview of the services we provide to those facing financial hardship: Chapter 7 A Chapter 7 bankruptcy is the most common bankruptcy case and the type of bankruptcy that most people think of when they think of bankruptcy. In a Chapter 7 case, a trustee is appointed by the bankruptcy court to: 1. Determine whether there are any non-exempt assets that can be sold to repay debt and 2. Determine whether the Debtor can repay debt with his or her income in a Chapter 13 bankruptcy. The trustee makes his or her decision on debt relief and asset liquidation based on information provided by the individual filing the bankruptcy case, referred to as the Debtor. In order for the trustee to make their decision, the Debtor is required to complete and file with the bankruptcy court a petition containing the Debtor’s name, social security number, bankruptcy chapter and various other information, along with detailed schedules that set forth the Debtor’s income, expenses and assets and a statement of the Debtor’s financial affairs over the last two years. If the Trustee determines the Debtor has no non-exempt assets and insufficient income to repay debt in a Chapter 13 bankruptcy case, the Bankruptcy Court will most likely issue a court order that absolves the Debtor of the legal obligation to repay dischargeable debts. Dischargeable debts include but are not limited to the following:
However, Chapter 7 does not relieve the Debtor of his or her obligation to repay the debts below:
The debt that cannot be eliminated in a Chapter 7 is referred to as non-dischargeable debt. In cases involving mostly non-dischargeable debts, it may be advisable to file a Chapter 13 bankruptcy case in order to pay these debts over time. Maybe the most beneficial component to a Chapter 7 and all other bankruptcy cases is the “automatic stay”. The automatic stay is a rule in bankruptcy that prohibits creditors from pursuing most collection efforts against the individual or business filing the bankruptcy. Creditors are prohibited from the following collection actions: calling you, writing you, filing a lawsuit, continuing to litigate a lawsuit, garnishing or continuing to garnish your wages. In the event a creditor desires to commence or continue any collection effort after a bankruptcy filing, the creditor must obtain bankruptcy court approval to do so. Be advised, a Chapter 7 is a liquidation bankruptcy. This means that any non-exempt assets will be sold by the bankruptcy trustee to repay your creditors. If you fail to disclose an asset or if you have valuable assets, you may risk losing that asset if you file a Chapter 7 bankruptcy without the benefit of speaking to a knowledgeable bankruptcy attorney. Chapter 13 A Chapter 13 bankruptcy case allows debtors to repay all or a portion of their debt over a period of 36-60 months. Chapter 13 involves the proposal and bankruptcy court confirmation of a plan to repay your creditors. It is similar to debt consolidation in that it consists of one monthly payment for most all debts. However, unlike debt consolidation, the amount of debt you repay is based on your current financial situation, not the amount of the debt. Chapter 13 is often used by individuals to stop foreclosure, auto repossession, and tax levies and garnishments and to repay such debts over time. Chapter 13 is also used by individuals who fail to qualify for Chapter 7 under the new bankruptcy laws. For example, if you have fallen behind on your mortgage payments, you may propose a repayment of your mortgage arrearages over a period of time ranging from 36-60 months. So, if you are $6,000 in arrears on your home loan, a Chapter 13 would allow you to pay $100 per month (not including trustee and other fees) to catch up on past due mortgage payments and avoid foreclosure. For those interested in saving their home in Chapter 13, the plan payment must be enough to cover your current monthly mortgage payment, all overdue mortgage payments, as well as trustee and attorney’s fees. In order for the Chapter 13 repayment plan to be approved by the bankruptcy court, the Debtor must provide proof of income in an amount to cover your mortgage payments, arrears, fees and all other monthly living expenses. In most other Chapter 13 cases, your plan payment is based on either:
A non-exempt asset is an asset such as equity in a home, vehicle, investment account, or injury claim that exceeds the allowable state or federal law monetary exemptions. For example, if your home is valued at $400,000 and you owe $250,000 on existing home loans and no tax liens, you would be required to pay the non-exempt equity sum of $78,000 over a period of five years or $1,300/month. This amount is calculated by subtracting the following sums from $400,000:
In a Chapter 13, a debtor repays his or her debts through a monthly payment made through check or wage deduction to the U.S. Bankruptcy Court. The Bankruptcy Court, in turn, repays your creditors pursuant to a plan proposed by the debtor and confirmed by the Chapter 13 trustee. Chapter 13 is a wonderful option but is often unsuccessful based on job loss, illness or other life-changing event that prevents the Debtor from making his or her plan payments. However, even if the Debtor becomes unable to make his or her plan payments, the Chapter 13 can be a valuable tool in buying the Debtor time to formulate a new strategy or to convert the Chapter 13 to a Chapter 7. Chapter 11 A Chapter 11 bankruptcy offers businesses and high debt debtors the ability to restructure debt obligations in order to continue operations with an organized debt load. In a Chapter 11 case, creditors must receive more than they would receive in the liquidation of non-exempt assets in a Chapter 7 bankruptcy case. Depending on the complexity of the Chapter 11 case, a business or individual can emerge from Chapter 11 with repayment agreements anywhere from a number of months to several years. Our Chapter 11 bankruptcy services involve the preparation and filing of the Chapter 11 bankruptcy petition, schedules, and other required pleadings. We also prepare and file the required Chapter 11 Disclosure Statement and Chapter 11 Plan. Other Chapter 11 bankruptcy services include “first day motions”, representing the debtor at the “341a” and other meetings with the U.S. Trustee and assisting the debtor with all financial reporting (operating reports and interim statements) required by the U.S. Trustee. We also appear at all court hearings related to your Chapter 11 case. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 After hundreds of millions of dollars were spent by credit card companies, banks, auto lenders and the entire consumer finance lobby to persuade Congress that people were abusing the bankruptcy laws, President George W. Bush signed the most sweeping changes to the bankruptcy laws on April 20, 2005. These changes to the bankruptcy laws were codified in the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 and were the most dramatic since the bankruptcy code was enacted. Several significant changes were made to numerous bankruptcy code provisions. The most important change made to the bankruptcy code was to restrict an individual debtor’s ability to eliminate debt in a Chapter 7 bankruptcy. The publicity campaign launched by the credit card industry following the passage of the new bankruptcy laws led many to believe that bankruptcy was no longer an alternative to deal with serious and irreversible debt problems. As a result, the number of bankruptcy cases filed in the United States fell to a 10 year low in 2006. Those who did not understand the actual changes in the law were forced to deal with aggressive collection actions, astronomical interest payments, lawsuits and wage garnishment rather than filing bankruptcy. While the new bankruptcy laws made it much more difficult to file Chapter 7 for some people, it is still available and numerous clients have successfully obtained debt relief since the passage of the Bankruptcy Abuse Protection and Consumer Protection Act. The bankruptcy law changes have caused many good attorneys to abandon their bankruptcy practice for fear of the attorney’s personal liability for making mistakes in bankruptcy cases filed after October, 2005. At Foster Law Offices, we embrace the challenge of representing clients under the new bankruptcy laws and have assisted dozens of clients in eliminating debt in Chapter 7 cases filed since the passage of the new bankruptcy laws. Creditor Workout A creditor workout is an arrangement made with your creditors whereby you agree to pay a lump sum to “settle” your debt obligations. Oftentimes, credit cards, medical bills and other past due account holders and collection agencies will agree to substantial discounts if the debtor can come up with cash payments to settle these accounts. In such cases, the creditor will receive the payment for a percentage of the total debt, and the remaining balance will be written off by the creditor. This “charge off” which will result in the creditor receiving significant tax savings. We negotiate these debts with each creditor on your behalf and propose one-time cash settlements to eliminate these debts. Depending on the creditor, we have found debt savings can range anywhere from 40% to 60% of the debt. A creditor workout is a fabulous alternative to filing bankruptcy. It is best utilized by those with access to cash or the ability to borrow money from friends, family members or by liquidating or refinancing existing assets. In most cases, clients fund creditor workouts by:
Bankruptcy Litigation In addition to our bankruptcy representation service, we also represent litigants in connection with complaints, motions, objections and other bankruptcy litigation-related matters. Litigation in bankruptcy moves quickly and can deprive the debtor of valuable assets and future financial recoveries if the Debtor fails to act promptly after receiving notice from the trustee, creditor or other party-in-interest. We have extensive experience in litigating claims and objections in Chapter 7 and Chapter 13 and are respected advocates for the rights of debtors and other interested parties. Our reasonable fee structure and honest assessment of the likelihood of success in your case promotes open communication and results in tremendous value and piece-of-mind to debtors facing legal action in their bankruptcy cases. More Information/Contact Us We look forward to assisting you with your bankruptcy or debt-related needs. For further information on bankruptcy, please visit www.attorneybankruptcy.net. To contact us, please complete the Quick Contact Form to the right, or if you would like to contact us directly feel free to call us at: (206) 903-1836. If you prefer to submit your questions in writing we welcome your email inquiries at info@fosterlawoffices.com. All inquiries are strictly confidential. CONTACT US TODAY FOR A FREE INITIAL CONSULTATION |