Making the decision to file a bankruptcy case is not easy. It is important to look at all of your options, and understand both the benefits and negative effects of filing. These are some of the questions that must be considered:

• How badly do I need relief? Are creditors hounding me? Have I been sued? Am I facing a garnishment or foreclosure? Is the pressure of dealing with my debts (or not dealing with them) causing problems with my job, my health, my family relationships? Have I tried to work with my creditors to no avail?
• Do I qualify for bankruptcy relief? Most individuals qualify for relief under either Chapter 7 or Chapter 13. However, higher income individuals may be restricted to a Chapter 13 repayment plan.
• Will filing a bankruptcy case really help? Bankruptcy under either Chapter 7 or Chapter 13 will stop creditor harassment, foreclosure, garnishments and lawsuits. Some debts, however, cannot be completely discharged (wiped out) by a bankruptcy filing. These include recent income taxes, child support, alimony, and most student loans. Even if you are facing nondischargeable debts, bankruptcy may still help, though, by providing temporary relief and by freeing up income that had been used to service debt that can be discharged.
• Will I lose my property? In most bankruptcy cases, the debtor is able to retain his property. However, in most cases if the property is being used as collateral on a debt, a plan must be proposed to pay the creditor at least the value of the property in order to protect it.
• Can I afford the cost of filing a bankruptcy case? The best and most experienced bankruptcy law firms will provide a free initial consultation. You will meet with an attorney who will thoroughly evaluate your situation and fully discuss your options. He/she will explain the fees and costs involved and discuss what payment arrangements can be made. In Chapter 13 cases, the attorney fees are usually included in the repayment plan, so a case can be started with little money up front.

The most important thing to remember if you are considering bankruptcy is to get good advice from an experienced bankruptcy attorney. Bankruptcy law is a specialized field. Only a fully qualified, experienced attorney will be able to fully advise you and follow through with the best plan of action.

You will meet with an attorney at your initial consultation.

Some other law firms have you meet with an assistant or paralegal first. With these firms, you may not even meet your attorney until your first court date. We feel it is important to meet face to face, so you can shake hands with the person who will actually represent you and get to know them. Most importantly, a paralegal or assistant cannot properly assess your options and advise you about the pros and cons of the bankruptcy process.
 
You will receive advice specific to your situation
Most people have a general idea of how bankruptcy works, but do not fully understand how it applies to them. This leads to misunderstandings about who can file for bankruptcy, which debts are eligible for discharge, and what happens with property and belongings. The initial consultation is our chance to clarify bankruptcy laws and how they apply to you and your specific situation. We will discuss your goals and priorities, and outline the different options available to accomplish them.
 
You will not file bankruptcy at your initial consultation
Under certain circumstances (foreclosure, repossession, garnishments), we can file a bankruptcy case immediately following the consultation. However, we normally encourage our clients to take the time to consider their different options. We understand that filing bankruptcy is a big decision that should not be entered into without advice and consideration. We want our clients to be comfortable with both the case they are filing and the attorney representing them before going forward with filing.

Not always. If a debt is less than seven years old, paying it could improve your credit score, IF it is showing on your credit report. How much depends on how old the debt is.

If the debt is older than seven years, by law it should have already come off your credit report. The credit rating agencies should not be considering it in assigning your score, so repaying it would likely have no effect on your score.

If the debt is less than seven years old, but is not showing up on your credit report, paying it off will not help your score, AND COULD EVEN HURT IT. This could happen if the creditor reports the payment, since your credit report would then show a debt that was formerly delinquent.

So, if you are thinking of paying off old debt, it is important to prioritize:

FIRST PRIORITY: Tax debt. Tax debts to federal, state and local governments accrue penalties and interest at an astounding rate. And, the government has multiple ways of collecting the debt that are not available to general creditors, such as seizing your tax refunds or government benefits, levying on your wages, and seizing your property.

SECOND PRIORITY: Child support or alimony obligations, and any other obligations you incurred as part of a divorce settlement. These debts are not dischargeable in bankruptcy, and failure to pay can even land you in jail.

THIRD PRIORITY: Any creditor that has sued you and obtained a judgment. A judgment will normally constitute a lien against your property, and may give the creditor the right to garnish your wages or bank account.

FOURTH PRIORITY: Any debt upon which you have been served court papers, even if a judgment has not been entered. If you have been served, a judgment is likely in the near future.

FIFTH PRIORITY: Debt that has been handed over to a law firm for collection, especially if it is a local law firm. A collection lawsuit is much more likely to be filed by a law firm than a general collection agency.

SIXTH PRIORITY: Other debts that are showing up on your credit report. Pay the newer debts first, as these affect your credit score more than older debts.

SEVENTH PRIORITY: Other debts that are not showing up on your credit report.

If it is not possible for you to deal with your debts in this way, it may be time to look at your bankruptcy options. STEER CLEAR OF THE DEBT MANAGEMENT AND DEBT SETTLEMENT FIRMS THAT YOU SEE ADVERTISING EVERYWHERE. The statistics are clear that these services rarely solve debt problems. More often, they are the only ones who get paid, leaving you further in debt and further behind.

In the United States collection agents are limited in the methods they can use to collect consumer debts by the Fair Debt Collection Practices Act (FDCPA). Consumer debts include credit card debt, auto loans, mortgage payments, medical bills and other family and household expenses not used for a business. If you are dealing with a debt collector or have any questions call your Morgan & Morgan for a free consultation today.

Collection agents MUST:

• Contact you in writing, or attempt to do so, before taking any further action to collect a debt, including legal actions to secure payment of the debt;

Identify themselves when contacting you about a collection matter;

• Provide information on the original creditor and amount owed. The original creditor is the company or institution to which the debt was owed before it was transferred to the collection agency.
• Collection agents are NOT permitted to:
• Harass you or your family with threats of harm or violence, use of obscene language or by making calls at unreasonable times of day;
• Deceive you by providing inaccurate or misleading information;
• Send you false legal documents or threaten to take legal action they are not authorized or willing to take;
• Charge interest or other fees that are not authorized by law;
• Demand payment on an account that you have disputed without providing verification that the debt is legitimate;
• Contact your employer, relatives, friends and neighbors for anything other than your direct contact information. In some instances debt collectors may be permitted to contact employers to verify employment, job title and mailing address.

Most debt collection activities by a collection service must stop if you notify the company in writing to stop contacting you. However, this will not stop you from being sued on the debt. If you are facing multiple debts that you cannot pay, it may be time to consider a bankruptcy case. At Morgan & Morgan, we will carefully analyze your financial situation and advise you of the best course of action. The initial consultation is free, and we never pressure a client to file a case. The ultimate decision of how you want to proceed is yours alone. The important thing is that you have all the facts you need to make the right choice. We’ll do all we can to make sure you fully understand your options.