Julie Kreutzer is an experienced Boulder bankruptcy lawyer, serving the Boulder and Denver metro areas in Colorado. Julie handles Chapter 7 bankruptcies and debt resolution through negotiation with creditors. Chapter 7 bankruptcy wipes out debt entirely and is appropriate in many cases. When that is not appropriate, it is possible to reorganize debt through a Chapter 13 bankruptcy* or through debt negotiation. When there are a small number of creditors and the client can come up with a lump sum to resolve debt, negotiation with creditors to obtain the most favorable resolution of the debts may be the best option. When there is a considerable amount of debt, no lump sum available and a larger number of creditors, bankruptcy options are evaluated with the client.
A Chapter 7 bankruptcy wipes out most debts (child support can’t be wiped out, student loans and maintenance and some legal judgments are difficult or impossible to wipe out). Chapter 13 reorganizes the debt into a debt payment plan that is to be paid for several years and either retired or the debt is forgiven. A Chapter 11 bankruptcy is for businesses.
Recent Changes In Bankruptcy Law
Bankruptcy law changed recently and has become much less favorable for consumers. That does not mean that consumers cannot get relief from bankruptcy but it is important to carefully evaluate eligibility before filing.
I need help but how can I afford an attorney?
The cost of attorney assistance is typically a one-time flat fee that is not that expensive and can be handled in one of two ways. The first is that if you are eligible for bankruptcy (most people are eligible for Chapter 7 or 11 or failing that, Chapter 13) then you can potentially stop paying debts you will soon discharge through the bankruptcy and instead use the money to hire counsel and file. If you file promptly, you will have the protection of the bankruptcy court by way of avoiding garnishment and other issues of concern. To find out if this option will work, schedule a consult to find out if you are eligible for bankruptcy and what bills should be paid if you are filing bankruptcy. If you have already stopped paying most debts and still have no money, you can consider the second option. This would involve getting a temporary loan from friends or family for the flat fee. If you look at your balance sheet your current obligations, once you have gotten rid of dischargeable debt, it is fairly typical you can repay the loan once your debts are discharged because you have more available funds.
Is my only remedy a bankruptcy?
No, in fact, you should review your debt or debts with an attorney because in some instances a debt may be fraudulent or overstated. In such cases, you, or your attorney, can resolve your debt problem by getting rid of the debt or reducing it to a manageable size. If the debt and amount sought is legitimate, there may still be opportunities to negotiate with creditors or strategies for debt payment that will work for you.
I’ve heard I’m not eligible for bankruptcy, how can I deal with my debt?
Even if your income or assets make you ineligible for a Chapter 7 or Chapter 11, you are usually eligible for a Chapter 13, which will protect you from creditors and deal with your debt (this is true even if you have filed for bankruptcy in the last eight years or have significant earnings and/or assets). Most people are eligible for some form of bankruptcy protection unless they have committed fraud or have some other unusual circumstance. In the unlikely event you are not eligible for any form of bankruptcy, there are still options, such as negotiation with creditors.
What are the risks of doing a Chapter 7 bankruptcy by myself to save money?
Because of the changes in the law, there is a lot more paperwork and a new set of requirements that trip up the inexperienced. If you miss one of the requirements or deadlines you can have your case dismissed (which means you need to pay to refile and you are unprotected till you do), you can be criminally charged for fraud (sometimes due to an oversight or error on your part), or you may need to correct documents or have your 341 hearing continued because your record is not accurate or complete.
What is the advantage of having an attorney compared to filing myself?
Attorneys familiar with bankruptcy law recognize early in meeting with you what the unique aspects of your case are that might cause trouble with your filing. Before they file your case, they work with you to be sure that the problems are resolved or are something that can be dealt with effectively. Also, they are familiar with the paperwork and other procedural requirements, which can save you a great deal of time and trouble.
If you take a look at the Petition and Schedules required for filing, they will remind you of a particularly long and difficult IRS form. It is safer and easier to have help with documents of this kind unless you are particularly organized and familiar with such forms. Also, attorneys are fairly comfortable with hearings because they know the types of questions that are likely to be asked, the burden of proof necessary to succeed and how the process is supposed to work. They are also usually familiar with the trustees. Having an attorney go with you to the hearing means that you have someone on your side to assist you in the hearing; that can be quite important depending on what the Creditors or Trustee might want to know or concerns that they might have.
If I do a Chapter 7 personal bankruptcy, how long does the process take and what do I need to do?
The process takes roughly ninety days from the day you file to the date your debt is discharged, if you get your information to your attorney in a timely fashion. (You’ll need to get copies of items like paystubs, bank statements, tax returns, etc.). You need to answer quite a few questions and provide a number of documents. You will also need to do a consumer budget and credit counseling course (this is cheap and does not take much time).
The information gets entered into a blizzard of paperwork that is then filed with the Court. You are assigned a 341 Meeting of Creditors Hearing date in less than a week and are likely to be in court for that hearing within a month. After the hearing, you need to complete a financial management course (again, inexpensive and does not take much time) and deal with any remaining questions. At this point, the debt is discharged.
What are my options to save my house if a Loan Modification or a Refi isn’t working?
Because President Obama’s program for these items are so new, it can take awhile to get an answer from your lender. However, if it appears you aren’t eligible, Chapter 7 or Chapter 13 may allow you to save your home. It is worth attending a free seminar for more specifics or a free 1/2 hour consult one-on-one to look at your specific facts including: the equity in your home, the level of debt on the home and other debts you have to see if either of those options might work.
What can I do if I can’t pay my student loans?
Student loans aren’t dischargeable in Chapter 7, however, you can discharge other debt to make it possible to pay off student loans. There is an ‘undue hardship’ clause for Student Loans but it is virtually worthless because the cost of putting on an evidentiary hearing for the bankruptcy court is beyond the means of most debtors and the criteria is very strict. Chapter 13 can include student loans but after it is concluded, you are still stuck with whatever balance is left over. However, there are some ways to deal with the student loan debt outside the bankruptcy process such as private hardship discharge that are more practical. Because each student loan situation depends on whether there is hardship, whether there is other debt and how much, etc., it is highly fact-specific, so it is best to get advice one-on-one; our office provides free consults for up to a half-hour to review your situation. However, a seminar will provide more detail on the criteria for items like private hardship discharge.
What are my options for credit card debt?
If you have enough of a stable income that covers your immediate expenses and you are able to maintain payments on all cards with some money left over, you can take a strategic approach to paying off the debt based on interest rate of various cards, size of balances and other types of debt you have. Over time, you will have a more manageable debt and you will dig out of the debt. However, if you don’t have the income for this strategy, you can file a Chapter 7 to eliminate all of this debt outright or a Chapter 13, which creates a plan to eliminate this debt over time in manageable chunks while protecting your assets. To explore which option is more appropriate, it is important to determine your eligibility for Chapter 7, as well as any benefit or risk to Chapter 13. A seminar will give you detailed information on these options or you can schedule a one-on-one session; both are free.
Important Do’s and Don’ts
If you are in financial trouble:
- Do not use your credit cards unless you must for necessities. If you use your cards 90 days before you file it is presumed to be fraudulent because the Court presumes that you must have known you would need to file and could not pay the loan.
- Do not try to protect assets by selling them to friends or family or by giving them away or transferring them. You will be asked about it in your filing and the trustee will probably do an asset search. (Example: Don’t give your car to your son.)
- Do not try to pay a favored creditor $600.00 or over. If you do, the trustee will call that person and make them refund the money to the Trustee even if it was a legitimate debt that you owed. It is called ‘preferential treatment of a creditor’ and is not permitted.
- Do not refinance your house to pay your debts unless you are certain you can pay them all off and that this will end your financial problems. At least part of the equity in your home is protected under bankruptcy law. If you refile and still need a Chapter 7, you will have lost all or most of the equity in your home to no purpose.
- Do not liquidate your retirement accounts! They are usually protected under bankruptcy law! Get legal advice before you consider liquidating those monies!
- Do not sign up with any debt resolution company unless you have carefully checked their plan. If they are charging you to manage your debt and have a debt repayment plan, can you afford their monthly payment? Are they negotiating down your debt? Is there any room in their plan for emergencies such as repairing a car or a doctor bill? If not, you might spend several months and thousands of dollars only to discover that you are still deep in debt and your situation has not improved.
- Don’t sign any agreement to resolve a debt until you have evaluated that agreement in light of your other debts. Is it practical given the other debts?
- Don’t panic! If you find you are losing sleep and can’t focus on your daily activities schedule a consult with an attorney to determine how best to solve your financial problems. Most attorneys charge for a consult but paying them a $100 or more to get an accurate view of your options is the best start to resolving your problems. (Our office does not charge for an initial consult of a ½ hour but most attorneys do, so ask in advance about the fee and be prepared to pay if you go to a different firm. If you retain that firm, usually the consulting fee is applied to the overall cost of the bankruptcy.)
- DO be certain to bring a list of your outstanding debts that includes the overall debt and monthly minimum payment. Also, bring bills, letters from collection agencies and attorneys and any legal paperwork you have received. Bring information as to your account balances for bank accounts, IRAs and assets. It’s important to relate the whole picture to the attorney who is advising you since they will not give you good advice if they are missing a piece of the puzzle.
- DO know that the past year is also important in terms of income and sale or transfer of assets. (For example, a client once neglected to mention that they had recently sold two businesses. It took a fair amount of work to resolve that oversight.)
Chapter 13 Bankruptcies
We do not do Chapter 13 bankruptcies. However, we think highly of the following attorneys who provide this service and who specialize primarily in bankruptcy law:
Bart Balis of Balis and Bartlett, P. C. 303-443-6924
Sylvia Lovisone 303-776-7212.
Referrals in Other States
We practice only in Colorado but can recommend the following:
Adam M. Weiner, Attorney at Law
Law Offices of Adam M. Weiner
Portland Bankruptcy Law Group
8624 SE 13th Ave.
Portland, OR 97202
Bankruptcy Advice from a Colorado Bankruptcy Attorney: The 4 Options for Dealing with Debt, a Few Warnings and the Insider View on Attorneys
We are required to label our firm as a ‘Federally Designated Debt Relief Agency’ pursuant to bankruptcy law. However, what we do is assist people with their debts through various means including bankruptcy. The information contained on this site is intended to provide general information to the public but is not a substitute for providing individuals with solutions appropriate to their needs. Readers are strongly advised to consult with an attorney before attempting any solutions to their debts since individual circumstances require individual solutions.