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The Healing Properties of Bankruptcy

Bankruptcy of North Alabama's goal is to help avoid foreclosure by working to resolve and prevent mortgage issues.

An unexpected or prolonged illness can hurt more than your body. It can cause serious damage to your bank account and your ability to pay your bills.

Nearly half of the clients who walk through Joseph Pleva’s door at North Alabama Bankruptcy have already been through the doors of an emergency room, or they have visited multiple doctors.

“They either didn’t have insurance, or they didn’t have enough insurance,” Pleva said. “A lot of Americans are just a paycheck or two away from serious financial trouble.”

The other half of Pleva’s clients have either over-extended their credit limits or have lost their jobs.

The Benefits Of Chapter 13

Bankruptcy is relief provided by the federal government that allows people and businesses to get a fresh financial start, offering freedom from unsecured debts and the restructuring of secured debts. It halts collection procedures such as garnishments, foreclosures, repossessions and tax forfeitures.

For many of North Alabama Bankruptcy’s customers, Chapter 13 bankruptcy can provide an effective fresh start. It offers customers the chance to pay their bills in a restructured, more doable framework than their initial debt did.

“With Chapter 13, you can restructure payments for your taxes, student loans and even child support without penalties or interest,” Pleva said. “Clients who couldn’t get a normal bank financing for a vehicle might be paying up to 25 percent for a car loan. We’re able to get that reworked down to 5.25 percent.”

Pleva said his goal is to help avoid foreclosure by working to resolve and prevent mortgage issues.

“We help borrowers who are at imminent risk of foreclosure, under water on the loan, or behind on payments by working to reduce their rates and negotiate for better loan terms,” he said.

A repayment plan may last three to five years, allowing clients to get caught up with their mortgage or other bills. Pleva explained the attorney will propose a plan, and a Chapter 13 trustee reviews it and makes a recommendation directly to the Judge.

“Clients have attorneys, and the creditors—such as banks and car companies—have attorneys who go before the Judge,” he said. “Bankruptcy is a balancing act between debtors getting a fresh start and creditors receiving fair and equitable treatment.”

Or Maybe Chapter 7 Is The Way

The other type of bankruptcy available to those with serious financial troubles is Chapter 7. Chapter 7 is a form of relief where a trustee is appointed to review a debtor’s finances, which can take about 3 months.  The trustee determines if a client is able to pay back debts such as credit cards and medical bills. If not, they will be discharged. However, student loans, taxes and child support are not expunged in Chapter 7.

Although it is shown as a liquidation, the court will allow a Chapter 7 debtor to retain up to $15,000 in real estate equity and up to $7,500 in remaining assets.

Pleva explained, “Most Chapter 7 clients and assets do not meet that threshold, and they are allowed to keep their stuff.”

When a debtor has valuable nonexempt property he wishes to maintain, Chapter 13 bankruptcy provides an avenue to protect it. But for the majority of people whose main goal is to eliminate the burden of debt without a court-ordered payment plan, Chapter 7 is the preferred route, Pleva said.

Navigating A Complicated Process

“It’s important to utilize the services of a qualified bankruptcy attorney who has a proven track record of successfully helping clients eliminate or restructure their debt,” Pleva said. “Bankruptcy is a complicated process, and a good bankruptcy attorney will help clients through every step of the legal process, from enrolling in credit counseling to creating a bankruptcy repayment plan.”

Pleva explained the bankruptcy will stay on a client’s credit report for seven to 10 years, but more important than that is the opportunity to have the debts removed from that credit report.

“This makes creditors more likely to approve you for loans in the future,” he said. “Most people are able to get financing for loans, car loans, and even mortgages within one to two years of filing for bankruptcy.”

If you are experiencing financial difficulty and wonder if bankruptcy could be the best avenue for your fresh start, Joseph Pleva at North Alabama Bankruptcy can help you. Contact Joseph Pleva and his staff at [email protected] or (256) 617-7115 for more information.

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