Should I File Bankruptcy?
If you have little income and a large amount of unsecured debt (medical expenses and credit card bills) then you might benefit from filing for bankruptcy. If you are filing for bankruptcy simply to stop creditor harassment, there are consumer laws which protect you from such harassment. It is recommended that you speak to a knowledgeable Montana bankruptcy attorney before you make a decision about filing for bankruptcy.
Bankruptcy can have numerous benefits to individuals. It can eliminate your legal obligation to repay certain debts. It can also stop wage garnishments. Further, if a creditor is in the process of garnishing your wages (such as starting a lawsuit), filing for bankruptcy can stop the creditor in their tracks from trying to collect on the debt while the bankruptcy proceedings are pending. It may also stop foreclosure proceedings, allow you to keep your car, and allow you to keep and secure certain categories of your property.
What are the Pros and Cons of Filing Bankruptcy?
The benefits of filing for bankruptcy is an elimination of the legal obligation to pay some or all of your debts, known as debt discharge. A bankruptcy filing can halt foreclosure proceedings on your home, allowing you the time to catch up on any arrears. A bankruptcy filing can halt a car repossession, or, in some cases, can force the creditor to return property after a repossession. Bankruptcy can stop wage garnishment, restore utility services (or prevent termination of those services), and can allow you challenge creditor claims when you think there is fraud involved.
What filing for bankruptcy will not do is solve every financial problem you have. You are generally not able to eliminate secured debts, or discharge debts such as child support, student loans, criminal fines, some taxes, court restitution orders, some divorce-related debts and spousal support. Bankruptcy does not protect any co-signers on your loans. If a relative, business partner or friend has co-signed a loan for you, even if you discharge the loan during your bankruptcy filing, your co-signer may still be liable for repayment of the loan. Finally, filing bankruptcy in the state of Montana will not discharge any debts which may arise after you file your bankruptcy forms.
What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?
Chapter 7 is the most common type of bankruptcy, however you must either be under the median income for your household sice, or pass the means test to qualify. You will compare your income to the median income in your county in the state of Montana, and if your income is equal to or below, then you will probably be able to file for Chapter 7 bankruptcy. In Chapter 7 bankruptcy, most of your debts are discharged without paying them. Chapter 13 bankruptcy is also known as debt reorganization, and will take your income minus your expenses, then the amount remaining (disposable income) will be distributed between your creditors for the next three to five years.
How Much Does It Cost to File Bankruptcy in Montana?
You will pay $310 in filing fees for a Chapter 13 bankruptcy filing, and $335 for a Chapter 7 bankruptcy filing. If you cannot afford this filing fee, you may qualify to pay the fee in installments. You will also be required to pay your Montana bankruptcy attorney’s fees, credit report fees, and the fees (if any) for the two classes you must take pursuant to the Bankruptcy Code. The attorney’s fees will depend on the size and complexity of your case, but we believe are fees are reasonable. Further, in a Chapter 13 bankruptcy, generally, the entire fee does not need to be paid up front. Rather, a majority of the attorney fees can be rolled into the repayment plan.
Will Bankruptcy Affect My Credit?
This is a tough question to answer, because it really depends on your individual situation. If you are far behind on your bills, your credit has most likely already been adversely affected, and filing bankruptcy will probably not make it much worse. A bankruptcy filing will appear on your credit report for ten years, however since it will also wipe out your old debts, you may be able to obtain credit and pay your current bills.
Will Bankruptcy Stop Creditors from Calling?
Filing bankruptcy in Montana immediately stops all creditors from debt collection practices, at least until all your debts are properly sorted out under the laws of the state of Montana. Once a creditor or bill collector is notified of your bankruptcy filing, they must immediately cease all collection efforts. This can take a couple of weeks, however you may also inform a creditor who calls you that you have filed a bankruptcy petition, supplying them with the case number. Your attorney can also contact creditors, particularly if a lawsuit is pending. Creditors who continue to harass you after being informed of the bankruptcy filing could be sanctioned by the court, and required to pay attorney fees.
Can I Erase My Student Loans Through Bankruptcy?
Student loans are not generally dischargeable through a bankruptcy filing. That being said, a student loan could be discharged if it is not insured and not guaranteed by a governmental unit, or if it is not under a program which is wholly or partially funded by the government. If paying the student loan would impose an “undue hardship” on the debtor and his or her dependents, then it could potentially be discharged.
If you are contemplating filing for bankruptcy, it is definitely to your advantage to consult an experienced Montana bankruptcy attorney who can fully answer your questions regarding bankruptcy in the state of Montana.
What Documents Do I Need to File Bankruptcy
At a minimum, you will need the following documents:
The last six months of your paystubs;
The last six months of your bank statements; and
The last three years of your tax returns.
At the meeting of the creditors, you will need to bring:
Your driver’s license; and
Your social security card or an original W-2.