Wantland Law

Today, I had a guy from Shepherdsville call me about filing bankruptcy. He was behind on child support because his credit cards had gotten behind and spent his money trying to catch up. Talk about confused priorities…

Last week I dealt with multiple bankruptcy clients. The first had cleaned out his IRA, sold off an old car, and cashed out a 401(k) to keep up with bills only to be bankrupt in the end. He lost truly everything. The next, just lost his job. He had a 401(k) and the standard household stuff. After his bankruptcy, he will still have all his stuff and his 401(k). Why?

This client came to me early. By planning for bankruptcy as opposed to just falling into it a client can position herself to protect assets. The bankruptcy code can do more than just get rid of debt- it can make sure you have a little something in your pocket when it’s time to start over.

Call early. The sooner you call, the sooner I can help.

Last week I was on my way back to my office in Bullitt County after appearing in Bankruptcy Court.  My client had asked me about how a chapter 7 bankruptcy affects a foreclosure. 

First, the filing of bankruptcy, in most cases, immediately starts the automatic stay.  This means that I get notice of the bankruptcy to the Bullitt County courts and commissioner to stop the sale of the house.  I file many bankruptcies the day or weekend before the sale for this very reason.  Even if you plan on not keeping the house, filing will allow you to stay for a while without paying rent.  This allows one a chance to save up and get ready to move.

What about moving?  With bankruptcy filing, I regularly see foreclosures stalled for months.  In my latest good example, my client filed bankruptcy in early September.   The sale is set for the end of February by the Bullitt County Commissioner.   My client probably won’t have to move until March.  Filing bankruptcy let this client stay in his home for six months without paying a dime.

If my client had wanted to and he was financially able, he could have used bankruptcy to get caught up on missed payments.  I’ll write more about that some other time.  In this case, my client wanted out of the house.  Normally, after the house is sold at the courthouse door, the mortgage company gets a deficiency judgment.  This means the mortgage company can come after you for the balance owed on the loan after the sale of the house.  Bankruptcy, unless you reaffirm the debt, cuts that off.

Bankruptcy, at least in my little corner of Bullitt County, can buy one six months of rent free living in addition to getting out from under a house someone can’t afford.