James R. Balmforth: Bankruptcy Lawyer Draper Utah

If you are late on your credit payments and are considering bankruptcy, speak to an experienced Draper Utah bankruptcy lawyer.

Each time you are late with credit payments, the issuer makes a note on your credit report. Notations are made for 30, 60, 90 and 120 days past due. Each mark hurts your credit score and makes it more difficult to obtain credit for purchases such as a car or house.

Typically, if a bill has been unpaid for four months, the company will charge it off to bad debt in their records and sell the account, at a reduced amount, to a collection agency. At this point the creditor no longer owns the account, but you still owe the bill. You can expect calls and/or letters from the collection agency demanding payment. If you’d like to negotiate a settlement, call and work out the details. It’s best if the collection agency agrees to delete your debt once you pay the agreed-upon amount, because that means all of those late payment notations will be removed as well. Also, ask for a letter outlining the agreement before sending any money.

Both the original account and the collection account will be a part of your credit report, and both will be deleted at the same time — 7 years from the date of the first missed payment that resulted in the charge-off.
If you plan to rent an apartment or buy a house or car, having even one collection account can cause you to be rejected or receive a high interest rate because it “brands” you as a high-risk customer; i.e., someone who does not pay credit card bills on time.

Bankruptcy Credit Counselors

Some people turn to credit counselors for help when debt becomes unbearable. These organizations will review your bills and assist you in consolidating them into one payment, often with a lower interest rate than your individual credit cards. Creditors often fund credit counseling programs because it protects their interests. Lenders would rather work with counselors, even if it means accepting lower payments, than be paid nothing.

Hire A Bankruptcy Lawyer

Filing a bankruptcy case is not easy. It has always been a detail-oriented process, and the 2005 amendments added a number of provisions that require automatic dismissal when the debtor fails to file certain documentation or complete certain procedural steps. The possible mistakes and omissions range from failing to file pay stubs or update tax records to filling out forms incorrectly to missing the deadline for stating whether the debtor intends to surrender his or her house or car.

These procedural hurdles may be more likely to trip up people who do not have lawyers helping them. A related possibility is that while these problems plague all cases about equally, an experienced Draper Utah bankruptcy lawyer can easily correct such problems and avoid dismissal, whereas the procedural errors prove fatal for pro se cases. When technical deficiencies in a debtor’s legal paperwork occur, courts often issue “show cause” orders instructing debtors to explain why their cases should not be dismissed. If the problem is corrected in response to the court’s order, the case will not be dismissed. Debtors represented by an experienced Draper Utah bankruptcy lawyer are be better able to respond to these court orders and to correct paperwork problems.

Experienced Draper Utah bankruptcy lawyers understand the motions and to know how to correct the deficiencies. They also have better access to the other parties to discuss settling matters and, indeed, better access to the courthouse. While bankruptcy lawyers typically file cases and amendments electronically, a pro se debtor may need to take off time from work to address a problem. The poor odds of a pro se debtor in avoiding or correcting technical errors offer a powerful reminder that law is not free.

Homeowners In Bankruptcy

Many debtors who file for bankruptcy, however, are behind on their mortgage payments. By the time they file, some are a few months late and others are on the eve of a foreclosure sale. Homeowners desperate to save their homes often seek refuge in bankruptcy court, but they find only limited relief there. Bankruptcy does not reduce the principal or interest on a home mortgage, absent the unusual situation of a lender consenting to a modification of the loan. If homeowners simply cannot make the ongoing payments after the interest rates on their mortgage loans have risen, bankruptcy law does not rewrite those loans to lower the interest rates or to subsidize mortgage payments.

Bankruptcy does, however, offer some specific provisions to help homeowners who are behind on their mortgages and want to catch up on missed payments. Chapter 7, the most common type of consumer bankruptcy, usually delays a creditor from foreclosing for a few months and permits a debtor to discharge credit card and some other debts, freeing up income that can then be used for house payments. When the debtor is in default, the lender usually will wait three to six months for the bankruptcy case to end and foreclose at that point. The lender’s more expensive option is to ask the court to permit foreclosure before the bankruptcy case ends, which sometimes will be granted. Chapter 7 also protects the debtor from having to pay a deficiency. Foreclosure sales often net far less than the amount due on the mortgage, and in most states, the debtor owes the lender the difference, called a deficiency. Chapter 7’s debt forgiveness would cover that deficiency. Thus, Chapter 7 debtors may lose their homes in bankruptcy, but mortgage lenders normally cannot take other assets or garnish wages to collect a deficiency because bankruptcy discharges that obligation.

Chapter 13, the other common type of consumer bankruptcy, was designed to help debtors keep their homes, but as in Chapter 7, the home mortgage loan cannot be modified. Absent unusual circumstances, the principal of the debt is still owed and interest rates normally cannot be modified. However, Chapter 13 allows debtors to stop a foreclosure and cure a default due to missed payments by repaying the amount in arrears over the next three to five years. Debtors can catch up on these missed payments without creditor consent, but they must get bankruptcy court approval of their repayment plan. To do so, debtors must first persuade the court that they will be able to make each future house payment as it falls due, plus have enough income to cover payments previously missed. Then debtors must make those payments as promised. However, much can go wrong over the three to five years of a Chapter 13 repayment plan. Only one-third of debtors succeed in making all the payments due; most Chapter 13 cases fail within a year or two. For homeowners in default, foreclosure likely will soon follow their missed payments and the dismissal of their bankruptcy case. Thus, although bankruptcy has a home-saving purpose, the outcome can sometimes be home loss.

Bankrupt debtors who lose their homes suffer immediate hard consequences: they must find somewhere else to live, perhaps persuading someone to take them in despite their recent or ongoing bankruptcy; they must pack up belongings and transport what they can afford to take or sell or abandon items too expensive to move or too large for their new residences; and they must leave friends and neighbors behind and move children away from familiar schools. At each of these turns, they face out-of-pocket expenses and the embarrassment of failure in the eyes of their neighbors, children, families, and others. Losing a home is nearly always a step down the social and economic ladder, and it may even be a tumble into serious hardship, such as renting in a high-crime area or having to endure unfit living conditions.

The consequences of home loss may be suffered for years. Some of the pain is financial, as families may lose current equity in their homes. More likely, however, the family who has lost a home has lost financial hopes for the future from expected price appreciation and the forced savings effect of making mortgage payments. There are also painful psychological losses, for “homeownership is about status, about participation in a community, about school districts and opportunities for children, about family memories and continuity, about emotional as well as financial security.”

Hire the services of an experienced Draper Utah bankruptcy lawyer. The lawyer will ensure that your rights are protected. Bankruptcy is a complex process. It’s not as simple as merely submitting a form to the court. The exact Utah bankruptcy process will depend on your chapter of filing. Individual debtors in Utah usually file for bankruptcy under Chapter 7 or 13. An experienced Draper Utah bankruptcy lawyer will review your circumstance and advise you on the chapter you should choose. Choosing the wrong chapter can have serious consequences. Don’t take chances.

Post Bankruptcy

With an experienced Draper Utah bankruptcy lawyer on your side, you can discharge most debts. However your credit will be adversely affecting by the bankruptcy filing. Once you are out of bankruptcy you have to start rebuilding your credit. Speak to your Draper Utah bankruptcy lawyer to know how you can rebuild your credit. Always beware of credit repair firms that promise you the world. For a fee, some companies claim to erase bankruptcies and other bad credit. There is no legal way to remove accurate information on a credit report. If there is an error, you can request an investigation, but that’s a free service. Credit repair is a perfectly legal process. Basically in credit repair what you do is inform the credit bureaus of the incorrect entries on your credit report and have them removed.

According to the Credit Repair Organizations Act, credit repair firms cannot advise you to commit illegal acts like changing one letter in your name to create a new credit file or sending several letters disputing an account you know to be correct in hopes the creditor will fail to verify the debt within 30 days, thereby deleting the account from your report. You have the right to dispute any information in your credit report that isn’t correct. Should the information be found, in the opinion, of the credit reporting agency to be accurate, complete and verified, the agency will inform the consumer the information would remain on file but they may include a consumer statement setting out the nature of the dispute. This becomes part of the credit report.

One last point on credit repair firms is that they cannot charge for a service they promise until they fully deliver. If the company says, for instance, that it will eliminate bad debts from your credit report, you do not have to pay until they have delivered on their claim. Some firms will ask you to pay a monthly fee while they work on repairing your credit file. By law you can do anything a legitimate credit repair organization can. Since you spent the time charging up the debts, be the one to tackle the problem. Consistently paying your bills on time is the best way to maintain and improve your score.

Prior bankruptcy (more than 8 years old) that still appears on credit reports.

The debtor must deal directly with the credit bureau by submitting a request for reinvestigation on the prescribed form which is available with the credit report. Alternatively, the debtor could send a letter to the credit bureau informing the inaccurate entries on the report. If the bureau maintains that the information is correct, the debtor must write to the creditors directly asking them to verify in writing whether the debt has been paid. The verification obtained from the creditor must be forwarded to the bureau with request to update the information. Bad credit is bad. It will cause problems when the person applies for credit. It is therefore important to check and update credit reports on regular basis. Debtors who have received a discharge in bankruptcy will be offered credit by lenders who specialize in lending to high risk individuals. Such lenders generally charge a higher interest rate.

Draper Utah Bankruptcy Lawyer Free Consultation

When you need help with a bankruptcy in Draper Utah, please call Ascent Law LLC (801) 676-5506 for your Free Consultation. We can help you with Debt Problems. Wage Garnishment. Foreclosures in Utah. Bankruptcy chapter 7. Chapter 13 Bankruptcy. Chapters 11, 9 and 12. Modification of Chapter 13 Plans in Bankruptcy. And Much More. We Want To Help You.