Bankruptcy

Bankruptcy

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BANKRUPTCY

My practice isn’t just limited to helping people solve tax problems. I also help hundreds of individuals and small businesses solve their debt problems through bankruptcy. Bankruptcy is a federal law which allows honest debtors to discharge most debts and get a debt-free fresh start.

Bankruptcy won’t fix some debt problems. Alimony, child support, criminal fines, recent tax debts, most student loans and debts secured by property (mortgages, car loans, furniture loans, etc.) are not discharged in bankruptcy. Most unsecured consumer debts like medical expenses, credit card debts, repossessions, and judgments are discharged in bankruptcy.

SOME BANKRUPTCY FAQs

I’ve heard people talk about Chapter 7, Chapter 11 and Chapter 13 bankruptcy. What’s the difference?

• Chapter 7 bankruptcy is also known as "liquidation". That scares a lot of people, because when you say "liquidation", most people think they will lose everything. That’s not what happens. Bankruptcy laws allow debtors to exempt a lot of their property from creditors. Many states such as Oklahoma, Texas and Florida have very generous exemption laws which allow debtors to exempt the home, car, furniture and other household goods, pensions and IRAs and many other types of property. Also, debtors in bankruptcy are usually allowed to keep assets like the car and the home as long as the payments are kept current. I have filed several hundred Chapter 7 bankruptcies for my clients in the last 15 years.

• Chapter 11 bankruptcy is used by businesses and sometimes by individuals to reorganize their debts. United Airlines, Kmart and WorldCom all filed bankruptcy under Chapter 11. I have filed several Chapter 11 bankruptcies for small businesses and a few individuals, but Chapter 11 bankruptcy is not what most individuals file.

• Chapter 13 bankruptcy is also called "Adjustment of Debts of an Individual with Regular Income". Chapter 13 bankruptcy is very useful for debtors wanting to save a home in foreclosure, adjust debts on vehicles that are worth far less than the debt and to resolve some income tax debts on un-filed or late-filed returns. In a Chapter 13 bankruptcy, the debtor pays a portion of the debts to a Bankruptcy Trustee who then pays the money to the creditors in accordance with a plan. The Chapter 13 bankruptcy plan requires monthly payments for 3-5 years. When all payments are made, the debts are discharged, even though most of the debts in a Chapter 13 bankruptcy are not paid in full.

Can you discharge income taxes in bankruptcy?

• In a word, yes. If the income tax return’s original due date plus extensions is more than three years ago, and the return has been on file for at least two years, the tax debt will likely be discharged in bankruptcy.

How much does a bankruptcy cost?

• Most lawyers charge a flat fee for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The filing fee which the Bankruptcy Court charges is a set amount. The Chapter 13 bankruptcy filing fee is $194.00, the Chapter 7 bankruptcy filing fee is $209.00 and the Chapter 11 bankruptcy filing fee is $830.00. Attorney fees for a Chapter 7 bankruptcy are usually $500-1,000. Attorney fees for a Chapter 13 bankruptcy are usually $2,000-3,000. However most of the attorney fees for a Chapter 13 bankruptcy are paid in installments through the Chapter 13 Trustee. Attorneys in a Chapter 11 bankruptcy case charge by the hour.

Can you represent me in a bankruptcy outside of Oklahoma?

• I am only licensed to practice law in Oklahoma and Arkansas, so I couldn’t be your only bankruptcy attorney in another state. However, I have been special counsel many times in other states where I advise the local bankruptcy attorney about tax discharge issues and other questions which require special expertise.

How will bankruptcy affect my credit?

• Bankruptcy stays on a credit report for 10 years. But most people who have filed bankruptcy are able to overcome the stigma in 18 months to 3 years if they stay current on their debts that remain after bankruptcy like mortgages, student loans, car loans, etc. I’ve been told by several credit and loan professionals that a credit report with a recent bankruptcy looks better to them than a report showing multiple late payments, repossessions, foreclosures and/or charged-off loans.

How will the new bankruptcy law affect me?

• The new bankruptcy law which goes into effect on October 17, 2005 imposes several new conditions and restrictions on debtors’ ability to discharge their debts in bankruptcy. If you think you need to file a bankruptcy to fix your debt problems: DON’T WAIT - ACT NOW!

How can I know if bankruptcy will help me out of my debt problems?

• Call lawyer Paul Tom at (918) 743-2000. I offer a free ½ hour bankruptcy consultation. I will explain the bankruptcy process to you and you can decide whether bankruptcy is the right option for you.

Bankruptcy is certainly not for everyone, but it is a real life saver for those who truly need debt relief. Bad things sometimes happen to good people. I can help.

Call lawyer Paul Tom today at (918) 743-2000