FAQ (FREQUENTLY ASKED
This is information is brought to you
by GANDY LAW OFFICES, P.C. We are licensed to practice law
and provide legal advice throughout all of Iowa, USA, only. You are advised that the following
information is general in nature, and may apply differently
to each person, depending upon their circumstances. You are
also advised that bankruptcy laws change from time to time,
so you may want to speak directly with an experienced bankruptcy
attorney to find out how the current bankruptcy laws apply
to your specific situation.
tell me a little bit about bankruptcy?
How long does a Bankruptcy take?
How do I know if I need a fresh start
How do I know if I am eligible for
a fresh start through bankruptcy?
This is a really hard decision for
me. Any help with perspective?
But I am embarrassed. How do I deal
with that fact?
What is Chapter 7 bankruptcy?
What happens if
I file a Chapter 7 bankruptcy?
Who can file a Chapter
7 bankruptcy petition?
What kinds of debts will
go away in a Chapter 7?
What kinds of
debts will NOT go away in a Chapter 7?
Can I get rid of Student
My wages are being garnished.
Will that go away?
I have heard of something
called a "Chapter 13". What is it?
Who can file a Chapter 13 bankruptcy
Will the bankruptcy stop creditors
How long after filing
will the creditors stop calling?
Who deals with my
creditors during the bankruptcy?
What should I be telling my
creditors when they call me?
Will my employer or
landlord find out about my bankruptcy?
Can my employer fire me
for filing bankruptcy?
Can I go to jail if I file bankruptcy
or don't pay my debts?
Does the spouse of a married person
also have to file bankruptcy?
What assets and property
will I get to keep in a bankruptcy?
What is an "Exemption"?
Will I lose my Property?
What happens to my personal property,
real property and other assets?
Can I keep my home and automobile?
I have a bank loan on my car and
house. Can I keep my car and house?
Are pension plans and 401(k)
Are IRA accounts exempt?
Which debts are non-dischargeable
Can I keep any credit cards?
How will my credit be affected?
Will I be able to get credit
after filing a bankruptcy?
Can home foreclosure be prevented?
Will I have to fill out forms?
Will I have to go to court?
Are there alternatives to bankruptcy?
What should I do to prepare
for filing bankruptcy?
Can I file a bankruptcy for
my debts, but not include my assets?
Can I file bankruptcy to delay
Do I have to disclose all
of my assets?
Do I have to list all my debts
in the bankruptcy?
I’ve lost track of who I owe. Any
What if I do not list a creditor
on the bankruptcy papers?
How much does it cost for a Chapter
I'm broke and I don't have the
entire fee. Can I pay in installments?
Is there anything else that
I should know?
Why choose the
GANDY LAW OFFICES, P.C. team to represent me?
you tell me a little bit about bankruptcy?
"You have saved our marriage.” -A.V.
Bankruptcy relief is, in many ways,
one of the best kept open secrets in America for the almost
instant elimination of pain, stress, worry, and personal torment.
For most of our clients the hardest thing about a getting a
fresh start through the bankruptcy process is making that first
phone call. We work very hard to make the process fast, simple,
and affordable once you call. The typical Chapter 7 bankruptcy
that we handle allows an individual or a married couple to
wipe out their debt for a standard fee. It forever cancels
most, if not all, of a person's debts (most medical bills,
credit cards, most civil court judgments, personal loans, and
so forth). Getting a fresh start through bankruptcy rarely
causes people to lose personal unsecured assets or property.
Even more than that, it offers a new lease on life, enabling
people just like you to enjoy a debt-free, higher standard
of living with new peace of mind and the ability to breathe
long does a bankruptcy take?
"The staff was very helpful,
and I felt at ease with every visit. Thank you very much
for my new start in life, I feel so relieved, no more pressure,
no more pain. You people are good at what you do. Thanks
again." - P.P.
For most people, once they decide to get a fresh start through
bankruptcy they want to do it quickly and get on with their
lives. We try to make the process go as quickly as possible.
While the whole process can take a few months (and sometimes
longer on certain occasions), you should start to feel like
you can breathe again right away. As soon as you retain our
services, we can begin right away to take your creditor calls.
Once the fees are paid, your credit counseling briefing is
completed, and all the information is gathered, the paperwork
may then be filed with the Bankruptcy Court. The moment your
paperwork is filed, the Court enters an order making you immune
to most actions a creditor may take to collect on a debt. (That’s
why our Chapter 7 attorney fees need to be paid before we file.
Otherwise, we might be one of the last creditors that our clients
discharge in their bankruptcy.)
From the time you retain our services
to the time your case is closed with the court can take up
to five or six months for a Chapter 7 filing (a Chapter 13
case has a different timeline as discussed elsewhere). This
length of time can be reduced dramatically if you are able
to pay your fee more quickly than the three months we normally
allow. We also offer expedited service for an additional fee.
The time it takes for our office to get your paperwork filed
with the court can be from three days to three months. The
two main limiting factors are when you are able to pay off
the fees, and when you are able to provide us with all the
relevant information about your financial situation. However,
the time between when we file your paperwork with the Bankruptcy
Court and when your case is officially closed is usually around
90 days. Since the process does take some time, it is a good
idea to get started right away. The sooner you get started,
the sooner you will be able to move on, into a new and brighter
future. Delaying a bankruptcy until the last minute may cause
you to lose money from garnishments or levies of bank accounts,
tax refunds or wages. Utilities may be shut off, vehicles repossessed,
and home foreclosures begun. So, it usually does not make sense
to delay making the decision to file.
It typically takes at least a couple
of weeks to finalize the bankruptcy paperwork, clear outstanding
checks through bank accounts, get a client’s financial
affairs ready for filing, and finish paying off the entire
fee prior to filing. We can often make the best of a bad situation
-- for instance, work with a bank to keep a house -- if we
have just a little lead time.
do I know if I need a fresh start through bankruptcy?
"I was in a bad place in my
life. Being a single mom trying to raise children was hard
on the budget. I got behind. But thanks to you all at Gandy
Law Offices, I have a new start." - R.W.
Having called us is a good sign that
some part of you knows you're in trouble; that your financial
problems have gotten, or are getting, out of control. One very
reliable objective indicator used to determine if debt has
gotten out of control is whether your monthly expenses are
usually more than your monthly income.
If you have back due bills (taxes, child
support, small debts to a number of creditors) that you have
been unable to take care of, then the odds are that your finances
are strained to the point where bankruptcy may make sense.
Another rule of thumb is that if 25%-30% of your take-home
pay is going for debts other than house payments, then your
debt is probably in the unmanageable realm.
Another indicator may be if there is
tension in your personal relationships regarding money issues.
It is usually better to swallow your pride, put aside your
vanity, and get rid of money worries rather than jeopardize
your most important relationships with something that can be
so easily taken care of by the simple act of getting a fresh
start through bankruptcy. According to Congress, one of bankruptcy's
primary goals is to try and save marriages and preserve families
where money tension is straining the relationship. In addition,
if you are depressed about money issues then it may be time
to remove this cloud of despair from your life by the simple
act of erasing your debts out of existence through this process.
Other indicators may be specific to
the type of debt: for instance, if the thought of destroying
all of your credit cards is unthinkable, or if you have taken
cash advances on one credit card to make payments on other
credit cards, or if you are routinely able to make only minimum
payments on your credit cards, then you pretty well know your
credit card debt is unmanageable. If you have recently been
denied credit then you know that your creditors probably consider
you to be insolvent. If one or more of your creditors has referred
you to "Consumer Credit Counseling Service" (CCCS),
or a similar debt consolidation service, then you can conclude
that your creditors have determined that you are essentially
bankrupt and that they hope to string you along for a while
making payments to CCCS (CCCS was created by, and is solely
funded by, the major credit card companies; a notation on your
credit report that you have used CCCS may cause future creditors
to deny you credit since generally only people with serious
financial troubles get directed to CCCS).
Other signs can become such a part of
your life and so routine that you cannot even recognize the
signals. For instance, if you have to work overtime just to
keep up with your bills then you are probably in need of some
financial help. If coming up with the monthly car or house
payment is always a stressful challenge, then your budget is
probably stretched to the breaking point. Or, if you have taken
more than one major cash advance on your credit cards within
the last year, you probably do not have enough cash coming
in to meet bills and expenses.
do I know if I am eligible for a fresh start through bankruptcy?
“You guys rock.” - L.K.
As a general rule, by the time folks
finally call us to ask questions about a bankruptcy they are
usually in relatively serious financial trouble and have no
problem at all qualifying for fresh start bankruptcy protection.
Generally speaking, if you feel you can't make ends meet and
need bankruptcy relief no one will argue with you. At the same
time, determining eligibility for bankruptcy relief is a big
part of what we do when we initially review your paperwork.
Most people who file Chapter 7 have more in monthly bills and
expenses than they have income to cover those bills. Please
call us to discuss your situation in greater detail. You may
very well qualify, even if you have an income that is enough
to meet your monthly bills and expenses. It just depends on
your total situation.
Common events that may cause money problems
include: retirement, loss of a job, too much credit, gambling
losses, tax underpayment, death of a spouse, failure of a business,
a recent, pending or planned divorce or separation (please
immediately call us about the issues that can arise from this),
loss of overtime hours, adverse civil court judgments, excessive
monthly car payments, illness or mounting medical bills, injury
at work or in a car, uninsured accidents, excessive credit
card interest payments, impoverishment following lengthy schooling,
loss of cash flow due to attempts to start a new business,
or simply an inability to keep up with monthly bills.
is a really hard decision for me. Any help with perspective?
“You guys done one he** of
a job and I appreciate it. THANK YOU!!!!” - Anonymous
The conclusion that it makes sense to
get a fresh start through bankruptcy is primarily an economic
decision. Major businesses such as United Airlines, Montgomery
Ward, TWA, Texaco, Rockefeller Center, Macy’s, Dow-Corning,
Greyhound Bus Lines, and Western Union have all taken advantage
of the economic protection afforded by bankruptcy.
What do you think of when you hear these
What does the father of Mickey Mouse have in common with the
drafter of the Declaration of Independence, the signer of the
Emancipation Proclamation and the author of the Truman Doctrine?
They all at one point or another in their lives sought financial
protection through bankruptcy. Honest Abe may have even filed
twice. But who knows or remembers or cares? And a hundred years
from now, or even ten years, who is going to care that you
once filed for bankruptcy?
Individuals, including such modern mega-wage
earners as Donald Trump, Wayne Newton, Tom Petty, Burt Reynolds,
MC Hammer, and Kim Basinger -- even actress Debbie Reynolds,
who once owned her own casino in Las Vegas (which is practically
the equivalent of owning a money printing machine) -- have
all sought bankruptcy's peace of mind.
If Honest Abe had not had the common
sense to walk away from his debts and wipe the slate clean
he likely would never have been freed up to have gone on to
be elected President. Then what would the world look like today?
And what will your world look like in
10 years if you don't deal with your debt now and give yourself
your own fresh start?
If you are unwilling to deal with your
money problems head-on, then what kind of a life are you condemning
your children to as they grow up? What kind of life are you
creating for your spouse as you grow old together, or for yourself
as you try to attain your goals? No one cares about your financial
situation or your family more than you. We are on this earth
for but a short time. No one will eulogize you for having paid
all your debts on time when you finally depart this world.
Who among your creditors truly cares about you, rather than
the stream of payments that you represent? The only ones who
will remember you for very long once you pass away will be
your close friends and family. And, what kind of memories will
you have left them if you do not take responsibility for dealing
with your debt?
Bankruptcy has been around as long as
civilization itself. The Old Testament refers to the practice
of forgiving unpaid obligations in the seventh year. In fact,
for large periods of time in the history of Western Civilization
it was actually illegal for anyone to lend money and charge
interest. This was because the effects of credit and never
ending interest on society are so destructive. With proper
representation, bankruptcy isn’t as big a legal ordeal
as you might think. In fact, usually the only time you have
to go to anything like a courtroom (and the judge is not present)
is for a required 5 to 10 minute hearing at your designated
Getting a fresh start through the bankruptcy
process is a business and personal financial decision that
is simply a fact of life. More bankruptcies are filed in federal
court each year than all other types of federal cases combined.
Read this statistic and think about
it for a moment: Approximately 1 in every 25 adults that you
pass on the street has filed a bankruptcy within the last 10
years, seeking to provide themselves and their families a better
economic future. Then they go on to live completely normal,
healthy lives. Every weekday thousands people file bankruptcy
seeking finally to provide a decent standard of living with
some peace of mind for themselves, their children and their
spouse. In recent times, the yearly total has been over a million
bankruptcies each and every year, so one more bankruptcy filing
isn't going to matter too much in the grand scheme of things.
But, it may transform your life for the better.
The ability to provide for bankruptcy
legislation was explicitly included by the framers of the United
States Constitution -- men such as George Washington, Benjamin
Franklin, James Madison and Alexander Hamilton. Debt and the
anxiety that debt causes can destroy family relationships,
physical health, and psychological happiness.
This country was founded and settled
by people who knew the value of a fresh start. Historically,
before everyone was tracked in nationwide computers as a number,
most bankruptcies were informal "geographic" bankruptcies:
when debts became too much to handle, folks simply moved away
and started over in a new town or state, out of sight of their
old creditors. In this day and age of technology, that just
doesn't work any more.
The minimum wage remains at a level
that will barely support, an individual, much less a family.
Here in Iowa tens of thousands of families are locked in a
wage-scale that has long since lost pace with the cost of living
or the nation-wide average wage scale. A huge number of Iowa
families are living hand-to-mouth, paycheck-to-paycheck, just
one payday away from financial ruin.
A recent Harvard study shows that wage
earners now log an average of an extra month of time per year
on the job compared with workers two decades ago. People are
working harder just to make ends meet. Much of American business,
from manufacturing to banking and insurance, is moving toward
the 24-hour office, to increase efficiency. About half of all
people say that they would gladly work for less pay in exchange
for more free time. Whenever you hear someone say that America
has become “more competitive”, what they often
mean is that wages and benefits have been lowered and hours
increased. In most of the developed “first” world,
such as Europe, workers are required to take four to six weeks
of vacation each year. Other than school teachers, how many
people in this country do you know who actually get to take
six weeks of vacation a year?
Thus, many Americans are working much
harder simply to service their interest debt and to pay people
in a daycare to raise their children while they work. But who
among us will sit around in old age and look back on our life
and regret that we didn't spend more time at work and less
with our family?
Nationwide, many people are simply overloaded
with consumer debts. In the 1940's and 1950's the only type
of debt nearly anyone had, or could even get, was a home loan
or a car loan. The only credit card in existence was a Diner's
Club card. Today, people are wallowing in debt, cash advances,
credit and interest. And, these interest rates remain at a
staggering 15% to 20% and more a year despite the fact that
the rate of inflation hovers at around 2% to 4% - with average
wage increases failing to keep up with even this modest rate
Traditionally, workers salaries “grew” them
out of debt: as inflation went up by 8% a year or so their
debt became a smaller portion of their disposable income as
that income increased. The Federal Reserve has managed to control
inflation, keeping it low for many years (at 2% to 4% or so).
We all know this. But interest rates on typical credit cards
(after teaser rate periods) remain in the double digits. (A
relatively new kind of loan mass marketed loan – short
term payday loans – have interest rates that can calculate
out on an annual basis to triple digits!)
It is this disparity between high interest
charges and a low rate of inflation that causes the credit
card industry to record profits year after year. We are talking
about profits of half a TRILLION dollars or more. These companies
have multi-million dollar advertising budgets to persuade you
to use their high interest rate credit. Thus, for many of our
clients, by the time they seek a fresh start through the bankruptcy
process they have long since paid the principal off on their
credit cards two or three times over, as a result of unending
interest charges and interest payments. So, guess where that
half-trillion dollars or so of profit came from?
The chief executive of one of the biggest
and most aggressive credit card lenders, MBNA, a few years
ago paid over a half billion dollars for the new Cleveland
Browns football franchise. In 2005, the reported income for
the CEO of Capital One Holdings, a huge issuer of credit cards,
was over $200 million dollars! That's $200,000,000.00+! Believe
me, these companies have money to spare. The real question
is: do you?
I am embarrassed. How do I deal with that fact?
“Thanks again for helping
us out. You all treated us as people not criminals.” -
G.G. & B.G.
Part of growing up and being an adult
is making hard decisions when they are in the best interest
of ourselves and our families. What most people don't realize
is that in most cases very few people, other than your creditors,
will ever know that you filed for bankruptcy unless you choose
to tell them!
What we also find is that our clients
discover that their lives are so much better, so much less
stressful, so much more liberating, that we get many, many
referrals from former clients who send us their close family,
friends and trusted co-workers (many of whom are often in the
very same financial situation that they once were).
From our experience, the main thing
that prevents many people from filing a getting bankruptcy
relief is "false pride."
We see a lot of folks who take pride
in the fact that they are "toughing it out" when,
in fact, their vanity and pride are negatively affecting the
present and future quality of their life in any number of ways.
They may be destroying any ability to save for their retirement
years, dooming themselves to a life-long cycle of near poverty.
They may be abandoning the ability to live in the present without
the stress and depression of money woes. They may consistently
be foregoing the simple pleasures in life from which fond memories
are made, such as taking a child to a movie now and then, spending
money for camera film, going out to eat with friends and family
once in a while, or actually taking a real vacation once a
year. Their trade offs may be even more tragic and long-lasting,
such as not bringing a desired child into the world in favor
of making endless interest payments to multi-billion dollar
corporations charging sky-high interest rates.
We speak with many hundreds of people
each year who have fought a losing battle with debt, bringing
upon themselves and their families unrelenting stress and tension.
We have had clients who have worked so hard at overtime and
even two or three jobs that they have had heart attacks or
come down with stress-induced diabetes or simply have no time
to spend with their own children.
All too often these problems stem from
false pride; an unwillingness to deal with their debts head-on
and take care of the financial mess once and for all, simply
because they are afraid of what someone other than their own
spouse or child might possibly think or say out of spite, vindictiveness,
or pettiness. It is you alone who have to face your stack of
bills each month, the burden of educating your children, of
trying to buy a home, and of somehow saving for retirement.
The simple fact is that bankruptcy represents
the single best, most realistic, simplest, cheapest option
for thousands of people here in Iowa to eliminate unwanted
stress and worry, once they stop the denial process.
Income alone is not sufficient to avoid
bankruptcy, for we have represented individuals earning high
five and sometimes six-figure incomes who needed to seek bankruptcy
relief. Legal sophistication alone is not sufficient to avoid
bankruptcy, for we have represented attorneys who have sought
bankruptcy protection (I myself took bankruptcy relief in 1990.
That’s how I came to focus on this area of the law. My
experience then taught me that I would have been better served
with better results to have had an attorney who practiced primarily
in that area. ) Nor is morality the issue, for we have represented
members of the clergy who have needed to file for the protection
of bankruptcy. The need to file for bankruptcy relief and get
a fresh start crosses all economic, social, and age classes.
Life is what happens to you while you're busy making other
plans. Today will never come again. So, if you keep doing things
the way you have been, you really can't expect things to change
for the better. And tomorrow will end up being just like today.
is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is often referred
to as straight bankruptcy or liquidation bankruptcy. It is
known as a liquidation bankruptcy because the trustee in bankruptcy
can liquidate any non-exempt or unprotected assets to satisfy
the demands of your creditors. In a Chapter 7 bankruptcy, most
debts are wiped out, and the debtor generally loses only non-exempt
property. Despite the term liquidation bankruptcy, property
is rarely liquidated, because most property is protected by
exemption under state law. When an asset is exempt from legal
process, a bankruptcy trustee cannot take the property. The
purpose for filing a Chapter 7 bankruptcy is to discharge a
debt or to cancel some debtor obligations. A Chapter 7 filer
does not have to make payments out of his or her future income
to have debts discharged. A Chapter 7 asks the court to erase
your debts forever. In exchange you might have to give up some
of your property, such as non-exempt assets. It is also important
to understand that some debts cannot be discharged in a Chapter
happens if I file a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy proceeding is
begun by filing a petition with the bankruptcy court. The person
filing a Chapter 7 is referred to as the debtor. The debtor
is required to disclose to the court all of his or her property
and debts and turn over all nonexempt property to the bankruptcy
trustee, who then converts it to cash for distribution to the
creditors. The debtor then receives a discharge of all dischargeable
can file a Chapter 7 bankruptcy petition?
Almost any individual, partnership,
or corporation may file a Chapter 7 bankruptcy petition if
he or she resides, has a domicile, a place of business, or
property in the United States. If you filed a bankruptcy petition
before and the prior proceeding was dismissed within the last
180 days, you may not be able to file a second petition.
If you were granted or denied a Chapter
7 discharge in a prior case within the last 8 years or completed
a Chapter 13 plan in a prior case, you might not be entitled
to receive a discharge in bankruptcy and probably are not a
candidate for a Chapter 7 bankruptcy proceeding. This rule
does have some exceptions.
kinds of debts will go away in a Chapter 7?
“We don’t like him,
but he’s the best.” - Local Banker (name withheld)
Just about every debt against you will
forever cease to exist. But, generally it must be listed in
your bankruptcy paperwork that goes to the court with your
creditor's correct name and address in order to go away. Dollar
amounts only need to be approximate, but addresses need to
be exact. Also, we should list the name and address of any
collection agency or attorneys, since we need to list the name
and address of the company that currently owns the debt and
there is no way to know whether the original creditor still
owns the debt or whether it was sold to a collection agency.
All sorts of debts will go away in a
Chapter 7: doctor bills, hospital bills, most credit cards,
overdraft loans, personal loans, most potential lawsuits, most
court judgments -- (call us to discuss court judgments) --
DOT liens against your driver's license stemming from a car
accident, and nearly any other kind of debt, including secured
loans, as long as you return the secured property. NOTE: A
very, very few student loans and a very, very few personal
income taxes at least three years old can be discharged in
a Chapter 7. This is very complex and we would need to discuss
your situation in detail. For instance, if the IRS has placed
a tax lien on your real or personal property we cannot get
that tax lien off of your property. Although, depending on
certain factors, bankruptcy may be able to limit the consequences
of a tax lien.
Immediately upon filing a bankruptcy
all creditors are put into something called an “automatic
stay”. The automatic stay prevents most creditors from
making any collection attempts towards a debt. This stops further
collection letters, repossessions, bank account seizures, most
garnishments, or the commencement or continuation of any civil
lawsuits or lien enforcement. This should also end harassing
collection letters and stop embarrassing phone calls at home
and work. Note, however, that criminal actions or attempts
to collect child support are not stopped by a bankruptcy filing.
kinds of debts will NOT go away in a Chapter 7?
“ I thought your service was
excellent - I felt so badly about having to take bankruptcy
and so nervous, but your staff helped me feel at ease and
were so understanding and helpful. Thank you.” - P.B.
Examples of debts that will absolutely
NOT go away in a Chapter 7 include:
1.All alimony and property settlements
2.All child support (your 1/2 of a child's medical bill is
the same as child support).
3.Debts from a prior bankruptcy that were dismissed for fraud.
4.Any obligation of any sort arising from drunk driving or
5.Criminal fines, restitution or civil money penalties (even
6.Other debts that probably will not go away for you in a bankruptcy
Most taxes, penalties and interest.
Most student loans or school debt of any kind.
If a number of other conditions apply,
some personal tax debts at least three years old and some (though
very few) student loans may go away or be reduced. You are
responsible for determining whether or not your tax debts meet
the necessary time deadlines. If you are in doubt, you may
want to file a Freedom of Information Act request for documents.
We can advise you on how to do this. This area of the law is
very complex, so you will need to call us to discuss this in
more detail. (If you have old taxes or old student loan debts,
you may choose to pay an additional fee to file an action to
try to have the court rule that these debts are dischargeable.)
There is now a relatively new wrinkle
in bankruptcy law. If your ex-spouse chooses to challenge your
bankruptcy they may be able to prevent you from discharging
any debts that they were also obligated on prior to the divorce.
Please call us immediately to discuss this complex area of
bankruptcy law if you have been divorced within the last ten
years, and any of the debts that you want to discharge were
once also debts of your ex-spouse. Also, call us if you are
separated, getting divorced, or think you are going to get
divorced. There are no simple answers or risk free strategies
if you are dealing with divorce issues.
In unusual circumstances, some other
types of debts may not go away in a Chapter 7. For instance,
debt incurred to improve your home (examples: remodeling debts,
home cleaning or repairs, new furnaces, carpeting or water
heaters, plumbing repairs, carpenters bills, lawn care) might
not go away. If you have home improvement-type debts, call
us to discuss this issue.
Debts involving fraud or fraud-like
activity will also NOT go away in a bankruptcy, but generally
only if your creditor is alert enough to challenge the debt
within a certain time period. If one of your creditors successfully
challenges the discharge of their debt for fraudulent activity
your debt to that creditor may not go away. For instance, if
you have fraudulently written a lot of bad checks and your
creditor challenges the debt from going away then that particular
debt may not be discharged. Unless you have an extraordinary
amount of bad checks this challenge is not usually worth a
Significant debts (approximately $500
for luxury goods or services or more at this printing) borrowed
within 90 days of filing a bankruptcy may not go away until
at least 90 plus 1 days have passed (during which time you
should try to make minimum monthly payments.) Cash advances
or convenience checks taken from one lender closer than 70
days before filing, and totaling more than $750, may not be
dischargeable. In addition, if you have racked up an extraordinary
amount of charges on a credit card or line of credit recently
or at a time when you could not have repaid the debt (if for
example you were disabled or out of work), or if you have made
little or no effort to repay the debt (for instance, made fewer
than three routine monthly payments) then you can expect that
your creditor may challenge the discharge of their particular
debt. This is a problem that a fair number of people run into.
The most aggressive credit cards seem to be currently Capital
One, MBNA, and Citibank. Let us know if you have any problems
such as this, so that we can discuss how best to position yourself
to either get rid of the debt or negotiate the debt down as
low as possible. If such a challenge is made against you and
the challenge has any merit, then the wisest move is generally
to have us negotiate a compromise settlement. If you want to
have a full-blown trial in front of a judge, this is beyond
the scope of our standard representation, and we would have
to discuss any fees that we may require as the situation arises.
As we say, if the claim against you has merit then you would
likely want to compromise and settle the claim against you
rather than go to trial.
As with all other debts, we will need
to review our completed paperwork to get a handle on these
particular debts. In most cases all or nearly all debts go
away, but there is no way to guarantee to you ahead of time
exactly what will happen in your bankruptcy, since this ultimately
depends to some extent on what, if anything, your creditors
may choose to challenge.
The best policy is to simply tell us
about anything that you have done or that you are worried about
so that we can analyze where you stand and try to arrange things
to your best advantage before you file. Do not try to change
things around or pay anything off without first checking with
us. You can do yourself more harm than good, and waste a lot
of money and time without first checking with us.
I get rid of Student Loans?
“Your office was very professional,
and made our life changing decision more comfortable, in
a very uncomfortable situation. Thank you.” - M. & R.
Federal law makes it very difficult
to get rid of student loans through bankruptcy. The bankruptcy
code provides that student loans will not go away unless you
can prove that there would be “undue hardship” in
trying to pay them, or the loan was for a fraudulent school.
But, what exactly undue hardship means has not been exactly
defined, and a federal judge would decide on a case by case
Contrary to what you may reasonably
think, filing bankruptcy is not enough by itself to prove undue
hardship. To prove undue hardship is a special proceeding that
can take place in your bankruptcy case. If you have student
loans, you will want to talk with us to find out more about
what the process means and how it works.
wages are being garnished. Will that go away?
“This was a very hard decision
for us, your office made it go smoothly & easy. Thank
you.” - G. & A. B.
Yes, unless the garnishment is for a
debt that will not go away (such as child support, taxes less
than three years old, or fines for drunk driving).
The number one thing that costs our
clients the most money is DELAY. As an initial matter, delaying
getting us your paperwork means that you will continue to strain
to pay bills that you could be getting discharged. Every day
that you continue to stretch to pay bills that could already
be fading into the past as a distant memory is another day
when, in a sense, you are losing money. We also see a lot of
people who make the huge mistake of taking out a second mortgage
or home equity loan, which converts unsecured credit card debt
into secured debt and wipes out all their exempt home equity
that has taken years to build up as savings for the future.
More importantly, however, delaying
dealing with your financial problems allows creditors to take
default judgments against you in just twenty to thirty days.
In just a few days after that, they may be able to start start
garnishing up to 50% of each paycheck (up to 100% if for taxes!).
Your creditors may also be able to raid every bank account
in your name and take every single penny out of your accounts.
The garnishment itself will often delay
filing a bankruptcy. If you think money is tight right now,
imagine how tight money will be when your entire checking account
is seized by the sheriff and up to half or maybe even 100%
of every week’s take-home wages are being delivered directly
to the sheriff every payday by your employer. As indicated
elsewhere in this packet, all fees must be paid before we file
your paperwork. Trying to come up with the filing fee and our
fee becomes very difficult when you are being garnished.
In short, starting your fresh start
process before anyone files a lawsuit against you can save
you a whole lot of heartache, embarrassment (particularly if
you are served by the sheriff at work), aggravation, stress,
and maybe most importantly, money! Please do not let things
get to the point where you are being garnished, or just days
away from being garnished, before you get your paperwork back
in to us.
have heard of something called a "Chapter 13". What
“Personnel was very courteous,
helpful, cordial & looking out for my best interests.
I would highly recommend Gandy Law Offices to anyone.” -
How does it compare to Chapter 7? What
other forms of personal bankruptcy are there?
Chapter 7: A Chapter
7 bankruptcy typically enables you to immediately free yourself
from your debts as if you had never owed them. Congress describes
this process as giving Americans a “fresh start” by
wiping the slate clean. Congress designed Chapter 7 for debtors
in financial difficulty who do not have the ability to pay
their existing debts. You may claim much, if not all, of your
property as exempt under current Iowa law. The purpose of filing
a Chapter 7 is to obtain a discharge of your existing debts.
Chapter 11: A Chapter
11 “reorganization” is designed primarily for the
reorganization of a business but may also be available to consumer
debtors. Its provisions are quite complicated and it is an
extremely expensive and lengthy process. These bankruptcies
are rarely done for a basic standard fee fee and a minimum
retainer of $5,000 to $25,000 is typical just to get started.
Chapter 12: A Chapter
12 is designed to permit family farmers and family fishermen
to repay their debts over a period of three to five years from
future earnings and is in many ways similar to a Chapter 13.
The eligibility requirements are restrictive, limiting its
use to those whose income arises primarily from a family-owned
farm. All payments are routed through a Chapter 12 trustee
who will also monitor the debtor's farming operations during
the repayment plan.
Chapter 13: Second
to the Chapter 7 bankruptcy, a Chapter 13 is the most common
bankruptcy that we file. It takes a lot longer and costs more
than a Chapter 7.
A Chapter 13 involves paying into the
court all your disposable income from every paycheck for at
typically a minimum of three years and up to a maximum of five
years! In a Chapter 13 a person must have enough money coming
in to meet current living expenses (so that they do not go
further into debt) and have money left over to pay down their
existing debts. Under a Chapter 13 plan, unlike a Chapter 7,
a person can sometimes keep “non-exempt” property
(motor boats, RV's, second homes, hundreds of acres of land),
as long as they continue to make certain minimum payments under
the installment plan. Chapter 13 may allow a person to pay
a relatively small fraction on the dollar of what is owed to
unsecured creditors. Secured debts must generally be paid in
To qualify for a Chapter 13, your debts
may not exceed roughly $1,081,400 in secured debt and $360,475
in unsecured debt, as of April 1st 2010. These numbers are indexed to inflation in
the bankruptcy code and are updated periodically. After completion
of payments under a Chapter 13 plan all debts are usually discharged
except: (1) alimony and child support; (2) most taxes and student
loans; and (3) secured obligations (like mortgages, home improvement
or home equity loans).
It has been our experience that people
who choose a Chapter 13 usually do so because either (a) they
have filed a previous Chapter 7 within the past 8 years (and
therefore cannot file another Chapter 7 yet; (b) they have
extraordinary assets (a lot of land, lots of equipment, a vacation
home, or a business) that would be lost in a Chapter 7 bankruptcy
(since no exemption would apply to them); (c) they do not understand
the advantages of a Chapter 7; (d) they simply do not qualify
for a Chapter 7 bankruptcy; or (e) their pride keeps them from
making the usually better choice of Chapter 7
can file a Chapter 13 bankruptcy petition?
Individuals may file Chapter 13 bankruptcy
petitions if they:
- Reside, have a domicile, a place
of business, or property in the United States
- Have a source of regular income
- On the date the petition is filed
owe less than $360,475 in non-contingent, liquidated, unsecured
debts and less than $1,081,400 in non-contingent, liquidated,
secured debts, as of April 1st 2010. These numbers are indexed to inflation in
the bankruptcy code and are updated periodically.
Corporations and partnerships may not
file a Chapter 13 bankruptcy petition.
If you filed a prior bankruptcy petition
and the prior proceeding was dismissed within the last 180
days, you may not be able to file a second petition.
the bankruptcy stop creditors from calling?
Yes. The automatic stay law prevents
creditors from taking any action to collect debts. When a person
gets behind on paying his or her bills, creditors often take
various actions to collect. Creditors may call home or work,
family, friends, fellow employees or even your employer. Co-signers
and guarantors may be called upon to make payments. Mortgage holders
and other creditors may initiate foreclosure or repossession
of cars, furniture, and appliances or other items. Lawsuits
and collection procedures may be started. Garnishment of wages
or seizure of property or bank accounts may begin. The filing
of a bankruptcy or reorganization automatically stops collection
efforts against you and your property. Once you file for bankruptcy
creditors must stop all collection efforts, including phone
calls, collection notices, and garnishments. Foreclosures must
stop and repossession action must cease. If you file to reorganize
your debts, instead of a complete bankruptcy, collection action
can also be stopped against co-signers and guarantors on consumer
type debts. Only a few actions are not halted by a bankruptcy.
Criminal proceedings cannot be stopped. An action to collect
child support, or alimony cannot be halted. However, a reorganization
plan may provide a viable means of catching up on past due
child support or alimony.
long after filing will the creditors stop calling?
If you choose to retain GANDY LAW OFFICES,
P.C. for the service, you can have all creditor calls directed
to our office. This way, creditors will no longer be able to
call you at home or at work as soon as you meet the retainer
fee. Otherwise, once a creditor becomes aware of a filing for
bankruptcy protection, it must immediately stop all collection
efforts. After you file the bankruptcy petition, the court
mails a notice to all the creditors listed in your bankruptcy
schedules. This usually takes a couple of weeks. Creditors
will also stop calling if you inform them that you filed the
bankruptcy petition, and supply them with your case number.
In urgent cases, we will contact the creditor immediately upon
filing the bankruptcy petition, especially if a lawsuit is
pending. If a creditor continues to use collection tactics
once informed of the bankruptcy it may be liable for court
sanctions and attorney fees for this conduct.
deals with my creditors during the bankruptcy?
If you choose to retain GANDY LAW OFFICES,
P.C. for this service, we will deal with your creditors once
we undertake your representation, which starts once the retainer
fee is paid, and we accept you as a client.
should I be telling my creditors when they call me?
“I was pleased and relieved
to have a honest and outstanding firm as yours - have had
a couple of bad experiences in the past. Thank you very much.” -
Okay, I think I'm going to file a Chapter
7 bankruptcy and get rid of my debts. What should I be telling
my creditors when they call me?
After you retain our law firm you have
the option to route all creditors to our office. This a part
of what we offer for our standard fee. (For more complicated
cases we may charge a small additional fee.) We find that many
clients enjoy being able to hear the phone ring and not have
to worry about it being a creditor, and if it is, they can
tell them to call somewhere else.
When you retain our office to handle
creditor calls, all you say is, “I’ve hired a law
firm to handle my financial affairs. Here’s their name
and number...” And it’s as easy as that! You don’t
even have to tell them that you’re filing bankruptcy.
(See our handout “What to Do About Creditor Calls” for
my employer or landlord find out about my bankruptcy?
Bankruptcy petitions are public records.
However, under normal circumstances, unless your employer or
landlord is a creditor, he or she will not know you filed a
bankruptcy petition. If your employer or landlord is a creditor
he or she must be listed as a creditor on the schedules and
will receive notice of the bankruptcy proceeding.
my employer fire me for filing bankruptcy?
No. The law prohibits government units
and private employers from discriminating against you because
you filed a bankruptcy petition or because you failed to pay
a dischargeable debt.
I go to jail if I file bankruptcy or don't pay my debts?
No. There are no debtor's prisons in
the United States.
the spouse of a married person also have to file bankruptcy?
No. In some cases where only one spouse
has debts, or one spouse has debts that are not dischargeable,
it might be advisable to have only one spouse file.
assets and property will I get to keep in a bankruptcy?
“Freedom is amazing, we can
answer our phone again and actually have money in the bank!” -
A good deal of personal property remains
safe from creditors under Iowa law when filing bankruptcy.
Having an experienced bankruptcy lawyer that knows the law,
and knows precisely what motions to file in order to keep all
of your belongings exempt from your creditors is crucial to
a successful fresh start bankruptcy. You must list all of your
assets of any kind in a bankruptcy. Failure to list all your
assets will expose you to a possible FBI investigation, review
of all financial transactions tied to your social security
number, followed by a possible criminal prosecution, loss of
bankruptcy relief, prison and large criminal fines.
How do you avoid any of these problems?
Simple. Just be honest and answer all our questions truthfully.
Tell us about all your property, all your lawsuits, any transfers
of money or assets, and any closed financial accounts. Gandy
Law Offices has filed a couple of thousand bankruptcies over
the years, since the early 90's, and our clients do not have
these kinds of problems because we insist that they tell us
everything! It's just that simple. It's just that easy. You
have absolutely nothing to worry about if you are honest with
“Exemptions” are the key
to keeping your property and assets in a bankruptcy. Iowa has
its own very technical rules dealing with what property may
be kept “exempt” from creditors in a bankruptcy.
Some of these exemptions are among the most generous of their
type allowed by any of the 50 states. For instance, in Iowa
a person's home -- no matter what its value -- is usually exempt
from creditors, to the extent the home is not “collateral” for
a debt. In a bankruptcy, most of our clients end up losing
none of the property they own free and clear, if the proper
motions are filed at the proper time and their paperwork is
properly prepared. Make sure you are aware of the current laws
affecting your particular situation before proceeding with
Most exemption categories may be “doubled
up” or “stacked” if you and your spouse both
file for bankruptcy jointly. For example, a married couple
can often “double up” and keep two unsecured cars
each with up to $7,000 in equity or they can “stack” their
exemptions and keep one unsecured car with up to $14,000 in
equity. Again, let me emphasize that most of our clients lose
none of their property in a bankruptcy.
is an "Exemption"?
Certain property is protected from creditors
in bankruptcy. This property is known as exempt property.
I lose my Property?
Under Iowa law, certain assets are exempt
from legal process. This means that they are protected, and
cannot be taken from you if you own them, or to the extent
that you have equity in them. For example, each person who
files can protect one motor vehicle up to a fair market value
of $7000. If you owe $2000 to a creditor for the vehicle and
it is worth $7000, you can protect the $5000 of equity with
your exemption. Generally speaking, most people can protect
most, if not all of their household goods and furnishings,
their clothing, the cash value of their life insurance, retirement
and pension plans, and the tools of their trade up to a maximum
value of $10,000. To obtain further information on the complete
list of exempt property and whether you could lose any property
if you filed a bankruptcy, it is recommended that you contact
an experienced bankruptcy attorney. If property is not exempt,
then it is not protected, and a Chapter 7 bankruptcy trustee
could sell this property and pay creditors with the proceeds.
If a person owns a significant amount of non-exempt assets,
they may be able to retain them by the filing of a Chapter
13 bankruptcy, and paying their unsecured creditors at least
the value of these assets.
happens to my personal property, real property and other
All of the property you own at the time
of filing bankruptcy, and your right to receive property in
the future, becomes the property of the bankruptcy estate.
This means that the bankruptcy trustee may take control of
this property and liquidate it to satisfy your creditors.
Certain property is exempt and you will
be able to keep that property. Iowa has a schedule of exemptions
which allows the debtor to keep most if not all personal property
through the bankruptcy. More times than not, all of your assets
can be protected.
I keep my home and automobile?
In many cases you can retain your home
and automobile in a Chapter 7 bankruptcy proceeding. You will
keep your home or automobile in a Chapter 7 if (1) you are
current in making payments on a loan secured by the home or
automobile; and (2) the home or automobile does not have equity
(a liquidation value in excess of the amount owed to creditors
with liens against the property) in excess of what you are
allowed to exempt. Iowa has a separate exemption which allows
each debtor to claim $7,000 in equity on one vehicle. So in
the case of a joint filing, the husband and wife each have
a $7,000 exemption in which to protect a car through bankruptcy.
In the event you want to keep your home or automobile, you
must continue to make payments after your petition is filed.
If you are in arrears on your home home or automobile, you
can consider filing a Chapter 13 petition, which allows you
to develop a plan for repaying your creditors without necessarily
have a bank loan on my car and house. Can I keep my car and
“Praise God, you all helped
me thru this.” - J.W.
Yes. Through Chapter 7 fresh start bankruptcy
you can essentially “pick and choose” which creditors
you want to keep paying off, and which ones you want to get
There are several different options
that you have when it comes to deciding what you want to do
with the collateral - in other words - something that a creditor
can take away from you if you do not pay for it.
One of the options is surrendering the
property to the creditor. It is important for you to understand
the difference between surrendering the property THROUGH the
bankruptcy process and surrendering the property OUTSIDE of
the bankruptcy process. When you surrender the property to
the creditor through bankruptcy, you’re eliminating your
personal financial responsibility on the debt. When you surrender
the property outside of bankruptcy, your personal financial
responsibility for the amount owed to the creditor may remain.
This means that the creditor could sell the property for less
than you owe, and you could still be responsible for the remaining
Another option is something called "'redeeming".
To "redeem" the property is to pay the entire amount
owed to the creditor in one lump sum, pay a reduced amount
to the creditor in one lump sum, or to negotiate a new agreement
with the creditor in which the payments are lowered. Redeeming
the property isn’t always available with creditors. The
creditor needs to be contacted to find out if it is willing
to redeem the property. Call us if you have any questions about
redeeming your property.
The next option is something called "retaining
and keeping current". When you "retain and keep current" you
are simply agreeing to pay the amount owed to the creditor
without signing a new agreement. This means that the original
contract that you signed is still in effect except that your
personal financial liability on the debt is removed
Another option is something called "reaffirming"
the debt. "Reaffirming" the debt means you basically
re-sign the original contract with the creditor. This means
that you are just as obligated to pay on the debt after your
bankruptcy as you were before the bankruptcy.
The difference between retaining and
reaffirming is the obligation that you have to pay on the debt.
Through retaining, you are agreeing to pay on the debt as originally
stated. If for some reason you are unable to pay on the debt
in the future and the creditor repossesses the property (a
vehicle, mobile home, or piece of real estate for example)
you are not personally obligated to pay on the amount owed
after the creditor sells the property. Your personal financial
responsibility is eliminated because you did not re-sign or “reaffirm” the
On the other hand, when you reaffirm
the debt with the creditor and for some reason you don’t
pay on it in the future, the creditor can still collect from
you the amount owed after they repossess and sell the property.
Your personal financial responsibility is reinstated through
reaffirmation. Should you retain Gandy Law Offices as your
bankruptcy lawyers, we will go over with you the differences,
and advise you as to what choice you should make.
One of the biggest myths in bankruptcy
is the idea that you can keep your property without paying
for it when there is a lien on it. Having a lien on your property
means that it is the collateral for a debt -- it can be repossessed
if you don’t pay your bill. If you want to keep property
with a lien on it, you must pay for it. The only way around
this through a specific process called voiding a lien. Some
liens, though not many, can be removed in this way if the circumstances
allow it. One of the most common examples is when you put up
a piece of your own property, that you already own, as collateral.
For example: You apply for a loan at Citifinancial for $1500.
You put up your TV, VCR, and entertainment center as collateral
for the $1500. This means that if you do not pay on the loan,
or if you fail to meet the requirements of the agreement with
Citifinancial, they can take the TV, DVD Player, and entertainment
center from you. The lien on your property may be removed through
the process of voiding a lien. The result is you keep the property
and you do not have to pay Citifinancial. Check with us if
you have questions about voiding a lien.
pension plans and 401(k) plans exempt?
The United States Supreme Court has
held that pension plans, 401(k) plans, and other "ERISA-qualified
plans" are generally "excluded" from the bankruptcy estate.
IRA accounts exempt?
Unlike 401(k) plans, IRA accounts are
not ERISA-qualified plans and are only exempt in certain circumstances
and to a limited extent. You will want to speak with an experienced
bankruptcy attorney if you need to find out more, since the
law in this area in Iowa has changed.
debts are Non-dischargeable debts?
Not all debts can be discharged by bankruptcy.
Examples of non-dischargeable debts include recent taxes, government
fines, and debts to spouses, former spouses, or children for
support, maintenance, or alimony. In addition, debts to creditors
that are not informed of the bankruptcy proceedings are also
likely non-dischargeable. For example, if you forget to list
a creditor, that creditor may not be discharged. As a general
rule, student loans are non-dischargeable unless the debtor
meets specific guidelines. If you have a student loan it is
a good idea to talk to an attorney to see if your particular
case meets these guidelines. Certain debts incurred through
intentionally deceptive or malicious behavior of the debtor
are not dischargable. Also, debts that arise from damages,
or injuries to another involving drunk driving are non-dischargeable.
Generally, under Chapter 7, these debts cannot be discharged,
however, Chapter 13 allows one to repay these debts over an
extended period of time. There are also some limited exceptions
where these types of debts can be discharged in Chapter 7.
I keep any credit cards?
Under some circumstances you may be
able to keep some credit cards if the creditor agrees. There
are many factors which must be considered, including the credit
card balance at the time of the bankruptcy, what terms the
credit card company is willing to accept, and your ability
to pay the present and future credit card debt.
will my credit be affected?
Many people believe that filing a Chapter
7 or Chapter 13 bankruptcy will ruin their credit for seven
or ten years or longer. Most credit reporting agencies will
keep a Chapter 13 bankruptcy on your credit report for seven
years. A Chapter 7 bankruptcy will usually stay on a credit
report for ten years. One of two circumstances usually applies
when a person considers filing a bankruptcy. Either they are
in financial difficulty, or anticipate it, and are looking
for a way to avoid it. In either of these two cases, a bankruptcy
may not hurt one's credit, but may in fact be the first step
towards repairing a bad credit situation. Probably the most
important situation for which you might need credit is buying
a house. Federal regulation may allow you to get a mortgage
two years after bankruptcy if you are otherwise eligible. Many
people buy a house less than two years after bankruptcy by
assuming a mortgage, or buying a house on contract. Nearly
anyone can obtain a bank credit card even if they have just
filed bankruptcy, by depositing money in one of the banks that
offers secured credit cards. You use the card just like any
other credit card, but the bank uses the money you deposited
to assure that you make the payments. People forget that someone
lending money is primarily interested in knowing whether you
can, and will, pay them back. If you get yourself out of debt
by filing a bankruptcy, you are better able to pay back any
new money you may borrow. Many creditors noting a bankruptcy
or Chapter 7 or Chapter 13 reorganization on a credit report,
are more interested in knowing what you've done since completing
the bankruptcy to make yourself a good credit risk.
I be able to get credit after filing a bankruptcy?
“Everything was explained
so that I understood, which made me feel at ease with the
staff. Thank you so much for the fresh start.” - A.S.
Probably. In particular, used car loans
are usually pretty easy to get after you get your final discharge,
which is generally about three months after filing your bankruptcy.
There are a lot of car dealers who specialize in financing
cars for people who have recently been in bankruptcy. You can
usually see advertisements for these types of dealerships on
T.V. or in your local newspaper.
Many clients ask what their credit report
or credit score will look like after filing a bankruptcy. Our
response is: Well, what does your credit report look like now?
From a credit rating, credit report, or credit score standpoint
our clients are often in no worse a position after filing a
bankruptcy than before, since their finances were such that
it was highly unlikely that any significant credit (like a
home loan) would have been given to them. In many cases filing
a bankruptcy actually improves a person's credit rating because
it eliminates bad debts that have been festering on a credit
record for some time. Many people are surprised to learn that
bankers consider one of the riskiest categories for home loans
to be educated, working married couples with young children
since they are often the most debt burdened (student loans,
car loans, doctor bills, credit cards). Wiping out this “mid-life” debt
can actually make a married couple more credit worthy for a
home loan in the eyes of bankers. Instead of your credit report
indicating that you have numerous collection agencies hounding
you for money, or that you’re past due on several different
accounts, it will simply state: (1) that you filed a bankruptcy
and each particular debt is discharged in bankruptcy and (2)
that you now have NO debts. Another factor on your side is
the fact that creditors know that you can’t file another
Chapter 7 bankruptcy for 8 years. Many will be more willing
to give you credit based on this fact.
There are also many different ways to
start rebuilding your credit so you can make an investment
for the future. Choices such as secured credit cards or keeping
a car or house payment through bankruptcy start the credit
rebuilding process immediately (for which you will likely get
promotional material soon after or even during your fresh start
process). And, of course, you'll want to make sure that you
pay whatever bills you keep, such as utility bills, rents,
etc., on time and in full. But remember, even though, credit
may come more easily than you thought after your fresh start,
be careful as best you can to avoid sliding down that slippery
slope to too much debt again.
Many of our clients have a far from
perfect credit report to begin with. Even if their credit report
was perfect, the actual finances and economic and psychological
health of their families are far more important than a slip
of paper glanced at perhaps once a year by a creditor. This
creditor may be someone or some company who doesn't care about
you or your family, but is only interested in charging you
an interest rate at ten times the rate of inflation. Years
ago a bankruptcy would stay on your credit report all of your
life. Now, the federal law states that the fact that you filed
a Chapter 7 bankruptcy must be purged and removed from any
credit report after 10 years.
Given the large number of bankruptcies,
its occurrence is only one factor that lenders look to these
days, since the pool of business represented by the millions
of people who have gone through this process is too large to
ignore. Many creditors will view a person who has recently
taken bankruptcy as a worthy credit risk for two primary reasons.
First, after filing bankruptcy a person generally has very
few debts that need to be serviced, which means any new loans
are fairly easily paid off. Second, an individual may not file
another Chapter 7 bankruptcy for at least 8 more years, so
most creditors will be paid off before another bankruptcy could
possibly be filed. Experience indicates that most creditors
will loan an individual money following bankruptcy based upon
(1) their employment circumstances and (2) their current ability
to pay back the loan. We have found that the general rule of
thumb applied by most lenders is that if a person has shown
responsible money management for a period of time following
the fresh start process, they are viewed as a worthy credit
home foreclosure be prevented?
When you get behind on your house payments,
the creditor may elect to call the loan in default, accelerate
the debt, and begin foreclosure proceedings. When a debt is
accelerated, the full balance of the note, not just the monthly
payments, is due in full immediately. This is usually preceded
by the creditors refusal to accept monthly payments. In the
event a creditor begins foreclosure, you will receive notice
of the commencement of the foreclosure proceeding. Unless the
creditor is willing to accept payments to reinstate the loan,
you will either have to pay the full balance remaining on the
loan, or file for protection in bankruptcy to stop the foreclosure
sale. The commencement of the bankruptcy case prior to the
foreclosure sale date will stop the foreclosure sale from taking
place, unless or until the creditor receives permission from
the bankruptcy court to proceed with the sale. Under a Chapter
13 plan, you make regular monthly payments and are given a
reasonable period of time to bring your loan payments current
in order to save your property. It is strongly recommended
you review your bankruptcy options as soon as you realize that
you are behind on your mortgage payments.
I have to fill out forms?
Filing bankruptcy means filling out
forms. Our staff will help you through the worksheets and answer
any questions that you may have. We have created the forms
to make it as painless of a process as possible. We will ask
you to fill out forms to provide us with the information needed
to prepare the bankruptcy petition. We will use the information
you provide to complete the official forms, using a specialized
computer program that complies with all the Court's requirements.
I have to go to court?
About 30 to 40 days after filing the
bankruptcy petition, you will have to attend a 5 to 10 minute
hearing presided over by a bankruptcy trustee. This hearing
is called the First Meeting of Creditors. The trustee is not
a judge, but an individual appointed by the United States Trustee
to oversee bankruptcy cases. At the First Meeting of Creditors
the trustee will ask you questions under oath regarding the
content of your bankruptcy papers, your assets, debts and other
matters. Myself or one of my associate lawyers will be there
right by your side to answer any questions and to help the
process go as smoothly as possible. Creditors will also be
permitted to ask you questions, although in the majority of
cases creditors do not ask questions at the First Meeting of
Creditors. After the initial meeting you normally do not need
to return to court.
there alternatives to bankruptcy?
Yes. Sometimes payment plans can be
negotiated with creditors. Obtaining loan extensions, compromises
and workout agreements require negotiation skills and experience.
These alternatives may alert your creditors to the existence
of nonexempt property that the creditor could reach and can
involve considerable expense. You also have the option of doing
nothing. In any event you should seek professional advice in
dealing with most of these alternatives.
should I do to prepare for filing bankruptcy?
First, you should consult with an attorney.
An attorney can help you plan for the bankruptcy, decide when
to file a bankruptcy petition, or even avoid filing for bankruptcy.
A few specific items are worth mentioning.
If you intend to file bankruptcy you
should stop using your credit cards. If you borrow money with
the specific intent of discharging the debt in bankruptcy instead
of paying it back, the debt is not dischargeable. In addition,
(a) certain luxury purchases over $500 within 91 days of the
bankruptcy filing are presumed non-dischargeable; (b) cash
advances aggregating $750 taken within 71 days of the bankruptcy
filing are presumed non-dischargeable; and, (c) debts involving
materially false financial statements are non-dischargeable
under certain circumstances.
Don't transfer your assets to friends,
family and business associates to protect the assets from your
creditors. The transfer may be considered a fraudulent conveyance.
If it is, you may lose both the property and your right to
a bankruptcy discharge.
Don't destroy any business or financial
records. You can lose your right to a bankruptcy discharge
as a result.
Carefully choose the creditors you pay.
Some creditors, such as landlords, secured creditors, and some
utilities should be paid under most circumstances. If you pay
a credit card debt that eventually will be discharged, you
may be throwing money away. We can advise you on what debts
should and should not be paid while you prepare to file a bankruptcy
I file a bankruptcy for my debts, but not include my assets?
No. By Federal law you are required
to include all debts and assets.
I file bankruptcy to delay a creditor?
The Rules of Bankruptcy Procedure require
you or your attorney to certify that your petition is not filed
for any improper purpose, such as to harass or to cause unnecessary
delay. Bankruptcy is intended as a tool for dealing with debts
that can not otherwise be paid. You should not file a bankruptcy
petition for the sole reason of delaying a creditor's actions.
I have to disclose all of my assets?
Yes. If you knowingly and fraudulently
conceal an asset from the court you have committed a felony
and can be fined up to $5,000, imprisoned for up to five years,
or both. In addition, the court can deny you your discharge,
or dismiss or convert your bankruptcy proceeding. If you have
any questions please do not hesitate to ask.
I have to list all my debts in the bankruptcy?
“You really go to bat for
your client.” - M.H.
Yes! Yes! Yes! By federal law you must
list everything, then you may be able to pick and choose which
debts to keep paying off.
So, be sure to list any debt. Even if
it is a really old debt. Even if it may be long forgotten.
Even if you intend to pay it off. Even if it is your minor
children's debt. Even if you doubt you will ever be sued. Even
if you think insurance will pay it off. Even if it was "charged
off' or "written off." Even if it is to a friend
or family member. Even if you think the debt "might" have
been paid by someone else. Even if the debt is merely a "potential" debt
or lawsuit. For instance, if you were in a car accident and
haven't been sued yet -- even if you had insurance -- you still
need to list the names of the other drivers, all car owners,
all passengers in all cars including yours and any insurance
companies or attorneys involved. List everyone in sight so
that all personal liability to you has the best shot of going
away (unless you were drunk or on drugs, accident debts generally
go away in a bankruptcy.)
You also need to list debts that were
assigned to your ex-spouse from a previous marriage, since
the original creditor can still come after you even though
the debt was given to your ex. And, if any of the debts that
you are discharging were once also your ex-spouse's debt or
could in any way go back on your ex then we need to list your
ex-spouse as a co-debtor.
It is an expensive and time-consuming
process to add a debt after filing. So, list everything. If
you fail to list a debt (such as to a friend or a family member)
then that debt may not go away in the bankruptcy. Most people
do not bother to list routine monthly utility bills if they
are able to stay up to date with them. However, if you owe
for previous months, it is a good idea to list them.
lost track of who I owe. Any suggestions?
“Thanks very much for everything.
you made this easier to get through with your kindness & understanding.” -
K. & J. B.
In the way we do things at Gandy Law
Offices we will want to obtain a copy of your individual credit
reports early on. Although, it is not necessary to have this
information for an initial consultation, it will be very helpful
to have this information before we file. With your approval
we will obtain a copy of your credit report for our files and
make sure you are provided copies. We get the very best and
most complete credit reports we can find, usually with information
from all three of major credit reporting companies, currently
Experian, Equifax, and Transunion, to increase your chances
that no creditor will be left behind.
if I do not list a creditor on the bankruptcy papers?
You are required to list all creditors.
If you intentionally omit a creditor from your schedules, it
is perjury and you may lose your bankruptcy discharge. However,
if a creditor is not known to exist at the time the schedules
are filed, you may amend your schedules at any time the case
is open to add an additional creditor.
much does it cost for a Chapter 7 bankruptcy?
“Your service was great. An
enormous weight has been lifted." -- R.F.
What we charge as a fee depends on how
much and what kind of legal work that we need to provide for
you in the process. We believe you will find our fees reasonable,
and we give you time to pay them installments. You may find
others who represent you for less money we suppose, but we
truly believe that you will not find any firm that offers you
a more professional, competent,and caring service got a fair
price. After all, investing a modest amount to forever get
rid of many thousands of dollars in debt is, we believe, worth
getting done right. Our fee includes everything that needs
to be done in an average straightforward bankruptcy, including
the credit counseling and debtor education costs, filing fee
and credit report costs. As part of that fee at Gandy Law Offices
we only require a modest down payment or "retainer" fee
which includes some perks you might not find at some other
law offices. By paying the retainer fee, which is deducted
from your total fee, you may no longer have to deal with those
annoying creditor calls. After you take care of the retainer,
you may choose to have our office handle some or all of them!
(In more difficult or complicated cases, there may be an additional
charge for handling the calls.) Imagine being able to hear
your telephone ring and feel good that it probably isn’t
a creditor demanding money, and if it is, you can tell them
to call somewhere else. And,if they go too far, we may can
sue them on your behalf. This is the peace of mind that Gandy
Law Offices strives to give you.
For most folks the cost of getting a
fresh start is two to three months worth of bill payments.
The cost, both in money and stress, if you do nothing, at least
for most folks who call us, will likely be much, much higher
than any fee paid for your bankruptcy.
(Please note that some cases are not
simple and involve much more time than the average uncontested
bankruptcy. In that event we will discuss the situation with
you and explain the necessary work involved, and the additional
fees that may be necessary.)
broke and I don't have the entire fee. Can I pay in installments?
"I just want to thank you for
all your kindness and help in this matter! You and your staff
were so kind, considerate and helpful... You really made
me feel at ease about the whole process." -- S.N.
Sure. In fact, most of our clients pay
in installments. Very few folks who are in financial difficulty
have a lot of cash just sitting around. That’s one reason
that they are seeking bankruptcy relief. Fewer than a third
of our clients pay their entire fee in one single payment.
Most need to pay in a number of installments over a period
of time. From the time that you pay the retainer fee, we give
you three months to pay off the remainder of your balance.
To keep your case moving, we do ask that your next installment
payment be made within three weeks from when we start representing
The only way that we can afford to charge
a standard fee is to make sure that we get paid with a minimum
of our attention devoted to the fee collection process, thus
all fees need to be paid before we actually file your paperwork.
Most people stop paying their routine unsecured bills for a
week or two to quickly accumulate the money necessary to pay
for their fresh start bankruptcy, others are gifted the money
from friends and family or they go out and get a temporary
evening or weekend job. Many others simply pay us in installments
each paycheck until the entire fee is paid and then we file.
Whatever method works for you is fine. Keep in mind, however,
that the quicker you pay off the fees, the quicker we can file
the necessary paperwork and get you on your way to a fresh
there anything else that I should know?
“No improvements were necessary
in the handling of my case. Professional, yet caring.” -
Yes. If you’ve made the decision
to seek bankruptcy relief and get a fresh start, then you may
want to stop using, cut up, and throw away all your credit
cards. Have a bonfire in the back yard, if you are into symbolism.
Or, drop off or send us the pieces. We have a “Credit
Card Graveyard”™ where we will toss them.
You should stop writing checks on your
checking account for at least 10 days before the bankruptcy
papers are filed because the bankruptcy trustee may demand
that you pay over any money above a few hundred dollars that
you had on deposit on the day we file your paperwork (even
if you had checks written against the account that later cleared).
Money orders and cashier’s checks are a perfect alternative
to checks for the short period of time you need to do this.
You should plan to stop banking at any
bank where you are filing on any debt to that bank (for instance,
personal loans, overdraft protection, car or home loans, Visa
or Mastercards originally obtained through that bank).
If you have complex or unusual finances,
such as assets that may involve the “nonrecognition of
capital gains” on real property (for instance the surrender
of property with significant negative equity, such as a house)
or other complex tax issues, you need to consult a tax professional
about whether filing a bankruptcy will create a taxable capital
gain or other taxable income event for you. The vast majority
of our clients have no such unusual issues, but be sure to
call us if you are giving back a house, land or other major
You should not withhold any information
from Gandy Law Offices. Lay it all out for us and let us devise
a legal, ethical strategy to best deal with your situation.
When in doubt, simply tell us the truth. We’re on your
You should not sell, transfer, buy or
give away anything or repay any old debts or debts to friends
or relatives without first checking with us. If anything changes
about your finances before we file for you or shortly after,
tell us immediately.
If you have any questions you should
pick up the phone and call our office.
choose the GANDY LAW OFFICES, P.C. team to represent me?
You may be deciding whether to have
the GANDY LAW OFFICES, P.C. team represent you in getting a
fresh start for you and your family by using the bankruptcy
process. Please know that the GANDY LAW OFFICES team will work
very hard to do an excellent job for you. Attorney Gandy and
his staff strive to be both competent and caring. They are
never judgmental of clients and truly understand the problems
they are facing. They want to be of help. They have walked
a mile in your shoes.
To give you some idea of why you would
want to chose their team to work for you, you'll want to know
that Attorney Gandy is profiled in Who's Who in American Law
and admitted to practice before the Iowa Supreme Court and
the United States Supreme Court. He has been licensed to practice
in Iowa since 1987, and since 1991 his practice has been dedicated
to representing consumers in straight bankruptcy under Chapter
7 and bill consolidation cases under Chapter 13 of the bankruptcy
code. Attorney Gandy holds degrees from Harvard University
and the University of Texas School of Law. He practices primarily
in Debt and Bankruptcy Law from his central office in Fairfield,
Iowa. To further demonstrate his commitment to this field and
develop his competency in it, Attorney Gandy has become the
first practicing attorney in Iowa to be Board Certified in
Consumer Bankruptcy Law by the American Board of Certification.
GANDY LAW OFFICES conducts its consumer bankruptcy law practice anywhere throughout
Iowa by telephone, mail and in-office client contact.
GANDY LAW OFFICES knows you have a choice
in deciding in who and how you will be represented in getting
a fresh start, and we appreciate the trust and confidence you
show by considering us. Ask yourself, "Is the firm you
may be choosing lead by a Board Certified Bankruptcy Lawyer?"
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MORE THAN 20 YEARS EXPERIENCE
"You guys rock" -- L.K.
"I'd stand on my head for you guys, but I'd look silly doing it." -- P.G.
"Now, I can sleep tonight" -- R.C.
"If you need the help, Gandy's the one to go to." -- P.G.
"Thanks again for helping us out. You all treated us like people, not criminals." -- G.G. & B.G
"You really go to bat for your clients." -- M.H.
"The knot in my stomach is gone." -- K.G.
"Freedom is amazing, we can answer the phone again and actually have money in the bank." -- K.
"I thought your service was excellent. I felt so badly about having to take bankruptcy and so nervous, but your staff helped me feel at ease and were so understanding and helpful. Thank you." -- P.B.
"You are wonderful people, very helpful & friendly! We have a new lease on life!!" -- S. & J. R.
"Excellent service, never felt uncomfortable with subject." -- R.R.
"This was a very hard decision for us, your office made it go smoothly & easy. Thank you." -- G.B.
"Everything was explained so that I understood which made me feel at ease with the staff. Thank you so much for the fresh start." -- A.S.
"Personnel was very courteous, helpful, cordial & looking out for my best interests. I would highly recommend GANDY LAW OFFICES to anyone" -- V.F.
"I was very pleased and relieved to have an honest and outstanding firm as yours. I have had a couple of bad experiences in the past - Thank you very much" -- R.H.
"I think you folks were great. I could hardly believe how easy and smooth it all went. Keep up the good work." -- D.S.
"Professional, yet caring." -- B.H.
"I wish everyone who was suffering financially like I was would find out how easy it is to get out of the mess they're in." -- Anonymous
"Thank you for your guidance and legal assistance. You did a very good job of keeping me informed." -- M.S.
"I was very pleased with Mr. Gandy and staff, and would recommend your law firm." -- C.S.
"Your service was great. An enormous weight has been lifted." -- R.F.
"... thanks for getting me through a very difficult time. I went to court much better prepared than others represented by other firms." -- S.J.
"Deciding to file bankruptcy was hard & I was embarrassed about it. But coming to your office and being treated with respect... it made the whole experience a lot easier, and more pleasant then I imagined it would be." -- Anonymous
"... You took our stress and made life better for us with a new beginning." -- P.H.
"I am glad I chose your firm." -- D.L.
"When I first came into your office, I was so down on myself and truly felt like a failure, but now I am really at peace with myself, and I have started a new life. I owe it all to you, Mr. Gandy, and your wonderful, caring staff." -- G.S.
"The service was wonderful." -- B.H.
"I just want to thank you for all your kindness and help in this matter! You and your staff were so kind, considerate and helpful... You really made me feel at ease about the whole process." -- S.N.
"You all rock!" -- K.
"I was VERY satisfied with your personnel and the way you guys handled everything for me." -- R.O.
"Keep up the good work and thank you very much." -- M.A.
"[You] made us feel like family... We weren't made to feel embarrassed about our decision." -- T.T.
And a very special story was shared to us by one of our valued clients:
"My true feelings about the Gandy Law firm:
I prayed for guidance how to get those bills paid. I was looking in the stand for something and the telephone directory fell out and opened to the yellow pages with the Gandy ad showing. After reading the ad I sat there wondering 'could they be the one's to help me?' My inner thoughts told me 'sure, give them a call and see what happens.'
Well, the rest is history... I'm so grateful to all of you. You people seemed concerned about my health, about me climbing those steps [to the office]. I want you to know since the burden has been lifted from me, my health has gotten better." -- H.B.