Bankruptcy Law in Kansas, MO
Facing financial trouble is difficult without worrying about local bankruptcy rules and procedures. If you need guidance regarding bankruptcy law in Kansas City or the surrounding areas, then look to Jeppson Law Office. We serve individuals and families who need help regaining control over their finances. Our goal is to help people move forward with their lives using appropriate legal channels, and we may have the solution you need.
What is Bankruptcy?
Bankruptcy is a court process in which a judge and a court trustee look at the assets and debts of people, partnerships, and businesses whose debts have become so large that they don’t think they can pay them.
The court decides whether or not to “discharge” the debts, which means that the people who owe don’t have to pay them anymore. The court could also throw out the case if it thinks the person or business has enough money to pay its bills.
Bankruptcy laws were made so that people who have lost all of their money could start over. Whether the breakdown was caused by bad decisions or bad luck, lawmakers could see that a second chance is an important fallback in a capitalist economy.
If you’re not sure about this option, the good news is that anyone that files for Bankruptcy gets that second chance.
The “automatic stay” provision of U.S. bankruptcy law is triggered when a bankruptcy petition is filed.
The automatic stay partially freezes, harassing phone calls, threatening letters, and lawsuits. In addition, it holds accountable debt collectors who are aware of the injunction if they violate it.
Even though this is not technically debt forgiveness, debtors facing such disastrous effects as foreclosure and wage garnishment will certainly feel relief.
Put simply; an automatic stay is a provision of U.S. bankruptcy law that prevents creditors, collection agencies, and other entities from pursuing debtors for money owed.
What is Chapter 7?
“Liquidation” is what Chapter 7 of the bankruptcy code is all about. Under Chapter 7, your debts are forgiven, but any property that isn’t exempt is sold, and the money is given to your creditors.
Who can file?
Chapter 7 bankruptcy is a good option for people who don’t have much income or valuable property, but not everyone is eligible. Chapter 13 bankruptcy is often better for people with higher incomes and a lot of property.
That doesn’t mean that higher-income people can’t qualify—it occurs more than you’d think. But it will only work if you have a lot of family members or a lot of allowable expenses.
What is Chapter 13?
Under a court-ordered plan, Chapter 13 enables debtors to repay all or a substantial portion of their debts within three to five years. Medical bills, credit card debt, and personal loans are the most widely known debts discharged in Chapter 13 proceedings.
If the court approves your repayment plan, creditors are prohibited from pursuing further collection actions. You should also receive relief from collection agencies and their constant phone calls and letters.
Chapter 13 is not typically what comes to mind when people think of Bankruptcy. It does not involve wiping the slate clean and starting over. During the repayment period, unsecured debts such as alimony, child support, student loans, and taxes must be paid in full, and payments on items such as the house and car must be kept current.
Chapter 13 is a repayment plan administered by a bankruptcy court trustee. Generally, a petitioner’s attorney devises a plan permitting the payment of significant debts over several years. Unpaid unsecured debts are discharged after this time period.
Who can file?
To be eligible for Bankruptcy under Chapter 13:
- You need a steady source of income.
- You can’t owe more than $419,275 in unsecured debt, and you can’t owe more than $1,257,850 in secured debt.
- You must file your taxes on time.
- You can’t have filed for Chapter 13 bankruptcy in the last two years or Chapter 7 bankruptcy in the last four years.
- You can’t have filed for Chapter 7 or Chapter 13 bankruptcy in the last 180 days and had it thrown out for things like not showing up to court or following court orders.
Chapter 7 vs. Chapter 13
Which type of bankruptcy is best for you?
Chapter 7 and Chapter 13 Bankruptcy will stop the collection of phone calls and lawsuits. Both provide exemptions to let you keep your house, car, retirement, and other property.
The best type of Bankruptcy for you depends on why you want to file.
Chapter 7 Bankruptcy is normally used by someone only wanting to discharge unsecured debt like credit cards, medical bills, repossession deficiencies, etc. Chapter 7 bankruptcy does not stop a foreclosure or repossession. You still have to pay for the property if you want to keep it.
Chapter 13 Bankruptcy is normally used by someone wanting to stop foreclosure or repossession. You may also file a chapter 13 bankruptcy if you can afford to repay some of the unsecured debt. Most people do not have to repay 100% of the unsecured debt.
There are other things to consider, and our trained attorneys would be happy to examine your case at a free face-to-face consultation.
Repossession can stay on your credit report for seven years after your auto loan becomes delinquent. To prevent this, our attorneys team up with you and your lenders to identify alternatives to repossession. We modify or renegotiate loans or suggest Bankruptcy, stop repossession or foreclosure.
Other options include:
- Loan workouts
- Car sale
If filing for Bankruptcy makes sense, our Kansas City lawyers will fight to have some of your debts discharged while protecting some of your property.
Stopping a foreclosure requires one of the following:
Cancel the sale with the mortgage company.
Once they start, it’s unlikely they’ll stop. Obtain written confirmation if they agree to stop the foreclosure. If they promise to cancel the sale over the phone and fail, you need more than just their word.
Get your mortgage company to agree to a loan modification.
Again, it’s unlikely they’ll do this after deciding to foreclose, but if they agree to review or screen you for a modification, they shouldn’t proceed with the foreclosure. Get a written promise to stop the foreclosure. If they say they’ll consider a modification and then foreclose, you need more than a phone call. Since the left hand doesn’t know what the right hand is doing, it will continue to foreclose during modification.
Pay what’s owed.
Paying late payments and fees stops foreclosure. This will give you time to dispute the debt later. By then, most people can’t afford to reinstate the loan. It includes past-due mortgage payments, late fees, and up to $2,000 in foreclosure fees.
Bankruptcy stops foreclosure. 10 minutes before the foreclosure sale, you could file for Bankruptcy and save your home. A Chapter 13 will permit you to resume monthly payments and catch up on delinquent payments for three to five years. Bankruptcy helps YOU. You gain control over your mortgage company when you declare Bankruptcy. The bankruptcy court has new rules for mortgage companies. In Bankruptcy, you can sue your mortgage servicer and noteholder. This is another additional benefit of Chapter 13 bankruptcy.
File a lawsuit.
Since foreclosure happens outside of court, you must sue to stop it. To stop the foreclosure, you’d ask the court for an injunction. Most courts require a bond before stopping foreclosure. Without the bond, foreclosure happens. If foreclosure has already begun, there isn’t enough time to file a lawsuit before the sale date.
Stopping Wage Garnishment
Three Methods to Prevent a Garnishment
- Payment in Full to the Creditor
If the creditor receives full debt payment, including court costs, the judgment will be satisfied, and wage garnishment will cease. If a creditor has gone through the trouble of obtaining a judgment and garnishment, they are likely unwilling to accept anything less than full, lump-sum payment from the debtor.
Frequently, collecting enough money to pay off debt will seriously damage another aspect of your spending plan for which the money was originally intended. We advise against this because late payments on other bills will harm your credit and result in unintended consequences such as home foreclosure or car repossession. Using your retirement funds to pay off a debt that could be handled in other ways could result in future difficulties.
- Court objection
If you believe you have grounds to contest the garnishment, you may submit an objection to the court based on the following reasons:
- The law exempts the funds or assets from garnishment.
- You are protected by bankruptcy law
- A higher priority garnishment or order has already garnished you for the maximum amount.
- Full payment was made
- The garnishment was not appropriately issued or is invalid for some other reason.
This objection must be filed with the court within 14 days of receipt of the writ. If no objection is filed within 14 days, the periodic, non-periodic, or tax refund garnishment will occur, and the creditor will receive the funds withheld.
- Submit a Bankruptcy Petition
Filing for Chapter 7 or Chapter 13 bankruptcy immediately halts the execution of a judgment or garnishment. In reality, if money is held by the garnishee or disbursed to your creditor over $600 within 90 days of your bankruptcy proceedings, we can return the funds to you.
Benefits of Filing for Bankruptcy
The following are some of the benefits that Bankruptcy can offer:
- Filing for Bankruptcy will initiate an “automatic stay” that prevents creditors from taking action to collect debts and from repossessing property such as automobiles and personal property. Additionally, it prevents creditors from calling, suing, or writing you.
- Although a bankruptcy filing will remain on your credit report for seven to ten years because debts can be discharged in Bankruptcy, many debtors begin to rebuild their credit after filing for Bankruptcy.
- Most individuals who file for Bankruptcy are relieved to have a clean slate. Filing for bankruptcy allows you to start over and be mentally liberated, which may not seem like a significant benefit.
- Many evictions, foreclosures, wage garnishments, and utility shutoffs are halted by filing for Bankruptcy.
- You can learn to live within your means and prevent future financial disasters if you do not have credit cards.
- Insolvent debtors will have access to financial counseling, which will provide them with the tools to manage their debt and their life better.
- In a bankruptcy proceeding, you can retain certain assets and make payments in smaller amounts.
- The responsibility to repay some of your dischargeable debts may be dischargeable.
- Your credit score may arise. Your debt-to-income ratio will improve after Bankruptcy, which is a factor in determining your creditworthiness.
Building a Brighter Future
We understand how confusing and overwhelming it can be to file for Bankruptcy regardless of your situation, which is why we want to streamline this process where possible. If you schedule a consultation with us, our bankruptcy attorneys will strive to protect your legal rights. We take a local approach to representation and will do everything we can to mitigate your stress. We offer flexible appointment availability, including weekends, by request to make it easier to come in and see us.
Choose Jeppson Law Office in Kansas City, MO, when you need assistance with bankruptcy law. We work hard to help our clients overcome temporary setbacks and enjoy a more solid financial future. To learn how we might be able to get you back on track, call us today to schedule an appointment.