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A consumer facing a insurmountable financial burden many times pursue either a Chapter 7 or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy provides a consumer relief in the form of what is known as a discharge from a good portion of his or her debts. On the other hand, relief in a Chapter 13... Read more »
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There is a right way and a wrong way to deal with debt.  The right way requires courage to take action.  This article provides an effective plan to determine whether filing bankruptcy is the right answer.   
  
1. How Many Months to Become Debt Free?
The answer to this question is essential and requires work.  We need to know household income and household expenses.  The left over money is used to pay credit card and medical bills.  Bankruptcy may be the solution if it will take too many months to become debt free.     
To help figure out household budget, here is a link to free budget forms from Dave Ramsey.  I am a huge fan of Dave Ramsey.  He is a great source to help get out of financial trouble.  He was forced to file bankruptcy and has since made a good living helping others deal with debt.  I offer his financial management course to all my bankruptcy clients.  
Now, we need to add up credit card and medical bills (unsecured debt).  Having trouble figuring out these types of bills?  These types of bills will be listed in a credit report.  Get a free credit report from www.annualcreditreport.com.  Ignore the offers to pay money for your credit score.   
Finally, we have the numbers to determine how long it will take to pay off unsecured debt.  Divide the total of all unsecured debt by the money left over from the monthly budget.  The answer represents the number of months it will take to pay off bills. Will it take more than three years to become debt free?  Tinker with the expenses that can be changed to see if you can become debt in a reasonable amount of time.   
2. Am I Being Forced to Take Action?
Are bills forcing you to take some action that will require an extreme financial consequence? Being sued by a creditor like Midland Funding?  Are your wages being garnished by a creditor?  Are you considering withdrawing money from a 401k to pay creditors? 
3.  Consult A Bankruptcy Attorney!If it is going to take too long to become debt free, or if you are being forced to take some action that will have a financial consequence, go talk to a professional.  

I, like most Fresno personal bankruptcy attorneys, do not charge for the first consultation.  If you contact an attorney that wants to charge right away, try someone else.  Remember, your chief goal is to determine whether you should file bankruptcy.  It's also important to feel comfortable with the attorney.  Trust your instincts.  There are a lot of attorneys that file Chapter 7 bankruptcies in Central California. 

The first meeting can last anywhere from 30 minutes to 90 minutes.  Make sure you are meeting with the attorney, and not a staff member.  The attorney's goal should be to explain the bankruptcy process and determine whether bankruptcy is the best solution.  If the attorney pushes you to filing bankruptcy without evaluating your income and bills you are probably meeting the attorney.  If the attorney wants to pass you off onto one of his/her staff members, you might want to consider another office.     

You should have all your questions answered.  The attorney should have a broad understanding your personal finances.  These topics include your assets, income, and expenses.  At the end, you should feel more comfortable deciding whether you want to file bankruptcy.  You should be quoted a price to file bankruptcy.  I typically charge $1200.  I often quote prices that are lower than $1200.  Sometimes higher if your case requires more like you operate a business, have a lot of creditors, or if you make car payments.  Each case is unique.  The Eastern District of California Bankruptcy Court charges $335.  There are two online bankruptcy classes can cost as low as $35. 

It is helpful to bring copies of the following documents to your meeting: 

1.  Driver License
2.  Social Security Card 
3.  Last two years of filed tax returns
4. Last six months income stubs.  (Pay stubs, unemployment, disability, etc.)  

5.  Lawsuits, garnishments, foreclosures, abstract of judgments or tax liens.
6. Retirement statements (Your most recent 401k, PERS, STRS, and/or pension statements

7. Title certificates to all cars, trailers, Boats, etc.  

8. Most recent invoice statements to vehicles and real property
9. Life insurance policies.
10. Credit report from www.annualcreditreport.com (the free report)

11. If you are required to pay child support or alimony, than provide Marriage Agreement and court order.

12.  License of professionals, e.g. sales agent, truck driver, attorney.   

Photo credit: Marco Bellucci: Flickr

If you’ve fallen behind on your student loans, you may be at risk for wage garnishment. Here are some tips on how to avoid garnishment and get back on track.
When you default on your federal student loans, the government can begin an administrative wage garnishment without a judgment from a court.
Under federal regulations, the government can take 15% of your disposable pay. You can, however, protect wages in an amount equal to 30 times the minimum wage.
In order for the government to begin a garnishment of wages, The Department of Education or a guaranty agency must notify you and give an opportunity for a hearing.
In order to avoid a wage garnishment, you must:

1. Negotiate a voluntary repayment and make your first payment within 30 days from the date the garnishment notice was sent; OR
2. Make a hearing request in writing postmarked no later than the deadline on the garnishment notice.

Request A Hearing
For most people, it’s safest to request a hearing. If you do so within the time specified in the notice, the wage garnishment cannot go forward until the hearing is held.
You can still request a hearing after the garnishment begins, but it won’t stop the government from taking your wages unless you win the hearing.
Defenses To Federal Student Loan Garnishment
The widely-used defense to an administrative wage garnishment order is that the garnishment would cause financial hardship to you and your dependents. You’ll need to provide documentation to sustain your defense.
Other defenses include:

• You were involuntarily terminated from last employment and have been employed in current job for less than 12 months;
• The federal student loan has been paid in full;
• It’s not your loan;
• You are making voluntary payments;
• You have filed for bankruptcy and the case is still open;
• The student loan was discharged in bankruptcy;
• You have a refund right against the school, but have not received the refund;
• The borrower is dead or totally and permanently disabled;
• The loan is not enforceable due to fraud or forgery; or
• You are eligible for a closed school or false certification discharge.

If you receive a notice of a pending administrative wage garnishment, call the collection agency handling your account and get the required forms to request a hearing. Be sure to complete the forms and deliver them within the time required to stop the garnishment.
You may or may not win your hearing, but one thing’s for sure – if you don’t request the hearing, you will definitely have a garnishment to deal with.

Attorney Jeff Hsu of JCH LAW FIRM is a California Board Certified Bankruptcy Legal Specialist
JCH LAW FIRM is pleased to announce that attorney Jeffrey Hsu is now a California State Bar Board Certified Legal Specialist in Bankruptcy Law as of August 1, 2014.
We look forward to continuing to serve the Southern California community at large, and we hope our current and future clients feel even more confident that JCH LAW FIRM is right for their needs.