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Gadda Law Offices, P.C. provides personal legal services designed with you in mind. Whether it is relief from crushing debt or defense of a lawsuit that has been filed against you, you can rest assured that your attorney will represent your interests and no one else’s. Mr. Gadda has practiced law in the Treasure Valley for more than fourteen years and will put his experience to work for you. The purpose of this blog is to keep the reader up to date on new trends and issues in law as it is practiced in Idaho.
Recently, because of the economic downturn Mr. Gadda has been specializing in debt relief and in particular Chapter 7 bankruptcies. Whether it is crushing credit card debt, financial crises’s due to medical emergency, lost employment or business reverses a Chapter 7 bankruptcy can be your opportunity for a fresh start and the beginning of the future you deserve.
While recent surveys show that the rate of bankruptcy in the United States has risen during the recent recession anyone who looks closely will also see that the chief reasons for that increase are only peripherally related to the recession. The biggest cause, regardless of whose surveys or studies you choose to believe is medical debt. Surveys show that between 50 and 70 percent of all Chapter 7 bankruptcies are to some extent caused by exploding medical costs. The next biggest reason is credit card debt.
Where can I find the money to pay for a bankruptcy? While this is often not the first question a new client asks it is often the most important one. It doesn’t take long for the debtor to discover that Chapter 7 attorneys must ALWAYS be paid up front. Because they are cruel? No, because when a bankruptcy is filed the attorney becomes a creditor. So, regardless of the bottom line the debtor can find himself on the outside looking in if he can’t come up with all the costs and fees.
Many debtors worry about the effect of filing bankruptcty, on their credit, their reputation and often with the possible effects it may have on their employment. The law does not allow such discrimination. Section 525 of the Bankruptcy code provides that:
§ 525. Protection against discriminatory treatment
A 401k is an employer sponsored retirement plan and is generally exempt from bankruptcy. If you have a 401k loan, you have actually borrowed against your own 401k retirement account. You are borrowing your own money. What this means is that 401k loans are not considered to be real loans and are not affected by bankruptcy except with regards to the possible restructuring of the payment of the penalties incurred for non-repayment and the tax charges.
The following piece was posted on the Idaho Legal Aid website on February 19, 2012 and is reproduced here with their permission.
Idaho Borrowers to Net Nearly $100 Million Benefit from Settlement with 5 Largest Mortgage Servicers
Can I save money using a paralegal (non-attorney) to prepare my bankruptcy?
As always the answer is, “It depends.” During The last Bush administration Congress passed the Mortgage Forgiveness Debt Relief Act of 2007. In short this act protects homeowners from owing income taxes on debt forgiven in a short sale or by a deed in lieu of foreclosure. This debt forgiveness is essentially the difference between the amount recovered by the lender in the transaction and the amount owed by the homeowner. Without some protection this could be a huge hit and many homeowners would find themselves facing gigantic income tax bills.
Clients often ask what effect a chapter 7 discharge has on judgments that have been entered against them prior to filing of their petition. This sometimes seems like a trick question. At least the answer may make it seem so. The law is that a discharge in bankruptcy “voids any judgment ..., to the extent that such judgment is a determination of the personal liability of the debtor." 11 U.S.C. § 524(a)(1) (1988) Thus, discharge does not affect liability in rem, and pre-petition liens remain enforceable after discharge. 3 Collier on Bankruptcy ¶ 524.02[1]. Huh?