Mary Elizabeth Schmitt
Attorney at Law

Bankruptcy Law Practice

• 1.  If you are facing financial difficulties then seek financial advice from a professional.  Many financial planners, attorneys, banks, credit unions and credit counselors will provide a free financial consultation.  Resources are also available online, and through government agencies and libraries. 
• 2.   If you are considering a bankruptcy, then seek legal advice before depleting retirement accounts,home equity or other financial investments or deposits.  These items could be exempt from the bankruptcy estate which means you don't have to give them up. 
• 3.   In most cases, the funds invested in certain retirement accounts are completely protected from creditors in a Chapter 7 or Chapter 13 bankruptcy.
• 4.  Please note that the bankruptcy laws give you an opportunity to stop a foreclosure and bring your mortgage or real estate taxes current through a Chapter 13 Plan.  Additionally, after you stop the foreclosure, you can apply for a loan modification or a refinance.  In some cases your 2nd mortgage can be avoided in a Chapter 13 case.
• 5.  Do not disregard your creditors.  If a creditor obtains a judgment then the creditor has a judgment lien against your home and can seize other assets.  If you are considering a bankruptcy then you seek legal advice before a judgment is entered.
• 6.  If you are current on your vehicle, then you can reaffirm your auto loan in a Chapter 7 bankruptcy and retain your vehicle.  You can also redeem your vehicle at the fair market value in a Chapter 7.  In a Chapter 13 you can bring your auto loan current over time, in certain cases pay only the fair market value of the car, and in certain cases reduce the auto loan interest rate.
• 7.  If you decide to file a bankruptcy then you should maintain a bank account where you have no debt.  
• 8.   If you decide to file a bankruptcy, then maintain your life insurance payments, car insurance payments, hazard insurance payments and health insurance payments.  You are allowed to continue paying for these benefits while you are in bankruptcy.
• 9.   If you decide to file bankruptcy, disclose all past money or property transfers to family or creditors to your bankruptcy attorney.  If assets were transferred in anticipation of a bankruptcy filing, then the bankruptcy court may require your family members or creditors to turnover the payments or the property  to the Bankruptcy Trustee.   These funds or the property which could have been exempted by you, if it wasn't transferred, would then lose protected status.
• 10.  If you have equity in your home and you are having financial difficulty, seek financial advice before taking out a 2nd mortgage.  A 2nd mortgage is usually a personal liability in addition to being a security interest in your home.  A 2nd mortgage will usually survive a foreclosure if your house forecloses for less than the principal on the 1st mortgage.

PLEASE NOTE:  THESE TIPS RELATE TO A SAMPLING OF THE COMPLEX ISSUES THAT MIGHT NEED TO BE ADDRESSED BEFORE OR AFTER FILING A BANKRUPTCY.   THESE TIPS ARE BASED ON THE BANKRUPTCY LAWYER'S EXPERIENCE IN THE STATE OF WASHINGTON AND IN THE JURISDICTION OF THE US BANKRUPTCY COURT OF THE WESTERN DISTRICT OF WASHINGTON.  THERE ARE DIFFERENCES IN THE STATE LAWS RELATING TO BANKRUPTCY ISSUES  AND EACH FEDERAL JURISDICTION'S APPLICATION OF THE FEDERAL BANKRUPTCY LAWS .

CHAPTER 7

CHAPTER 13

CHAPTER 12

CHAPTER 11