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A sign of the times
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| Woodland Park attorney Robert Hardcastle has seen the number of bankruptcy cases increase, many of them because of medical bills and credit card debt piled on top of mortgage payments. Photo by Pat Hill |
By Pat Hill
While the terminology Chapter 7, 11, 12, 13 refers to the cut-and-dried details, the emotional cost of bankruptcy can be traumatic.
“It’s hard times for people who have spent their lives trying to pay bills on time, waking up one day and, because of circumstances beyond their control, owe more than they ever dreamed of owing,” said Robert Hardcastle, a Woodland Park attorney whose business has increased in the past several months. “It’s time to do something about it.”
When people feel a financial stranglehold, bankruptcy offers a certain sense of relief.
“One of the aspects of bankruptcy is that you can have the freedom to decide which creditors to get rid of and which ones to keep,” Hardcastle said.
For instance, people with past-due mortgages who also have credit-card and medical debts can let two go.
“You need to make up those missed payments because the bankruptcy court doesn’t give you any slack,” he said. “Once you’re rid of all the other stuff, you can afford the house, if it’ll work out that way.”
However, when debts are compounded by a job loss, the options narrow.
“You may need to file just to get creditors off your back — the calls end, the harassment ends, they can’t garnish your bank account,” Hardcastle said. “For people in financial trouble, there’s a lot of emotional grief and the bill-collecting industry doesn’t make it any better.”
With a Chapter 7 bankruptcy, which takes four to six months to complete, the business owner or individual liquidates all assets.
“If there’s nothing left, there’s nothing left,” he said.
Businesses or individuals with up to $1 million in secured assets, homes or equipment, for instance, can reorganize under Chapter 13 bankruptcy. For assets of more than that amount, the reorganization is a Chapter 11 bankruptcy. Chapter 12 is designed specifically for family farms.
However, reorganization plans only work if the filer is asset-rich but cash-flow poor.
“You can place yourself back in a position of good cash flow to pay down those bills,” Hardcastle said. “Otherwise, it won’t work, it will fail and the people will then have to convert the case to a Chapter 7.”
In all bankruptcies, unsecured creditors (those who haven’t been given collateral) are at the bottom of the payback list.
“Payback plans focus first on collateralized loans; if there’s anything left, it goes to the unsecured creditors,” Hardcastle said.
As of three years ago people who file bankruptcy are required to take a financial-management course along with consumer credit counseling.
“The counseling must be done within 180 days, not six months, before filing,” Hardcastle said. “You cannot file unless you’ve done it.”
Also, the filer must report all income which is then compared to an average for the state and the region.
“If you’re above the average, the trustee in the bankruptcy court is going to give you a hard time about why you’re not filing a “13” and may try to force you into filing a Chapter 13,” Hardcastle said.
While bankruptcy is a last resort for most people, the number of cases, particularly foreclosures in Teller County, have increased.
“Given the way the economy is now, the collapse in the real estate and construction industry and no light at the end of that tunnel, bankruptcy may be the only way out for a lot of people,” he said.
For information, call Hardcastle whose office is in The Law Center at 750 U.S. 24 in Woodland Park, at 719-641-3707. In addition to Hardcastle, William Moller also handles bankruptcy cases and can be reached at 719-687-2328.
Bankruptcy
“It’s hard times for people who have spent their lives trying to pay bills on time, waking up one day and, because of circumstances beyond their control, owe more than they ever dreamed of owing,” said Robert Hardcastle, a Woodland Park attorney whose business has increased in the past several months. “It’s time to do something about it.”
When people feel a financial stranglehold, bankruptcy offers a certain sense of relief.
“One of the aspects of bankruptcy is that you can have the freedom to decide which creditors to get rid of and which ones to keep,” Hardcastle said.
For instance, people with past-due mortgages who also have credit-card and medical debts can let two go.
“You need to make up those missed payments because the bankruptcy court doesn’t give you any slack,” he said. “Once you’re rid of all the other stuff, you can afford the house, if it’ll work out that way.”
However, when debts are compounded by a job loss, the options narrow.
“You may need to file just to get creditors off your back — the calls end, the harassment ends, they can’t garnish your bank account,” Hardcastle said. “For people in financial trouble, there’s a lot of emotional grief and the bill-collecting industry doesn’t make it any better.”
With a Chapter 7 bankruptcy, which takes four to six months to complete, the business owner or individual liquidates all assets.
“If there’s nothing left, there’s nothing left,” he said.
Businesses or individuals with up to $1 million in secured assets, homes or equipment, for instance, can reorganize under Chapter 13 bankruptcy. For assets of more than that amount, the reorganization is a Chapter 11 bankruptcy. Chapter 12 is designed specifically for family farms.
However, reorganization plans only work if the filer is asset-rich but cash-flow poor.
“You can place yourself back in a position of good cash flow to pay down those bills,” Hardcastle said. “Otherwise, it won’t work, it will fail and the people will then have to convert the case to a Chapter 7.”
In all bankruptcies, unsecured creditors (those who haven’t been given collateral) are at the bottom of the payback list.
“Payback plans focus first on collateralized loans; if there’s anything left, it goes to the unsecured creditors,” Hardcastle said.
As of three years ago people who file bankruptcy are required to take a financial-management course along with consumer credit counseling.
“The counseling must be done within 180 days, not six months, before filing,” Hardcastle said. “You cannot file unless you’ve done it.”
Also, the filer must report all income which is then compared to an average for the state and the region.
“If you’re above the average, the trustee in the bankruptcy court is going to give you a hard time about why you’re not filing a “13” and may try to force you into filing a Chapter 13,” Hardcastle said.
While bankruptcy is a last resort for most people, the number of cases, particularly foreclosures in Teller County, have increased.
“Given the way the economy is now, the collapse in the real estate and construction industry and no light at the end of that tunnel, bankruptcy may be the only way out for a lot of people,” he said.
For information, call Hardcastle whose office is in The Law Center at 750 U.S. 24 in Woodland Park, at 719-641-3707. In addition to Hardcastle, William Moller also handles bankruptcy cases and can be reached at 719-687-2328.
Bankruptcy
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