Doug Minor: Hello Everyone. It's time for Consumer Credit TV, and I'm your host Doug Minor, the internet's most passionate credit show. We're here to help you with your credit issues and problems.
Today in studio we have Greg Shanfeld, he's a bankruptcy attorney locally here in Southern California. He is the nicest, best bankruptcy attorney I've ever met, and he's here to answer some questions for us today.
But we're going to basically start off with, what do most consumers and what sort of bankruptcies are they dealing with?
And Chapter 7 is probably what most people think of when they think of bankruptcy. It's straight bankruptcy. While Chapter 13 is a reorganization. Generally it's a 3 to 5-year plan and they make payments to court during that period of time.
Doug Minor: So when consumers go through, let's say, Chapter 7 bankruptcy as most of them it sounds like are doing, what sort of process can they expect and how is it going to take to get through that process?
Greg Shanfeld: The Chapter 7s are pretty quick, and pretty simple, and probably a lot less invasive than people expect. Generally, once the case is filed, they have a meeting of creditors, or a 341A Meeting, about 5 weeks after filing. And then, about 3 to 4 months after that is when the case is discharged and closed.
Doug Minor: Then after the discharge date, that's when Greg sends t*hem over to me and I help them fix their credit up.
Greg Shanfeld: Absolutely. And in all seriousness, people come out of bankruptcy and one of the common things unfortunately is, creditors aren't necessarily reporting everything the way they should be. So a professional like Doug is someone we gladly refer our clients to make sure the credit looks like it's in good shape.
Doug Minor: And so, you've gone through the process. We know the two basic chapters of Chapter 7 and 13 that most consumers are going through nowadays. What sort of things can they expect to lose or hang onto with respect to whether it's credit card debt or their home? Are they going to be able to keep these things?
Greg Shanfeld: That's probably the first question we get most of the time. The good news is, is that in a Chapter 7, while there are limitations on what we can protect, 95% of the cases are what we call "no asset cases" - nothing is liquidated, people get through the process unscathed. And in Chapter 13, assets don't get liquidated. Assets just help determine what the plan payment may be.
Doug Minor: When you say plan payment, how long do they end up having to make payments in these cases?
Greg Shanfeld: Generally, the answer to that is 3 to 5 years. Often, that's determined by what their income is relative to the median income. But Chapter 13 is an excellent tool to reorganize on your mortgages, and in some instances, we can strip off the second mortgage, which is keeping us very busy now.
Doug Minor: Can you explain the stripping off part? I don't know if all of our viewers understand what that means.
Greg Shanfeld: Sure. Stripping off basically means wiping it out entirely. So, in a lot of cases, if we can show that the value of the home is less than what is owed on the first mortgage, we can wipe out or file a motion, or sometimes an adversary proceeding, to wipe out the second mortgage altogether. And its a great tool, and often beats going down the loan modification process.
Doug Minor: Ah interesting. Listen, I'm sure a lot of you guys out there have a lot more questions for Greg. Greg, can you let our viewers know how they can get in touch with you if they have some more questions?
Greg Shanfeld: Sure, my name is Greg Shanfeld. You're welcome to call my office toll-free, at 800-958-6760. Or you can drop us an email at firstname.lastname@example.org
Doug Minor: Hey, thanks everybody for watching. Greg, thanks for being here. And listen, just so everybody knows, you can contact our office at 800-679-1505. Or email us with your questions at email@example.com, and look for future posts with Greg and I. Greg is going to keep us posted on what's going on with bankruptcy as we move through this new year. Thanks so much for watching.
Watch Part 2 of the series here.