Dennery Law FAQs

If you are facing late car and mortgage payments you may have some concerns. It is true that making your monthly mortgage and car payments is crucial to maintaining good credit. Even more important, however, are the consequences of falling behind on your car note and mortgage. Your loan with your car or mortgage lender is a secured debt. This means that your lenders have a contractual and legal right to enforce their right to payment by taking possession of your property.

In the case of a car, a 5 AM repossession can be more terrifying than any repo reality show could ever be. In the case of your home, a foreclosure action threatens to destroy your investment and stall your family’s future. In some cases, a loan modification, forbearance agreement, or payment plans with your lenders can get you back on track. After all, most lenders don’t really want to foreclose on your house or repossess your car. What they want are regular payments from you. So, if you get back on track, you will keep your property.

In other cases, however, periods of unemployment or other personal circumstances make it impossible to keep up with the probationary payments or catch up on late payments. In those cases, the stress and anxiety of doing the impossible are simply too much to bear. After numerous failed attempts to get back on track, many people lose their primary means of transportation, which further exacerbates their financial hardship. Even worse, many homeowners watch their homes auctioned off and their hopes for the future vanish with the stroke of a judge’s gavel.

You should know that: Bankruptcy will prevent repossession and stop the foreclosure sale.

So why do people endure years of collection calls, lawsuits, and garnishments to pay back old debts that won’t build their future?

Did you know that filing for bankruptcy will allow you to recover monies garnished within 90 days before filing your case?

What if we told you that for as little as $0.00 and an affordable payment plan, you could file for bankruptcy and:

• Keep your property and tax refunds
• Catch up on late mortgage or car payments
• Eliminate and/or reduce credit card debt, personal loans, and/or medical bills
• Wipeout judgments, stop payday loans, and stop and recover garnishments
• Start to rebuild your credit

As you must know by now, living with constant financial stress is no way to live at all. Our clients file for bankruptcy to move past their debts, to recover from financial hardship, and to transform their future.

Making your monthly mortgage and car payments is crucial to maintaining good credit. Even more important, however, are the consequences of falling behind on your car note and mortgage. Your loan with your car or mortgage lender is a secured debt. This means that your car lender has the legal right to collect the debt by foreclosing or repossessing your property.

In some cases, a loan modification, forbearance agreement, or payment plans with your lenders can get you back on track. After all, most lenders don’t really want to foreclose on your house or repossess your car. What they want are regular payments from you. So, if you get back on track, you will keep your property.

In other cases, however, periods of unemployment or other personal circumstances make it impossible to keep up with the probationary payments or catch up on late payments. The stress and anxiety of doing the impossible are simply too much to bear. After numerous failed attempts to get back on track, many people ultimately lose their primary means of transportation, which further exacerbates their financial hardship. Even worse, many homeowners watch their homes auctioned off and their hopes for the future vanish with the stroke of a judge’s gavel.

A foreclosure action threatens to destroy your investment and stall your family’s future. A 5:00 am repossession can be more terrifying than any repo reality show could ever be.

After receiving a notice of home foreclosure, it is important to take action quickly to prevent lenders from seizing your home. Generally, there are four primary ways to stop a foreclosure, namely:

• Repay to the loan
• Modify the terms of the loan
• Sell the home
• File bankruptcy

Depending on the circumstances, the first three options may not always be feasible to stop a foreclosure. For this reason, many people look to Chapter 13 bankruptcy to prevent foreclosure and halt collection efforts. Filing for bankruptcy under Chapter 13 allows a homeowner to propose a repayment plan and address outstanding mortgage payments, therefore stopping foreclosure in its tracks.

Facing foreclosure on your home or repossession of your vehicle is incredibly stressful. At Dennery Law, we help our clients understand whether they can stop a foreclosure or a car repossession.

Can I Stop Car Repossession?

Automobiles are valuable and important pieces of property, allowing individuals freedom of mobility and, sometimes, transportation to and from a workplace. When a person finances a car, the lender maintains ownership of the vehicle until the loan is paid in full. If the individual falls behind on payments and the loan goes into default, the lender may seize the vehicle and sell it to repay the debt.

To stop car repossession, a debtor may refinance their loan or file for bankruptcy. The former option allows a person to pay off the existing loan and start fresh, but this will not prevent the same issue from happening again down the line. Filing for bankruptcy under Chapter 13, however, allows a debtor to stop car repossession and repay their loan over a specified period of time.

Personal debt among Americans reached $14 trillion by the end of 2020, representing a pervasive and major financial issue for many individuals and families. Having personal debt can be overwhelming, made worse by aggressive collection efforts from creditors. How aggressive can these collection efforts become? Can you be sued for personal debt? Dennery Law bankruptcy attorneys can help answer those, and other, questions.

Personal debt is any debt for which you are individually responsible. Personal debt can also involve more than one party. For example, if you and your spouse obtain a loan for a vehicle together, that is considered personal debt even if there are two parties involved. Personal debt can be secured or unsecured.

When the sheriff comes to your door to serve court papers, something has to change. Being sued is a wake-up call – another indication that your life has become unmanageable, and that the payment plans and debt settlement programs are not making things any better. In many cases, your sincere desire to repay your creditors is what is holding you back and creating the vicious cycle.

Under KY law you have 20 days from the time of being served with court papers to respond to the complaint. If you dispute the debt, timely filing an answer with the court is essential to preserving your defenses and claims against your creditor. Consulting with an attorney as soon as you are notified of a lawsuit is always the best course of action.

If on the other hand, you owe the debt and have no legal ground to defend against the lawsuit, the chances are that a judgment will be entered against you for the balance of what you owe, PLUS penalties and interest, PLUS court costs, PLUS attorney fees. Ultimately, your wages could be garnished. If you own property, your judgment creditors can file a lien against your house threatening your investments.

BANKRUPTCY WILL STOP ALL COLLECTION LAWSUITS DEAD IN THEIR TRACKS.

You should also know that filing for bankruptcy can help you:

• Recover garnishments
• Eliminate and/or reduce credit card debt, personal loans, and/or medical bills
• Wipeout and strip judgment liens from your home
• Start to rebuild your credit

With this in mind, what happens if a person does not pay their personal debts? Can they be sued by creditors? The answer is yes, you can be sued for the personal debt. In fact, lawsuits are a common tactic used for debt collection. In such situations, a creditor will file a complaint with the court and you will be served with the complaint. Then, you file a formal response with the court and attend a hearing.

What Do I Do When Debt Settlement Fails?

Debt settlement involves paying a lump sum to creditors in exchange for a portion of a debt being forgiven. Consumers are able to settle their debts on their own or they can hire a service to negotiate on their behalf. Moreover, debt settlement may have tax consequences, since the Internal Revenue Service (IRS) considers forgiven debt to be taxable income.

Naturally, there are risks associated with debt settlement. In some cases, it can fail altogether, leaving a debtor unsure of how to proceed. When debt settlement fails, creditors will continue collection attempts. A surefire way to halt aggressive collection attempts is by filing for bankruptcy. Doing so initiates an automatic stay, which prevents creditors from seeking payment.

Living with wage garnishment is frustrating and upsetting, especially when income is limited and every dollar counts. It is possible to prevent creditors from garnishing your wages, however, and address outstanding debts through bankruptcy.

Under Kentucky law, creditors can garnish your wages shortly after obtaining a judgment against you. In our experience, garnishments will occur anywhere from 60 to 120 days after you have been served with court papers.

Typically, your employer notifies you of the garnishment, but once a garnishment is ordered by the court, there is little that you can do to stop it. Creditors can legally garnish up to 25 percent of your net pay (depending on how much you make). For most people who are already struggling financially, a 25 percent reduction in income is the beginning of a vicious cycle of falling behind on other bills, car, and mortgage payments, not to mention the anxiety and the feelings of hopelessness.

If you are facing an order of garnishment, or if an existing garnishment is too much to handle, bankruptcy will help. Filing for bankruptcy will stop the garnishments in their tracks. You should also know that filing for bankruptcy can help you:

• Recover garnishments
• Eliminate and/or reduce credit card debt, personal loans, and/or medical bills
• Wipeout and strip judgment liens from your home
• Start to rebuild your credit

If you receive a notice of wage garnishment, it may be possible to stop the order. Filing an exemption claim with the court or raising an objection is the only way to prevent wage garnishments. Many times, it is also possible to stop wage garnishments by filing for bankruptcy.

It should be noted that there is an allotted time frame in which a wage garnishment exemption or objection can be filed. Failure to file an exemption or objection within the specified time frame can result in an inability to stop wage garnishments. For debtors who do not file in time, the only way to stop wage garnishments is by filing for bankruptcy.

Can I Recover Wage Garnishments That I Have Already Paid?

In some cases, it is possible to recover wage garnishments that you have already paid. If the wage garnishment occurred 90 days before you filed for bankruptcy, then you may be entitled to the wages that were garnished. The garnished wages must exceed a specific amount and you must be able to protect the wages with an exemption. Note that in order to recover wage garnishments, it is necessary to file for bankruptcy.

How Do I Stop Wage Garnishments?

Under Kentucky law, creditors can garnish your wages shortly after obtaining a judgment against you. In our experience, garnishments will occur anywhere from 60 to 120 days after you have been served with court papers.

Typically, your employer notifies you of the garnishment, but once a garnishment is ordered by the court, there is very little that you can do to stop it. Creditors can legally garnish up to 25 percent of your net pay (depending on how much you make). For most people who are already struggling financially, a 25 percent reduction in income is the beginning of a vicious cycle of falling behind on other bills, car and mortgage payments, not to mention the anxiety and the feelings of depression.

You should know that bankruptcy will stop the garnishments!

Why then do people endure years of collection calls, lawsuits, and garnishments to pay back old debts that won’t help to build their future?

Did you know that filing for bankruptcy will allow you to recover monies garnished within 90 days before filing your case?

What if we told you that for as little as $0 and an affordable payment plan, you could file for bankruptcy and:

• Keep your property and tax refunds
• Catch up on late mortgage or car payments
• Eliminate and/or reduce credit card debt, personal loans, and/or medical bills
• Wipe out judgments, stop payday loans and stop and recover garnishments
• Start to rebuild your credit

As you must know by now, living with constant financial stress is no way to live at all. Our clients file for bankruptcy to move past their debts, to recover from financial hardship, and to transform their future.

Divorce is one of the most common causes of personal bankruptcy claims. Not only is divorce emotionally stressful, but it can lead to great financial burdens for both parties. If either party is unable to pay their debts, it can become exceedingly difficult to maintain control of finances. Legal costs alone are enough to force some individuals to file for bankruptcy, while in other cases alimony or child support may be too great of an obligation, causing bills to pile up.

It is preferable to file for bankruptcy before a divorce proceeding in order to limit the number of issues and debts that must be negotiated during the process. This is not always feasible, however. In some situations, financial hardship is the result of the actual divorce process or unforeseen financial emergencies occur. In these cases, an individual may wish to file for bankruptcy during the divorce proceeding.

In Kentucky, it is possible to file for bankruptcy during divorce. A bankruptcy proceeding will not stop the divorce, nor will it stop support obligations or custody disputes, but it will postpone the division of assets until after the bankruptcy is finalized. Since any nonexempt assets become part of the bankruptcy estate, the presiding judge in the divorce will not be able to divide these assets between spouses. Because bankruptcy and divorce proceedings directly impact each other, it is not advised to pursue both at the same time.

It should also be noted that filing for Chapter 13 bankruptcy as a married couple, both spouses maintain responsibility for the repayment plan for the duration of the bankruptcy process. Filing for business bankruptcy during a divorce may impact the division of business assets, particularly if your spouse was involved in the formation of your business.

What Debts Does Bankruptcy Exclude from Discharge?

Filing for bankruptcy does not automatically mean that all debts will be discharged. While consumer debts will be discharged, there are non-dischargeable debts that one should account for before filing for bankruptcy during divorce. These include:

• Child support
• Alimony
• Attorney’s fees for child custody or support
• Student loans
• Most tax debt

While this list is not comprehensive, it is important to note that filing for bankruptcy will not alleviate child support or alimony responsibilities. While these obligations may directly contribute to financial distress, filing for bankruptcy is not a way to avoid these obligations. In rare cases, however, it may be possible to negotiate lower payments.

As a business filing for bankruptcy, the list of qualifying dischargeable debts is the same as in personal bankruptcy cases. Chapter 7 liquidation can be used to discharge both personal and business debt, allowing business owners to seek holistic and comprehensive relief.