At What Point Should You Consider Filing for Bankruptcy?

Interviewer: What are some factors that may indicate whether a person may need to start filing for bankruptcy? At what point should they start considering it?

If You Can Only Pay the Minimum Balance on Credit Cards and If You Are Late or Unable to Meet Your Mortgage Payments because of the Credit Card Payment, It May Be Time to Consider Filing for Bankruptcy

Vance Truman: You really should consider filing if: You're only able to make minimum payments on your credit cards; if you're having to transfer your credit card balances from a higher interest rate to a lower interest rate; if you're late on any payments; or if you're late on your mortgage payment. There's all kind of indicators that would indicate that you need to look at filing bankruptcy.

It Is NOT Advisable to Begin a Cycle of Using Payday Loan Companies to Meet Financial Obligations

I have people that come in and say, "Look. I can't even put food on the table because I'm having to pay these credit cards. I can't put gas in the car."

If that's the case, then you're past the point. If you have to go to these payday loan companies, you are in financial crisis.

You go to these payday loan places, and once you get on that merry-go-round, it's almost impossible to get off. I have clients who come in here and they have four or five payday loans. Every payday they go to one, pay off the loan, borrow again, go to the next one, and use that money to pay another off. It's just like a merry-go-round. When they get to the end of it, they're still in debt and they're paying 300% interest on the money they borrow.

Payday loans are not going to meet your monthly obligations.

How Can An Attorney Assist You in the Bankruptcy Process? Some Creditors Are Aggressive in Their Collection Methods

Interviewer: What are some of the difficulties that you face during a case like this, working with someone, and it may not be the individual themselves, but other circumstances present the biggest challenge to you?

Vance Truman: Some creditors are pretty aggressive, as far as automobiles. They take the car that the client is driving, that's been put up on blocks in a garage. They don't have any dents or wear on it or anything like that. The value's higher than it really is. That's an issue a lot that we have to deal with.

Your Credit Charges Will Be Scrutinized 3 to 4 Months Prior to the Bankruptcy Filing

Another big issue we have to deal with is there's a window before you file bankruptcy that the creditors really look at your usage. If you have a lot of charges within the three or four months before you file bankruptcy, that's always a big issue.

That's something we always have to negotiate, because they do have to end up paying some of that back. There are many other issues where I have to fight for my clients.

The Trustee Overseeing a Chapter 13 Bankruptcy May Dispute Some of the Client's Living Expenses

With the Chapter 13 trustee, there's a payment plan. The payment plan is based upon their income and their monthly expenses. Sometimes clients have so much monthly expenses that it may appear to the trustee to be too high. I have to explain to the trustee why these are high, or why the client has to pay this amount. For example, the trustee may dispute the amount of money for gasoline usage. I say, "Well, my client works. She works all over the state of Ohio. She has to drive a lot."

Chapter 13 bankruptcies are one of the hardest ones that you do with your clients. This is because you're with them for three to five years. If they need to buy a car while they're in a Chapter 13, we need a court approval. As an attorney, I have to negotiate with the trustee and fight for the client the whole time they are in Chapter 13.

Bankruptcy: Unusual Case History

Interviewer: What are some of the unusual cases that you've dealt with?

Vance Truman: One of the questions I ask on the questionnaire is, "Do you have any patents?" A client came in one time and I asked that question, "Do you have any patents?" The client said, "Well, no, I don't." I didn't think anything of it, because very few people have patents.

I went and filed for bankruptcy. Then after we had the meeting with the trustee, the trustee called me up and said, "I just saw your client on the news talking about this patent he has on TV." I called my client. He said, "Well, I don't really own the patent, you know. It's owned by this company that this man and I own together, is who owns the patent."

I asked him a question. He didn't really own the patent. The patent was in the name of the company, but he was part of it. You've just got to be real careful and word these questions and make sure that they understand what you're looking for.