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Sir: Welcome back to On-Air with Sir. It’s your man Sir, man. We’re doing what we do. I’m live in Philadelphia right now. Getting ready to go to DC for two weeks. If you’re interested in coming on the show, you know … Just go to OnAirwithSir.com and fill out the form and you could be the next guest on my show. Right now, I have a very special guest here to educate everyone on bankruptcy, which there are a million questions when it comes to this. Peter Daigle is on the phone. How you doing tonight, sir?
Peter: Good afternoon. Nice to talk to you.
Sir: Oh man, thank you for calling up man. I appreciate it man. Tell everybody what you got going on.
Peter: I’m a bankruptcy attorney and how I got into this business is I got in trouble myself, basically. Years ago I was in real estate and construction and I ended up not doing as well as I thought and so I ended up in bankruptcy. From that I became a bankruptcy attorney. I decided I wanted to go and help folks get rid of debt and rebuild their credit and that’s what I do. I’ve helped thousands of people over the last almost twenty years now.
Sir: I got a question. How do you know when it’s time for you to file for bankruptcy. Like how much debt is actual debt versus someone just panicking because they can’t pay something off?
Peter: Okay. So usually you’re getting that feeling as you wake up at two in the morning or three in the morning and you’re feeling that overwhelmed feeling when you know that what you have coming in just isn’t going to cover what you owe. It’s not just a matter of juggling, there just isn’t enough money to go around and so what happens is that you start slipping on payments to credit cards, to the IRS, to your mortgage payment and you realize that no matter how much money you’re making it’s just not going to go around and you don’t have anybody about to die and leave you any money, you’re not about to win the lottery or get a huge promotion so you’re just sort of stuck in the middle.
Sir: Huh. Okay. Are there any type of … I guess you call them like qualifications on, like how do you know that you qualify to actually file for bankruptcy?
Peter: Nearly everybody qualifies. The main class of qualification is what is your income level. Back in 2005, they amended the bankruptcy laws in such that if you make above a certain amount of money, you may have to pay something back to your creditors or sometimes even all of it if you make a considerable amount of money. Nearly everybody qualifies, it’s just whether or not you get to wipe out 100% of the debt or not, depending on what you make or what your family makes. If you’re below the median income you get rid of all of it and if your above the median income you may have to pay a little something back.
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Sir: So, in some cases you don’t actually get to wipe it away…
Peter: Let’s assume for a second that you don’t qualify for Chapter 7 because you make too much money. Based upon what you do make though, you can afford to pay, let’s say 10% of your creditors. So, you’d pay 10% of your creditors for, say three years or five years, depending how long the plan is. In the end of the three or five years, the rest of the debt would be extinguished so you’d only pay back 10% of the creditors, let’s say. Then the rest of it you’d receive what’s called the discharge of bankruptcy in the mail. You pay based upon what you can afford to pay where in the past were paying what you were required to pay based upon what you agreed to.
Sir: Now, I heard you say Chapter 7 and I know there’s a Chapter 13, so what’s the difference?
Peter: Thirteen, right. The difference is in Chapter 7 you pay nothing to the creditors, zero. That takes approximately three months to go through and the creditors get zero. The only types of creditors that you have to pay back are student loans, if you owe a spouse, ex-wife or ex-husband and certain types of IRS debts are not dis-chargeable. You have to repay those debts. Everything else would get discharged.
Sir: Okay. So if you file for bankruptcy, do you lose your home or do you lose like your car or anything? How does that work?
Peter: As long as you’re making your payments on your house or your car you get to keep them. If you get behind on your car payment or get behind on your house mortgage you have the ability to play catch-up inside bankruptcy and you can spread the delinquent payments out over three or five years. If you got behind let’s say $6,000 on your mortgage payment you could repay it at $100 a month for five years.
Sir: Oh, gotcha, gotcha, gotcha. Okay, okay, okay. So then I wouldn’t owe the rest of the house. It would just be the balance.
Peter: Right. You only use the bankruptcy to play catch-up on what you owe for your past payments but you have to pay for going forward. If you want to keep your house or keep your car you have to make each payment every month on top of what you owe from the past but the arrears, what’s called or the past due payments can be spread out over 36 or 60 payments to make it affordable.
Sir: Got it. So let’s just say if I was behind 6,000, let’s say I’m going to pay $100 a month and let’s say my mortgage is already 500, I would pay 600.
Peter: You got it, exactly.
Sir: Okay. Okay. Now if someone can’t afford their bills and someone is really, really like behind, how can they afford to pay for your services?
Peter: We work out an affordable payment plan, okay. So what we do is we work out a plan and we make it an affordable payment, whatever can be afforded to pay, we would accept that and as long as those payments were being made, we will keep the creditors off your back, so to speak. Then when the payments are made, we will file the bankruptcy.
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Sir: Okay. So I guess my next question is, is how does it really effect you? Because I kind of feel like this … I feel like the moment that I file for bankruptcy my life is over. So, like is that true or you know?
Peter: No. Because of what happened back in the late ’90s and in the 2000s where everybody got in trouble. Mortgages were going down, foreclosures. There were so many people that got in trouble so they enacted these changes to the bankruptcy code and again, where millions of people have filed, essentially it takes about 12 to 18 months to rebuild your credit back to the point where you can borrow at conventional rates. We have a program that we work with folks on that. It’s called the 720 program, 720 being the score you need to get to get car financing at 2.99%. Part of what our office does is we not only get rid of your debt but we also rebuild your credit as part of the process and again, we shoot to get you to the 720 score. It generally takes between 12 and 18 months for us to obtain that, so at the end of that time you’ll have no debt and you’ll be able to go into the car dealership and get money at the low rate.
Sir: If I file for bankruptcy and I catch up on everything and I get my credit score up will I still be affected when like I go to get that new car and they see that I filed for bankruptcy like a year ago?
Peter: For the first year, it’ll be difficult to borrow money on a car and for two years it’ll be difficult if you want to go borrow money for a mortgage on a house. If you can sweat it out that one year for a car, you’ll be able to get the lower rate at the end of the twelve months.
Sir: Um. Okay. That’s pretty interesting. Now, how does it work as far as if someone’s getting a divorce?
Peter: Well sometimes it works to the advantage of getting divorced because if a married couple has financial trouble which you see a lot of them doing, that may be a reason for divorce. If you file bankruptcy prior to the divorce then all the marital debts are wiped out. If there are credit card debts that the husband or the wife have run up and they’ve co-signed for each other than that debt will be discharged. Then at that point, they could just split the assets, whatever they own because the debt will be discharged.
Sir: Ah. That’s interesting. Wow. That is interesting. Peter, before I let you go, tell everybody how to find you online.
Peter: Daiglelawoffice.com. D-A-I-G-L-E lawoffice.com. My website has lots of good information on it, all types of bankruptcies, foreclosure defense. It talks a lot about student loans which we haven’t spoken about here and a lot of things we’ve talked about today. Also, I’ve written a book and if you go on my website you can request a free book and I will mail it out to you.
Sir: Oh wow! A free book. That is, wow. That is nice. Actually, you know what? I’m going to go on the website right now. I need a free book. Thank you so much again, Peter. I appreciate it.
Peter: Okay, thanks.
Sir: For more information everybody, just go to OnAirwithSir.com and visit our blog, all right? We’re going to get to our next song. This is On-Air with Sir.
Sir: You’re now listening. We’re On-Air with Sir.
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