| Katherine: | Hello everyone. Thank you for joining us on “This Needs to Be Said.” Our friend, Attorney Peter Daigle, is joining us and he’s going to answer some questions on bankruptcy over which we’re concerned. He’s helping us to not see the bankruptcy word as the bad “B” word. He’s helping us to see it as a great way to reset, restart, and renew especially your credit situation and just get yourself back on a good path. Peter, thank you for coming on “This Needs to be Said” again. Welcome. |
| Peter Daigle: | Thanks Katherine, it’s always a pleasure to talk to you. |
| Katherine: | I enjoy talking with you as well. Our first question for today is about all bankruptcy options, are they the same? I know you’ve gone over this in different ways. We may have even addressed this in a previous interview. I think it would probably be good, especially as we’re getting towards the year, to sum it up and to answer this question again for the “This Needs to be Said” audience. |
| Peter Daigle: | Sure. It’s a great question and I’m going to try to make it as simple as possible, even though there’s quite a bit to it. I think I can give everybody a good sense. In Chapter Seven you essentially wipe out all of your what’s considered unsecured debt. Credit card debt, medical debt, utilities, and you retain all of your secured debt. That’s your car loan, your mortgage, and you also retain student loans. It discharges 100% of all of the unsecured debt. What it doesn’t do is it doesn’t solve problems if you’re behind in your mortgage or if you owe the Internal Revenue Service money recently or if you’re behind in your child support. It doesn’t cure those problems.
To cure those problems you need to file what’s called a Chapter 13. In a Chapter 13 you can also get rid of your credit cards, medical, utilities, but you get an opportunity over a period of either three or five years to pay back your deficiencies on your mortgage if you’re behind or the IRS or your child support or anything else you’re behind on. It allows you to play catch up by sending one check per month to the bankruptcy trustee who will distribute that check to the different interested parties like the IRS or your former spouse or your mortgage company. It keeps them at bay, so to speak, as long as you’re making the payments. |
| Katherine: | Okay, good. It depends on what it is that you’re trying to achieve. Talking with someone like Attorney Daigle will help you know the best option to go. |
| Peter Daigle: | Exactly. |
| Katherine: | Excellent. Excellent, excellent, I think that was a good summary. If you file you’ll lose everything you own. That is one of the questions that someone sent. Is they believe that if they file they’ll lose everything that they own. |
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| Peter Daigle: | Okay. There are two types of assets that you have. One are called exempt assets and then there’s non-exempt assets. Examples of exempt assets are all the things that you need in your life to live comfortably; your home, your car, your furniture, your jewelry, your retirement account, your clothes. Those are things that you need. As long as those things aren’t exorbitant or luxury then you get to keep them basically. In other words, you would exit the bankruptcy maintaining all of your essentials in life.
If you have things that are luxury or extraneous. For instance, if you owned a chunk of land somewhere in addition to your house or you had just inherited some money, things that you probably wouldn’t need to file bankruptcy anyway for. If you had expensive items not necessary to sustain your life then those items could be subject to what’s called the bankruptcy estate in which that money can be used to pay creditors with. If you look around your home and everything you see, and you drive, those assets are exempt. |
| Katherine: | Okay. Next question. You’ll never qualify for a loan after filing. I think that is an excellent question because you think about the word bankruptcy or any time … Even when we played games as a kid you were going bankrupt that means … Going back to our second question that we had today, was that you lost everything, at least that’s what you feel like. Now I’m thinking about, “Okay, what is life after bankruptcy?” About applying for a loan and we’ve talked about credit cards at length. The next question is, they believe that they would never be able to qualify for a loan after filing. |
| Peter Daigle: | Okay, so let’s talk about two different types of loans. One, are mortgages, house mortgages. The house mortgage under the federal guidelines for federally backed loans is 24 months so you would qualify at the end of two years. You could walk into a local bank, apply for loan, and you would not be denied as a result of the bankruptcy if you wait two years or 24 months from the date of discharge. Most of the loans that are sold, obtained today through mortgages are backed by the government so you’d apply for those loans. Individual banks are different but it’s generally two years across the board.
In terms of obtaining credit card debt, credit cards, again, and other types of credit card, you should be able to rebuild that immediately upon your receiving your discharge in bankruptcy. Some of the initial cards that you’re going to get are going to be secured cards. I know Capital One, MasterCard, they have secured cards where you put $300 in an account and you may get a $500 credit limit. Those are the types of cards that you’ll start off with and you’ll be able to do it immediately upon filing. Each month as long as you pay on time they will report favorably to the credit bureaus saying that you paid on time. You’ll be able to use that, those good marks that you’re now receiving to increase the limits on the credit card. You go from a $500 card and then the limits come off and then all of a sudden you get approved for a $1,000 card and then a $5,000 card and up it goes. That process rebuilding your credit starts immediately after you get your discharge. |
| Katherine: | Okay, excellent. Thank you for that. If you file Chapter Seven Bankruptcy, are all debts wiped clean? I’m not quite sure how they’re meaning that, wiped clean. |
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| Peter Daigle: | Okay. Well, let me you what’s not wiped clean. If you owe a former spouse money for alimony or child support that’s not wiped out. If you owe student loans that’s not wiped out. If you owe the Internal Revenue Service, the federal government or the state government within the last three years, that’s not wiped out. If you’ve got some mortgage arrears or car payment arrears, that’s not wiped out. If you want to keep your car, you want to keep your house, you’ve got to be able to make those payments, so they’re not discharged. Everything else is dischargeable. Credit cards, utilities, cell phone bills, medical bills, if you owe family money or friends money or anybody else that’s out there you can discharge those debts, those are wiped out. |
| Katherine: | Now, this last one I think really gets more into either the moral or the emotional part of what people go through when they’re filing bankruptcy. They said, only losers file for bankruptcy. They want to know is that true or false. |
| Peter Daigle: | Well, I would say that nearly everybody who comes to me comes to be because there’s an event that’s occurred in their life outside of their control. Somebody’s lost a job. A spouse has passed away. They or a family member’s gotten some serious medical issues. There’s been an event that occurred in their life and from what I’ve seen it happens to a lot of people over the course of their life, that is a little bit of we’ll call it a speed bump. It’s generally for an event that they don’t, necessarily responsible for, that they pay their bills on time and the next thing you know they’re laid off.
Very rarely do I get somebody who just decides they want to be irresponsible and not pay their debts. It’s generally some type of an event has occurred that pre-dates it. I think that give everybody a little bit of a break here and know that to call somebody a loser for filing bankruptcy it could happen to you or it could happen to a close person. You could have an event in your life that could set you back that’s unexpected, so I hope I could answer it. |
| Katherine: | It’s not an automatic thing; it doesn’t make you a loser. |
| Peter Daigle: | No. |
| Katherine: | What’s another way … What do you say to help people feel comfortable about this process? They are probably coming to you after they are at the end of their knowledge or at the end of themselves and they’ve waited probably to the last minute. It’s just not one of those things that, “Oh,” like a fire exit. Okay, if there’s a fire exit the building this way. By the time they get to you I’m sure they’re pretty distressed. |
| Peter Daigle: | I think for the most people they want to do the right thing. Nearly everybody that walks in here has been trying to do the right thing. They’ve been paying minimum payments for years a lot of times on credit card debt. The amount of the charge, initial charge, has long been paid off and all they’re doing is paying interest on interest to the balances. For the most part, people have done everything they can do. I see folks that have exhausted their IRAs, their 401k’s. They’ve borrowed from family. They’ve done everything possible to not come to my office. Unfortunately, they should have come to me earlier. Before they start going to family members and raided their retirement accounts they could have gotten rid of this debt. Really, most of the debt that they’ve been paying is going to pay interest on credit cards for companies that can well afford to write it off. My advice is to kind of … |
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| Katherine: | What do you say to get them comfortable once we’ve gotten to, “Okay, they’re coming out of desperation.” How do you get them to calm down? |
| Peter Daigle: | Well, to sort of say there is a life after bankruptcy. They think that just coming to me is sort of like the end of the line and that life’s never going to be the same. I think that there are misconceptions out there about what a bankruptcy discharge means and how your credit’s affected and how your life goes on. I think maybe from … It’s more in elderly people than younger people too. They have this preconceived notion that I need to pay this off no matter what. That human feeling of I failed is pretty powerful. It’s just sort of letting go and saying, “You know what? I just, I need help here, I can’t do this alone.”
That’s what the laws are all for. They were designed so that you would be able to get a break, catch a break. A lot of the folks that are out there anyway just living week to week. Being burdened with all the additional debt, especially when they have children or expenses to pay, it hard. I don’t know, you got to give yourself a break and just say, “Oops, well, don’t be so hard on myself.” |
| Katherine: | Absolutely. Absolutely, absolutely. Peter, how can they get in touch with you outside of “This Needs to be Said?” Are you still giving out a copy of your book? |
| Peter Daigle: | I am. If you want to get a copy of my book you can go to daiglelawoffice.com, lawoffice.com. Daiglelawoffice.com. that’s D-A-I-G-L-E law office.com or you can call me on the phone at 508-771-7444 and we’ll get you out a copy. |
| Katherine: | Awesome. Thank you. As always, it’s a pleasure having you on “This Needs to be Said Health” and answer the questions of the audience. Until next time. Have a wonderful day. |
| Peter Daigle: | Thanks, Katherine. Bye bye now. |
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