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Listener Questions on Bankruptcy – May 2016 Interview

Katherine: Hello everyone. We’re getting ready to talk with attorney Peter Daigle. We’ve been talking bankruptcy for a while now with him and he has given us a wealth of knowledge. Now the listeners, you all have submitted some things to me, some questions you had, and I didn’t want to claim I knew what I was talking about so I definitely sent them to Attorney Daigle for him to answer for us. Although I’ve been taking notes every time he and I speak, there’s always something I don’t know to consider. Instead of me guessing and giving you wrong information, I’ve shared those questions with Attorney Daigle and he’s going to give us some answers.
Please understand that these are general answers. You can always contact him for more specifics on your particular situation. He’s going to give you some information and move you in the right direction. By the time we finish, he always lets us know how to get in touch with him outside of This Needs To Be Said as well as how to pick up a free copy of his book if you haven’t already done that, The Truth About Bankruptcy in Massachusetts. Attorney Daigle, thank you so much for joining us again on This Needs To Be Said. How are you?
Peter Daigle: Oh, great, Katherine. Thank you so much for having me. I look forward to this every month.
Katherine: I want to go ahead and get into the questions that the listeners have shared with us. The first one here on the list is, “I feel like I don’t own anything. Is bankruptcy for people who just have debt and no assets? How does that work?” What I’m gathering that this person’s talking about, I’m working on my will right now which is a different topic.
Peter Daigle: Right.
Katherine: When you look at your will you’re saying okay, list your assets. What is that? What if you don’t have anything right now to list? If a person is thinking of bankruptcy not being an option for them, do you find that people are ruling out this even being an option for them because they don’t feel like they have stuff?
Peter Daigle: Well, I mean, everybody has something whether it be clothes or furniture for the most part, a computer or an automobile. To start with, bankruptcy protects all those assets. Even if you were to have assets then those assets are protected, things that you normally have in life. Your stuff so to speak. The reason to file bankruptcy is so you can move on in your life without debt and then acquire assets. Even if today you don’t have any assets and you have a lot of debt, it makes sense to shed the debt so then as your life gets better you acquire assets then creditors aren’t coming after you.
Katherine: Okay, okay. Well good. I’m glad we did have that question on here because for a person who feels like they don’t own anything, you just clarified, you have stuff.
Peter Daigle: Everybody has stuff. Everybody I know has something. It just kind of gets you a fresh start. It gets the creditors from you. Bankruptcy just gives you that fresh start. You may not have any assets but you don’t have to have any debt either so you’ll be basically at zero. Really otherwise you’re on the negative. You have debt and no assets. I think it’s more of a comforting feeling to say you’re at zero than minus.
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Katherine: Um-hmm. I want to skip to one other question, not the one that’s directly on the list here.
Peter Daigle: Sure.
Katherine: This brings me to, “The bankruptcy keeps appearing on my credit report. I feel that people are looking at my credit report and not allowing me a chance to explain. How can I explain if not allowed?” Going back to our first question here, I think this question fits into the thought process of a person and bankruptcy.
Peter Daigle: The first thing you have to look at is where are you at within your life. If you have enough money to pay off your creditors or you earn enough money to afford to buy items and pay for them with a credit card, then you don’t need bankruptcy. Bankruptcy is there as a last resort if nothing else is working. If you’re not going to inherit any money or can’t earn your way out or you don’t have the assets. It’s a matter of whether or not you need to file them on. The credit report is secondary.
With the credit report, even though it’s going to report that a bankruptcy has been filed, if you’re in a position when you need a bankruptcy the chances are your credit report has got all kinds of problems anyway, late payments, repossessions, foreclosures, charge offs. You’re going to have pages and sometimes pages of negative reporting information. Where at least when you have the bankruptcy you just have the one item.
It’s really not any different whether or not you have all kinds of charge offs and delinquencies versus the bankruptcy, at least from someone looking at it. It really only takes a year to get the credit report back up to … where you can get up to as high as 720 which is what we do. We rebuild people’s credit here. If you came to me and you had to file a bankruptcy, in 12 months you’d have a 720 credit score and no negative, no derogatory comments on your credit report other than the bankruptcy but your credit score would be high enough that it would overcome it.
Katherine: That’s important to know. I’m glad we did have that question because I think I haven’t asked you that before so I didn’t know. I did not know that. Well, good, good, good. Working with you not only gets them back to a zero balance but over the course of 12 months they can probably end up in a better place than they were …
Peter Daigle: They will.
Katherine: … before they went into all of this spiraling out of control for sure from the bankruptcy..
Peter Daigle: Most of the people coming to me, Katherine, have a credit score in the mid-500s. If you come to me with a credit score in the mid-500s and I clean up all your creditors and charge offs and all your stuff that’s on your credit report and you have a credit report score over 12 months of 720, there’s certainly a benefit to that.
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Katherine: Oh, absolutely. Now this question is about what all do they have to include? Do they have to include all of their property, retirement accounts, saving accounts, insurance policies in a bankruptcy?
Peter Daigle: Anybody filing bankruptcy gets to keep certain assets and exempt them. An exempt asset is something that is protected from the bankruptcy estate. Those items are generally what’s called your stuff. Your house, your car, your furniture, your jewelry, your clothes, your retirement accounts, your pets, your life insurance policies, the things, your home. Things that you need to go forward in life. It doesn’t include luxury items like a boat or a motor home or if you’ve got a lot of jewelry or if you have land somewhere or you have a second home. It doesn’t generally cover luxury items but it covers all the basics. All the basics are protected in bankruptcy.
Katherine: Okay, okay, good. We’re talking with attorney Peter Daigle and he has a book that you can go to his website and actually order, not download but order, called The Truth About Bankruptcy in Massachusetts. We’ll get to that in a moment. Our last question for today is, this caller or this listener says, “I filed bankruptcy and now no one will give me a place to stay. This is hard. I feel like I made a bad decision.”
Peter Daigle: A lot of times when people are running their credit in terms of a rental place, they’re really interested in what’s your rental history. If you have a rental history of not being a very good tenant, meaning that you’re skipping out on landlords and not paying judgments and having to be evicted, then possibly you may have a problem going forward but only because of your history as a tenant. However, if you got the first, last and security deposit or whatever they require, first and last, to move into a new place and your credit report has no negative reporting’s on it regarding prior evictions or whatever, then you should be able to get a property even though there’s a bankruptcy on the record.
I think the bankruptcy in fact, will actually make you a better tenant because you won’t have any other debt. You can go ahead and pay your rent. If you have a credit report with all kinds of charge offs and lawsuits and delinquencies on your credit and you’re looking to rent a place, I think a landlord could say, “Boy, I think this person’s having a hard time paying their bills.” If you’ve got a bankruptcy there, that means you have no bills, no debts, no creditors and then you can go ahead and start paying your rent on time.
Katherine: Then they need to call you so they can get themselves together.
Peter Daigle: Exactly.
Katherine: Attorney Daigle, I want to say thank you so much. I’ll forward this because that last question I wouldn’t even … Again, I didn’t know the answer myself. I wanted to make sure we get the right information because what it sounds like what you said is that they’re not really looking at the credit report. I understand that there are other agencies that do the rental history which is different from the credit report, right?
Peter Daigle: Right, exactly. If you are not a good tenant and you have a history of not doing what you’re supposed to do, bankruptcy’s not going to save you or hurt you. It’s really the rental history they’re going to be concerned about.
Katherine: Uh-huh. Well, that’s good to know. As we do about this time, let people know how to get in touch with you outside of This Needs To Be Said.
Peter Daigle: Sure Katherine. Thanks so much. It’s 508-771-7444, 508-771-7444 or you go to www.daiglelawoffice.com and we’ll get you out a copy of the book or if you have questions you can call me directly.
Katherine: Awesome. Until next month. Thank you so much.
Peter Daigle: Okay, Katherine. Have a good day. Bye-bye.
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