Frequently Asked Questions

1) Do I need a bankruptcy?

You need a bankruptcy if your debts exceed your income. Many people who have more money going out every month than coming in try to keep going with continued borrowing such as refinancing their home or paying one credit card with money from another. We call this the "robbing Peter to pay Paul" syndrome. All this does is prolong the problem by increasing the debt. In this case, bankruptcy is the best solution.

2) Do I qualify for a bankruptcy under the New Bankruptcy Law?

The Bankruptcy Reform Act of 2005 changed many things about bankruptcy, but the main change was the adoption of the median income test to determine whether a person qualifies for a Chapter 7 or is required to file a Chapter 13.

Chapter 7 simply eliminates all of your debts such as credit cards, loans, pay day loans, old landlords, medical bills, old car loans, and basically any other debt except most taxes, student loans, child support, property settlements from a divorce, and restitution. Chapter 13 is a three to five year repayment plan that is much more complicated and expensive.

If your family income is less than the median income for your family size in the state where you live, you qualify for Chapter 7. If you are over the median income, you can still qualify for Chapter 7 in many cases if you have certain extraordinary and necessary expenses such as child support, larger mortgages, or tax debts.

At Milwid & Schlosser, PC., the first thing we discuss with you over the phone is whether you qualify for Chapter 7 or 13 and provide a recommendation. We have found that over 90% of the people who contact us qualify for Chapter 7.

3) Why do I feel so bad about filing bankruptcy?

In all our years of practice, we have never had a client who wanted to file bankruptcy. People have an overwhelming feeling that they have failed, that they are doing something terribly wrong, and that the consequences in the long run will be bad. All people feel a strong moral obligation to pay their debts, and feel terribly guilty that they must consider bankruptcy as an option. These feelings are based on fear.

To understand this fear and the guilt that goes with it, you must look at the real causes of bankruptcies for most people. It is not being irresponsible or bad in some way, but it is being hit with some of the devastating problems that happen in life to everyone. We have found that bankruptcies are generally caused by certain life events that wreak havoc with your finances. They are: problems with unemployment or a loss of pay; health problems; problems with a child or elderly parent; divorce; problems with a small business; or, particularly lately, problems with real estate. These problems hit everyone you know at some time in their lives, but depending on your circumstances and timing, they can be devastating to your finances through no fault of yours.

In reality, bankruptcy is your legal right to relief from your debts. It allows you to stop being overwhelmed and dragged down by your problems. The creditors who you owe can often take a tax deduction in the year in which you file, and you get a discharge order that frees you from the debts forever. If you truly can't afford to pay, bankruptcy fixes the problem for everyone concerned. Also, in this fast paced economic world we live in, people can often reestablish credit and get back on their feet shortly after bankruptcy if they have or are able to get a reliable income source upon which to rebuild.

4) Will I lose everything if I file bankruptcy?

No. In Colorado there are fair and generous exemption laws that protect most people's necessary property like their home, their car, their retirement, their work tools, and their household goods.

In addition, you can generally keep your house or car in Chapter 7 if you are current with the payments when you file bankruptcy and remain so after the filing, and the property is insured. You can also return property if you can't afford it or don't want it without having to pay any additional money at all.

Bankruptcy is not at all an intrusive process. No one comes to your home or work to examine your property or bother you in any way. Most of your involvement will be working with our office as we steer your case through the system of the United States Trustee's Office and the Bankruptcy Court to obtain a discharge of your debts.

5) How do I get immediate protection from creditors before the bankruptcy is filed?

The process with our firm begins with a short telephone call where we answer your preliminary questions and set you for a free consultation appointment in our office. At the consultation we explain your options completely and describe the entire process from start to finish including the procedure and the cost. There is no cost for the consultation should you decide not to file, and no obligation to proceed whatsoever.

Most people who come in do need bankruptcy and elect then to hire us to be their lawyers by making a small down payment on the fees- the retainer- which allows them to IMMEDIATELY refer all creditor phone calls to us. If you can't afford to retain us immediately, it is an easy matter for you to drop by later and do so.

This referral of your creditors to us usually stops most calls within a day or two, giving you breathing room to prepare your case without unnecessary pressure from the creditors. Also, if creditors are planning to sue you, they often stop when they hear our name because they don't want to waste money on more lawyer fees for them if we are planning to cancel the debt in bankruptcy anyway. Our experience has been that after the referral has been made, everything calms down, and the bankruptcy can be processed in an orderly manner.

6) How much does bankruptcy cost?

There is a sliding scale for Chapter 7 bankruptcy fees in our office depending on the complexity of the case. While we can sometimes provide a close estimate over the phone, the exact cost (which includes all court costs) is determined at the initial consultation and a payment plan is worked out. Most people pay in payments as we do the work, and we have developed a payment arrangement over many years that allows folks facing bankruptcy to pay for the case in a manner that works best for them.