Chris Migliaccio “…finds satisfaction in helping others find a fresh start.” In the below interview he answers everything form basic bankruptcy questions down to how bankruptcy can affect lawsuits and judgments against you. Find answers to your questions below.
Interview Table of Contents
Why you Should Hire Chis Migliaccio to Handle your Personal Bankruptcy Filing
Interviewer: If I am going to file bankruptcy and hire you as my bankruptcy attorney, do I first have to disclose everything to you? Will you then point out any potential problems I am going to have in court?
Chris: Yes, that is 100% correct. When I work with my clients, we do what we call hypothetical bankruptcy. After we draft all the paperwork and petitions on all the bankruptcy schedules, we invite the client to come in.
We go over every page of that bankruptcy petition and schedules. We go over all the questions that you will be asked in 341. We review all the assets to see if there are any potential issues with maybe having assets liquidated from your estate; or taken by the trustee. So, 99% of the time we will know, before we even file the case, about any issues you may have; any potential assets the trustee may request that you hand over.
So you are absolutely correct. We can do that beforehand. We have people come in and we do the hypothetical bankruptcy.
Interviewer: That is a big reason to hire an attorney versus trying to do it yourself. If you do it yourself, you may be ripped to pieces by the court.
Chris: Yes, you are absolutely correct. That is a good point. This is what we do. The bankruptcy attorney files bankruptcy. I would not want to touch bankruptcy unless I spent years learning about it and knowing all the little rules you need to know to keep yourself out of trouble.
I take the same approach with things I do not know how to do. An example is my car. I do not try to fix my car or change the oil; or anything like that. This is because I do not have any experience doing such work. Frankly, if I tried I might do more damage to the car.
With bankruptcy, it is good to go with an attorney just to protect yourself. We will help you avoid all the mistakes. Also, it is a very stressful process. Learning something new can be very stressful, especially when you consider that an error can get you in trouble with the bankruptcy court.
Interviewer: What do your clients tell you, once they hire you, is the reason they hired you? What is the feedback from clients regarding why they like you?
Chris: Clients typically give me positive feedback on communication. I do not want people to just blindly have me file bankruptcy for them. I want them to have a basic understanding of what we are doing and what impact it is going to have on them.
I want them to understand, and I want to stress to them that this is going to give them a great new opportunity. So a lot of times, I hear from clients that they feel things have been made clearer to them. They understand all the different options they have.
If you listen to the radio, or just basic media, people are not aware of all the rights they have regarding debt issues. Most of my positive feedback comes from just being a good communicator and trying to help people understand exactly what they are going through.
How Often Can You File Bankruptcy?
Interviewer: When can you file for bankruptcy once you have filed already, under both chapters?
Chris: Typically, if you filed a Chapter 7 and received a Chapter 7 discharge, you will have to wait about eight years. You have to wait eight years in-between. If you go from a Chapter 13 to another Chapter 13, you will have to wait about four years to get a discharge. Those are some of the basic ideas.
Note: Chapter 13 is a bankruptcy that sometimes you can file for reasons other than getting a discharge. This is because it helps you keep property, like a house. Sometimes clients file Chapter 13 knowing they are not going to get a discharge; but because they want to keep property.
For instance, if they went in to get a home modified but fell behind on the mortgage and need to save their house from foreclosure, they may file a Chapter 13 to give them an opportunity to catch up on the mortgage.
How Does Bankruptcy Affect Lawsuits And Judgments Against You?
Interviewer: Can you discharge judgments in bankruptcy?
Chris: Yes, bankruptcy is a very powerful tool. If you are getting sued and file bankruptcy, you just provide notice to the court. Then, the case is typically stayed, which means stopped or paused. Very shortly thereafter, the case will get dismissed by the plaintiff or the creditor. So it kind of cleanses everything.
One of the great things about bankruptcy is it typically allows you to consolidate all your financial issues. If you are sued by three different people, you can fight three different lawsuits with three different attorneys; or you can file bankruptcy and give notice to everyone.
All three cases have to go to the bankruptcy court where they probably will not get what they want. In addition, you do not have to deal with three cases. So it is a very effective tool in dealing with lawsuits and judgments.
Interviewer: What if you have an old judgment? Can you get some of it taken off if you file bankruptcy?
Chris: The judgments themselves are dischargeable. At times, you do have to go in and do some additional paperwork to get the judgment removed from your credit report and the record. But the judgment itself, which can linger on your credit report for many years, becomes essentially ineffective against you in most cases.
In Texas, we do have friendly laws. You are not allowed to garnish people’s wages unless you are the Attorney General collecting child support or the IRS collecting taxes. But one of the main tools creditors use here when they get a judgment on you, is they try to get the money by garnishing it from your bank accounts.
So if you have a judgment from 2005, you always, every day, have to worry about the creditor finding a way to freeze your bank account and take any money you have. Maybe the day after you get paid, they do it. You could lose several thousand dollars. However, bankruptcy takes care of that. You disclose the judgment, and that judgment typically will be dischargeable.
Interviewer: Does that mean they will knock it out and you will not need to pay it anymore?
Chris: No, you will not.
What Debts Can You Erase Through Filing Bankruptcy?
Interviewer: Besides credit card debt, what are the other common debts people have that bankruptcy can get rid of?
Chris: Most of the typical debts that bankruptcy can help discharge are medical bills and credit cards. If you ever had to return a car and got a deficiency against you when they sold it at auction, then that is something they can come after you for. Those are what we call vehicle deficiencies.
If you had any personal loans, or were in a car lease and couldn’t afford it anymore and had to return it, sometimes you can discharge taxes. However, there are very specific criteria for that. But there are some income taxes that are dischargeable.
A big misconception is secured debt; for instance, your car or house. Technically, you can discharge debt associated with it through bankruptcy. But the only difference between that and maybe an unsecured credit card is that the secured creditor, let’s just say the mortgage company, has recourse. They have a security interest in the house.
So if you decide that you can’t pay and you want to discharge that in bankruptcy, they can’t come after you personally. But they can take back their house. Still, the main thing I want to point out is that the mortgage itself can be discharged.
Some of the debts that typically are not dischargeable are child support and alimony; which are basically never dischargeable. Some of your income taxes, as well as student loans, right now do not have any significant discharge abilities.
Interviewer: Let’s define secured versus unsecured debts. Secured means there is collateral that can be taken and sold to pay off part of it. Unsecured means there is not such a thing, right?
Chris: Exactly; it is like when you go to buy a car. You sign a document that gives the car financing place a security interest in the car. In the event that you do not pay your car note, they can exercise taking back the car; taking the collateral back. Once they take that car back, there is no more collateral. It becomes an unsecured loan to you.
With a credit card, you are just signing a promise to pay. If you do not pay, right off the top they are not going to take any property from you, unless they sue you. However, that is a whole other story.
What Assets Can You Keep When You File Bankruptcy?
Interviewer: This plays into misconception, but on TV when someone files bankruptcy in cartoons they are naked with a barrel around them. However, you are saying that you can keep certain assets in bankruptcy. What can you keep and what will you lose in bankruptcy? What are the exemptions?
Chris: For assets, typically you can keep your house; and in most cases you can keep your cars. If you are a household with two parents- husband and wife- who each has a car, you are probably going to be able to keep both cars. The trustee very rarely is interested in any of your clothing, or any of your household items.
Things that are not exempt are rare. But sometimes if you have a vacation home that has equity in it, that could be something that is not protected; as well as a boat, a fancy coin collection or really expensive jewelry.
I will tell you, probably 90% of the time or more, you can typically protect all of your assets. People just do not have this extra stuff. There are a very small percentage of people who do. However, in my experience most people do not have assets the trustee is really going to be able to get his or her hands on.
Interviewer: So it is not like in the movies where they take everything from you. They will not come to your house and try to take your TV, clothing or jewelry; unless it is really nice jewelry.
Chris: In my experience, no, that is not going to happen. If that happens that means there is something else and more to it. You must have something really valuable in your house that you are hiding. However, if you are just an average Joe, you have personal items and there are exemptions to protect that stuff.
What is the Cost to File Bankruptcy?
Interviewer: Filing bankruptcy essentially means you have no money. Yet, there is a charge to file. Obviously you cannot work for free. What is the average cost to file the different forms of bankruptcy available to people?
Chris: Well, there are different prices depending on your situation, of course. To address the “have no money” comment, people file for bankruptcy not necessarily because they do not have money. They typically find themselves filing for bankruptcy because they cannot afford to cover the budget which is being presented to them at a certain point.
One of the reasons I love practicing bankruptcy is that I can take a person who has a budget that should be really good for them- meaning they have enough money to pay bills including their mortgage, rent, utilities, food, car and medical insurance- and work so they have a budget that leaves them in a good situation that they can afford.
What they cannot afford is the $2,000 worth of credit card minimum payments that they have to make every month. That is what is killing them. So that is what bankruptcy can do. It is not that they do not have money. It is just that they do not have that much money left over to realistically pay these credit cards back.
Again, it is not that they have no money. It is just they cannot afford to pay the cards. The budget is just upside down. If they can just eliminate some of these unnecessary debts, then their budget is going to be positive and they will have money.
Interviewer: What is the cost to hire a bankruptcy attorney?
Chris: Well, the two bankruptcies that we practice here at Warren Migliaccio are Chapter 7 bankruptcy and Chapter 13. For Chapter 7, you are going to find the prices range between $1,500 and $2,500. It is pretty much within that scale. So I encourage people not to focus on the price as much because it will all be within the same ballpark.
This is what I stress to people: When choosing a bankruptcy attorney, you really need to look at them and consider if you work well with one particular attorney. You will be going through a potentially stressful period of time in your life where you are really trying to put yourself in a better position. You will want someone you feel comfortable communicating with.
So do not go with one guy just because he charges $50 less than the other guy. Go with the guy you feel comfortable going into war with; someone you feel comfortable calling and asking questions, and someone that you work well with.
I always tell people to meet with one attorney, or meet with several attorneys. However, pick the one you are most comfortable with. Do not pick on price because price is not as big an issue with bankruptcy as it would be with other areas of law.
For Chapter 13, the court pretty much sets the rates for what attorneys charge in this area. Right now, that is anywhere from $3,000 to $4,000, depending on the case.
Interviewer: Instead of looking at this as knowing you have to pay, isn’t bankruptcy an ironic way to investment? Let’s look at it this way: You are investing let’s say $2,000 in this process, but you are getting a return of maybe forgiving $30,000, $50,000, maybe $100,000 of debt. It is like an investment, in a weird way.
Chris: In a weird way, it is. That is definitely something to consider. Just earlier today, I spoke with someone who had about $42,000 worth of credit card debt between husband and wife.
Our fee will be in the $1,500 to $2,500 range, probably closer to $2,000. That is the amount of money we take; while going through other means to pay that $40,000 plus interest back would be pretty high.
Paying $2,000, assuming they do everything correct, is going to discharge $40,000 plus interest in unsecured debt that was doing nothing for them. It was acquired because of medical bills and things that happened in life that they didn’t expect to happen. So absolutely, it can be an investment in making your life better in the future, and getting you a fresh start.
Interviewer: I see how it could save you and essentially push you forward years, financially. If you have a $60,000 debt out there and this can wipe it out, that is saving you years and years of work. If you didn’t have good financial habits, it may be saving you 20 years of trying to pay that debt; and you never will.
Chris: That is true. It is saving you so much time, and I have not even calculated how much time. However, let’s take the $60,000 worth of debt that you mentioned. Most people are unable to afford the minimum payment; or maybe afford the minimum payment and a few extra dollars.
What is that? You are looking at years. It is not an option. At some point, it is just not an option to try to pay those credit cards back. It is just a matter of when you hit the point where you just can’t afford to pay these bills.
Then you are not going to have the choice to file bankruptcy. You are going to have to either file bankruptcy or deal with lawsuits and judgments that will come your way. A lot of times, it is a matter of being able to foresee what is going to happen and looking at the numbers.
I make $40,000 and I have $50,000 worth of credit card debt. Mathematically, I am not going to be able to pay that back unless I either get a job paying triple what I make; or I win the lottery. You cannot live your life banking on those things.
So you have to make a decision: Do I just get myself a fresh start so I can be healthier for me and my family; or do I wait and hope for something to change? Well, doing nothing, most of the time, changes nothing.
At some point, those interest fees are going to get a little too high and you are not going to be able to make that minimum payment. Then you will be in a situation where you have to do something; not where you can control it a little better by being proactive.
What Kind of Person Files Bankruptcy?
Interviewer: I don’t know if it is a myth, but I have heard that most people who fall into bankruptcy are just trying to beat the system and stick it to their creditors. Is that your experience? What kinds of people file bankruptcy?
Chris: No, that is absolutely, in most cases, false. When people normally find themselves in bankruptcy, it is due to some kind of extra-curricular event in their life, such as loss of a job.
Some people have surgeries that are not covered by their insurance, and they just cannot afford to pay. Some people have family members that they have to help, and they use all their reserve funds to take care of them. Then they run into a situation financially where they need their reserves but they do not have it there anymore.
There are many different reasons why people find themselves struggling financially and needing bankruptcy. In my experience, I find that most of the time people have gotten there because they were just trying to either help others; or just trying to get through everyday life challenges.
Interviewer: I guess the immoral debtor is probably a myth out there. Are you saying that is slim to none?
Chris: I would say it is slim to none. It does exist, but I talk to people every day about this. For the most part, it is people who feel bad about not being able to pay their debts. There always seems to be something; whether a job loss or anything relating to health.
There are even people who try to modify their mortgages, but the mortgage company takes advantage of them. The next thing they know, they are six months behind on their mortgage. Those are the people I talk to who need bankruptcy these days, for the most part.
Who Will Know That I Filed Bankruptcy?
Interviewer: How public is bankruptcy? Will your friends and family find out?
Chris: That is a good question. Bankruptcy is a public event. You are not required to tell your parents, unless your parents are creditors. It is on a public database, but I will tell you this public database is not something like Facebook or Twitter; even Gmail.
People do not go onto this account, unless you are a bankruptcy attorney, trustee, or really into bankruptcy. You are not going to go onto this system called Pacer to look and see who filed bankruptcy.
Again, the answer is it is a public event. However, unless you are a creditor or an ex-spouse receiving child support, you are not going to typically have reason to find out unless the person who filed decides to tell you. That is the answer there.
Interviewer: Will my friends know?
Chris: They will not necessarily know. In most cases they do not need to know, unless they are doing some kind of spy mission on you. They would have to get a membership to this online system. Then they would have to look the case up and understand the docket language. So I venture to say, no.
Now, if you owe a friend or family member money, then they will find out. This is because you are required to disclose your creditors, and anyone in the world who you owe money to. So if you owe your buddy $1,000 and he expects you to pay him back, you need to include him in the bankruptcy. He will get something in the mail saying you filed bankruptcy.
However, for the most part, friends and family that you do not owe money to would probably have no reason to know that you filed bankruptcy; unless you told them.
How Are People Affected When Their Bankruptcy Case Is Resolved?
Interviewer: Before they file, people are often ashamed. After they file or after their case is resolved, do they feel better? What changes do you notice in people?
Chris: This is one of the things that I take as a personal challenge. People are very emotionally stressed when they are beginning the bankruptcy process. All along the way, I try to make them calm and let them know, “I know it seems hard, but I have done this for a lot of people. I can tell you what is probably going to happen, and you are going to be okay.”
However, for the most part, until the case is over there is always going to be a little bit of timid-ness. But afterwards, people become more relaxed. They realize they will be able to get a loan if they really want a loan.
If they need to buy a car, they will be able to find a car. If they really want a credit card, they might be able to get a credit card. Although, I advise clients to only get a credit card to build credit; not to get back into bad habits. I advise clients to use credit cards as little as possible afterwards.
But most of the time, my clients feel relief. This stuff keeps people up at night. There is guilt associated with it. So my goal is always to make people get a better night’s sleep after or during the bankruptcy.
Interviewer: Can you safely say, at least under certain circumstances, that filing bankruptcy may be the best thing someone ever does for themselves financially?
Chris: From a financial standpoint, the answer is yes. This is because, believe it or not, a lot of people are in bankruptcy because they have helped others. Perhaps it is a child; or they had a medical issue they struggled through; or they have gone through a nasty divorce. Things are not necessarily people’s fault. Things happen in life.
Life happens, and we get behind. Then, it starts to deteriorate your life. It starts to break you down financially, and you are not living your best life. However, bankruptcy allows you to responsibly deal with debt.
We tell our kids to face their problems. Do not ignore them; face them. Bankruptcy is basically your way of facing a problem. Once you are done facing that problem, you can realize all the freedom you had.
You typically will learn how to be on a better budget for yourself that is not going to get you in trouble. It can really blast you off to a great new start financially. Frankly, that is why I practice bankruptcy; because I enjoy being a part of that process.
I enjoy taking people to that point in time where they really do get to start over; where they get that new beginning. That makes me feel great, and gives me great gratification.
When is the Best Time to File Bankruptcy?
Interviewer: How long does it take someone in their life to reach a decision to file? It does not sound like a quick process. Does the decision stew in their minds for a long time?
Chris: Yes, it depends. There are different types of people. For instance, take a person who has a lot of credit card debt. The first big step they need to typically take is accepting the fact that they can no longer afford to make those minimum payments; and still have food on their table and pay their rent or mortgage.
So they actually have to go through a very immensely challenging process of not paying their credit cards. That can be very difficult for some people. Some people just have no problem not paying, because they know at the end of the day they cannot afford it. However, some people wait months or even years too long before they decide, “Okay, I just can’t afford this.”
That is normally one of the first big steps. Depending on the person, sometimes he or she will come to this decision in a couple of months. Sometimes it will take two years. So a lot of it has to do with the makeup of the person. There is a lot of emotion and guilt involved, so there is quite a difference in range of time.
Interviewer: Can you take too long to file for bankruptcy; or is it better to take as long as possible and file as a last-ditch effort?
Chris: A lot of it has to do with your personal situation. The way I look at it, in most cases if you are considering bankruptcy it is probably best. You probably need bankruptcy already if you are considering it, if you have financial issues.
From a pure numbers standpoint, it is probably better to file right away. However, again, sometimes people need to go through the steps of preparing for it mentally and emotionally. So whatever you need to do to rid yourself of the guilt is a huge factor in how long it takes. It does not take too long. There is no timeframe.
However, I would say that if you are having financial issues, the number one thing you need to do right away is stop listening to what people say. Start researching and educating yourself on what bankruptcy is and what your options are.
Does Filing Bankruptcy Stop Harassment By Creditors?
Interviewer: There are creditors who call every single day; calling people at work, hounding them and making them feel bad. When you file bankruptcy, do creditors have to stop calling you?
Chris: Yes, and it is not an option. They have to. When you file bankruptcy, again, you disclose all your creditors. They receive notice in the mail or via email, or however their system is set up, that you have filed bankruptcy.
Basically, the federal stay is placed on everybody, which means they are no longer allowed to continue any collection efforts. This includes calling you, suing you, sending you nasty letters, or anything like that. That all stops. That is typically an immediate impact.
Now at my law firm, as soon as we start working for you we try to block these people from you. There is no reason they should get in the way of us executing a really good plan for your financial future. So when clients sign up with us, we tell them, let’s find out who these creditors are and get them to stop calling you.
That is done with a very easy phone call or letter sent from our office. So we can typically stop those, before we file. Certainly after you file, if someone is calling or contacting you trying to collect a debt, they are breaking the law. There are consequences for that, and so that does not happen very often.
Interviewer: Do you recommend people pull their credit reports and comb through to see if there is anyone they missed or should include on their list of creditors?
Chris: I do not just recommend it; I actually require it as part of our process. We have special software that we use to check people’s credit reports to make sure we get everybody we need to.
We find that is the best way to be due diligent. Typically, we pull your credit report from our software. We share it with you; let you have your copy. Then we ask you to review your own notes.
Some things do not appear on your credit report. Your brother’s loan of $1,000 probably is not on your credit report. However, you still need to disclose it. Sometimes medical bills are not on your credit report.
We find that using the credit report is a good starting point for determining who you owe money to. Then it is just a matter of, “Who else do I owe money to?” You are building on that list, rather than blindly trying to figure out all the people you owe money to.
How Do You Prepare to File Bankruptcy?
Interviewer: Financially, what should you do to prepare for bankruptcy? Should you close your credit cards?
Chris: That is a good question. If you are considering bankruptcy, it is almost a mandatory time to immediately stop using your credit cards. At the same time, stop paying the credit cards. What you really have to do is change your habits.
You need to start, I call it, pre-paying for life. That means instead of paying the credit cards off, or paying the minimum payments on the credit cards and re-using them, you do not pay the credit cards. You pay yourself. You put it in a checking account. Then, instead of using the credit cards, you use your debit card.
You try to get ahead of the system by eliminating the need to use credit cards. A lot of times, when you stop making payments on credit cards, you can use the excess funds that you save every month to pay for things that you would have used the credit cards for in the first place.
So that is one of the first big things that people have to typically do when they are considering bankruptcy.
Interviewer: Will the court just try to take away any excess money that you have? How do you do it right, without causing trouble?
Chris: Well, a good percentage of the people who have to file bankruptcy do not have large sums of money in their bank account. I am not addressing retirement. That is something completely different. With money just in their checking and savings, for the most part people are living paycheck to paycheck.
If people have some money in their accounts or some assets they are worried about losing, you need to get educated. In most of my Chapter 7 bankruptcies, my clients are not losing any assets. There are exemptions provided by the State of Texas, as well as federal exemptions that help you protect most if not all of your property. So, in most cases, you are not going to lose any property.
Interviewer: What are the common mistakes people make that actually impact and hurt their ability to file bankruptcy?
Chris: One of the worst things you can do is a lot of cash advances from your credit card, because that can affect your ability to discharge that. A lot of times, people do that to try to avoid bankruptcy, because they want to be able to try to make the minimum payments or keep up with their bills.
In bankruptcy, there is a lot of paperwork involved. There are a lot of disclosures. When you are preparing for bankruptcy, it is very important that you give your attorney all the information they request.
It is a common mistake to not give your attorney all requested information in the very beginning. It will come up later in your bankruptcy case, and it can cause you a lot of problems.
A lot of people feel guilty. They do not want to disclose some things because they are worried the trustee or their attorney might say, “That is not good.” In most cases, it does not matter.
Interviewer: Specifically, what things do people tend to want to hide that will cause them trouble?
Chris: People may have money in a bank account that they do not want to disclose. Well, in a lot of cases you can protect a certain amount, depending on other assets. You can protect a few thousand or several thousand dollars in your bank account. Meanwhile, people think, “I don’t want to lose this $4,000, so I am not going to disclose it.”
Interviewer: Do they think, “This $4,000 is all I have. If I lose this, I can be completely screwed?”
Chris: Yes, they just make assumptions that they are going to lose it. It turns out, if they had disclosed it to their attorney, their attorney could probably have used an exemption to protect it in many cases.
Instead, they end up not disclosing it and getting in big trouble with the bankruptcy court. That is essentially fraud; not disclosing it. So you are basically in a situation where you are not disclosing something that would have been protected either way.
That is one of the reasons why it is very important to disclose everything. That is one of the big mistakes that some people make when they are considering bankruptcy.
Interviewer: How long before you file do you need to watch what you are doing and not make any big financial moves? How many months or years, before you file?
Chris: Well, the bankruptcy court can go back as far as they want to, if they feel a need. However, in the paperwork itself they focus a lot on the last two years, or 90 days. I tell clients: When you are considering bankruptcy or you have made that decision, you have to stop using the credit cards. You also have to stop paying the credit cards because that can cause you problems, as well.
Most of the time, bankruptcy just happens and you just disclose whatever you did in the last couple of years. There is not a problem; unless you are actively planning on utilizing bankruptcy in a bad-faith way. Unless you are doing that, you really do not have to think about it too much, up until filing.
Interviewer: You said they may look back a year or two years. So how would you ever know a year beforehand that you are going to file? You may do stupid things. Are you saying it doesn’t really come up? Or is it really the last 90 days that are most important? How do they look at it?
Chris: Let’s say you want to file bankruptcy now, but a year and a half ago you bought a TV on a credit card. If the bankruptcy court can somehow determine that you intended on filing bankruptcy a year after you bought this TV, that could be presumed to be a non-dischargeable debt and also get you accused of fraud in that case.
Let’s take the same example. I am living the American dream. I buy a TV on credit, and a year and a half later I lose my job. Three months later, I need to file bankruptcy. When I bought that TV, I did not have the intent of filing bankruptcy to try to eliminate the credit card account that was associated with the TV. So that is the difference.
It is the intent when you do it. So, for the most part, unless you are scheming like the individual in the first example, you do not have to worry about it. But if you are scheming, that is what the bankruptcy court can do when they investigate your case.
So you do not have to worry about everything you did, but you have to be able to disclose it. The key is good faith. If you acted in good faith, then you will be okay. If you did not act in good faith, well then you justifiably will have problems.