Chapter 7 Bankruptcy Information

one thing leads to another. with foreclosures on the rise in Plymouth County, bankruptcy filings are skyrocketing, as those who’ve opted for short sales or experienced foreclosure seek shelter from banks that could potentially sue them for the outstanding balances.

Suddenly, some attorneys who specialized in real estate, family or criminal law are beefing up their bankruptcy knowledge to cash in on a growing market.

Plymouth Bankruptcy Attorney William Scannell hasn’t had to do that. He’s specialized in bankruptcy for 17 years and said he has never failed to get his clients relief from debt. but there are many attorneys claiming to specialize in bankruptcy who have less than two years experience, he added.

“I have not had a Chapter 7 bankruptcy not go through in 17 years,” Scannell said. “It’s really about dedication to the law and staying up to date on all the latest changes and amendments to the U.S. Bankruptcy Code.”

the resounding message Scannell sends to the debt-ridden is that most of what they’ve heard about bankruptcy is a lie, intended to scare them away from filing. Big business and the government push these myths and misconceptions intentionally to deter people from filing, he said.

for instance, most people think filing Chapter 7 will ruin their credit for seven years. That simply is not true, he explained. the bankruptcy may be listed on a credit report for seven years, but that will not prevent the client from obtaining credit and improving their credit score for seven years.

“Chapter 7 only really affects your credit for one or two years,” Scannell said. “and two years after a Chapter 7 discharge, most individuals with regular W-2 employment can get a mortgage at a reasonable interest rate.”

another myth that has been deliberately perpetuated is that when the bankruptcy laws changed in 2005, people could no longer file for bankruptcy to be released from their short sale, foreclosure, lawsuit and credit card debt, he added. but nothing could be further from the truth. the 2005 legislation added a great deal of paperwork to the filing process so the courts could better verify a debtor’s information and set specific income limits on who could file. It also made it more time consuming for debtors and attorneys. the additional work mandated for Chapter 7 and Chapter 13 filings meant attorneys had to charge more for the service.

the credit card industry was very much a part of these legislative changes, which passed in 2005, and successfully doubled the minimum payments on credit card balances. the 1 percent norm jumped to 2 percent. It may not sound like much of a hike, but it doubled the minimum monthly payment, Scannell noted. Credit card companies were also allowed to raise interest rates – even on customers who were paying on time– based on their payment history with another card.

the irony of these changes is that, in time, they led to even more bankruptcy filings, as more and more credit card holders found they couldn’t make their monthly payments. meanwhile, the new laws made it more expensive to file for bankruptcy because the documentation required is now more extensive.

while Scannell has always been a bankruptcy attorney, he used to have time to practice other types of law occasionally. Those days are gone, he said, as his bankruptcy practice now takes all his time. he said he’s proud to be able to provide his clients with an escape route from one of life’s most stressful experiences.

Plymouth Redevelopment Authority Executive Director and HUD agent Laura Schaefer counsels her clients on how to avoid foreclosure, but sends many to Scannell when these measures fail.

 “I used to have a life,” Scannell said, smiling. “I work 12 hours per day, six days a week. People want a lawyer they can contact. How many attorneys do you know who will return every phone call within 24 hours? That’s why people appreciate my staff and me.  Its because we really care about trying to help them.”

Scannell handles every type of bankruptcy, including Chapter 7 and Chapter 13 for individuals, couples, families and businesses. the cost varies, depending on the level of difficulty and amount of work involved. for instance, Chapter 13 is a very complicated filing that helps clients stay in their homes and pay off their outstanding debt over a period of three to five years, in many cases. Chapter 7 is the more typical form of bankruptcy. It wipes out the debt for those who qualify. Bankruptcy costs begin at $1,500 to $1,800.

Scannell also warned those in tough financial straits to beware of debt settlement and debt consolidation companies offering assistance. Almost all of these agencies are frauds, he said. These companies make a fortune tricking people into schemes that leave them in a worse financial state, and they wind up having to declare bankruptcy anyway. Companies offering mortgage modification services for a price, which must be paid in advance of the company actually obtaining the modification for the client, are almost all illegal, he added.  

“the best advice for anyone seeking a mortgage modification is to contact Attorney General Martha Coakley’s office or the HOPE program,” Scannell said. “most importantly, do not ever pay a company in advance for a loan modification, unless the person doing it for you is an attorney licensed in the state of Massachusetts.”

he stressed that different states have different laws pertaining to bankruptcy, banking and foreclosure, so hiring an out-of-state company for counsel or services just doesn’t make sense.

Scannell urged residents to visit his website at wescannell.com for information on bankruptcy and its impacts.