Philadelphia Bankruptcy Attorney Alfred Abel Takes the Stress Out of Bankruptcy
Bankruptcy and the financial duress that leads one to file bankruptcy can be overwhelming. Philadelphia Bankruptcy Attorney Alfred Abel recently met with VIEWS Digital Marketing to discuss bankruptcy and address some of the questions many individuals and business owners commonly ask including why having an attorney can be such an advantage. Read the entire interview transcript below or watch the video.
Transcript of Interview: Mary Stewart (MS) from VIEWS and Philadelphia Bankruptcy Attorney Alfred Abel (AA)
MS: Hi I’m Mary Stewart from VIEWS Digital Marketing. We work with various companies who want to grow and define their online presence and today I am talking with local Philadelphia bankruptcy attorney Alfred Abel.
Alfred began his own law practice in 1982 He’s represented individuals and businesses throughout the Philadelphia and Montgomery County area in cases, primarily bankruptcy, business transactions and litigation, and accident cases.
Prior to opening his law practice Alfred ran a family-owned business which he later sold to investors so he has got first-hand knowledge and experience with the challenges of running a business.
Good morning Alfred.
AA: Good morning thank you for interviewing me.
MS: Thank you for coming in, or coming in virtually.
So, today many people are finding themselves unexpectedly struggling financially but they may be fearful of taking a step to file for bankruptcy. Can you give us an overview of how a typical personal bankruptcy works?
AA: A personal bankruptcy? Sure a personal bankruptcy, there’s really two ways they progress. One way to progress is without having a repayment plan. Another way to progress is a bankruptcy that actually does have a repayment plan and they’re very very different approaches.
The one called the Chapter 7 that doesn’t have a repayment plan you kind of disclose to the court, through the attorney in most cases, what your assets and income are and what your debts are and you’re allowed to keep a certain amount of property then you get a fresh start. It’s called a fresh start bankruptcy or a Chapter 7 bankruptcy.
And after that disclosure you keep what you’re entitled to keep. Anything that exceeds those limits is available for the creditors to get paid.
It takes a bit less than a year in most cases, actually less than eight months in most cases. And then you get a fresh start and the creditors can’t come after you anymore. For those, that’s for the debts that were wiped out.
On the other hand a Chapter 13, which some people are forced into because they have high income or they have a lot of valuable property they want to keep, that has a repayment plan.
So instead of lasting less than a year typically they last between 3 and 5 years and you’ll pay the creditors back anywhere from zero cents on a dollar to a hundred cents on a dollar but it varies from one case to the next.
MS: Okay wow all right. Well some people may feel that bankruptcy is a sign of failure. Although any person or company can have financial problems for reasons that are completely out of their control.
What would you say to someone who was worried about the social implications of bankruptcy?
AA: Well it’s a serious issue and people don’t want to file bankruptcy because they feel, you know, guilty, bad, like a failure, like you say however putting it off to not filing a bankruptcy doesn’t solve that problem because in most cases those people in that situation, as I often say to people: people in that situation are afraid the bankruptcy will ruin their credit and make them look bad. But if they’ve got a car repossessed or they got a foreclosure, that problem is already going to be there. It’s probably better to address it with a bankruptcy and starting the slate clean and resolving those issues than letting them linger forever.
The bankruptcy is just…it doesn’t in most cases, doesn’t damage anyone’s credit that much. In most cases the credit’s been a problem already.
MS: Gotcha, yeah, that was actually one of my questions about how how it impacts our credit, because lot of people will say “Oh, I’ll be ruined forever,” but as you say it’s just temporary, and…
AA: Well it’s certainly it’s, during the course of the bankruptcy it’s a problem because it’s going to show up but after the bankruptcy’s over I give my clients a way to rebuild their credit.
So I call it my 10-step program. I kind of made it..it’s just a way to–a guideline for my clients to rebuild their credit by taking kind of common sense steps about what to do to rebuild their credit.
And I’ve had people come back to me 2 or 3 years later and they bought a house, they refinanced their mortgage, they bought cars. They’re back on track. But you have to follow the steps. If you ignore them it’s of no use whatsoever.
MS: Wow yeah, that’s great “10 Step Program by Alfred Abel.”
Okay well you’ve dealt with hundreds of bankruptcy cases. So from what you’ve seen what’s the most common mistake that people make with a bankruptcy case?
AA: Actually there are three that people tend to make, actually four, but the three big ones are:
one is they will start depleting their retirement account to try to hold on to the last possible minute which is a mistake in most–There are, in every state there’s some protection for a retirement plan. It varies from state to state and Pennsylvania happens to be very generous.
But if you–actually Pennsylvania is generous in other ways but their retirement plans are protected 100%. So in Pennsylvania, 100% under federal guidelines. So you could have a million dollars in a retirement plan and file bankruptcy and still have your retirement plan.
If you deplete that by paying bills, you’re depleting your retirement account.
So one mistake is people deplete their retirement account by taking loans or early withdrawals and paying penalties. Not realizing that all that it’s doing is delaying the inevitable and they’re destroying the retirement plan. That’s one mistake it’s a long explanation I’m sorry for that.
MS: No it’s good!
AA: Another one is people if they can’t pay their first mortgage because it’s too big, they’ll pay for their car payment or a second mortgage instead, which is really a bigger problem, because you’re probably better off in most cases paying your first mortgage if you have a first mortgage, or paying your first and second mortgage instead of maybe the car payment or a second car payment, something like that. They kind of pay what they can pay because they, they feel bad, and they want to pay something.
MS: Right.
AA: So they pay more. They pay their credit cards because they can pay the minimum rather than paying their first mortgage because they feel like they’re doing the right thing. That’s really a mistake because unsecured debt like credit card debt or medical bills, things like that, that’s where you really make progress in a bankruptcy. But the secured debt, like a house or car, they’re gonna get paid in most cases.
And the third, the third issue I was going to say is they just put it off too long. They put it off and put it off and do everything they can to put it off and these things tend to get worse, not better over time. They think they can fight their way through it. Some people do and good for them but the typical case, it’s just, it’s not going to work.
MS: So do you have any specific advice for people who are considering bankruptcy but they’re not quite sure if it’s the right move?
AA: Well it’s self-serving a little bit, but I’d say contact a lawyer. It’s kind of obvious. And read online. There’s some lots–I mean now there’s tons of good information online. The best thing you can do is plan ahead and most people don’t do it because they’re fearful. They don’t want to file bankruptcy.
They’re going to fight their way through it and so on. But getting, paying some money to an attorney and getting some good advice is probably a better way to go and planning for it.
And when you see these big cases like we’re reading the paper about all these national retailers who are filing bankruptcy they’ve been probably planning for a year. And now they’ve got the resources to do it. This situation is different. But they don’t go in there at the last minute and try to figure it out. They’ve probably figured it out pretty much in advance.
If individuals would take that kind of approach, in most cases they’d be better off.
MS: So even if they were in the situation of just struggling, then consulting with someone like you who, you know, you have experience, you can tell them “Okay you you might be able to get out of this doing this and this,” maybe you can give them the Ten Step Plan, but at least then they have the framework to not make mistakes, like you can make mistakes leading up to bankruptcy, right?
AA: If you’re kind of thinking about it- there are things that… For example — another example I have is
some people will file their tax returns but not pay their taxes because they haven’t got the money to pay. Big mistake because the tax lien, you know it’s gonna put a lien on your property that’s come– well, that’s one of those debts that doesn’t go away unlike unsecured debt.
MS: Right.
AA: So that’s something somebody might do. If they can pay their car note or pay their credit card so they can buy food, then won’t pay their taxes there might be some better way to approach that.
MS: All right, so tax liens are not going to be discharged in a bankruptcy.
AA: They can but in a very limited set of circumstances. They have to be over three years old. There’s a whole long list of ways, criteria, that have to be met. They can wipe out, and you can wipe out tax debt and tax penalties and interest but it’s only a very limited opportunity to do that. 08:46
Unlike credit card debt or medical bills or loans from friends and family or certain business loans or leases on business property, things like that, where they’re unsecured. You can really, you can wipe them out 100 cents on a dollar sometimes.
MS: Wow so that’s really, that would be the goal. Like you said fresh start, and then start over.
AA: Yes I mean the Chapter 7 bankruptcy is referred to as a fresh start bankruptcy for consumers. That’s exactly what it’s there for.
MS: All right. Well thank you. Is there anything else that you think would be helpful to the community?
AA: No the only thing I’d say is some people don’t know what bankruptcy they’re going to file. It depends somewhat on their income level and how much assets they have and small business…Small business people can actually qualify for a consumer bankruptcy even if they’re in business, like a self-employed person, one man shop, something like that. They don’t have to file an expensive Chapter 11 case. In some cases they can file a Chapter 13 or Chapter 7.
But that’s really about it. Again the advice is kind of obvious, and again it’s self-serving but contact an attorney… Read online–tons of information–but a consultation with somebody who knows what they’re talking about and can plan, and get you a much better result.
MS: Yeah. Great. Well I appreciate your time, I appreciate you giving us this information. For those of you out there who are listening if you’d like some more information you can contact Alfred at the site which is below or you can give him a call at the office to get more information or schedule consultation. So thanks again Alfred. I really appreciate your time.
AA: Thank you for having me.
MS: Take care.
AA: Right-i-o.
Contact Alfred Abel for Skilled Representation in Your Philadelphia Bankruptcy
Alfred Abel has been helping individuals and businesses successfully navigate the challenges of Philadelphia bankruptcy for over 35 years. To get professional advice and representation in your bankruptcy case, contact Alfred today to set up a consultation.
Tags: Bankruptcy Lawyer