How To Move Forward After Bankruptcy
An Interview with Matthew J. Cherney, Cobb County Bankruptcy Attorney
Bankruptcy is frightening. Many people wonder, “What will bankruptcy do to my credit score? What will my friends say? What will my family say?” People seeking help are asking difficult questions and making difficult choices. “Do I pay my mortgage this month, or do I pay my high-interest credit card? Do I pay rent this month, or do I pay my car note? Where can I turn for help?”
While there are legal issues associated with bankruptcy, most questions and concerns remain more practical than anything else, and oftentimes just as important. Debt brings about anxiety, stress, shame, and embarrassment. People believe they have let themselves and their families down. They feel that they have nowhere to turn.
Matthew J.Cherney of Cherney Law Firm, LLC and his team are experts at helping their clients wade through the problems that make up consumer bankruptcy. They will help you reduce your stress and help get you back on the road to financial stability.
Matt, tell us a little bit more about yourself and your law firm. Obviously, bankruptcy is a big issue. Is bankruptcy all that you deal with?
Matthew Cherney: I’ve been practicing exclusively in bankruptcy and debt related matters for about 13 years. I started practicing in my hometown of Chicago, Illinois back in 2005 and practiced there at a large bankruptcy firm for approximately four years.
And the firm I was with provided me an opportunity to move down here to Georgia. They were expanding their practice into other markets and I was afforded the opportunity to move down here with my wife and act as managing attorney at the firm down here in Georgia.
I stayed with them for about another five years and then started my own practice. I’ve been in private practice for myself, dealing exclusively in debt related matters, for about six years now and focus primarily on consumer bankruptcy cases, specifically chapter 7 and chapter 13.
What are some of the issues that people are having these days with debt relief and what kind of solutions are there available for them?
Matthew Cherney: In all my years of practice I’ve run the gambit and run into almost every sort of circumstance that you can imagine. I’ve been doing this quite a long time now.
I have clients anywhere from people who are unemployed to where they just can’t begin to service any portion of their debt. I have clients who are underemployed. These are clients who made good money and at the time, they were able to service what would have otherwise been a manageable amount of debt relative to their income, but now their current income simply doesn’t allow them to maintain their payments on their debt while still maintaining a certain standard of living.
I have clients who fell ill, recently hospitalized, who can’t afford to maintain or begin to pay what is an astronomical amount of debt for their medical bills. I have clients with tax debts, I have clients who for a host of different reasons simply fell behind on house payments, vehicle payments, and perhaps it’s not necessarily a matter of maintaining these payments going forward but for unforeseen circumstances, they just simply cannot catch their payments up.
One thing that I found over the years that dealing with debt brings with it potential legal issues but it’s not always just legal problems for individuals. I found that the larger issues are emotional.
Many of my clients deal with anxiety, stress, shame, embarrassment, and all things associated with the underlying debt and they feel like they maybe let themselves down. Perhaps they feel like they’ve let their families down. They feel like they’ve got nowhere to turn.
A lot of this stems from debt and having creditors that might be harassing you or trying to collect from you and I found that a lot of the collateral issues are largely emotional. That’s something that’s not lost on me which is why I really try to be an advocate for clients and try to show them that I understand that these things are larger than just the debt itself.
What is the most common reason people get into debt?
Matthew Cherney: It changes over the years. In good economic times, I found that it comes from unforeseen expenses, household expenses, illness. During less than stellar economic times, it may come from unemployment, underemployment and just inability to service the current debt that they have. There are times where you make a good living, you provide for your family, you’re able to afford the monthly payments associated with your debt and then there comes a time where you’re just not able to do it anymore and people are faced with the idea of, “Do I provide for my family? Do I pay my mortgage payment, my lease payment on my apartment? Do I pay my car loan? What do I do? Where do I turn?” These are the harsh realities and circumstances that face a lot of my clients.
We have been recovering from the recession back in 2007, 2008 when the market crashed but it’s been pretty good for the last 10 years. Do you see things in the market suggesting that it’s going to turn again?
Matthew Cherney: Well, the signs before were very tied to the housing market and that was one thing that most people point to when they talk about the recession and it affected a lot of people back, around the time that I started to practice in 2006 to 2008. A lot of people point to the housing market.
But now the signs aren’t necessarily tied to that. What I’m seeing are things tied to lending, just lending in general, specifically vehicles. That’s one big thing, subprime vehicle loans. I see a bubble really getting ready to burst there.
Traditionally, vehicle loans were a four or five-year loan. Now you’re seeing some vehicle loans stretched out as far as seven or eight years and often times, these sort of subprime loans are going to carry with them rather high interest rates, 18, 25 percent.
Some people, unfortunately, might not be as savvy to look at the amount of interest that they pay on a vehicle over eight years. Sometimes people are paying 60% more than what the vehicle may even be worth.
Student loans are another huge area where something at some point is going to have to give. I don’t know if that’s going to be by the intervention of Congress but that is something that is certainly coming to a head. There is so much student loan debt and folks, no matter what their financial circumstances are in life, are having difficulty in dealing with these payments. That’s not just someone who is working for minimum wage. These are professionals, doctors, lawyers.
These sort of student loan payments are just becoming very unmanageable. So, the signs of a recession are becoming more and more apparent, not necessarily tied to housing but more towards things like vehicle loans, student loans, etc.
When somebody does get into trouble, what kind of options are available for them?
Matthew Cherney: I meet with clients all the time, potential clients or just individuals who might be looking for some sort of solution to deal with their debt. That could be the possibility of trying to negotiate lower payments or negotiate settlements on a particular debt.
Bankruptcy, while an option, isn’t always someone’s first option. A lot of times the first thing a potential client and I speak about is the fact that no one wants to find themselves here in my office and having the conversations that we ultimately have. A lot of people might feel embarrassed or they’re already dealing with anxiety and stress and perhaps shame.
We sit and we have an open conversation about what options might be available to them and if they’re not in a financial position to negotiate any sort of payment or settlement, we can always look at bankruptcy options, be that a chapter 7 or chapter 13. That is some sort of reorganization mandated by the court that allows individuals to either eliminate their debt in full or perhaps reorganize their debt, which is putting together a plan that allows an individual to pay back their debt or a portion thereof in a more economically viable way that suits their budget. Something that’s not just based upon the debt itself but based on their ability to pay.
Break down chapter 7 and the chapter 13 bankruptcy because I know a lot of people just need clarification on why you would use either one.
Matthew Cherney: Chapter 7 is going to be designed for individuals who do not have the financial means to pay back their debt. That’s referred to as the complete bankruptcy. If someone’s doing their own research on bankruptcy or learning a little bit about bankruptcy, the first thing that they see is the idea of chapter 7.
Chapter 7 is there to deal with things like unsecured debt. Unsecured debt could be credit cards, medical bills or personal unsecured loans where they haven’t pledged anything as collateral for the loan. What we’re illustrating in chapter 7 is that one cannot reasonably pay back their debt within a period of time however nominal that payment will be.
Chapter 13 is designed for individuals who may not qualify for chapter 7. That could be either based upon that fact they filled a chapter 7 within the last eight years or perhaps they make too much money to do a chapter 7 because there are income criteria for chapter 7. Chapter 13 is designed for those individuals who may be trying to protect an asset like a vehicle that they may have fallen behind on that’s in danger of being repossessed or to prevent home foreclosure. They may have fallen behind on their mortgage payments and chapter 13 allows them to consolidate all of their debt and propose to pay it back to their creditors in some form over a period of anywhere from three to five years.
What does this do to the credit? Is that a big fear that holds people back?
Matthew Cherney: Certainly one’s credit score is of concern and a lot of times when we sit and we have a discussion about what option’s going to suit the individual best, one thing they ask is, “Well, what’s it going to do to my credit?”
My response to that, while not dodging the question, is often times, “What does your credit look like right now?” If I’m meeting with someone, chances are their credit might not necessarily be in the best state of repair.
If the credit is not necessarily in the best state of repair currently, then the less effect the bankruptcy is going to have on that individual’s credit.
Now, I do have folks who are trying to simply be preemptive. They say, “I’ve been making my minimum payments on my car. I’ve never missed a payment. I’ve never missed a payment to anybody but for reasons x, y, and z, I see that at some point, that’s no longer going to be the case.”
Those individuals often have pretty good credit scores. The only thing that might be affecting their credit score is their debt to income ratio. They’re paying out a lot of debt, maybe just barely and relative to their income which could be affecting their credit score, but otherwise, they’ve maintained payments all along. The effect on those folks’ credit is going to be a little bit larger because we’ll presume that their credit score is higher. The higher your credit score, the more effect the bankruptcy is going to have on it but, I really try to convey to folks, especially those who really need the relief is we’ve got to shift our thinking here and shift our focus from what is the effect going to be on my credit to how do I start over? How do I get into a better financial situation? How do I change my focus and shift it from, what’s my credit score going to be…to how do I get out of this debt?
If we can shift the focus to that, people say, “Well, okay. I can put the thoughts about what the effect’s going to be on the back burner and just look forward rather than look behind.”
Other than the credit issue, what are some other fears clients have?
Matthew Cherney: A lot of it has to do with rehabilitating. Where am I going to be a month after bankruptcy? A year after bankruptcy? What is my credit going to look like and what are ways that I can rehabilitate my credit?
Those are certainly concerns but might be better explained as misconceptions. A lot of times, people feel that well, if I file bankruptcy, I’m going to lose everything that I have. I’m going to lose my car, I’m going to lose my house. Frankly, that’s more the exception than it is the rule. People in the immediate sense worry about what bankruptcy is going to do to their current circumstance, but they are also concerned about rehabilitation and where they’ll find themselves after bankruptcy is over.
How do you save those kind of assets like the cars and the homes?
Matthew Cherney: Well, if someone is delinquent on their vehicle payment or if they are delinquent on their home mortgage, we accomplish that through chapter 13. In a chapter 13, the client needs to meet the requirements, which ultimately is that they have regular income.
Regular income could be classified in many different ways. It’s not just having W2 wages. It could be self-employment, it could be fixed income, social security, child support income, rental income if they rent out a room in their house or if they have property that they lease to another individual. Regular income is the criteria.
What we’re able to do specifically with those debts where the individual has a delinquent vehicle or house note, we’re able to take those debts and pay them back through a chapter 13. Vehicles specifically would be paid in full, subject to certain modifications perhaps to the interest rate but generally, the vehicle would be paid in full through the chapter 13 plan.
With house notes, the plan is to be able to take those mortgage arrears, the amount that the individual’s currently behind at the time of filling and propose to pay those arrears back through the chapter 13 plan. Certain districts in the US are different as to how the mortgage lender is paid going forward.
Here in the northern district of Georgia where I practice, the plans are structured in such a way to where the plan only contemplates paying back the arrears. The individual’s then obligated to make those mortgage payments going forward with the next consecutive month.
For example, if an individual filed chapter 13 on the third of the month, the chapter 13 plan would cover paying back all mortgage arrears through December. The individual would then be responsible to maintain and resume making mortgage payments in January.
By having a plan that contemplates paying back those debts, it prevents a vehicle creditor from repossessing the vehicle. It also prevents a mortgage lender from foreclosing on the property.
What are some of the warnings signs of bankruptcy?
Matthew Cherney: It comes in many different ways. As I said earlier, it’s not always just going to be about missing a payment or having a creditor that is calling or sending letters. A lot has to do with the emotional side of it too.
If someone is getting anxious about a particular bill they have coming up and whether or not they should make their payment to a particular creditor on a credit card or if I do that, how am I going to pay my light bill or pay my gas bill? Those are warning signs. Or, if you’re using your credit cards to pay your normal household expenses and juggling balances between one card to the next. Or, stressing about having the ability to meet your financial obligations when that time of the month comes. I think those would qualify as some warning signs.
Do you feel right now that most people are living above their means?
Matthew Cherney: That is always going to be relative to their financial circumstances. What I’m seeing currently is that incomes are starting to rebound. People are starting to recover just purely from employment. People are going from being unemployed to being employed so, that doesn’t always mean that your current employment situation is sufficient enough to maintain your debt and make those payments each month. Your income before might have been considerably more. Your income now might be less than it was and you just can’t afford to do it. I don’t necessarily see that people are living above their means as much as they’re really scratching and crawling to be able to make their payments as they are now.
Give me some examples of people that you have dealt with. What kind of position were they in? How were you able to help them and ultimately, what was the outcome for their lives?
Matthew Cherney: As I said earlier, I have clients that run the gambit from unemployment, underemployment, medical related issues, tax-related issues, mortgage, and vehicle-related issues. One thing I try to convey to all of my clients or people that I meet with is that ultimately, bankruptcy can be an option.
Nearly every individual that I meet with shares these same feelings. After I meet with them, they begin to realize that there are options. Most even start to feel a bit of relief after the first consultation. I find that it’s simply perhaps just having someone to talk to, just an objective person to speak with, someone with the experience who can tell them that they understand their situation. They don’t have to feel like they’re being judged.
I can’t count the number of times that clients have told me that they’d wish they’d at least come to speak with me sooner, especially after the process is over. Again, whether that’s completely eliminating their debt, not having to worry about how they’re going to make a certain payment on a particular month and they can then reapportion that money to other areas of their life, providing for their family.
They wish they had taken the step sooner and ultimately, every client that I have helped ultimately winds up happy that they met with me and that they went through the process.
If somebody has some of those issues that we’ve been talking about today and they want to get in contact with you, what is the best way for them to do that?
Matthew Cherney: They can reach me via phone. I’ve got a great assistant here that works with me. Her name is Denise and can be reached via phone at 770-485-4141. That’s my main office number. 770-485-4141.
Often times people are a little bit hesitant to want to speak to someone on the phone so they can always go to my website which is cherneylaw.com, that’s C-H-E-R-N-E-Y-L-A-W.com. I have options of being able to converse via email. My email address is firstname.lastname@example.org.
At my website, you can also set up appointments via text. You can text and 9 times out of 10 I’m going to to be the individual that is responding to the text messages. That is certainly something that I’ve learned over the years, that I try to bring to my practice, which is more of a personal touch.
So if people call in and you need to speak with me and you want to speak with me, you can speak with me. If you want to text, you can text and I welcome that opportunity.
About Matt Cherney
Attorney Matthew Cherney, founder of Cherney Law Firm LLC received his Bachelor’s Degree from Carthage College in Kenosha, Wisconsin before going on to receive his Juris Doctorate from Western Michigan University (The Thomas M. Cooley Law School) in Lansing, Michigan.
After graduating law school, Matthew was admitted to the State Bar of Illinois and began his legal career in his hometown of Chicago, Illinois, where he represented clients in all areas of debt relief for a large bankruptcy firm. In 2008, he moved to Georgia and was admitted to the State Bar of Georgia. Over the years, he gained experience at both large-volume and mid-volume consumer bankruptcy firms before starting his own practice in 2012.
Mr. Cherney now seeks to provide personal attention and counseling for all his clients, working personally with them from their initial consultation all the way through the completion of their case. Having represented thousands of clients since he began practicing law, Matthew has helped to improve many individuals’ quality of life and to decrease their financial stress.
At Cherney Law Firm LLC, clients can expect the highest quality legal representation alongside thoughtful counseling and attention to detail. Mr. Cherney dedicates his time to properly investigating every possible avenue of debt relief for his clients before simply stepping into bankruptcy. Seeking to make each consumer that comes to him for legal aid as comfortable as possible, he keeps his clients in the loop with every step he takes.
Attorney Matthew Cherney is licensed to practice in all state courts of both Georgia and Illinois, as well as in the federal courts for the Northern and Middle Districts of Georgia, and in the Northern District of Illinois. Matthew is also married and enjoys spending time with his wife and his son.
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