Money Saving Tips for the Holiday Season

February 13, 2013 - 02:47 by rmckinney

The end of the year is always eventful from Halloween to New Years, but with the bustle of the season comes lots and lots of spending. The last thing anyone wants to start a new year with is thousands of dollars in credit card debt and consulting with a personal bankruptcy attorney. Here are 5 tips on how to get through the holiday season without tons of credit card debt and a looming bankruptcy:

1. Keep it Simple - Remember that being around friends and family during the holidays is more important than thousands of dollars worth of “stuff” so don’t go overboard when shopping for gifts or planning a menu. Try to give yourself a price limit when shopping for specific people in your life and stick to your plan.

2. Plan Ahead - If you are hosting a holiday at your home don’t wait until the last minute to create a menu and buy the groceries. Make your menu early so that you can delegate to your guests what they can bring. Asking guests to bring an item isn’t rude, it’s smart and allows everyone to feel like they pitched in for the event.

3. Look for Sales - Black Friday and Cyber Monday aren’t the only holiday sales worth looking forward to. Most retail shops have sporadic sales from October until December to keep customers in the doors. Check for online deals with free shipping or ads in the Sunday paper to keep up with the best value for the price.

4. Homemade gifts - Handmade gifts not only have a personal touch, but they can be great if you are trying to find a way to give lots of different people a gift. Bake cookies, make ornaments, make candies, or stock up on bulk candles for a nice gift that won’t break the bank.

5. Buy throughout the year - The good thing about the holiday season is that it’s consistent; it comes at the same time every year without fail. Because of this make sure and keep your eyes peeled for sales throughout the year on bulk items or even special items that you want to get for certain people in your life. Spreading out your spending will keep the holiday season from feeling like nothing but a spending spree.

The best way to not fall into a debt trap during the holidays is to simply not spend what you don’t have. Start an account and the beginning of the year for holiday gifts and groceries so that you don’t automatically rush to use credit cards when October comes around. By using this tips you can avoid thinking about filing for bankruptcy after having a wonderful holiday season. Remember you can only file Chapter 7 bankruptcy once every 8 years so an overboard Christmas spending spree is not what you want to cause one.



Chapter 13 Bankruptcy & Foreclosure

February 13, 2013 - 02:43 by rmckinney

During my time as a bankruptcy paralegal I heard hundreds of reasons why individuals and married couples decided to file for personal bankruptcy. The main reason I heard people choosing to file Chapter 13 bankruptcy was to stop the foreclosure process on their home. With the housing crisis that America faced several years ago and the still waning real estate market it is no surprise that foreclosures are rampant, but giving up your home is never an easy decision to make. In some cases filing Chapter 13 bankruptcy to halt a foreclosure is the best decision a family can make. So how does it work?

First of all let me explain what a Chapter 13 bankruptcy is. Chapter 13 bankruptcy is a form of personal bankruptcy that involves a 3-5 year court ordered payment plan where the debtor is allowed to pay back a percentage of their overall unsecured debt and any other secured debt that they choose. Put simply, the debtor sends a check to his/her bankruptcy trustee every month for 3-5 years and the trustee makes sure that all of the creditors are paid. By the end of a typical Chapter 13 bankruptcy the debtor is free of all unsecured debts (credit cards and/or medical bills) and caught up on all secured payments (mortgage and/or vehicle). And that is where foreclosure comes in.

If the foreclosure process has already started when you file Chapter 13 bankruptcy then the bankruptcy court will notify the bank to stop all proceedings until further notice. At that point your bankruptcy lawyer and the bankruptcy trustee who will oversee your case will create your repayment plan. The repayment plan will include all of the mortgage payments that you are behind on and any unsecured debt you may have. The current payments on your mortgage will need to be paid by you outside of the plan in order to stay up to date. As long as you are making your monthly bankruptcy payments then the bank who holds your mortgage has no right to take legal action against you. In fact, in order to take legal action against you the bank would need to file a motion with the bankruptcy trustee.

By the end of your Chapter 13 repayment plan you will be caught up on your past and present mortgage payments and at no risk of losing your home. This also works in the case of vehicle repossession. If you are being threatened with foreclosure or are in the midst of the process and think that filing Chapter 13 bankruptcy could benefit you then don't hesitate to contact a local bankruptcy attorney. In most cases bankruptcy attorneys offer free initial consultations that allow you to share your situation with them to see if they can help. Filing Chapter 13 bankruptcy could be the final push you need to help save your home.



Bankruptcy and Your Belongings

February 6, 2013 - 02:40 by rmckinney

Are you ready to file bankruptcy but too worried about what will happen to your belongings? Don’t be! The bankruptcy code is very clear on what will happen to your belongings when you file for Chapter 7 or Chapter 13 bankruptcy. Most of the rules for keeping your belongings when you file bankruptcy deal with the specific state that you live in and their rule on the matter. Here are some important things to know about the most commonly mentioned items that debtors are worried about losing:

1. Home If you are filing a Chapter 7 bankruptcy to get rid of large amounts of unsecured debt such as credit cards or medical bills and you don’t want to lose your home then remember one phrase: to keep it, stay current. If you stay current on your mortgage payments during your bankruptcy process then it will show the court that you will be able to do that once your personal bankruptcy is completed as well. If your home is paid in full then the situation is a bit different and relies solely on how much equity your state bankruptcy exemptions protect.

2. Vehicle Again, the key phrase if you want to keep your vehicle is: to keep it, stay current. If you have multiple vehicles then the bankruptcy court may want you to prove that each one is a necessity and if that can’t be proven then the court may choose to take one unnecessary vehicle and use it to pay back some of your creditors. If you have one or more paid in full vehicles then the issue again goes to your state bankruptcy exemption for vehicles and how much it allows to be protected.

3. Clothes, jewelry, and/or other household items Each state has the right to create their own bankruptcy exemptions and the majority of the states have a miscellaneous or “catch all” exemption for items like clothing, jewelry, and household items. The protection for these items can range from $1500-$10,000 depending on what state you live in. If you are unsure about your state’s bankruptcy exemptions you should consult the bankruptcy court (online or over the phone) in your district or a local bankruptcy attorney.

As you can probably tell, state bankruptcy exemptions are incredibly important to the filing of any case. Using them correctly can ensure that your belongings are safe and your debts are erased. Using them incorrectly can result in not only losing your debt, but losing property that you intended to keep. Typically, personal bankruptcy attorneys that have been practicing in the same state for several years are knowledgeable in the specific state exemptions that will be most beneficial to your situation. The bottom line is that filing bankruptcy is not going to strip you of everything you have in your name. The bankruptcy court understands that sometimes all people need is to wipe away their debt and start fresh with what they have.



Student Loan Bankruptcy

January 31, 2013 - 02:35 by rmckinney

In March 2012 a United States report showed that for the first time in history student loan debt in America had surpassed credit card debt. It was a startling, yet not completely unexpected figure. More people are going to college, college tuition is constantly on the rise, financial aid is readily available, and jobs are scarce after graduation. The average amount of student loan debt in the US today is nearly $27,000. How can an individual struggling to find a job ever find a way to pay off that massive amount of debt? Here’s how declaring bankruptcy may be the answer:

Student loans are typically placed into a category of debt that cannot be wiped away through the normal Chapter 7 bankruptcy rules. Although it is rare, there are some cases where student loan debt may be eligible to be erased if the debtor can prove that making their payments will cause them “undue hardship”. The bankruptcy court has various tests that they use to determine whether or not a hardship exists for the debtor. One of these tests is known as the Brunner test and requires showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans.

Chapter 13 bankruptcy rules are a little different when it comes to student loans. A Chapter 13 bankruptcy allows the debtor to “reorganize” their debts and pay them back through a court ordered 3-5 year repayment plan. This can be beneficial for many reasons, but one of the most important is that the student loan company can no longer set the monthly payment. The monthly payment for Chapter 13 plans are created and overseen by the bankruptcy trustee. The debtor simply mails a payment to his/her bankruptcy trustee each month for the duration of the plan and the trustee handles the disbursement. Another great thing about a Chapter 13 bankruptcy is that at the end of the 3-5 year repayment plan the debtor is not only debt free, but caught up on all secured payments like their mortgage, vehicle, and in our case student loans.

Claiming bankruptcy because of student loans is unfortunately becoming more common each year. Whether you are hiring a bankruptcy attorney or trying your hand at a do it yourself bankruptcy, remember that you must list all the debts in your name must be listed on your bankruptcy paperwork. Don’t get discouraged if you find out that your student loans cannot be erased with a bankruptcy, remember that after your case is completed you will be debt free otherwise and in a healthier financial state to make timely student loan payments. Doing this will help not only pay down your student loan debt, but help you rebuild your credit quickly after your bankruptcy is completed.



Within every section of the law there are subsections with different rules than the ones before.
The laws that govern bankruptcy are no different; there are separate chapters that can be filed and different rules for each chapter. The laws are sometimes so complex that certain attorneys only specify in one type of bankruptcy. If you are thinking about a hiring a bankruptcy attorney or even filing a do it yourself bankruptcy it is typical that you will be faced with sifting through information about the different types of bankruptcy. Here is some helpful information that highlights some of the differences between the various types of personal and and business bankruptcy:

1. Chapter 7 bankruptcy - This is the most common type of personal bankruptcy filed by either individuals or married couples. Businesses do not have the option to file Chapter 7 bankruptcy. In most cases Chapter 7 bankruptcy forms are used to erase large amounts of unsecured debt such as credit card debt and medical bills. It is typically beneficial for individuals or married couples that have little or no assets that could potentially be liquidated by the bankruptcy court in order to pay off some of their creditors.

2. Chapter 13 bankruptcy
- This is the second type of personal bankruptcy available to individuals or married couples. Businesses also do not have the option to file Chapter 13 bankruptcy. In most cases filing the necessary Chapter 13 bankruptcy forms allows the debtor to take part in a 3-5 year repayment plan that encompasses a percentage of their overall unsecured debt. The percentage of debt involved in a Chapter 13 repayment plan can range from 10%-100% and is calculated by using the debtors disposable monthly income.

3. Chapter 11 bankruptcy - This type of bankruptcy is for businesses only and works similarly to how a Chapter 13 bankruptcy works for individuals. The bankruptcy court allows businesses to “reorganize” their debt and set up a payment plan that works for the business and its creditors. The repayment plans in both Chapter 11 and Chapter 13 bankruptcies are overseen by a bankruptcy trustee that makes sure payments are made on time and are correctly given to the creditors.

Typically, attorneys utilize the bankruptcy means test to determine the chapter of bankruptcy would best suit your needs. If you own your own business and feel as though a Chapter 11 business bankruptcy would benefit you it may be in your best interest to contact an attorney that specializes in that area. Filing a business bankruptcy does not necessarily mean that your business doors will be shut forever; in fact business bankruptcies aim to get finances back in order so that the business can not only stay open, but continue to grow. Filing a business bankruptcy does not mean that you must file a personal chapter of bankruptcy too, and if you are unsure about why or why not you should.




Paperwork You’ll Need to Provide to File Bankruptcy

January 11, 2013 - 02:31 by rmckinney

The legal document submitted to the court when a bankruptcy is filed is called a “petition.” When all is said and done a petition can range anywhere from 10-200 pages depending on the debtor’s specific situation. Some information on the petition is self-explanatory such as name, address, and social security number, but the majority of the document requires specific financial information that can only be provided by the debtor. Here are a few key items that you may need to supply to the bankruptcy attorney who is filing your case:

1. Pay Stubs - In most cases your bankruptcy lawyer will request copies of your pay stubs from you in order to accurately calculate your total income. This information is used to determine which Chapter of bankruptcy you will qualify for. If your income is below your state’s median then you may be eligible to file a Chapter 7 bankruptcy, but if your income exceeds the state median it may be best for you to file a Chapter 13. In some states you may be required to submit your spouse’s pay stubs even if they are not filing with you so that the “household” income is correct.

2. Tax Returns - Another financial document requested by many bankruptcy attorneys is prior tax returns. Depending on the chapter of bankruptcy that you file you may be asked to supply 3-5 years’ worth of returns. The information on your tax returns will be used so that the bankruptcy court has the exact figure of your gross wages as well as any miscellaneous income you have obtained throughout the years. If you have questions about how your potential tax refund may be affected by your bankruptcy you should consult with your attorney.

3. Mortgage Statements - If you are a homeowner filing bankruptcy it is likely that you will be asked to supply a copy of your most recent mortgage statement showing your current balance. This information is used by your attorney as well as the bankruptcy court to identify the amount of equity in your home. Equity is calculated by subtracting the balance of your mortgage from the Fair Market Value of your home. Equity in your home is protected by specific state bankruptcy rules called “exemptions” so this figure is extremely important.

This may make it seem like documents will be piling up as soon as you decide to file for bankruptcy, but it really isn’t all that bad. In most cases an organized bankruptcy lawyer will give you a concise list of documents you need to make the paperwork seem minimal. If you are unsure about where to find a certain document that is being requested of you just ask your attorney or someone in your attorney’s office. Shuffling through papers is just a small part of the bankruptcy process and it is well worth it. Once you hand the correct documents to your bankruptcy lawyer they will place the information into your petition and you will be on your way to a debt free life.



Calling the Bluff on Bankruptcy’s Bad Reputation

December 30, 2012 - 02:28 by rmckinney

When I started as a bankruptcy paralegal several years ago I went into the job with preconceived notions about bankruptcy, the people who file, and how it affects credit. It didn’t take long to realize that my perceptions were way off base. I want to share some of that knowledge with you here so that perhaps we can change the tide in how people think about bankruptcy. I’ll start by sharing information that I thought was true, then explaining what really happens.

1. Bankruptcy is a terrible choice for anyone to make. This remark is almost laughable to me now after seeing thousands of people turn their lives around with bankruptcy. The truth of the matter is that in some situations filing bankruptcy is the best decision a person can make. By going bankrupt an individual with overwhelming debt can find a financial fresh start in less than 1 year.

2. Bankruptcy is only for people with very low incomes. Again I can’t believe I ever thought this was true; maybe someone should have just mentioned 2 little words: Donald Trump. That’s right, the multi-billionaire has filed bankruptcy on his many hotels and casinos numerous times! He may be a hard guy to relate to financially, but it proves a point: even people who many may consider “wealthy” sometimes have to file bankruptcy in order to get their finances in order. In many cases individuals and couples with very high incomes file what is known as a Chapter 13 bankruptcy which consists of a 3-5 year repayment plan where the court allows them to pay back a percentage of their total debt. This is in contrast to a Chapter 7 bankruptcy that in most cases is used for those individuals or couples with low incomes and very little assets.

3. Bankruptcy will ruin your credit forever. This is a common misconception that I really think scares people away from ever considering the help that bankruptcy may give to them. Allow me to explain the truth about what really happens to your credit when you file bankruptcy. When an individual files bankruptcy all of their creditors are notified via US Mail by the bankruptcy court. The creditors then notify the credit bureaus that the specific accounts are under “bankruptcy”. Once the bankruptcy is complete and the debts are erased, the bankruptcy court again notifies the creditors of the progress. Again the creditors notify the credit bureaus that the account balance is $0.00 and the account is marked with “bankruptcy”. The mark of bankruptcy will stay on an individuals credit report for 7-10 years depending on the chapter of bankruptcy that was filed, but that mark doesn’t stop the debtor from rebuilding credit, owning a home, or financing a vehicle.

Don’t believe everything you hear when it comes to bankruptcy. Find advice you can trust whether it be from a friend or family member who has filed bankruptcy before or a local bankruptcy attorney.



Why Filing Bankruptcy Shouldn’t Scare You

December 21, 2012 - 02:25 by bankruptcylawyer

You may have heard some negative things about filing bankruptcy over the years, but we all know that not everything you hear is always true. If you are facing an overwhelming amount of unsecured debt like credit cards or medical bills then going bankrupt may be in the best interest of your financial future. Don’t let the negative rumors surrounding bankruptcy scare you away from doing something that could really help you in the long run. Here are just a few reminders of why filing Chapter 7 bankruptcy or Chapter 13 bankruptcy shouldn’t scare you:

1. You aren’t alone - Don’t fall into the trap of thinking that no one else is having debt problems like you are. In this economy that’s just not true. For years people have been struggling with credit card debt, large amounts of medical bills and more recently foreclosure and repossession. Last year alone more than 1 million Americans filed for Chapter 7 bankruptcy to get a financial fresh start by eliminating their unsecured debt. Due to the recession our country has and is still facing it would be surprising if you didn’t know of someone that has had to file bankruptcy to keep afloat.

2. Help is readily available - The great news about looking into bankruptcy now is that at any given time you are not too far away from tons of information regarding bankruptcy. One simple search on the internet will provide you with more information than you ever wanted on how to file bankruptcy and if it is right for you. Not only is the internet a wealth of knowledge, but in some cases bankruptcy attorneys will allow you to meet with them for free initial consultations before you make your decision. If neither of these options appeal to you then maybe you should just start by asking friends or family who you know have filed in the past.

3. The system is on your side - The bankruptcy laws are written for one purpose: to help individuals and married couples get out of debt and find a way to have a financial fresh start in life. The laws are not meant to be abused, which is why there are limits to how many times a person can file in a given number of years, but for the most part the bankruptcy code is on the side of the debtor. The bankruptcy court as a reputation of being fair and open minded to every situation they hear. Don’t think that your situation is too far gone for bankruptcy to help.

If you truly think that going bankrupt could help you and/or your family then don’t hesitate to find out more information. Just remember that you aren’t alone, help is always readily available, and the system is on your side. The bankruptcy process will be over before you know it and in less than 2 years you could be debt free and planning for the future.



Bankruptcy and the Hostess Twinkie

December 12, 2012 - 02:08 by bankruptcylawyer

If you’ve followed the news or been to your local Wonder Bread store recently you may have noticed the high demand for the nation’s cream filled treat: the Twinkie. Hostess, the company that produces the simple oval shaped sponge cake filled with a sweet cream, is going bankrupt and the country is fretting the end of a favorite dessert. So what does it mean for consumers when a company like Hostess files for bankruptcy?

First of all you should understand the type of bankruptcy filed by the Hostess Corporation called the Chapter 11. This type of bankruptcy is solely for businesses and it acts as a “reorganization” of plan so that the business can get back on track financially. A Chapter 11 bankruptcy is similar to the Chapter 13 personal bankruptcy that allows individuals or married couples to pay back an overall percentage of their unsecured debt through a 3-5 year repayment plan. The reorganization of the Chapter 11 bankruptcy is overseen by a bankruptcy judge who has the initial responsibility of approving or denying the plan altogether. Once the Chapter 11 is filed the court will alert all of the creditors involved so that they are aware and can be prepared for the possible lack of full repayment.

The Hostess Corporation first entered Chapter 11 bankruptcy in 2004 and emerged from it in 2009 with the doors still open, and with positive outlooks about their financial future. During their bankruptcy process the company closed 54 bakeries, nearly 300 retail stores, and downsized their workforce by 10,000 employees. Unfortunately their first Chapter 11 bankruptcy didn’t work out in the long run and in January 2012 they filed again.

When Hostess filed again in January 2012 they cited $860 million dollars worth of debt and they were hoping once again that the bankruptcy would help them pay off their creditors and get back on track. The first few months of the Chapter 11 saw the company’s CEO resign, an email threatening a mass layoff, and other worrisome events. Finally, due to an employee strike in November 2012 the Hostess company could not continue production and was forced to layoff their 18,000+ workers and begin to succumb to their creditors.

So what is going to happen to your favorite snack cake? Probably not too much. Hostess will need to start liquidating their assets which means selling off small pieces to competitors, entrepreneurs, or anyone else interested. They will be able to start the liquidation process as soon as the bankruptcy judge approves the request. It would truly be stunning if no one decided to buy the Hostess company out for the recipe and distribution of the “Twinkie” or it’s many other famous snacks.The ultimate goal of a business bankruptcy is always to get the company back on the right track and keep the revenue flowing, but sometimes it doesn’t work out that way.



Gambling and Bankruptcy 

November 27, 2012 - 05:01 by bankruptcylawyer

Everyone’s finances are different, and for that reason everyone’s financial struggles are different. Thousands of people each year choose bankruptcy help to assist them with whatever type of financial difficulty they are having. There are different rules within the bankruptcy code for specific types of debt whether it be a secured debt like a mortgage or a vehicle, or unsecured debt like credit cards and medical bills. One type of debt that has more recently come onto the bankruptcy scene is gambling debt, and it must be handled with care.

According to the current Bankruptcy Code, dischargeable debt is debt that is eligible to be eliminated by filing bankruptcy, while non-dischargeable debt cannot. Some types of non-dischargeable debt are: student loans, child support, alimony, back taxes, and for many years gambling debt. Times changed, of course, and suddenly fewer gamblers were using cash, and instead they were able to gamble with their credit cards. This lead to quite a change for how gambling debt was handed within Chapter 7 and Chapter 13 bankruptcy cases.

Because credit cards fall under the category of unsecured debt they are typically dischargeable whether you are filing chapter 7 or filing chapter 13 bankruptcy. The “judge” that presides over bankruptcy cases is known as the trustee and they ultimately can choose which debts, if any, to object to. That is where the subject of gambling debt within bankruptcy becomes very messy. Whether you find a cheap bankruptcy lawyer or file bankruptcy yourself you will be required to disclose all of your financial information including gambling debt for the past couple of years.

Section 523(a)(2)(A) of the Bankruptcy Code provides an exception to discharge for debts obtained by “false pretenses, a false representation, or actual fraud. In plain English this means that Creditors owed gambling debts may file what are known as “adversary proceedings” to challenge the dischargeability of their debts. These cases are rare and extremely hard to win, but they do occur. In most cases they take place after the mandatory “Meeting of Creditors” and may require the debtor to pay additional attorney’s fees since the adversary proceeding is technically an extra civil suit.

In most cases if a trustee finds out about debt that was purposefully left off the bankruptcy paperwork or purposefully not mentioned in the bankruptcy hearing it he/she may suspect fraud in your case and it could affect the dischargeability of other debts you have. If gambling debt is the bulk of your financial struggles then you should be upfront with your bankruptcy attorney so that they can work to ensure that the trustee agrees that the debt should be dischargeable. Remember that filing bankruptcy is a way to get your finances on track and give you a fresh start so every little bit helps. In most cases even if the bankruptcy trustee decides to not erase your gambling debt they will still allow all other types of unsecured debt to be erased.



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