What is a Bankruptcy Trustee?

April 9, 2012 - 04:03 by bankruptcylawyer

A U.S. Bankruptcy Trustee, also known as a Trustee in Bankruptcy, is an individual or an entity who is appointed by the U.S. Department of Justice to administer a bankruptcy case.  Chapter 7 and 13 trustees are typically professional accountants or attorneys.

Depending on the nature of your bankruptcy proceedings, you may have limited interaction or numerous exchanges with the bankruptcy trustee assigned to your case.  For example, if you are filing Chapter 13 bankruptcy, you can expect to have more frequent involvement with your trustee than if you are filing Chapter 7 bankruptcy. 

The bankruptcy trustee’s objective is to protect the interests of the creditors involved in the case, not those of the debtor.  Individuals and couples filing Chapter 13 or filing Chapter 7 bankruptcies should be prepared to protect their interests, assets and property before meeting with a bankruptcy trustee.  Hiring an experienced bankruptcy attorney to negotiate and communicate with the trustee on your behalf is a wise investment.

Chapter 13 Trustee

A bankruptcy trustee plays a larger role in Chapter 13 cases than in Chapter 7 cases.  Individuals or couples filing chapter 13 will note the trustee plays a dual role. The trustee’s main function is to ensure that the creditors’ receive fair and timely repayment of outstanding debts.  In order to achieve this, the bankruptcy trustee will work with the petitioner to reorganize debts and schedule a repayment plan.  Once the reorganization, payment plan and schedule are approved, the bankruptcy trustee assumes responsibility for receiving the debtor’s monthly payments and distributing them to creditors. 

A certain amount of negotiation and a thorough understanding of bankruptcy law are required of the bankruptcy trustee so that they may endeavor that both the creditors’ and debtor’s interests are upheld in accordance with the laws of the U.S. Bankruptcy Code.  The only way for a petitioner to guarantee their best interests are being represented is to retain the counsel of a bankruptcy attorney.

Chapter 7 Trustee

In Chapter 7 bankruptcy cases, the bankruptcy trustee plays a minimal role in the proceedings.  Individuals and couples filing Chapter 7 liquidation will first encounter their Chapter 7 Trustee at the Section 341 Creditors’ Meeting.  At this meeting, the trustee will review all creditor lists, financial documents, assets and exemptions that you and/or your lawyer submitted when filing Chapter 7 bankruptcy. 

Just as the trustee’s role in Chapter 13 cases is to protect the interests of the creditors, the same is true for Chapter 7 Trustees in Bankruptcy.  The Chapter 7 bankruptcy trustee must aim to satisfy the creditors’ claims through the liquidation of the debtor’s non-exempt property or assets.  The trustee oversees the sale of non-exempt property and assets, and distributes the proceeds to pay the balance owed to priority creditors.  Most individuals and couples filing Chapter 7 bankruptcy petitions are classified by trustees as “no asset” cases, and therefore no property is lost.

Bankruptcy questions and answers

Above all else, remember the Bankruptcy Trustee represents the interests of the creditors in both Chapter 7 and Chapter 13 bankruptcy cases.  A bankruptcy attorney can answer most of your bankruptcy questions and answers, and is in the best position to address concerns you may have about dealing with a bankruptcy trustee.  If you choose to enter bankruptcy proceedings without the assistance of bankruptcy lawyers to oversee your case, you may still benefit from contacting a legal professional to answer basic bankruptcy questions and answers prior to filing Chapter 7 or filing Chapter 13 bankruptcy.


#1 Resource for Finding Common Bankruptcy Forms

April 4, 2012 - 04:58 by bankruptcylawyer

Filing bankruptcy may be the most emotionally- and financially-charged event in a person’s life.  Perhaps the most challenging aspect of the entire bankruptcy process is overcoming the stigma of filing personal bankruptcy. If bankruptcy truly is the most appropriate solution to overcome your crushing debt, then hold your head high because the U.S. bankruptcy code was penned to help and protect you at this difficult time.  The fundamental purpose of the federal bankruptcy laws is to give “the honest but unfortunate debtor… a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” (Decision of The Supreme Court, 1934)

When it comes to finding common bankruptcy forms, you need to be on the look out for local, national and official (mandatory) forms.  If you intend to seek the guidance of a qualified bankruptcy expert, your bankruptcy lawyer will assemble and organize all of the forms necessary for filing personal bankruptcy.

If you intend to take on filing bankruptcy by yourself, the best resource for finding common bankruptcy forms, explanations and instructions for the bankruptcy process is located on the U.S. Courts website.  All of the essential forms a bankruptcy lawyer utilizes are available for download from this site, including information on how to differentiate between local, national, mandatory and basic procedural forms.

The forms required for filing personal bankruptcy under Chapter 7 or Chapter 13 are listed for your benefit in Procedural Form B 200.  The U.S. Bankruptcy Court’s Form 200 contains required lists, schedules, statements and fees associated with successfully filing personal bankruptcy.

When searching for and finding common bankruptcy forms without the benefit of a bankruptcy lawyer, you must understand that all bankruptcy forms, whether official or procedural, come from one of two groupings under the bankruptcy code: the National Judiciary (National) or state (Local) categories, respectively.  Local forms differ from one state to another, while National forms are standardized and consistent across the United States.  Under the U.S. Bankruptcy Code, it is mandatory to use the official forms when filing for bankruptcy.  Making use of the procedural forms is not required, although it may simplify details your personal bankruptcy case for the court reviewing your petition.  If you have any doubt about which forms are essential to successfully filing bankruptcy, a bankruptcy lawyer can provide timely advice on which forms may help to avoid unwanted delays and in some cases, a judgment of dismissal.

As you begin finding common bankruptcy forms and gain a clearer understanding of bankruptcy procedures, you may recognize that a bankruptcy form is not a single document, but a comprehensive list of individual forms and documents.   Whether you choose to hire a bankruptcy lawyer or proceed with filing bankruptcy personally, you will need to be able to differentiate the required common bankruptcy forms from the procedural ones that can be overlooked with no penalty or delay to your case.


Can One Spouse File Bankruptcy?

March 27, 2012 - 04:55 by bankruptcylawyer

“Can I file bankruptcy without my spouse?”

The short answer is “Yes.”  According to U.S. federal bankruptcy rules, one spouse may act as a soul petitioner when filing for bankruptcy protection under Chapter 7 or Chapter 13 bankruptcy.

The long answer is slightly more involved.  Whether it is advisable to file bankruptcy without your spouse depends entirely on your personal circumstances and thoroughly weighing whether Chapter 7 vs Chapter 13 bankruptcy is more beneficial for you.  In a nutshell, if your debt is in your name only and your spouse has not co-signed contracts, loans, credit or mortgages you are named in, then the debt is yours alone and bankruptcy may have little impact on your partner. 

Obtaining the advice of an experienced bankruptcy attorney will be valuable in this regard.  A bankruptcy lawyer knows the benefits and limitations of Chapter 7 vs Chapter 13 bankruptcy and can explain the bankruptcy rules in detail.  This is essential for making an informed decision that allows you to keep as much of your property and assets as possible in the event you bankrupt.

“How will bankruptcy affect my partner?”

Shared credit cards, mortgages and car loans are examples of debts that both spouses are equally liable for.  When your debts are shared, the effects of bankruptcy on your partner can be drastically different depending on the filing spouse’s decision to petition under Chapter 7 vs Chapter 13.

According to U.S. personal bankruptcy rules, cases in which one spouse petitions for Chapter 7 bankruptcy discharge from shared debts, the non-filing spouse will assume total responsibility for repaying the creditors in full.  Also worth noting is that in Chapter 7 bankruptcy cases where the only one spouse is filing bankrupt, the non-filing spouse will not have the benefits associated with bankruptcy protection, such as automatic stays and bankruptcy discharge from debt.

Depending on the various federal or state bankruptcy exemptions for which you may qualify, it may be more beneficial overall for your spouse to file for bankruptcy discharge with you.  Often married couples may double the allowed exemption values, thereby protecting more assets and personal property than would otherwise be possible if one spouse filed alone. 

It is important to note that even if your spouse chooses to not file bankruptcy their income will still be attributed to you.  In the event that your spouse’s income is sufficient, you may be found ineligible for Chapter 7 liquidation bankruptcy.  If this happens you may choose to withdraw your bankruptcy petition entirely or file for a Chapter 13 reorganization and repayment plan.

Chapter 13 bankruptcy rules, however, allow co-debtors - including non-filing spouses - to be protected by a co-debtor stay.  The stay prevents creditors from focusing all of their collection efforts on the co-debtor while the bankruptcy petitioner works with a Trustee to reorganize the debts and negotiate a repayment plan.

Whether you are wrestling with Chapter 7 vs Chapter 13 bankruptcy benefits and drawbacks, the U.S. Bankruptcy Code allows for a non-filing spouse in a “community property state” to share the benefits of their spouse's bankruptcy discharge, as a matter of law.  Individuals and couples considering petitioning for bankruptcy discharge or protection should seek the counsel of a bankruptcy lawyer to determine if your state is a community property state.

In terms of how one spouse going bankrupt will affect the credit of the non-filing spouse, if you share joint debts, you can expect the bankruptcy to be noted in some way on the credit record of the non-filing spouse.  If your debts are separate, however, one bankruptcy should not be reflected in non-filing spouse’s credit reports.   Within 6 months of filing bankrupt, have your spouse check their credit rating.

A bankruptcy attorney can explain all of the Chapter 7 vs Chapter 13 bankruptcy rules, the consequences and benefits of going bankrupt as an individual and as a couple, and how to achieve a bankruptcy discharge from debts.  Contact a bankruptcy lawyer in your area for professional advice on the effects of filing bankruptcy without your spouse.


Top 8 Budget Tips to Avoid Bankruptcy

February 1, 2012 - 05:42 by bankruptcylawyer

Financial strain impacts every aspect of your life. It affects your sleep, your work performance, your relationships, and your health and well-being.  If you’re reading this because you’ve begun to research bankruptcy advice or investigate the benefits or drawbacks of bankruptcies, you’ve just taken the first major step toward regaining control of your finances.  To reward your bravery and to help you take proactive measures to avoid bankruptcy, we’ve compiled 8 simple and effective budget tips from leading financial advisors.

1. Get Organized

Organizing your finances is not as difficult as you might think. Your first task is to collect all the receipts, statements and pay stubs that you can find.  These are the same materials you will have to bring to your credit counsellors and bankruptcy lawyers if you choose to seek their support and guidance.  But first you have to get your financial house in order to get on the fast-track to debt repayment.  The goal here is to find out what you really earn, and uncover where that money is being spent.

2. Live Within your Means

On paper, it might appear that you can justify treating yourself from time to time, but are you spending more than you earn? The average salary of a full-time, minimum wage employee in the US is around $15,080.  

The harsh reality is that a growing number of good, hard-working people are losing their homes, personal property and assets to foreclosures, repossessions and bankruptcies because they did not know their financial limits and failed to live within their means. In 2010, the number of home foreclosures in America increased by 35%.

How do you whip your finances into shape without risking it all? It’s simple: track your spending habits. After you pay your bills each month, how much do you have left over? This is a figure that most of us grossly overestimate because we forget about the other costs nibbling away at our income. Cell phones, car fuel, home heating costs, groceries, eating out, pocket money, entertainment, and even our daily coffee or snack add up to hundreds of untracked dollars spent. If you don’t know how much money you really have left over at the end of the month and are trying to avoid bankruptcy, a budget is the key tool that will work in your favor.

3. Accept that a Budget Works for You, Not Against You

Society gives the budget a bad rap.  What you should know is that a budget will do more to set you free than to limit your opportunities.  

Creating a monthly budget and sticking to it will be your single, strongest tool for living within your means, achieving your financial goals and staying out of the bankruptcy lawyer’s office. The reason budgets are not restrictive is because they put you in complete control of the direction your life is headed.

Though you will gain insight into your priorities and financial obligations, you may discover that you cannot comfortably, or even responsibly, afford elements of your lifestyle that you’re accustomed to. This can be upsetting, but because you’re determined to be free of debt, it will be easy to adjust your expectations.

Not sure what exactly goes into a budget? Our next bankruptcy-proof budget tip will help you perform damage control and achieve a debt-free future.

4. Put Your Budget to Work

Below are the four primary expense categories that should appear in your budget.  Organizing your expenses this way makes it easier for you to track your monthly spending habits and budget to avoid bankruptcy

  • Fixed Expenses:
    • Mortgage, rent, condo fees, property taxes, home/ vehicle/ medical insurance, utilities, heating costs
    • Your entire household budget each month should not exceed 32% of your net income.
    • Your maximum rent expenditure should not exceed 25% of your income.
    • Your maximum mortgage expenditure should not exceed 30% of your income. 
  • Incidental Expenses:  
    • Repairs to home or vehicle; cost of gas, parking, taxis, or public transit; grocery expenses, cleaning supplies, pet food; child care; spending money and allowances; clothes, shoes, gifts; tobacco and alcohol expenses; medical and personal care expenses
  • Debt Repayment:  
    • Repayment of student loans, car loans, lines of credit, consumer credit
    • Your Total Debt Service Ratio should not exceed 40% of your Net Worth.
  • Savings:
    • Retirement savings, education savings, emergencies, medical costs and the unknown
    • Your recommended minimum savings goal should not be less than 10% of your income.


5. Compromise and cut unnecessary expenses

When budgeting to avoid bankruptcy, you have to commit to cutting expenses.  Take a look at the following list of common (and sometimes non-essential) expenses.  Experts advise that your top 3 areas of spending on this list are the places you need to cut back.

  • Entertainment: This includes dining in restaurants, attending movies, going for drinks, memberships to clubs and gyms, to name a few. 
  • Clothing:  Choose alternatives to brand name clothes, shoes, jackets that fit and are appropriate for the climate.
  • Groceries, meals, snacks: Consider alternatives to your daily coffee habit, take-away work lunches and snacks, and paying full price for grocery items.
  • Transportation:  Public transit is smart, efficient, and cost-effective compared to the costs of owning and maintaining a vehicle or throwing money away on cabs.
  • Beauty products/ makeup: Drugstore brand personal hygiene and grooming products are a pleasant, cost-effective alternative to department store prices.
  • Rent: You may need to downsize, get a roommate.

7. Pay Down Your Debts

  • Make a payment schedule that chips away at your principal. Paying interest only prolongs the repayment period and can add thousands of dollars to the total cost.
  • Contact your credit card companies and request that they lower your interest.  You’re reclaiming control, so be persistent.  
  • Consolidate your credit cards. You can do this by transferring the balance of your other credit cards onto the card with the lowest interest rate.  Cut up the old cards.
  • If the above steps do yield results, seek credit counseling and bankruptcy advice to help you choose an effective debt repayment program.
  • Take on a second job, ask for a raise and increase your work hours, as required.

8. Get Expert Bankruptcy Advice

If you decide to seek relief under the Bankruptcy Code, bankruptcy lawyers can help you navigate with confidence through the various chapters of the Bankruptcy Code.  You may file a petition for relief under the most appropriate chapters of the Code, depending on your circumstances. Title 11 contains nine chapters, six of which provide for the filing of a petition. The other three chapters provide rules governing bankruptcy cases in general. Your bankruptcy case will be referred to by the chapter under which your petition is filed.


10 Clever Cost-Cutting Measures to Avoid Bankruptcy

January 25, 2012 - 05:42 by bankruptcylawyer

Times are tough.  Non-business bankruptcies filed in federal courts in 2010 totalled 1,593,081, up 8.1 percent from 2009.  If you live in fear of bankruptcy, now is the time to take control in the areas of your life over which you still have power.  Financial problems won’t go away overnight, but taking action empowers you to get on track.  You can always complete chapter 7 bankruptcy forms or chapter 13 bankruptcy forms before you meet with bankruptcy lawyers, but you may try cutting expenses in creative ways -- it's easier than you think.

Below is a list of common expenses identified by financial experts and credit counselors.  Many of us throw our money into these expenses without giving it a second thought.  Consider the three items on which you spend the most money - these are the areas you need to cut before looking for bankruptcy help.  If you commit yourself to cutting back, these 10 tips could help you budget to avoid bankruptcy.

1. Entertainment

This includes dining in restaurants, attending movies and going for drinks, to name a few.  These extracurricular activities are pricey and are luxuries you can do without, or you could compromise from time to time by trying the following:

Consider staying in and watching movies or playing multi-player video or board games with family or friends.  Host a pot-luck dinner where everyone brings a dish and shares the expense.  You can feed more people for less when you cook from scratch.  Everyone needs time away from the house, so seek outdoor activities or community events that are free. You can typically find these listed on your municipal home page or local radio station’s site.  If you have saved enough to splurge on seeing a movie in theatre, only go on “reel deal” night.  Many theatres have reduced ticket prices one night each week; contact your local theatre for information.  Catching a movie for less once every month or so is a good compromise - just be sure to avoid the overpriced concessions counter!
Cutting back on your entertainment budget will be a key part of your new strategy to avoid bankruptcy.

2. Clothing

There’s really no excuse to pay full retail price for brand name clothes. There are many stores that offer deeply discounted designer lines, and box stores that cater specifically to people on a tight budget and want to look stylish.  Do you live near a consignment shop?  You can buy new or gently used brand name clothes for a very small percentage of the retail price.  Another great option for families is to invite close friends, relatives and neighbors with children to come together for a clothing swap.  Kids outgrow clothes before they have a chance to wear them out, so rather than lose the investment altogether, trade them for another child’s unworn or gently used items.  Depending on how close the relationships are, the adults might be interested in trading from their closets, too.
Clothing and shoes are necessities, but once you get accustomed to making room for only the essential items, your clothing budget will no longer be a contributor to your risk of declaring bankrupt.

3. Coffee/ Specialty Coffee

Coffee drinkers are known to splurge on their daily “fix.”  This typically runs anywhere from $1-5 per cup, depending on where you buy it. That can add up to $20-100 per month.  Many workplaces have tea and coffee available for the staff at break periods - take advantage of that perk! If the office beverages are not to your liking, bring you own packages of herbal tea or a favorite coffee roast from home. This way, you can enjoy your “fix” for pennies a cup. 

4. Work Lunches 

When it comes to work, pack your own lunch and healthy snacks.  It’s healthier for your wallet and might benefit your waistline, too.  Grabbing $10-20 of cafeteria food or take-out each day will cost you upwards of $50-100 per week, or $200-400 per month.  You can do without that expense.  If you have school-aged kids, get them involved too!  They will feel good about helping to bring positive changes to the family.  From now on, you’re all going to “brown bag” it.
Cutting non-essentials such as take away lunches and specialty coffees from your list of approved expenses is an effective budget tip to avoid bankruptcy.

5. Cabs

Like take-out lunches, cabs only appear “essential” when you didn’t take the time to plan ahead to make other arrangements.  If you cannot walk to your destination, leave earlier so you can make your connections on the bus or subway.  If public transportation isn’t available in your area, carpool with a coworker, or ask family or friends to give you a lift. 

6. Transportation

Public transit is smart, efficient and cost-effective compared to the costs of owning and maintaining a vehicle.  If you require a vehicle for your job, take turns carpooling with a coworker to cut fuel costs by half. I live in an rural area where there are no busses, so I had to get creative to cut transportation costs.  I save all my errands and run them at once.  I’ve let my friends and family know that if they are considering getting me a gift for my birthday or holidays, I’d love the gift of gas cards for topping up my tank at the service station.

In addition to using public transportation and carpooling to cut transportation costs, you may also need to consider purchasing a less expensive vehicle, or reducing the number of family vehicles to one.  The key to success when budgeting to avoid bankruptcy is to compromise wherever possible.

7. Beauty products/ makeup

Department store brands are beautiful but they fall squarely in the luxury category.  You can’t justify paying high-end prices when you’re cutting expenses.  I learned in university that the best value can be found in popular drugstore brands.  Drugstores carry a huge assortment of beauty products that do a great job and are gentle and animal cruelty-free. Most drugstores have great loyalty rewards programs, so you earn deep discounts or free products as you shop over time.  Win-win!

8. Gym membership

If you have a membership you don’t use, find out if you can give it up early or transfer it to another person.  If you’re going on vacation, ask if you can get a refund for the time your membership will not be in use.  Do a quick online search to find free fitness clubs and classes in your area, and spend more time outdoors.
Luxury items such as high-end makeup and gym memberships are usually among the first things to be stricken from a budget when an individual is facing filing bankrupt.

9. Groceries

Food costs are high, but there is a lot of competition among grocery retailers that will benefit you if you do your homework.  In addition to strictly avoiding high-end and overpriced grocery stores, your best bet is to spend time at home with sales flyers and make a grocery list of bargains you find - and only buy what is on your list.  Also, if there are no coupons in your sales flyers, every grocery store has coupons posted in a highly visible area.  Make use of them!

10. Rent

Everyone needs a roof to sleep under, so this may call for a compromise. To find ways to subsidize your rent or mortgage costs, get a roommate.  Do you have a spare room that could bring in extra cash?  If not, begin looking for a cheaper place, or a place that will lower costs for you in other areas.  This can include lower rent or mortgage costs, lower heating costs, or a better transit system so you can leave your car at home and save the costs of fuel and regular wear and tear on your vehicle. 
Food and housing costs are essential items in your budget and now you have strategies to empower you to get these expenses back on track. Taking the time to plan your meals around sales in the flyers will help you cut food expenses in your budget and downsizing your housing or sharing housing costs with another tenant are compromises that could divert you from scheduling a meeting with bankruptcy lawyers.

Commit yourself to cutting back, and integrate the above 10 tips into your budget to avoid bankruptcy.



What is a FICO Score?

January 5, 2012 - 05:44 by bankruptcylawyer

FICO Score

Your FICO score may be better known to you as your credit score.  This system of measuring your “credit worthiness” was founded by the Fair, Isaac and Company and has been used reliably by lending institutions since the mid-1960s.  The FICO system determines your credit score based on how well - or poorly - you manage your debt.  In the case of individuals who wish to declare their self bankrupt to gain relief from creditors, bankruptcy lawyers can advise their clients of the impact various types of bankruptcy can have on a FICO score.

Your FICO score takes into consideration whether you pay your bills on time, how many credit cards you have, how much debt you carry, whether you pay the balance each month and whether you are currently bankrupt or released from bankruptcy.  All of these details are compiled by three credit bureaus who track our financial activities.  Every time you pay – or fail to pay – a bill on time, it gets reported by your lender/ creditor to one (or more) of three credit bureaus.

Your financial track record indicates your credit worthiness through your demonstrated ability to repay what you borrow from lenders. Your score is a predictor of whether you are going to repay the money on time and in full, whether you are likely to default on your payments and whether you’re on the path to making an appointment with bankruptcy attorneys.  The higher the default risk you pose to creditors, the higher the interest rate they will charge you.  High interest rates are the lenders’ insurance against the losses they expect to incur in the event you fail to repay your debt.

What do FICO scores look like?

  • 850-720  (Really good)
  • 719-700
  • 699-675
  • 674-620
  • 619-560
  • 559-500  (Not good)
  • 000-499  (Really bad)    

How is my FICO score calculated?

  • Payment history (35%) – Late payments and various types of bankruptcy have a negative impact on your score.  Risk is calculated by how frequently you miss payments, how long it takes you to pay, how recently the late payment event took place, whether you’re currently bankrupt or how long since you’ve been released from bankruptcy.
  • Outstanding balances (30%) - Risk is calculated by comparing your total balances with your total available credit.
  • Length of credit history (15%) - Your score favours how long your various credit accounts have been open and how frequently you use the accounts. 
  • New Credit (10%) – Opening more than one credit account within a short time frame is a good way to begin establishing a credit history.
  • Types of credit (10%) – Your score considers the total number and types of accounts open in your name. It looks at the number and type of credit cards you use (bank or department store), lines of credit such as student loans or home repair, automobile financing and mortgages. 

How to Get Your FICO Score:

Beware of fake FICO reports – you do not have to pay money to learn your credit score.  Some instances where you may need to know the exact number of your FICO score include applying for a mortgage or large line of credit and investigating why your application for such loans has been rejected.  Should you choose to seek relief from creditors under the Bankruptcy Code, your credit counsellors and bankruptcy lawyers will require your credit information and score.  The easiest way to get your free credit report is to approach the credit bureaus mentioned at the beginning of this entry.  You can apply to them individually by using the contact information below:

  • Equifax (US)                           (800) 685-1111           www.equifax.com

    Equifax (Canada)                    (800) 465-7166           www.equifax.ca
  • Experian (US)                         (888) 397-3742           www.experian.com    

    Experian (Canada)                  (888) 397-3742           www.experian.ca
  • Trans Union (US)                    (800) 888-4213           www.transunion.com      

    Trans Union (Canada)             (800) 508-2597           www.transunion.ca



Benefits of Bankruptcy Counseling

January 5, 2012 - 05:36 by bankruptcylawyer

Going bankrupt is one of the most emotionally and financially devastating events that can take place in an individual’s life.  Although it can feel like an isolating experience, a total of 1,467,221 non-business bankruptcies were filed in US federal courts in between September 2010 and September 2011.  The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has changed the rules for petitioning for bankruptcy.  The changes aim to provide financially education and support to troubled consumers throughout the bankruptcy and discharge process. The decision to file bankruptcy yourself, or with a bankruptcy lawyer, is a serious consideration with real consequences to juxtapose the benefits.  As such, the new act ensures that consumers do not enter the process without qualified bankruptcy advice.

The education component of the 2005 act is comprised of two parts: pre-bankruptcy counseling and a post-bankruptcy debtor course.  Under the new bankruptcy law, individuals who intend to file for bankruptcy protection must receive credit counseling from a qualified agent. Once the required counseling is completed, a certificate of proof must accompany the Chapter 7 or Chapter 13 filing.  The purpose of mandating a pre-filing counseling session is to enable consumers to fully understand the potential advantages and disadvantages of, and alternatives to, going bankrupt before action is taken.  Bankrupt individuals must also complete a post-bankruptcy debtor education course before their debts will be discharged.

The benefits of bankruptcy counseling include an in-depth discussion of the circumstances that led you into financial difficulty, an evaluation of your personal financial situation from a qualified credit counselor who will also discuss your alternatives to bankruptcy, and develop a budget or repayment plan specifically for you. The fee is generally in the $50 range, depending on factors such as where you live and the types of services you receive. The counselor will discuss all fees with you before starting the counseling session. If you cannot afford to pay for credit counseling, request a fee waiver before your session begins. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay.

Your ability to make an informed decision about whether bankruptcy is the best solution for your particular financial situation depends on your full understanding of the repercussions associated with bankruptcies and awareness of feasible alternatives to filing bankruptcy yourself. This education can only come from bankruptcy professionals such as credit counsellors and bankruptcy lawyers.

You are not required to be represented by an attorney, but bankruptcy lawyers are able to provide you with valuable bankruptcy adviceIn light of the recent changes made to bankruptcy law, an attorney will help you understand your rights and the consequences of your bankruptcy case.  If you decide to file a Chapter 7 or Chapter 13 bankruptcy petition, the advice and assistance of an experienced bankruptcy lawyer is generally a worthwhile expense.         


Is There Bankruptcy Software?

January 5, 2012 - 05:12 by bankruptcylawyer

In 2011, approximately 5,484 Americans filed for bankruptcy protection each day.  While factors such as healthcare costs, foreclosures and job loss continue to be catalysts for bankruptcies, the majority of filings tend to be linked to consumer debt.  To meet the demand of consumers seeking do it yourself” bankruptcy alternatives, various web-based businesses and software firms have cropped up, marketing cheap and easy tools to file bankruptcy online.

Similar to do-it-yourself tax software, bankruptcy software is sold directly to the consumer and, like the former, has its share of inherent benefits and pitfalls. An obvious advantage is the degree of explanation and step-by-step guidance throughout the software, which is altogether absent from traditional court forms.  Also, do-it-yourself bankruptcy software promises to save the user a great deal of time.  A word on this point however: the software still has a large degree of specialization, and therefore will only be truly efficient in the hands of individuals familiar with preparing bankruptcy filings.  The fee charged to file bankruptcy online or to purchase bankruptcy software runs anywhere from half the cost - to the full cost - of hiring a bankruptcy lawyer to prepare the documents on your behalf.    

For all the perceived benefits of bankruptcy filing software, this alternative has definite limitations for the average consumer.  The software itself is unlikely to perform an incorrect mathematical function; however, the user must understand the underlying concepts for each of these functions or user errors may result in your form being inadmissible.  Initially, tax and bankruptcy software were designed not for consumer use, but intended as tools for professionals to make their own work more efficient.

Consumers with complex bankruptcy situations should retain an attorney for bankruptcy advice and to explain your rights and obligations as a debtor.

Perhaps the most important information for consumers considering do-it-yourself bankruptcy software, or planning to file bankruptcy online, is to be aware of the changes made to US bankruptcy laws in 2005 that the software cannot help the debtor fulfil.

The Bankruptcy Abuse Prevention and Consumer Protection Actof 2005 implemented a series of amendments to US bankruptcy laws that prescribe a series of criteria that petitioners must fulfil in order to declare bankrupt and ultimately be discharged from bankruptcy.  The first criterion is the completion of a bankruptcy means test, an income-based test which determines whether debtors are eligible for Chapter 7 or Chapter 13 bankruptcy, and in particular determines whether the debtor has sufficient financial means to repay a portion of their debts.  The bankruptcy means test was implemented in part to prevent wealthy debtors from filing for Chapter 7 Bankruptcy and is.  Individuals filing for bankruptcy ought to seek the counsel of credit counsellors and bankruptcy lawyers to complete this test.

The final conditions that cannot be met using bankruptcy software are related to pre- and post- bankruptcy education.  Under the new US bankruptcy laws, individuals seeking relief from creditors through bankruptcy will be required to complete a pre-bankruptcy counselling session with a qualified credit counsellor. Certificate of completion from this session must accompany bankruptcy filings.  When a debtor has reached the end of their repayment plan, they must complete a post-bankruptcy debt education course before their bankruptcy filing can be discharged.

Ultimately it is the consumer’s choice how to proceed, whether filing bankruptcy with the counsel of bankruptcy lawyers or with do-it-yourself bankruptcy software and filing online.  Under the new laws, debtors must consult with credit counsellors and complete debt education courses in order to successfully file for, and be discharged from, bankruptcy.  When applying for relief under US bankruptcy laws, it is your responsibility to be informed of your rights and obligations as a debtor, and given the complexity of many bankruptcy cases, the bankruptcy advice and professional guidance provided by bankruptcy lawyers are worth the expense.


Illinois Bankruptcy Information

July 28, 2011 - 05:09 by bankruptcylawyer

Of the two things that people fear most in life, death -- according to researchers -- is not one of them. The first fear is the catastrophic destruction of property through natural phenomenon like tornadoes or hurricanes and other events such as fire and flood. The second fear is having to file for bankruptcy.

Most people define “security” as being directly attributable to their social and financial capacity. Clearly, money really makes the world go around, and one can not live comfortably or securely without enough of it. For this reason, if you’re considering bankruptcy, it’s crucial for you to be exposed to Illinois bankruptcy information in order for the proper bankruptcy processes to be facilitated effectively. After educating yourself on Illinois bankruptcy information, you will find that filing for bankruptcy is a highly personal decision, and you should undergo a thorough process of weighing all your other options.

There can be serious repercussions when you choose to file for bankruptcy in Illinois. The first is that you must go through a supervised federal court process which can take - depending on the chapter of bankruptcy that you file - anywhere from four to six months, to five years. Secondly, although you’ve probably heard that bankruptcy destroys your credit forever, this is not true. Bankruptcy stays on your credit report for seven to ten years, depending on the credit bureau. Given that most people typically file bankruptcy in the event that they’re up to their eyeballs in debt, their credit is already in bad shape at the time of filing anyway. However, bankruptcy can prevent you from borrowing money from various creditors in the future. So, make sure to properly assess the pros and cons of your important decision on whether or not to file a bankruptcy in Illinois. The more you educate yourself on Illinois bankruptcy information, the better off you’ll be.

Through the proper understanding of Illinois bankruptcy laws, you may be able to avoid or stop garnishments, foreclosures, repossessions of your car or household goods, and the creditor harassment that comes with collection activity. In the right situations, filing for bankruptcy may be one of the best decisions you ever make. It can free you of the emotional stress and feelings of depression that are commonly associated with being trapped in situations of financial hardship.

It is also important to note that the bankruptcy laws have changed in the last decade, and not everyone who could file for a complete bankruptcy (Chapter 7) can now qualify. This is the reason why having the right Illinois bankruptcy information can spell the difference between debt freedom and disaster. For all its worth, Illinois bankruptcy information can be accessed very easily. One’s best bet is to consult a professional for a free evaluation of your case - an bankruptcy attorney who focuses on bankruptcy.


Personal Bankruptcy Information

July 28, 2011 - 05:02 by bankruptcylawyer

Educating oneself on personal bankruptcy information is essential for anyone who is considering filing for personal bankruptcy. While statistics do show that the number of people filing for personal bankruptcy has surged due to the economic downturn of the past few years, it’s imprudent to file for bankruptcy without the adequate amount of personal bankruptcy information. Knowing enough personal bankruptcy information can help you avoid encountering potential problems with your bankruptcy filing, and can help you go through the bankruptcy process more smoothly. In all, acquiring as much personal bankruptcy information as possible is an excellent option if you’re considering filing for bankruptcy.

Chapter 7 Bankruptcy

The specific personal bankruptcy information you need varies on a case-to-case basis and depends on your subjective situation. Most people have the mindset that bankruptcy should provide them a fresh start - that it will wipe out debts they owe. This complete type of bankruptcy is known as Chapter 7 bankruptcy. Also referred to as the “liquidation bankruptcy," Chapter 7 bankruptcy clears you of all dischargeable debts, like credit cards and medical bills, but also may force you to surrender some of your possessions or property so they can be sold to repay your creditors. A bankruptcy attorney can assist with understanding this concept further. Because of this provision, Chapter 7 bankruptcy doesn’t always flow as smoothly as originally planned, but it is by far the most efficient way for most people to get a clean slate and a fresh start. Many people have the misconception that their debts are immediately cleared after the filing of a Chapter 7, which is not the case. One’s debts aren’t officially forgiven until a discharge is entered by the bankruptcy court.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is the second most commonly filed chapter of bankruptcy by consumers. Also known as the “reorganization bankruptcy”, Chapter 13 reorganizes your unresolved debt at the time of filing into one affordable monthly payment. It’s used by many to help save their homes from foreclosure. personal bankruptcy information on Chapter 13 is much more detailed and complex than Chapter 7. Most bankruptcy judges will not let you file a Chapter 13 without the assistance and representation of a lawyer, and the repayment plan must las five years in most instances. As mentioned above, the advantage to filing Chapter 13 is that you’re given the privilege to retain certain assets and property, such as your home, but still receive the protection of the bankruptcy court from your creditors.

Is Filing Bankruptcy Right for You?

Chapter 7 and Chapter 13 bankruptcy typically the only two options available to those to those who want to declare personal bankruptcy to deal with their financial problems. Once a bankruptcy has been filed, individuals are then protected by law from collection lawsuits and any other actions that creditors may take against them, such as wage garnishments. However, bankruptcy comes with a price - it’s commonly known to all that bankruptcy is a major dent to your credit report. It can remain on your credit report for seven to ten years, depending on the credit bureau.

Credit Counseling Sessions

To properly complete a personal bankruptcy, a pre-bankruptcy credit counseling session and pre-discharge debtor education session is required. These can typically be done online. The first course (pre-bankruptcy) is basically required to inform interested parties that they may have other options besides filing for bankruptcy.The sessions are helpful and also a great way to garner basic personal bankruptcy information and other financial advice, providing people information on the best ways to handle their finances post-bankruptcy completion.

Rates for both sessions are around $50 each, and if you plan on having the fee waived due to financial hardship - you must secure a fee waiver before sessions start. Both credit counseling sessions are required for all individuals and married couples filing for bankruptcy, and certificates are issued as proof that the counselings were completed.

After your bankruptcy has been filed, you must then obtain your post-bankruptcy “debtor education” counseling certificate. These sessions can also be done in person as well as online or possibly over the phone. The purpose of the post-bankruptcy session is to help you work on developing budgets and managing money. While you may not have sterling credit after filing a bankruptcy, you’ll still be educated on using credit wisely.

Knowing the proper information when deciding whether to file for personal bankruptcy can help you make the right decision. For more personal bankruptcy information, be sure to explore bankruptcyhq.com.


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