Bankruptcy and Dealing with Debt

With the prolonged economic recession, many people are burdened with debt. As lay-offs continue among big and small companies, people face an increased possibility of losing their jobs. Higher interest rates, salary cuts and job retrenchments exacerbate the debt problem. Filing for bankruptcy is usually the last resort in solving the debt crisis. But before taking that step, there may be other things you can do.

First, review all your expenses, not just the major fixed expenses like mortgage and lease payments but also the minor, incidental expenses like your morning cup of coffee, your massage sessions or pedicures. These may be small and irregular but when you add them up, they come up to quite a sizable amount of money.

Next do something about your credit card debts. The most obvious thing to do would be to spend less on credit and keep up with at least the minimum payments due each month. Also, most people have more than one card. Consider transferring part of your balance from the card with the higher interest rate to the other one with the lower interest rate.

Finally, do not hesitate to negotiate with your creditors for a lower interest rate or extended payment period, both of which would reduce your monthly expenses and ease your debt situation. Here’s a tip – when you mention that you are likely to file for bankruptcy, some creditors may be more willing to reduce their interest rates or give you more favorable terms because they would want to avoid having their debt discharged in bankruptcy.

Now assuming you have taken every step you possibly could to alleviate as much of your debt problem and still find yourself mired in insurmountable debt then it is time to consider filing for bankruptcy. The question then is when you should do so. Every person’s situation is different so it pays to consult a bankruptcy lawyer to decide when the best time would be.

For example, if you have charged a lot of expenses to your credit cards recently, it may not be a good time to file for bankruptcy just yet. This is because the bankruptcy trustee might decide that your recent credit card debts are exempt from discharge which means you have to pay them in full. The worst outcome is the bankruptcy trustee dismisses your case if you have racked up your credit card debts just so that they can be discharged by the bankruptcy. Likewise, if you expect your debts to pile up soon, it might not be the best time to file for bankruptcy.

You can discuss all this with an experienced bankruptcy lawyer who will help you save money and discharge as much of your debt as possible through bankruptcy. Call us at (813) 200 4133 for a free consultation on how bankruptcy can benefit you.

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    Little-known Tips on Improving Credit Score Post-bankruptcy

    Filing for bankruptcy obviously decreases your credit score. Once you have been discharged from bankruptcy, it is time to take steps to improve your credit score. The good news is that it does not have to take at least seven years to get your credit score back to a healthy level as it was before your bankruptcy. But few people know the surefire and proven things to do to restore credit scores. As a result, most people do things that actually damage their credit score even more.

    This is because there are several fallacies people have been conditioned to believe or think are correct because they seem logical. For example, many people think that your credit score will improve if you have less debt or that on-time payments will improve your credit score. While there is nothing wrong with both these practices, but they are not the primary factors that improve your credit score. In other words, even if you reduce your debt and pay your debts on time each month, your credit score may not improve.

    So what really improves your credit score? Contrary to some of the popular beliefs floating around, your credit score improves with a good credit to debt ratio. As the name suggests, a credit to debt ratio is the ratio between how much credit you have and the amount of debt you carry given the credit you have. So if the amount of credit you have (from all your credit cards combined) is $5,000 and your total debts is $1,000 you have a better credit score than someone else who has a total credit of $2,000 and total debts of $500. Get it?

    Therefore, after your bankruptcy is discharged you should not be too quick to close your credit card accounts just to decrease your likelihood of debt. The credit bureaus do not lower your credit score based on how many credit cards you hold. They base it on how much debt is outstanding on all the cards in ratio to the total credit you

    Likewise, if you have one credit card that has reached its maximum credit limit and 3 others that are hardly used, technically your credit score is better than having 2 credit cards that have both reached half their credit limit. This is because the first scenario has a higher credit to debt ratio (it has more credit compared to debt) than the second.

    With these tips, you do not have to wait several years to improve your credit score after bankruptcy.

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      A Bankruptcy Lawyer’s Points on Chapter 13 Bankruptcy

      When filing for bankruptcy, the best thing to do to make the process as seamless as possible is to hire a bankruptcy lawyer. A bankruptcy lawyer will do a lot of things for you, not least of which is guide you through the entire process (which can be very complicated, unless you are very well versed with the bankruptcy code). One of the most common types of bankruptcies chosen by individuals is Chapter 13 bankruptcy.

      Here are some helpful pointers for your Chapter 13 bankruptcy filing.

      Firstly, Chapter 13 bankruptcy is only for individuals and sole proprietors, not for companies or partnerships. If you wish to file for bankruptcy for your company or partnership, you need to file it under Chapter 11 bankruptcy.

      Secondly, Chapter 13 bankruptcy is preferred by the bankruptcy court and is easier to gain approval compared to Chapter 7 bankruptcy (the other type of bankruptcy filing for individuals). This is because Chapter 13 bankruptcy is involves a payment plan stretched out over a period of time (up to 5 years) whereas Chapter 7 is liquidation bankruptcy where your non-exempt assets are sold off to pay for your debts.

      Thirdly, there are some prerequisites to filing for Chapter 13 bankruptcy. For instance, you need to be earning a steady income. It does not have to be a high income but it must be consistent. If you only earn income sporadically it may not be considered good enough to qualify you for Chapter 13. The consistent income requirement is to ensure that you and your family have enough finances to sustain a reasonable living while repaying your debts under Chapter 13. If your income is inconsistent, the bankruptcy court may decide you do not have enough to survive while undergoing bankruptcy and hence your bankruptcy plan will not be approved.
      Fourthly, you must not have debts exceeding the limit set by the bankruptcy court. If you do, your bankruptcy filing is not likely to be approved. This limit may change from time to time.

      Fifthly, you must be current with your tax filings. If you have not filed your taxes for certain years, you need to bring it up to speed before filing for bankruptcy. You may still have tax debts but you must not be behind in your tax filings.

      Finally, you must fulfill the residency requirements of your state. Depending on which state you live in, there are certain requirements set by the state government. Generally, you file for Chapter 13 bankruptcy in the state you reside in, but certain states have a time requirement in that you must have been living in that state for longer than a certain time to be permitted to file for bankruptcy there. Otherwise, you would be required to file for Chapter 13 in the last state you lived in (or the one you lived in for the longest time).

      For more information regarding Chapter 13 (or Chapter 7) bankruptcy, call us at (813) 200 4133 for a free consultation.

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        Going it Alone in Bankruptcy?

        If you are thinking of filing for bankruptcy, there are basically two options you can take – file for bankruptcy yourself or engage a bankruptcy lawyer. While it is possible to file for bankruptcy on your own, it is not something I would recommend. This is because the bankruptcy filing procedure is a complicated one and at times may be a long-drawn out process.

        If you choose to file for bankruptcy on your own you would need an adequate knowledge of the bankruptcy code. Depending on whether you intend to file for bankruptcy for yourself individually or for your company, there are differing sections of the bankruptcy code that govern your filing. Furthermore, even within an individual bankruptcy filing, there are different types. The first is Chapter 7 bankruptcy and the other is Chapter 13 (named according to the relevant sections in the bankruptcy code).

        But you might think you could save yourself a whole lot of money by filing for bankruptcy without hiring professional help. Sure, but you run the grave risk of making crucial mistakes that could result in your filing being derailed and worst of all, dismissed altogether. For example, one common way of thinking is to max out your credit cards just before (or during) filing for bankruptcy because when the bankruptcy is discharged, whatever unpaid debts on your credit cards will be forgiven, right? Wrong. If you intentionally use up all your credit prior to filing for bankruptcy, the bankruptcy trustee will not look kindly on your case and will recommend that it be thrown it out by the court. Therefore hiring a qualified and experienced bankruptcy attorney will save you from committing such costly mistakes.

        On the other hand, you might be thinking you could cut costs by using bankruptcy filing software instead of engaging a bankruptcy lawyer. The problem with most bankruptcy filing software is that the software can never be engineered to cater for all the possibilities that may crop up during the process of bankruptcy. For example, the bankruptcy judge may require you to file a document but your software may not cover how to do so or you may have questions outside of the scope of the bankruptcy software and without professional help, you would have nowhere to turn.

        The truth about bankruptcy filing is that it is complex and even small technical mistakes like an inaccurate reporting can cause your case to be dismissed. Furthermore, without the guidance of a bankruptcy attorney especially in difficult situations may result in unnecessary anxiety and worry for you.
        So take the smarter route – hire a qualified and experienced bankruptcy attorney for your bankruptcy needs. Call us at (813) 200 4133 for a free consultation.

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          How Bankruptcy Shortcuts your Financial Recovery

          Are you drowning in debt like so many people are these days? Does it feel like you always have “too much month at the end of the money” every month? You can either soldier on and try to change your fortunes in this tough economy or take the easier route – file for bankruptcy.

          How does bankruptcy put you on the road to financial recovery? There are 2 forms of bankruptcy for individuals (as opposed to companies, municipalities, governments etc) and they are called Chapter 7 and Chapter 13 bankruptcy (following the sections in the bankruptcy code that govern them). Each of these bankruptcies work in different ways and both bring benefits.

          The most obvious benefit is that bankruptcy wipes you financial slate clean of all your debts. Under Chapter 7 bankruptcy (called liquidation bankruptcy), your non-exempt assets are liquidated and the proceeds are used to pay off your debts. After all non-exempt assets are sold off, the rest of the debts are forgiven so that you can have a fresh start financially.

          Under Chapter 13 bankruptcy you are given a schedule to repay your debts over a maximum of 5 years. This gives you some breathing space to finish paying off your debts over time. So whether you file for Chapter 7 or Chapter 13 bankruptcy, your debt problems will soon be a thing of the past.

          Another benefit of bankruptcy is Automatic Stay. Automatic stay is a court-ordered prohibition imposed on all your creditors disallowing them to communicate with you in any form while you are under bankruptcy protection. This means an end to all harassment, badgering and hounding from hardline creditors. Automatic stay comes into effect immediately upon the confirmation of your bankruptcy.

          In addition, choosing bankruptcy saves you time as it cuts the recovery curve in dealing with your debts. We all know the vicious cycle of debt and repayment that never seems to end because your debts keep increasing even though you try to pay as much as you can each month. All the money you pay is like throwing it into the Black Hole of Calcutta, it never seems to fill it. But bankruptcy can put an end to this vicious cycle and allow you to save not just money but time as well.

          Finally, when you file for bankruptcy, you get advice on how to manage your financial affairs through the bankruptcy from your bankruptcy attorney and bankruptcy trustee. Your bankruptcy attorney is your most valuable ally in your fight against debts and your bankruptcy trustee is your arbiter between you and your creditors.

          So if you are considering filing for bankruptcy, call us at (813) 200 4133 for a free consultation. Our team of experienced bankruptcy attorneys are at your service.

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            What a Bankruptcy Trustee Does in Chapter 7 Bankruptcy

            What a Bankruptcy Trustee Does in Chapter 7 Bankruptcy

            When you file for Chapter 7 bankruptcy, the bankruptcy court will appoint a trustee to oversee your case. The trustee’s overall responsibility is to liquidate non-exempt assets to pay off as much of your debts as possible. It would be to your advantage to understand the role of the bankruptcy trustee so that you can cooperate with the trustee and have your bankruptcy discharged as soon as possible.

            The first thing the bankruptcy trustee does is review your bankruptcy petition to see that everything is in order. In doing so, the trustee will examine your assets to determine which are exempted from being liquidated and which are not. So it is imperative that you list all your assets and debts in your bankruptcy petition. If the trustee detects any discrepancies or irregularities, he may dismiss your case.

            Sometimes, you may miss out listing certain assets either due to a genuine oversight or because you have received the asset only after filing for bankruptcy. For example, if you are involved in a lawsuit prior to filing for bankruptcy and you are awarded assets in judgment post-filing, this asset may not be listed in your list of assets. In such a case, you need to inform your bankruptcy attorney who will in turn inform the trustee of the asset(s) that are not in your list.

            Another major thing the bankruptcy trustee does is to convene the meeting of creditors where the trustee once again reviews the bankruptcy petition and confirms it with your bankruptcy attorney. This is where you get another chance to rectify any errors or insert any missing information into your petition. The best thing to do would be to inform your bankruptcy attorney about any changes you need to make to your bankruptcy petition so that you attorney can liaise with the trustee and make the necessary changes promptly. If you are considering filing for bankruptcy and need a bankruptcy attorney, call us at (813) 200 4133 for a free consultation.

            One of the bankruptcy trustee’s main tasks is to determine non-exempt assets by reviewing your list of assets. If you state that a certain asset is exempted from liquidation, the bankruptcy trustee (and any of the creditors) can challenge it. On the other hand, the trustee may review a non-exempt asset and determine that it may not be worth liquidating and hand it back to you.

            If the bankruptcy trustee finds no non-exempt asset, he or she will file a “Notice of No Assets” and discharge the case. All non-exempt assets will be liquidated to pay off debts after the bankruptcy trustee deducts his or her administrative fees from the proceeds.

            It would not be uncommon to overlook valuable bankruptcy exemptions. In such a situation, the bankruptcy trustee will not educate you about overlooked bankruptcy exemption which is why having a bankruptcy attorney to advise you is so important.

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              Little-known Info from a Bankruptcy Lawyer

              Circumstances Excluded from Automatic Stay

              When you file for bankruptcy, an automatic stay goes into immediate effect. The automatic stay refers to the prohibition on creditors from continuing to seek payment from you using any means. This brings immediate relief from harassment and any high-handed tactics used by creditors to get money from you. But there are certain circumstances where automatic stay is not possible. Here are some of them.

              1. Child support

              Automatic stay does not apply to your obligation to give child support. This is also the case with any other court-ordered payment such as alimony.

              2. Divorce proceedings

              If you are in the midst of divorce proceedings, you cannot get out of it as automatic stay does not apply here. The only situation where automatic stay comes into play in divorce proceedings is when there is an issue over property in the divorce. In this case, your spouse (or soon-to-be ex-spouse) is not allowed to approach you over the property once you file for bankruptcy.

              3. Crime

              If you are indicted of a crime or are charged with committing it, then an automatic stay will not prevent you from undergoing the legal process of going to court, answering your charges, defending yourself etc.

              4. Landlord actions

              If an eviction notice has been served on you before you filed for bankruptcy, an automatic stay cannot be used to stop eviction proceedings. However, there may be a chance your bankruptcy lawyer may help prevent you from getting evicted if your landlord has not filed the necessary papers.

              5. Retirement Plan Loans

              If you have taken a loan on any retirement plan such as a 401, you are still obligated to repay the loan. This means any deductions on your paycheck to repay the loan will continue and automatic stay does not annul them.

              If you wish to know whether any of your circumstances are exempted from automatic stay, call us at (813) 200 4133 for a free consultation.

               

              How to file Chapter 7 Bankruptcy even though Below Means Test

              Chapter 7 Bankruptcy refers to the section in the bankruptcy code that relates to liquidation bankruptcy where your non-exempt assets are liquidated to pay off your debts. Any unpaid debts after that process are forgiven so that you can start afresh financially. To be eligible to file for Chapter 7 Bankruptcy is not easy for obvious reasons. You have to pass the Means Test i.e. your income needs to be below the Means Test level set for your state. Generally, if you fail the Means test, you have to file for Chapter 13 bankruptcy instead.

              If you know your income falls above the Means Test level, here are some things you can do to change things:

              1. Buy health insurance

              Health insurance is deductible from your income so having this insurance would lower your income level.

              2. Take the Means test at the right time

              For many people, income may vary depending on the timing. After losing your job, your income obviously reduces substantially, so you should take the Means Test when your income is at its lowest.

              3. Review the number of people in your household

              The Means Test takes into consideration the total income of those who live in your household, not only the members of your family. This consideration may be able to reduce your household income, depending on your circumstances.

              If you wish to file for Chapter 7 (or Chapter 13) bankruptcy, call us at (813) 200 4133 for a free consultation.

               

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                How to Plan for Bankruptcy

                If you are considering filing for bankruptcy, it is best to take some steps to plan your bankruptcy. Proper planning will keep your debts to a minimum and ensure a smooth bankruptcy process. Here are some things to consider before filing for bankruptcy.

                1. When to file for bankruptcy
                Since your income level is one of the main factors in bankruptcy, it is important to choose the most appropriate time to file for bankruptcy depending on your job situation. Some people decide to file for bankruptcy because they have lost or are about to lose their jobs. One of the things you may need to do in your bankruptcy filing is take the Means test. The Means test is to ascertain if you have enough disposable assets to pay off your debts and is based on your previous 6 months’ income. Therefore, you should take the Means test and file for bankruptcy after you have lost your job or have quit.

                2. How you pay off debts
                Obviously, you will want to reduce your debts as much as possible. But if you file for bankruptcy, you should ensure that you do not pay off any debt(s) preferentially i.e. favor one creditor (like a family member). This is because if the bankruptcy trustee discovers preferential payments to a creditor he or she may void the payments and demand the return of the money to the bankruptcy estate.

                3. Buying a car
                If you buy a new car through a car loan 910 days before filing for bankruptcy, the loan will not be dischargeable. Hence you will have to continue repaying the loan throughout the bankruptcy and beyond. So if you really need a car before your bankruptcy, either buy one in cash or determine that you can keep up with the loan repayments through bankruptcy.

                4. Selling assets
                If you sell off any assets before filing for bankruptcy, you need to ensure you sell at market value. If the bankruptcy trustee finds you have sold off your assets (like property) below market value, he or she may void the transaction and classify it as an illegal transaction because you did not receive the appropriate value in the transaction.

                It is important to discuss these pre-bankruptcy planning matters with your bankruptcy attorney before filing for bankruptcy. Call us at (813) 200 4133 for a free consultation.

                 

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                  Do Not Make these Holiday Mistakes if Filing for Bankruptcy

                  If you are going to or thinking about filing for bankruptcy anytime next year, you must be careful of your spending during this holiday season. The holidays is traditionally the time we get into more debt due to credit spending but if a bankruptcy filing is on the cards for you, you must be aware of these holiday pitfalls. Here are the most prevalent holiday mistakes you need to avoid.

                  1. Do not transfer your assets

                  Some people filing for Chapter 7 bankruptcy try to reduce their assets by transferring them to their loved ones to minimize their losses. This is a fundamental mistake you should avoid. If you make any transfer of assets to any family member, the bankruptcy trustee would find out because he or she would trace all asset transfers done up to one year prior to your filing. And if the bankruptcy trustee finds out you have tried to game the system, he or she might dismiss your case.

                  Transferrable assets are not limited to physical properties but also include cash.

                  2. Not reserving money for bankruptcy expenses

                  You will need money for the bankruptcy filing process. And obviously you cannot pay for this expense on credit. So if you spend all your cash reserves this holiday, you will find yourself unable to meet the expenses of your bankruptcy filing and your entire process will be derailed.

                  So by all means buy gifts for your friends and loved ones but do not forget to reserve some money to cover your bankruptcy expenses.

                  3. Spending on credit without repaying

                  Go easy on the credit card spending especially before filing for bankruptcy. Once you file for bankruptcy, the bankruptcy trustee will review your credit card usage up to 3 months prior to your filing. Exorbitant spending without reasonable attempts at repayment will definitely raise a red flag to your trustee, who will question you about it. If you cannot justify your credit spending and repayment, your bankruptcy trustee may declare your expenditure ‘non-dischargeable’ which means that debt has to be repaid through the bankruptcy process of asset liquidation.

                  If you intend to file for bankruptcy or have questions regarding how bankruptcy can give you a fresh start financially, give us a call at (813) 200 4133 for a free consultation.

                   

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                    Beware of Creeping Credit Card Debt

                    Heard of this story? A frog was swimming in a pot of water on a lit stove. He thought he could jump out at any time before the water got too hot so he continued to enjoy his swim. Before he realized it, the water temperature had risen to boiling point but by then it was too late for the frog to save itself as its muscles had been atrophied by the heat. What went wrong for the foolish frog? It had to do with the slowly increasing temperature. The temperature did not rise suddenly but slowly. As it rose slowly, the frog’s body temperature rose together with it, which was why the frog did not notice it was getting boiled until it was too late.

                    So what’s the moral behind the story? Just this – credit card debt has a way of creeping up on you unnoticed and before you realize it, you are overwhelmed by your debts.

                    It is very unusual for credit card debt to rise suddenly. It normally rises in stages. The first stage of debt is debt that comes when you overspend on credit. If you are not able to clear your credit card balance at the end of each month or at least within 4 months, you are at risk of getting into even more debt in future.

                    So you should always spend within your budget and keep your credit card spending to a minimum. Spending on credit should be reserved for necessary times like when you are travelling and cannot carry lots of cash on you.

                    If you allow your credit card debt to rise above the first stage, you will get into deeper debt where you can only afford minimum payments on your credit cards or you transfer balances from one card to another while your credit spending continues. You need to take some drastic action if you are in this much debt.
                    The best thing to do is to drastically reduce your overall spending (cash and credit) and use the cash you save to reduce your credit card balances. You may need to negotiate your credit terms with your credit card issuer.

                    The final stage of credit card debt is when you start skipping payments and you are charged more interest and fees on the unpaid balance. This is the ‘boiling water’ stage and you must do some debt negotiation with your credit card issuers for a lower monthly repayment or waiver of late fees.
                    If all negotiations fail then the other option is to file for bankruptcy. Bankruptcy is your right under the law and can be your means of wiping the slate clean for you financially. Call us at (813) 200 4133 for a free consultation or further information.

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