Can Bankruptcy be the Answer to Unemployment?

Unemployment has reared its ugly head due to the recession. Many of you may be unemployed at this point in time. If that is the case, what should you do (besides look for a job and cut down expenses)? It is practical to have contingency plans, just in case your job-hunting proves unfruitful or takes longer than you would like. When unemployment strikes, it inevitably leaves you with a mountain of debt to settle. So whatever you decide, it must take into consideration the debts you have.

Essentially, you have three options – pay up what you owe, negotiate a settlement for your debts or seek bankruptcy protection. The first option is only open to you if you have enough savings or have the resources to pay off all your debts. But this is usually not the case with most people. That is why they have to take up loans in the first place. And most people service their loans out of their salaries, not their savings. So once you lose your job, you also lose the ability to service your loans.

The second option is contingent upon the willingness and cooperation of your lender. To some extent, this can be influenced by your repayment track record. If you have been faithfully servicing your loans regularly and your perfect record has been disrupted only since you lost your job, then your lender may be more sympathetic towards your case. They may accept a smaller amount as full settlement of your loan, reduce your interest rates or suspend your payments for a period of time. However, not everything is within your control, so things may not go the way you wish. Your lender may or may not grant you more reasonable payment terms.

The only option that is within your control is the third one – file for bankruptcy. You should consider this option because it is the only viable option that can potentially relieve you of all your debts in the shortest possible time. At most, it would take you 5 years. If you keep struggling to pay your debts, look for a job, cut down expenses, it may mean more than a decade of misery. Why be burdened with debts that you can find relief from through bankruptcy?

Furthermore, if you have been constantly hounded by creditors demanding payment, bankruptcy can give you immediate protection from such harassment. When you file for bankruptcy, the court grants you an immediate automatic stay on all collection efforts against you. This gives you the time to sort out your finances and go through the bankruptcy process.

There are two types of bankruptcy open to individuals – Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is where your assets are liquidated to repay your debts. In Chapter 13 bankruptcy, you are put on a payment plan where you repay your debts over a period, usually between 3 to 5 years. But to successfully file for Chapter 13 bankruptcy, you need to have a regular source of income.

If you wish to discuss bankruptcy as an option to resolve your debt woes, call us at (813) 200 4133 for a free consultation.

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    When You Need to File Chapter 13 Bankruptcy

    The essential difference between Chapter 7 and Chapter 13 bankruptcy is that in Chapter 13 bankruptcy you will not lose any of your assets as it is basically a payment plan drawn up by the bankruptcy court to pay off your debts over a period of time up to 5 years. The payment plan would be based on your income and ability to pay. If you keep to the payment plan, you get to keep all your assets.

    So how do you know when you need to file Chapter 13 bankruptcy? Here are some indications.

    1. When you do not qualify for Chapter 7 bankruptcy because your income exceeds the means test
    Those who wish to file Chapter 7 bankruptcy must pass the means test by having their income lower than the average household income in their state (this differs from state to state). So if you do not qualify for Chapter 7, you have to file for Chapter 13 instead.

    2. You have enough disposable income to pay towards your debts after essential living expenses
    To make periodic payments according to a payment plan obviously means you do have some disposable income each month. This makes you eligible for Chapter 13 bankruptcy.

    3. You are struggling to keep up with your periodic payments but want to keep your assets
    For most people, their most essential assets are their home and vehicle, both of which are under some form of periodic payment agreement like a mortgage or lease. If you are not able to keep paying your periodic payments for these assets but still want to keep them, you should consider filing for Chapter 13 bankruptcy.

    4. You want to have bankruptcy protection from your creditors while repaying your debts
    Once you successfully file Chapter 13 bankruptcy, you come under automatic stay i.e. your creditors are barred from making any more attempts to collect on the debts you owe. At the same time, you wish to be able to repay your debts according to your affordability, not the demands of your creditors. If this situation describes you, Chapter 13 bankruptcy is ideal for you.

    5. Your assets qualify for Chapter 13 bankruptcy rather than Chapter 7
    You should always file for the Chapter of bankruptcy that is most relevant to your assets so that you stand the best chance of being approved. If your assets are more suitably filed as Chapter 13 rather than Chapter 7 bankruptcy, you should opt for Chapter 13. To determine which Chapter of bankruptcy your assets are better filed under, contact us at (813) 200 4133 for a free consultation.

    6. You need legal help repaying your debts now but want to have the option of filing Chapter 7 in future
    To determine how to file for Chapter 7 after filing for Chapter 13 bankruptcy, call us at (813) 200 4133 for a non-obligatory discussion.

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      Identity Stolen? File for Bankruptcy

      Identity theft is an ongoing scourge in our society that does not seem likely to disappear in the near future. While more stringent efforts are constantly made to prevent and prosecute identity theft cases, the menace remains especially with the popularity of online financial transactions of all sorts. When your identity is stolen, it would inevitably lead to a tremendous amount of debt in a short space of time. So if you have been a victim of identity theft, what can you do about it? One good option is to file for bankruptcy protection.

      A bankruptcy filing will bring about an immediate automatic stay on all your creditors. The bankruptcy court will order a freeze on all collection efforts against you, meaning No creditor will be allowed to pursue the debt you “owe” them. This will give you the time you need to deal with the theft with the relevant authorities.

      All cases of identity theft must be reported to the Federal Trade Commission (FTC) and the US Trustee Office. These authorities will work hard to nab the perpetrator of the crime. At the same time, if you file for bankruptcy protection, you will be given special consideration by the bankruptcy court because the debts in your name are not bona fide. The court will protect your interests and reason with the creditors on your behalf. This will buy you the time you need to sort things out with credit bureaus in relation to any fraudulent charges made, thereby reducing the amount of debts that are discharged under your bankruptcy.

      So declaring bankruptcy is one of the best ways to get creditors off your back while at the same time protecting your credit score. Every year, millions of Americans have their identities stolen and Florida is among the states with the highest incident of identity thefts in the country. The average amount of debt accumulated in identity theft cases is $5,270.

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        Resolving Credit Card Debt through Bankruptcy

        The most common type of unsecured debt is credit card debt. Since you do not put up any collateral against your debt, the credit card company has the right to sue you for payment if you default in your obligation to service your outstanding balance. In addition, the credit card company might also file a lien in court on your property or you could be subject to wage garnishment. What should you do when these things happen?

        First, you should understand the process of how credit card companies go about collecting on the debt you owe. If you receive a notice from an attorney about an impending lawsuit, it may not be the credit card company that is suing you (although they have the right to do so). That is because some credit card companies prefer not to get involved in messy collection efforts and so they sell off their debts to debt collectors and the debt is written off as a bad debt (usually after 180 days). An added reason for the credit card company to write off your debt is that they receive a tax break for such losses.

        Secondly, you should know your rights. You have the right to validate the debt that the credit card company says is yours. You may need to validate because if you learn about your debt from a debt collector, you should determine if the debt is rightfully yours.

        Another right you have is the right to the statute of limitations. The statute of limitations is the time limit by which the credit card company has to initiate legal proceedings against you. The credit card company cannot sue you for any outstanding debt that is older than the statute of limitation.

        Thirdly, you should consider how to resolve the issue of the lawsuit by the credit card company or debt collector. One way to do so is to file for bankruptcy. But time is of the essence. It is important to file for bankruptcy before the credit card company initiates legal action. If you do so after, the bankruptcy court may not consider your credit card debt as part of your dischargeable debt.

        Filing for bankruptcy before any legal proceedings may put a stop to it before it begins. As filing for bankruptcy brings about an automatic stay on all actions by creditors to get payment from you, it may prevent the credit card company or debt collector from initiating their lawsuit.

        For more information about how bankruptcy can help you resolve your credit card and other unsecured debt problems, call us at (813) 200 4133 for a free consultation.


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          How Bankruptcy Affects Foreclosure

          The most dreaded thing you can experience relating to your home is foreclosure. This happens when you default on the repayment of your housing loan, in which case the bank has a right to initiate foreclosure proceedings. If you are in the unenviable position of having your home foreclosed or about to be foreclosed, my advice is to file a bankruptcy petition.

          Filing bankruptcy can stop debt collectors, slow down foreclosure proceedings and give you more time to work out details pertaining to your finances. Once you file for bankruptcy, you will be allowed certain exemptions related to which property that can be kept. If you filed under Chapter 7 bankruptcy and are current on your mortgage you should be able to reaffirm your mortgage debt. On the other hand, in Chapter 13 bankruptcy, missed mortgage payments can be added into a new repayment plan.

          Furthermore, filing for bankruptcy will put into effect an immediate automatic stay that freezes all collection efforts of your creditors. This automatic stay can prevent your home from being sold if you file for Chapter 7 bankruptcy. If you filed a Chapter 13 bankruptcy, automatic stay will put a stop to collection efforts on your mortgage until the court confirms your new payment structure.

          However, if you default on your Chapter 13 payments, depending on whether you default during or after the automatic stay, there are different effects on foreclosure. If you default during the automatic stay period, your bank cannot foreclose your property. But if you default after the automatic stay period, your bank may apply to the court to foreclose your property, especially if there is already a lien on your property.

          One option open to you is to convert your Chapter 13 bankruptcy to a Chapter 7 one but you would need to discuss this with a bankruptcy attorney and obtain permission from the bankruptcy court. If you are contemplating filing for bankruptcy to avoid foreclosure of your home, call us at (813) 200 4133 for a free consultation.

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            How Bankruptcy can Prevent Utility Disconnection

            If you file for Chapter 7 bankruptcy, it may just prevent your utilities such as water, electricity and gas from being disconnected. The immediate automatic stay that comes into effect after you file may give you additional time to come up with a solution to keep your utilities connected. According to the bankruptcy code, utility providers are prohibited from discontinuing utility supply once you have filed for bankruptcy protection especially when debts will be discharged through bankruptcy.

            However, even though your utility provider cannot immediately disconnect your supply, it does not mean they are obliged to allow you to stay connected perpetually. You must do one important thing to ensure continual supply of your utilities. You must give your utility provider assurance of payment within 20 days of filing for bankruptcy.
            Giving assurance means paying a cash deposit, obtaining a letter of credit, prepaying for future utility services or any other form of security to the utility provider that ensures them you will be able to make future utility payments. If you do not provide this assurance within the stipulated time frame, it can result in having your services cut off. In some states, the utility company can cut off your supply after 20 days without any further notice if you have not given assurance. If you are unable to provide assurance within 20 days, you may need to seek court intervention to maintain your services while working on an agreement.

            To help you pay your utility bills you may take advantage of any discount programs in your state or offered by the utility provider.

            So if you have fallen behind in paying for your utilities, consider filing for bankruptcy protection before your supply is cut off. For further information, please call us at (813) 200 4133 for a free consultation.


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              Filing Bankruptcy for the Self-employed

              If you are in business for yourself, you face challenges of different kinds compared to a wage earner. Under today’s economic recession, going into business for yourself is especially challenging as the possibility of failure is high. If you encounter crippling financial debts, you may file for bankruptcy just like wage earners do. But there are some things you need to do differently.

              To file for bankruptcy, you need to furnish the bankruptcy court with proof of income and meet specific income requirements for the chapter you wish to file (the types of bankruptcy follows the chapters in the bankruptcy code). Generally, individuals file for either Chapter 7 or Chapter 13 bankruptcy. Under Chapter 7 bankruptcy, you liquidate your non-exempt assets to pay off your debts while under Chapter 13 bankruptcy, you pay off your debts through a payment plan set by the court of between 3 to 5 years.

              Wage earners can use documents such as their recent pay slips, W-2 or tax information to show proof of income. But if you are a sole proprietor or self-employed, you need to provide some documentation to show how much you have earned. Documents such as your bank statements, a profit and loss account or balance sheet and income tax information should suffice. Be prepared with at least 6 months’ worth of income information to present when filing for bankruptcy.
              To determine which chapter of bankruptcy to file you need to look at your income statements. If you do not have records of your income in order, then filing for bankruptcy can be difficult.

              If you are self-employed and are considering filing for bankruptcy, call us at (813) 200 4133 for a free consultation.

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                Types of Bankruptcy Dismissal

                If you are filing for bankruptcy, you will want to ensure that your petition is successful and not dismissed. Only then will your debts be discharged and you can chart a new beginning financially. There are essentially only two types of bankruptcy dismissal – voluntary and involuntary.

                In a voluntary dismissal, you the bankruptcy petitioner voluntarily pull out and your case is dismissed. This would cost you time and money. So if you have the slightest inclination of not going through with your bankruptcy petition, it would be better not to file for bankruptcy in the first place. Those who voluntarily dismiss their own bankruptcy usually do so for two basic reasons.

                Firstly, they may find their financial situation unexpectedly improves and therefore they no longer wish to carry on their bankruptcy filing. Another possibility is that the debts they want to discharge are found to be non-dischargeable through bankruptcy. Examples of non-dischargeable debt are alimony and child support, certain tax bills and student loans.

                The second type of bankruptcy dismissal is the involuntary one. This is where the bankruptcy court dismisses your case. This may happen for several reasons that include wrongly filing your bankruptcy papers, transferring your assets to a family member before filing bankruptcy, racking up a substantial credit card balance before bankruptcy and so on.

                If your bankruptcy petition has been dismissed, there may be a chance you could have it reinstated. But re-filing a bankruptcy case for reinstatement depends on various factors that need to be evaluated on a case-to-case basis. You should consult a bankruptcy lawyer to help you reinstate your bankruptcy petition.
                If you want to file for bankruptcy or have your bankruptcy petition reinstated, contact us at (813) 200 4133 for a free consultation.

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                  Dischargeable Debts that Cannot be Discharged via Bankruptcy

                  The purpose of filing a bankruptcy petition is to have your debts discharged. There are certain types of debts that are exempted from discharge through bankruptcy. The most common ones are child support, alimony, certain tax debts and student loans. All other types of debt can be discharged through bankruptcy. But there are times when the bankruptcy court disallows dischargeable debt from being discharged.

                  If you have incurred debt through fraud, these debts will not be discharged. These would include debts incurred through deceit or writing a fraudulent check. Likewise, if you have incurred debt through any form of illegal activity such as Criminal Breach of Trust or harmful acts that brought damage to someone else’s property, these debts would not be considered dischargeable through bankruptcy.

                  Any type of divorce settlement debt besides alimony and child support is also not dischargeable. If the divorce court decides you have to pay a certain sum of money to annul your marriage, then such a debt cannot be discharged through bankruptcy.

                  If you wish to file for bankruptcy or discuss which of your debts can be discharged, contact us at (813) 200 4133 for a free consultation.

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                    About Chapter 7 Bankruptcy Debts

                    Chapter 7 bankruptcy is also known as liquidation bankruptcy. Under Chapter 7 bankruptcy, your non-exempt assets are liquidated to pay off most, if not all your debts. However, there are debts that can be discharged through Chapter 7 bankruptcy and there are others that cannot. It is worthwhile to distinguish between one and the other.

                    Some debts can be discharged under Chapter 7 but it may entail liquidating a particular asset connected to the debt. For example, you may be able to discharge your mortgage or your car loan but it may involve selling off your house or car. The bankruptcy trustee will recommend to the court on whether to liquidate your house or car.

                    Other debts that can be discharged under a Chapter 7 bankruptcy would include unsecured debts such as credit card debts, medical bills, business debts incurred under your Social Security number, any demands against you and all forms of personal debts.

                    On the other hand, there are certain debts that cannot be discharged under a Chapter 7 bankruptcy. They include alimony payments, child support, student loans and certain tax debt. Student loans can be discharged only if you can prove to the bankruptcy court that repaying your student loan would cause you extreme financial hardship. Obviously, this is not an easy thing to prove as merely normal financial hardship is not enough. Your taxes unpaid for more than 3 years may be discharged. But your current taxes up to 3 years prior cannot be discharged under Chapter 7 bankruptcy.

                    After your non-exempt assets have been liquidated, whatever debts left unpaid will be cancelled subject to approval from the bankruptcy court.

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

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