Can Bankruptcy Discharge Credit Card Debt of my Deceased Spouse?

Under normal circumstances, when a credit card belongs to one person, that person (the credit card holder) is responsible for settling the debt. If that person passes away, his or her estate is used to settle all debts and the estate administrator is responsible to see to this. Usually sources of funds like life insurance policies, retirement funds or other accounts payable upon death would be used to pay off debts. Any money left over will be distributed according to the will of the deceased or if he or she died intestate, then according to the Letters of Administration issued by the court.

But this scenario changes when the credit card account was jointly owned by you and your deceased spouse. This would mean both you and your deceased spouse were liable to pay debt incurred on the credit card so the credit card company can choose to pursue you (the surviving spouse) for payment. And if you live in a community property state such as Texas, California or Louisiana, you may also be responsible for the debt. Community property includes assets and debts accumulated during marriage.

If the debt under the credit card account is substantial, it may pose a problem. If you cannot afford to settle the debt, you need to weigh other options. One option is to file a bankruptcy petition. Bankruptcy is your right under the law to discharge debts that you cannot afford to pay. Assuming you did not dishonestly incur the credit card debt (like by purposely making lavish expenses on your card prior to filing for bankruptcy), then there is a chance that the credit card debt will be discharged during bankruptcy. This is for the bankruptcy judge to decide on.

So bankruptcy can help lower the amount of debt in the estate after death. If you wish to discuss this matter further, please call (813) 200 4133 for a free consultation.

 

What is an Upside Down Mortgage?

Have you heard of the term “Upside Down Mortgage”? It’s also known as an “Underwater Mortgage”. Both these terms mean that you have a mortgage on a property (usually a house) but the property’s value is less than what you owe on the mortgage. This invariably means that selling the property does not fully pay up your loan and you are still indebted. There are many upside down mortgages these days because of the recession. And the recession happened because the prices of properties were grossly inflated about a decade ago caused by indiscriminate lending by banks thus leading to the property bubble. Well, the bubble burst in 2008 and till today, we are still reeling from the effects of it.

So what can you do about an upside down or underwater mortgage? It depends on whether you can still afford to pay your installments under the mortgage. If you are still current with your payments, you are safe. But if you have fallen behind and do not have the means to pay your debts, then you have to consider whether you still want to keep your property. If you do not mind losing your house, then you may sell it to offset the loan or allow it to be foreclosed by the bank. After the sale, you still have to pay the remaining debt under the mortgage but at least you will not owe the bank as much anymore.

Assuming you wish to keep your house, then you have to think of a way to either pay up your debts or have your debt discharged. There are a number of options for you, if you plan to keep the house and if you’re afraid the mortgage will get too overwhelming. Filing a bankruptcy petition is one option. Consult a bankruptcy attorney about what to do. Call us at (813) 200 4133 for a free consultation.

Why Good Faith is Important in Chapter 13 Bankruptcy

Chapter 13 bankruptcy is where you as the debtor are put under a payment plan for 3 to 5 years in order to settle your outstanding debts. When you file for Chapter 13 bankruptcy, you must provide the court with a complete list of all your debts. Then the bankruptcy trustee (appointed by the court) will work with you to derive the amount of monthly repayment you will make towards your debts. This is where good faith comes in.

Good faith is required for your Chapter 13 bankruptcy payment plan to be approved. Your payment plan will include payments towards priority debts (debts backed by collateral) and payment towards all other unsecured debts that are not considered to be priority ones. Out of your monthly income you will firstly pay off all priority debts and then out of your disposable income (the amount left over after payment of priority debts), you will make payment towards your unsecured debts.

The final decision on the approval of the payment plan rests with the bankruptcy court. And the court will only approve your plan if the judge feels you will make your monthly payments in good faith. This means the judge believes that you genuinely wish to follow the payment plan and clear your debts. What will lead the judge to believe such a thing is your declaration of debts, assets, income and expenditure. You must be completely honest when declaring these things to the court. Some courts may review where your disposable income is going to ensure you are acting in good faith.

If the court finds some form of discrepancy in your declaration, it could result in your bankruptcy petition being thrown out. Examples are getting a pay rise that increases your monthly disposable income, incomplete listing of your assets or incorrect deductions for your income. These are some issues that may prevent your Chapter 13 bankruptcy from being approved. To prevent this you should review your situation with your trustee before presenting your plan to the court.

If you are considering a bankruptcy petition, call us at (813) 200 4133 for a free consultation.

 

 

 

 

How Bankruptcy Wipes Out Credit Card Debt

Most people have credit card debts to some extent. The problem with credit card debt is that it is so easy to acquire but so difficult to settle in full because of the high interest rates. If you have credit card debts that are beyond your ability to settle, you should file for bankruptcy protection before the credit card company or bank takes legal action on you.

There are two types of bankruptcies according to bankruptcy law – Chapter 7 bankruptcy and Chapter 13 bankruptcy. Both types of bankruptcy can be used to discharge credit card debt. Chapter 7 bankruptcy is also known as liquidation bankruptcy where your non-exempt assets are sold off and the proceeds used to settle your debts, including credit card debts. Chapter 13 bankruptcy is where a 3 to 5 year repayment plan is drawn up for you to pay off your debts over time.

Regardless of which bankruptcy you file, your debts will be classified according to priorities. Secured debt such as a mortgage or vehicle loans are usually considered priority debts because they are backed by collateral that can be repossessed from you if you default on payments. According to the law, some non-dischargeable debts have priority also even though they are not backed by any collateral. Examples are child support and back income taxes.

So when you file a bankruptcy petition, you will provide the bankruptcy court with a list of all your creditors (including the credit card issuer). If you qualify to file for Chapter 7 bankruptcy, the court will appoint a bankruptcy trustee who will supervise the liquidation of your assets and pay off your debts starting from the priority ones. If you file for Chapter 13 bankruptcy, you will propose an amount you are willing to pay towards your debts on a monthly basis. Usually, credit card debt payments are determined based on what is left over after paying priority debt.

Most credit card debts do not require full payment but it may not be the case if your credit card debt is secured. Whatever credit card debt you have still outstanding after liquidating your assets under Chapter 7 bankruptcy will usually be discharged. Whether the judge grants you a discharge of your credit card debt under Chapter 7 boils down to whether you have incurred the debt honestly. If the judge feels you did not incur the debt honestly you won’t receive a discharge. For example, if you go on a spending spree with your card just before filing for bankruptcy, it is considered a dishonest debt.

Under Chapter 13 bankruptcy, if you regularly pay according to your repayment plan, any remaining credit card debt may be discharged when your bankruptcy case ends.

Bankruptcy is a good option for discharging credit card debts.  If you wish to consider bankruptcy, call us at (813) 200 4133 for a free consultation.

Do I Need To Worry About My Credit Reports if I’m Not Applying For A Loan?

Is it imperative to pay strict attention to your credit score and its relevant reports if you are not necessarily applying for any loans or lending? The article sheds light on some facets of credit reporting to various organizations and persons who may concern themselves with your score in ways that can affect you.

Read the full article here:
Do I Need To Worry About My Credit Reports if I’m Not Applying For A Loan?

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      What to do if Unemployed

      There are a lot of people who lose their jobs. In fact, there’s news of massive job losses everyday hitting some town or city in America. It is safe to say that everyone knows at least one person who isn’t employed – if they are not unemployed themselves. You don’t necessary need to be an experience in powerlessness if you are unemployed. There’s one article in Dallas Morning News that tackles about some good (as well as not so good) tips on what you can do if you lost your job and now you’re suddenly one of the unemployed people. So here are some tidbits from that article:

      “Take a personal inventory,” said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. “Consider all assets, income and expenses. Hopefully, you will not have to liquidate any assets to survive, but it is good to know what you have to fall back on.”

      Nothing is off-limits. “If necessary, consider selling the second car, or any recreational vehicles, real estate holdings, rental properties or jewelry,” Cunningham said.

      This is something that we all could agree to that an unemployed person needs to take an inventory of all of their expenses, income and assets. However, we often caution against selling assets without considering the long-term implications first of doing so. The sale of certain assets might be suspect depending upon when the sale took place and what was done with the proceeds if you are unemployed and decided to file for bankruptcy after all. It is required to use those assets according to the bankruptcy law to be used to repay creditors in proper order. If you have already sold your assets before you filed for bankruptcy, your bankruptcy case has a possibility to get dismissed if it was determined that the assets that you sold were a way for you to avoid repaying the creditors.

      After reviewing income vs. debt obligations, if there isn’t enough money to make ends meet, calculate how much is needed to meet the basic household living expenses.

      Adding to this suggestion, you should consider filing for bankruptcy if you find yourself not having enough income to pay for your basic living expenses and debts especially if you’re already suspecting that this would become a long-term issue. The best initial action for you to do is to discuss your situation with a bankruptcy attorney BEFORE it gets out of hand. In other words, you need to get yourself a bankruptcy attorney before you do reckless decisions such as selling assets just for you to make the mortgage/rent, provide foods for your family or that you’re already facing foreclosure of your home.

      “Your goal is to pay everyone, but if you must make a choice, keep your home life stable by paying your rent or mortgage, utilities, child care, insurance premiums, health care, food and keeping gas in the car,” Cunningham said.

      Although this is also a good suggestion, it may still jeopardize your family’s wellbeing if you are several months behind on credit card payments, taxes or bank loans. There are a lot of unsecured creditors nowadays that are becoming more and more aggressive in collecting debts from even unemployed people and not to mention that they often if not always filing lawsuits against their debtors and securing judgments. A creditor can seize assets including bank accounts with a judgment, so you cannot allow these bills to become severely delinquent. You should speak with your bankruptcy attorney immediately if you think your unsecured debt payments are severely delinquent and find out how you can protect your assets from creditors through the help of bankruptcy.

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