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Thursday, February 26th, 2009

What’s the Bankruptcy Automatic Stay?

You’ve probably heard the phrase “bankruptcy protection”, but do you know how filing for bankruptcy could actually protect you?

The bankruptcy automatic stay offers one of the major protections in a bankruptcy case. Here are some basics on the automatic stay:

Immediate effect: Usually, right after filing bankruptcy, the automatic stay goes into effect. It prevents collection action against you of any kind, including:

  • Creditor contact
  • Foreclosure
  • Repossession
  • Garnishment
  • Lawsuits

Duration of protection: The automatic stay’s protection lasts as long as your bankruptcy case is pending – for a Chapter 7 case, usually a few months; for a Chapter 13 case, typically three to five years.

Note: In some cases, the automatic stay can be lifted before a bankruptcy discharge. If a creditor requests the stay be lifted, a judge may do so. If the property protected by the stay no longer makes up a part of the bankruptcy estate, the automatic stay’s protection may lapse.

Will the Bankruptcy Automatic Stay Help You?

If you’re trying to hang on to your home or car, struggling to keep the utility company from shutting off your service, being harassed by creditors or experiencing wage garnishments, the bankruptcy’s automatic stay may be able to help you.

Contact a bankruptcy lawyer.

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Wednesday, February 25th, 2009

Bankruptcy Question: What Debts Are NOT Dischargeable in Bankruptcy?

If you’re thinking about filing bankruptcy as a way of relieving your debt, it’s important to know what bankruptcy cannot do for you.

Many types of debt are not dischargeable in bankruptcy – that is, you’ll likely still be responsible for paying these debts even if you seek bankruptcy protection. Non-dischargeable debts include the following.

  • Student loans: Unless you can show that paying an educational loan (government-issued or otherwise) would cause you undue hardship, you’re probably going to have to pay it. Ask a bankruptcy lawyer about how to prove undue hardship.
  • Taxes: Most tax debt is not dischargeable in bankruptcy. The exceptions have to do with the age of the debt, the timeliness of your tax filing and the correctness of your return. Because this one involves a solid understanding of the law, a good bet is to consult with a bankruptcy lawyer.
  • Marital debts: Any money you owe as part of a divorce or separation agreement typically cannot be discharged by bankruptcy. Again, an attorney may help you figure this one out.
  • Alimony and child support: If you owe support or maintenance money for children or a former spouse, you typically must pay it. DSOs, or Domestic Support Obligations, will usually not be discharged in bankruptcy.
  • Citations and fines: Generally, any fines you’ve gotten for breaking laws or violating civil codes are your responsibility.
  • Recent cash advances: “Last-minute” purchases of luxury goods from a single creditor are generally non-dischargeable in bankruptcy, especially if they:
    • total more than $500
    • were made within 90 days of the bankruptcy filing

Similarly, cash advances (including payday loans) of more than $750 taken out within 70 days of a filing are non-dischargeable.

  • Intentional torts: Fines charged because of willful and intentional acts cannot be excused in bankruptcy. This is a legal-heavy issue, so make sure you have your bankruptcy lawyer explain it to you if you need clarification.
  • Fraud: Debt you incurred from an illegal activity cannot typically be discharged by the bankruptcy court.

Questions? Talk to a sponsoring bankruptcy attorney today--for free and with no obligation.

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Monday, February 23rd, 2009

Filing Bankruptcy 101: Your Car in Bankruptcy

We rely on our cars for work, commuting, shopping and transporting our families.

Understandably, if you’re considering filing bankruptcy, you probably want to know what may happen to your car in bankruptcy.

Chapter 7 Bankruptcy & Car Loans

When filing Chapter 7 bankruptcy, you have three options for handling a car loan:

  • Reaffirmation: You enter an agreement with your lender stating that you will continue to make regular payments on your car. In exchange, your lender will likely not repossess the vehicle – as long as you keep paying the bills. If you fall behind, though, your lender can sue you for what you owe. Note that reaffirmed debts are typically not discharged in bankruptcy and are strictly voluntary.
  • Redemption: You agree to make one lump payment to your lender of the car’s fair market value – regardless of what you owe on the loan. Any amount you owe in excess of the car’s current value could be discharged as part of your bankruptcy.
  • Surrender: If both making regular payments and forking over a lump sum are beyond your means, you can surrender your automobile to your creditor. Any debt you have on the car may be discharged by the court.

Chapter 13 Bankruptcy & Car Loans

Chapter 13 bankruptcy can effectively halt car repossession (similar to how it can stop mortgage foreclosure).

In Chapter 13 bankruptcy, the amount you’ll pay usually depends on how long ago you purchased your car.

  • 910 Claim: If you purchased your car in the last 910 days (30 months), you must usually pay the full amount you owe, regardless of the car’s current value. The good news: the interest rate you pay may be significantly reduced by the court.
  • Cram Down: If you bought your car more than 30 months ago, you’ll likely only have to pay the company the car’s present value over the course of your repayment plan.

Bankruptcy & Car Leases

Whether you file for Chapter 7 or Chapter 13 bankruptcy, you may continue making payments on a lease or surrender (reject) your lease and vehicle.

A bankruptcy lawyer can offer more details about how each chapter handles leases.

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Friday, February 20th, 2009

How Much Debt is Too Much? Know When Debt Needs a Solution

Although most people have debt, some may not know how much debt is considered “too much debt” and when a debt solution is needed.

One way to get a general overview of your financial health is to calculate your debt to income ratio—your monthly debt payments compared to your monthly income.

Knowing Your Debt to Income Ratio

Your debt to income ratio can give you a good idea of where you stand and can help you decide if you need to reduce your debt.

When mortgage lenders calculate an applicant's debt to income ratio, mortgage and rent payments, property taxes and insurance are included in the calculations.

Other lenders may not consider housing costs as part of a borrower’s debt when calculating the income to debt ratio.

Other debts that are generally included in debt to income ratio calculations are:

  • Personal loans and home equity lines of credit
  • Car payments
  • Monthly payments on revolving credit accounts
  • Student loan payments
  • Double the minimum monthly credit card payments
  • Child support payments

To determine the income figure to use in a debt to income ratio, consider:

  • Monthly take-home pay
  • Amount received yearly in overtime and bonuses, divided by 12
  • Any other annual income, divided by 12

The total of all monthly debt payments divided by total monthly income is the percentage of debt to income.

You can use this number to determine if you should seek a debt solution.

How Low Can You Go?

Obviously, the lower your debt to income ratio, the better.

Lenders generally consider a 36 percent or lower debt to income ratio good.

If your debt to income ratio is above 36 percent, you may be stretched financially and need to reduce your debt.

Lenders generally consider borrowers with an income to debt ratio, including housing expenses, below 30 percent to be a low risk.

Finding a Debt Solution

If your debt to income ratio is 40 percent or higher, it may be a good idea to seek a debt solution.

You may consider utilizing credit counseling through an accredited agency, a debt settlement program or filing bankruptcy.

Chapter 7 bankruptcy can be a very attractive option for people who have a large amount of unsecured debt. With Chapter 7, many people can get a fresh start after debts are discharged and begin to rebuild finances without the heavy burden of unmanageable debt.

Debt Calculator

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Wednesday, February 18th, 2009

Filing Bankruptcy? What to Look for in a Bankruptcy Lawyer

Here’s some things keep in mind when you’re shopping for a bankruptcy lawyer:

  • Shop around. Interview a few bankruptcy lawyers before making a decision. Many offer free consultations (be sure to ask), which will give you a chance to meet a few before selecting one.
  • Ask some questions. Don’t waste your introduction to them – get information that will help you make your decision by asking questions like:
    • How long has the bankruptcy lawyer been practicing?
    • What types of the cases does he/she have experience in?
    • Does he/she offer client references?
    • How much experience does he/she have with your type of bankruptcy case?
  • Don’t shy away from finances. It’s okay to ask how much your case will cost and it will demonstrate that you’ve thought through the bankruptcy process. Try to find out:
    • Whether the bankruptcy attorney charges hourly or by case
    • Whether installment payments are accepted
    • Whether you’ll receive itemized bills
    • Whether you can get an estimate
  • Find out who will work on your case. Don’t shy away from asking who will be responsible for your case. After all, you’re footing the bill and you should be kept informed about what is going on.
  • Accept referrals. If a bankruptcy lawyer refers you to someone else, don’t take offense. He or she likely has good reasons for doing so, like too large a workload to give your case proper attention or insufficient experience with a case like yours.
  • Offer to help. While your attorney may handle most of the paperwork and court-related documents, he or she may need you to collect receipts, find tax returns or complete other tasks. Letting your bankruptcy attorney know you’re engaged and ready to help will set the stage for a cooperative case.

Contact a Local Bankruptcy Attorney Today

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Posted in Find a Bankruptcy Lawyer | 1 Comment »

Friday, February 13th, 2009

Filing Bankruptcy FAQs: Get Your Bankruptcy Questions Answered

If you’re considering filing bankruptcy, you probably have many questions on your mind.

Take a look at these frequently asked questions about bankruptcy to learn the answers you may need to move forward.

  • Do I need a bankruptcy lawyer? Since the introduction of the new bankruptcy law in 2005 (BAPCPA, or the Bankruptcy Abuse Prevention and Consumer Protection Act), filing for bankruptcy has been much more difficult. Because you need to fill out vast amounts of paperwork, meet strict deadlines and file reams of paperwork with the court, you should consider working with a bankruptcy lawyer.
  • What is the automatic stay? The automatic stay is one of the most powerful protections bankruptcy offers. It works by preventing your creditors from taking any collection action against you and lasts throughout the duration of your bankruptcy case, as long as you adhere to the rules set up by the court.
  • Can bankruptcy prevent foreclosure? Foreclosure is considered a form of collection, so when you file for bankruptcy, foreclosure can be prevented by the automatic stay. Because Chapter 13 bankruptcy cases last for three to five years, you may be able to prevent the foreclosure of your home long enough to make other plans or catch up on your mortgage payments.
  • How do I know if bankruptcy is right for me? A bankruptcy lawyer can help you make this important decision, but you can help yourself by doing some research on your own. You can find lots of useful information on both Chapter 7 bankruptcy and Chapter 13 bankruptcy on Total Bankruptcy’s web site.
  • What are the bankruptcy laws in my state? Technically, bankruptcy is ruled at the federal level, so laws are the same across the country. Each state, though, has different Chapter 7 exemptions, which determine what property you can hang on to if you decide to file under Chapter 7 of the U.S. Bankruptcy Code. Check out your state bankruptcy laws.
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Posted in Setting the Record Straight about Bankruptcy | 3 Comments »

Thursday, February 12th, 2009

Unemployment Benefits Fall Short

Mass layoffs have been sweeping the country, leaving millions of people unemployed and relying on unemployment benefits to make ends meet.

But the problem is that there are few jobs to be found in this economy and unemployment benefits are meant to be temporary.

For millions, this means unemployment benefits can be exhausted long before they find a job.

Call for Unemployment Benefit Reform

Economists are calling for a reform of unemployment benefits to bring the program up to date with modern times, according to MSNBC.

Currently, only full-time workers are eligible for unemployment benefits after losing a job, and usually only for 26 weeks.

But today there are many more people working part time jobs now than there were in 1935, when the program was established.

In addition, many people cannot qualify for unemployment benefits because state unemployment offices use an outdated system to calculate income and determine eligibility.

Those who can qualify are often unemployed for longer than 26 weeks.

Job Help Needed

In 2008, Congress extended unemployment benefits twice.

Although this extended unemployment benefits by up to 33 weeks, in December there were still about 500,000 more unemployed workers not receiving benefits than a year before.

Economists say that true reform of is necessary to fix the system and that quick fixes by Congress do little to correct the real problems with the outdated program.

No Wonder More People Are Filing Bankruptcy

Approximately 5.2 million Americans are unemployed and not receiving benefits. Many of these people have already collected benefits for 26 weeks and have been unable to find new jobs.

Without assistance, these people are at risk of foreclosure and may file bankruptcy to resolve debts.

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Wednesday, February 11th, 2009

Scammers Target Online Job Seekers

The FBI issued a warning to online job seekers on Feb. 4., as it and the Internet Crime Complaint Center (IC3) continue to receive numerous complaints about work-at-home fraud.

As millions of Americans who are currently unemployed seek job opportunities, scammers work to devise schemes to take advantage of them.

The FBI warns that criminals operate many work-at-home schemes.

The scammers attempt to gain the trust of online job seekers in an effort to use working relationships to increase the reach of their illegal activities.

Although many people are aware of "phishing" and other identity theft scams, those seeking employment may not recognize this brand of criminal activity until they are already in the middle of it.

In most of the reports to the FBI and IC3, job seekers are offered jobs processing payments, transferring funds or reshipping products.

The victims usually don’t realize they are participating in crimes by cashing fraudulent checks, transferring illegally obtained funds or handling stolen merchandise until it is too late.

Other scams the FBI warned of include "mystery shopper" jobs.

The victims of these schemes are sent fraudulent checks and instructed to cash the checks and wire the proceeds as an audit of a company's service. As payment, they’re told to keep a portion of the funds.

In addition to participating in a crime, the victims of these scams may also unwittingly give criminals their personal information, which can then be used for identity theft.

These "employers" have reportedly used victim's identities not only to open credit accounts, but to commit additional crimes as well.

Richard Kolko of the FBI National Press Office advises everyone who may be seeking a job online to be wary of unsolicited job offers and to report any criminal activity.

The old adage applies - If it seems too good to be true, it probably is.

If you've been a victim of identity theft and your finances have been hurt, filing bankruptcy may help you.

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Wednesday, February 11th, 2009

How Can Filing for Bankruptcy Stop Foreclosure?

If you’re one of the millions of Americans in danger of losing your home, you’re likely at your wits’ end trying to hang on to the place you live.

We don’t have to tell you that saving your house is worth the time and effort. When examining options for saving your home, you may find that Chapter 13 bankruptcy may be the first step in protecting your biggest asset.

The Power of the Automatic Stay

When you file bankruptcy, something called the “automatic stay” goes into effect.

This stay prevents your creditors from taking any collection action against you. Foreclosure is considered a kind of collection, so foreclosures are halted when you file for bankruptcy.

This stay continues working throughout the duration of your bankruptcy case, as long as you adhere to the guidelines set by the court.

Protecting Your Home

Filing bankruptcy can be just the first step in stopping foreclosure. Be sure to take these measures when dealing with foreclosure and bankruptcy.

Talk to a bankruptcy lawyer.

Your bankruptcy lawyer can not only help you figure out whether bankruptcy makes sense in your case, but also keep you updated on the latest foreclosure defenses around the country.

Take action.

You may feel intimidated to contact your lender – or even your lawyer – but you shouldn’t! Remember, your home is at stake here, and staying quiet when you have questions or concerns will get nothing done. Speak up early and often to learn as much as you can about the future of your home.

Read up.

TotalBankruptcy.com offers a wealth of bankruptcy information . Learning as much as possible about what to expect from both will help you prepare for the road ahead.

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Thursday, February 5th, 2009

Was 2008 the Year of the Bankruptcy?

Times are indeed tough—more than one million Americans filed Chapter 7 and Chapter 13 bankruptcy last year.

As the U.S. economy sunk, the number of Chapter 7 and Chapter 13 bankruptcies rose 33 percent, according to data from U.S. bankruptcy courts compiled by bankruptcy data firm, Automated Access to Court Electronic Records.

Bankruptcy data shows there were 819,115 personal bankruptcy filings in the U.S. during 2007.

In 2008, that number rose to 1,086,130. While the number of bankruptcy filings in 2008 falls far short of the record 2.1 filings in 2005, it’s still a significant increase.

The number of U.S. personal bankruptcies in 2008 was the highest since the new bankruptcy law went into effect.

The Reason for the 2005 “Bankruptcy Rush”

In 2005, many consumers raced to file Chapter 7 bankruptcy before the bankruptcy reform law took effect.

After BAPCPA took effect, it became more expensive to file bankruptcy and some people weren’t eligible to file Chapter 7, making Chapter 13 bankruptcy more appealing to some.

Some States Hit Harder Than Others

Although the number of bankruptcy filings increased everywhere, some areas of the country seemed to be hit harder by the recession.

The greatest increases in per capita bankruptcy filings were seen in Nevada, Delaware, California, Rhode Island and Florida, where the effects of the collapse of the housing market, mass layoffs and a generally poor economy were particularly pronounced.

For the second year in a row, Tennessee had the highest per capita rate of personal bankruptcy filings.

Texas saw an increase of only 1,500 more Chapter 7 and Chapter 13 bankruptcies, making it the state with the smallest increase in bankruptcy filings.

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