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Monday, March 30th, 2009

Chapter 13 Bankruptcy: The Process

Curious about Chapter 13 bankruptcy? Talk to a bankruptcy lawyer about whether it could help you.

Chapter 13 has helped many resolve their debts and save their homes from foreclosure. Here’s a bit more on the process and what you may expect:

Credit counseling briefing: This is a pre-filing requirement for all filers, and it’s designed to make sure your financial situation demands the protection of bankruptcy (and not, say, debt negotiation). Once your lawyer files your certificate of completion with the court, your case can officially begin.

Automatic stay: As soon as your case is filed, the automatic stay takes effect and prevents your creditors from making any collection actions. This means that foreclosure, garnishment, lawsuits and repossession are all halted. As long as you adhere to the terms of your bankruptcy case, the stay should last for the duration of your case.

The next three to five years: One of the papers your lawyer will file with the court will be a repayment plan. This plan provides a repayment schedule that you’ll stick with to catch up on your past-due balances while staying current with other payments.

Your bankruptcy trustee: This is a federal employee who will be assigned to your case to oversee your paperwork and distribute your money to your creditors every month.

The first payment: You must make your first payment (as part of the repayment plan) within 30 days of filing your petition – otherwise, the court may decide to dismiss your case.

Meeting of the Creditors: Within six weeks of filing your petition, you’ll have to testify to the completeness and accuracy of all information in your petition. While all your creditors are invited, most probably will not attend.

Financial management course: Before you’re eligible for your bankruptcy discharge, you must complete a financial management (debtor education) course. The course is designed to help you learn strategies for handling money, working with credit and generally making your fresh financial start a success.

Five years after filing: You’re required to make your final payment within five years of filing your petition. After doing so, you’ll receive your bankruptcy discharge and officially be out of bankruptcy.

The Next Four Years: You are not eligible for Chapter 13 bankruptcy protection if you’ve filed for bankruptcy in the past four years, so make sure you fill your bankruptcy lawyer in on your financial past when discussing your case.

Learn more about filing bankruptcy.

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Posted in Filing Requirements, The Truth about Bankruptcy | 1 Comment »

Wednesday, March 25th, 2009

Starting a Savings Plan

Whether you’re recovering from bankruptcy or just trying to improve your finances, saving money is essential.

How to Save Money

The secret to saving is to do it little by little. This isn’t winning the lottery, but over the years, the small amounts you sock away will accumulate.

Forced savings: If you don’t think you can resist spending what you earn, consider a plan that forces you to save. Many employers offer retirement accounts that automatically deduct money each month from your paycheck. Or, if you have a mortgage, you’re building equity in the home with every payment – another type of savings.

Mini-savings: Even saving toward specific goals can save you money. Consider opening a savings account strictly for purchases – a new car, a stereo, etc. Rather than paying interest on a loan, you can make a purchase when you have enough money in your account for a one-time payment.

Gradual savings: If you’re like most Americans, you don’t have much money left over after each paycheck to stash away. But that shouldn’t keep you from hanging on to whatever you have. Even 20 dollars a month will accumulate with help from compound interest.

Why Save? Think About It.

The safety net. If you’re hit by job loss, reduced income, divorce, injury or a natural disaster, you’ll likely have unexpected expenses.

Many people who file for bankruptcy do so because some surprise cost overwhelmed them financially. A savings account can help you in a crisis.

The money-saver. As you know, if you’ve ever taken out a loan to buy something (home, car, etc.), interest payments add up quickly. If you have enough money saved to pay sticker price with no help from a lender, though, you’ll save money in the long run.

Even if you have only enough savings to make a larger down payment, you can keep interest costs lower.

The money-earner. The beauty of savings accounts is compound interest: when you put money in a savings account, you earn interest on the principal amount (whatever you initially deposits) plus whatever interest your account earns.

So, the longer you let your savings account sit, the more money it earns you, and you don’t have to lift a finger.

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Posted in Finance 101: Secure Your Future, Post-Bankruptcy Debtor Education | No Comments »

Monday, March 23rd, 2009

Warning Signs of Predatory Lending

Predatory lending can devastate consumers.

Predatory loans can come in the form of credit card agreements, mortgages, payday loans and even bank loans.

Although there’s no surefire way to make sure a loan you get is safe, but here are some warning signs that your lender is less than trustworthy.

Lack of Transparency: Any time the terms of your loan are unclear, beware. Some loans come with terms so lengthy and dense with legal jargon that the average borrower has no way of understanding them (think of your credit card agreement).

Hidden Interest: Loan-related costs with names like “fee” or “charge” are often just interest in disguise. These can take the form of “overdraft charges” from a bank, “fees” on a payday loan, or “service charges” on a credit card.

Hidden Add-ons: Some unscrupulous lenders will sneak extra services into a loan’s terms (e.g. home appraisal fees with a mortgage) without telling the borrower that such services may be available elsewhere for less money.

Outright Lies: Writing a borrower’s “stated income” and similar tricks amount only to lying on a loan form. The only way to be certain that information in your loan documents is accurate is to fill them out (or double-check them) yourself.

Redlining: Aiming loans at specific groups of people is illegal. Studies have found that subprime loans disproportionately affected women, racial minorities, less educated people and the elderly. Other groups may be targeted for other types of predatory lending.

Exorbitant Interest: Sometimes, lenders conceal how much interest they’re charging by revealing only short-term interest rates (as with credit card offers) or by disguising interest (see above). Payday loans, for example, can come with a yearly interest rate of more than 300 percent!

The Magic of Negotiation

One way to make sure you aren’t victimized by predatory loans is to know as much as you can about them – that way, you can walk away when warning signs pop up. But keep in mind, too, that part of understanding lending is understanding that almost everything is negotiable.

Asserting yourself by trying to get a lower interest rate or a discount of some kind can signal to lenders that you know what you’re doing and will not be taken in by predatory tactics. Just be sure to do some research first so you know a reasonable rate to request.

Learn more about filing bankruptcy and how it may lessen your financial stress.

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Friday, March 20th, 2009

Chapter 7 Bankruptcy: The Process

After you’ve met with your bankruptcy lawyer and decided to file for Chapter 7 bankruptcy, here’s what you can expect from before you file until you after you receive your discharge.

The credit counseling briefing: Before filing your petition with the bankruptcy court, you must complete this briefing, which acts as a filter: anyone who could benefit from credit counseling, debt negotiation or another bankruptcy alternative is discouraged from filing bankruptcy.

The automatic stay: Once your lawyer has filed your certificate from the briefing with your petition for bankruptcy, the automatic stay takes effect. It protects you from all collection action and lasts for the duration of your case.

The next six months: Your bankruptcy case will likely last about six months, during which time, you can expect the following:

  • Meeting of the creditors: You’ll testify in front of all the people to whom you owe money that the information in your petition is complete and accurate.
  • Liquidation sale: If your bankruptcy trustee determines that you have any non-exempt assets, he or she can sell them to raise money to pay your creditors. In many Chapter 7 cases, filers do not have any non-exempt assets.
  • Reaffirmation of debts: If you have any non-exempt assets you’d like to keep, you’ll have a chance to reaffirm (renew) your debt with the lender – basically, you’ll agree to keep making payments so you can keep whatever property you don’t want to give up.

The financial management course: Before you’re eligible for your Chapter 7 discharge, you must complete a financial management (also known as “debtor education”) course. The course is designed to help you make the most of your fresh financial start and includes tips on saving, managing money and handling credit.

The bankruptcy discharge: The court will determine which of your debts can be forgiven, and will relieve you of your responsibility to pay those debts. After you receive your discharge, you’re technically out of bankruptcy.

The Next Eight Years

You cannot file for Chapter 7 bankruptcy again for the next eight years.

Bankruptcy’s fresh start is intended to be a long-term solution, not an occasional boost. Take the lessons of the financial management course to heart – and good luck!

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Posted in Filing Requirements, Finance 101: Secure Your Future, Post-Bankruptcy Debtor Education, The Truth about Bankruptcy | No Comments »

Thursday, March 19th, 2009

Assessing Your Debt: When It May Be Time to Take Action

If you’re having trouble making it paycheck to paycheck or if you’re having difficulty paying your bills, it may be time to assess your debt levels objectively.

Debt Test

This debt test involves a series of questions concerning your debt levels. Simply answer the yes/no questions to discover how you may be able to improve your financial situation.

Debt Calculator

Enter your current debt and interest rate(s) into this debt calculator. Through this calculator, you can see what may lie ahead for you in paying off your debt.

Reasons for Mounting Debt

One of the most important things to remember about debt is that you’re not alone. Everything from compulsive shopping and gambling to growing medical expenses, job loss, divorce, injury and unexpected expenses is leading to increasing levels of debt for Americans today.

If the burst of the real estate bubble and the exposure of high-level con artists reveal anything about investing it’s that even those who are “in the know” aren’t always sure of what’s happening with their money.

So don’t feel bad that your finances have gotten out of control – take this as a sign that it’s time to start over.

Learn more about how a bankruptcy attorney may help you analyze your debt situation.

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Posted in Filing Requirements, Finance 101: Secure Your Future, Find a Bankruptcy Lawyer, Pre-Bankruptcy Credit Counseling, Your Credit Score | No Comments »

Monday, March 16th, 2009

What Happens to Your Cosigners When You File Bankruptcy?

A cosigner is someone who signs his or her name along with the primary borrower on lending papers and takes on responsibility for payment of that debt should the primary borrow default.

In most cases, a cosigner has stronger credit than the primary borrower and can help that person get better loan terms, like lower interest rates and monthly payments.

Cosigners can be helpful for:

  • Young adults: Often, a parent (whose credit is better established) will cosign a loan for an adult child to help him or her get more affordable terms.
  • Those recovering from bankruptcy: After filing for bankruptcy, you may need someone with stronger credit to cosign a loan with you in order to get reasonable terms.

What happens to cosigners when you file for bankruptcy?

  • In Chapter 7 bankruptcy, many debts are completely forgiven (discharged). This would mean that the burden of payment is removed from you – BUT your cosigner (or “codebtor”) is still responsible for making payments.
  • In Chapter 13 bankruptcy, payments are made according to the terms of a repayment plan. In this case, as long as you keep up with your payment schedule, your cosigners are protected and not responsible for paying that debt.

Other Cosigner & Bankruptcy Considerations

  1. Remember: before you're filing bankruptcy, any payment you miss or make late will harm both your credit and your cosigner’s credit.
  2. Cosigners for business loans are not protected at all by bankruptcy filings.
  3. When deciding which chapter of personal bankruptcy to file, you need to choose the one that will work best for your finances. Although your cosigners could be negatively affected by your decision, they did take on considerable legal responsibility and personal risk by signing the legal documents.

Friend & Family Cosigners & Your Bankruptcy

In many cases, cosigners are close friends or relations. Filing for bankruptcy has the potential to strain these relationships, so it’s important that you take steps to make sure bankruptcy is the right choice for you and the best way to get you back on your feet financially.

Speaking with a bankruptcy lawyer may be a wise first step.

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Posted in Filing Requirements, Finance 101: Secure Your Future, Your Credit Score | 1 Comment »

Thursday, March 12th, 2009

The Wrong Voices are ALWAYS Heard

Remember in elementary school choir how there was always that one kid who couldn't carry a tune, but who belted out every song and made sure everyone heard him?  Unfortunately, the same thing is happening in the political process today--lobbyists don't have the best interests of the country (and certainly not of the average person) at heart, but they're singing out loud and clear and everyone is hearing them.

The banking and consumer credit industries spent a decade and a hundreds of millions of dollars to pass the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005...an act which has been almost universally assessed to cause far more trouble than it's worth without effectively achieving any of its intended purposes.  Today, that same lobby is at work again, trying to prevent Congress from correcting a strange inconsistency in the U.S. Bankruptcy Code--one that will impact millions of people who have never even considered filing bankruptcy.

That's right.  It doesn't matter whether or not you ever plan to file for bankruptcy--if you own a home, or rent a home, or live in a neighborhood where there have been a lot of foreclosures, or hope to buy a home, S. 61 will affect you.

If, that is, it ever sees the light of day.

The bill, whose companion bill passed the House of Representatives last week, would allow bankruptcy judges to modify mortgages in bankruptcy court.  The banking industry wants you to think that's radical, but in fact right now virtually any secured debt (car loan, vacation home, commercial real estate, etc.) can be modified in bankruptcy court EXCEPT for the loan secured by the debtor's home.

With an estimated 8 million + foreclosures in the pipeline over the next few years, this provision could slow or even stop the slide in the housing market, make it possible for homeowners to stay in their homes, and stabilize housing costs.  Even homeowners who DO NOT FILE BANKRUPTCY will see those benefits, as mortgage holders will have a new incentive to renegotiate rather than institution foreclosure proceedings.

Right now, the banking industry, mortgage holders...the very people who created this mess over the past decade...are singing loudly--they're being heard.  They have the loudest voices, but there are far more of us than there are of them, and hundreds of thousands of soft voices can add up to a roar.

Please take a moment to let your Senator know that you support the mortgage modification bill, S. 61.

You can find contact information for your Senator here:  http://www.senate.gov/general/contact_information/senators_cfm.cfm

It only takes about a minute to make this phone call or to send an email, but it could make a lasting difference to someone you know!

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Posted in Bankruptcy News and Events, Home Foreclosure, The Truth about Bankruptcy | 1 Comment »

Wednesday, March 11th, 2009

Death and Debt Collectors

In today's economy, budgets are tight in many households. While people are losing their homes to foreclosure and their jobs to the financial crisis, life marches forward.

In addition to financial stresses, family obligations and emergencies can't be avoided.

When a Loved One Dies

The loss of a loved one is devastating.

In addition to the emotional and psychological pain, the financial pain can also be great.

If the deceased had no insurance coverage to cover funeral expenses, it’s typically the responsibility of the immediate family to cover the cost.

This can add an extra burden to a family who may already be struggling.

Debt Predators

At least one company is now actively pursuing payment for debts of the deceased, according to The New York Times.

Some grieving family members are receiving collection calls from DCM Services in New York.

DCM Services employs debt collectors to call relatives of deceased debtors and ask if they would agree to settle the deceased’s balances on credit cards, loans or other final bills—even though the family often has no legal obligation to do so.

Unfortunately, many people don’t know that.

DCM uses this to their advantage.

How Debt Predators Find Their Targets

The collection company uses carefully crafted tactics and scripts to convince a large number of people that coughing up cash they don’t owe is the right thing to do.

The collection agency has been so successful in convincing people to pay up, collection efforts on accounts of the deceased are becoming a bigger trend.

How They Do It

The company first checks nationwide probate court databases to find out if the deceased person has an estate open.

If so, the company may file a claim against the estate and attempt to have the debt settled through the probate court.

However, in cases where there’s no estate, calls are made directly to the next of kin with condolences—and an appeal for them to settle the deceased’s debts.

Debt collectors at DCM receive specialized training to prepare them to confront family members with a loved one's burden of debt and teach them to play the morality card when boldly asking for payment.

Many people don’t know that they don’t have any obligation to satisfy the debt but they agree to pay because they believe their loved ones would have wanted them to, or to avoid any suggested legal or credit problems.

The Facts

In general, unless a family member is a co-signer on an account, they’re not legally responsible for the debts of their deceased family member.

In most cases, there’s no risk of a family member being penalized for refusing to pay a debt left behind by the deceased.

But, unfortunately, this fact is artfully omitted during the collection calls, unless the family member asks the debt collector firmly and directly about their legal obligation to pay.

Learn more about how filing for bankruptcy may help stop creditor harassment.

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Posted in Finance 101: Secure Your Future, Home Foreclosure, Predatory Lending | 1 Comment »

Monday, March 9th, 2009

Protect Your Credit Identity – Monitor Your Credit Report

The crime of identity theft occurs when someone uses another person’s identifying information (including Social Security Number, account numbers and credit card information) to make fraudulent transactions.

Unfortunately, the same technological advances that allow us to pay bills, shop and bank over the Internet also offer identity thieves opportunities to steal our data.

What Happens if My Identity is Stolen?

If you’re victimized by an identity thief, you may find your finances thrown into turmoil – and, depending on how quickly you realize the problem, you may have quite a headache in store.

Identity thieves can do many things, including:

  • make purchases with your credit cards
  • pose as you during a criminal arrest
  • use your SSN to pose as you during everyday life
  • obtain lines of credit using your information

Preventing Identity Theft

There’s no surefire way to prevent identity theft, but you can take steps to make sure you protect yourself as much as possible, including the following.

  1. Check your credit report! This is the single most important preventive measure you can take. Visit www.annualcreditreport.com for a truly free credit report from major reporting bureaus. This report will include information about action on all of your accounts. You’ll be able to see any suspicious activity – and take care of it immediately.
  2. Avoid phishing scams. Be cautious about e-mails. Many scammers pose as legitimate banks or lenders and request personal information for “verification” purposes. Never send sensitive information unless you are SURE you know where it’s going and that it’s secure.
  3. Treat your SSN like gold. Some people, like lenders and employers, actually need your Social Security Number; but most do not. If you’re uncomfortable about giving out your Social Security Number, ask how it will be used and why it’s needed. If you still feel uncomfortable, withhold that information. It is generally considered best practice to never give it out over the internet.
  4. Shred your important mail. Once you’re finished with credit card offers, bank statements, medical reports and other important mail, shred them. Shredding is an easy and effective way to prevent identity thieves from getting their hands on your information.

If you've been a victim of identity theft, a bankruptcy lawyer may be able to help you sort things out.

Learn more about how filing bankruptcy may help you.

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Posted in Find a Bankruptcy Lawyer, Identity Theft | No Comments »

Wednesday, March 4th, 2009

Speak Out to Save Homes from Foreclosure

A foreclosure occurs every 13 seconds, according to the Center for Responsible Lending.

It’s time to stop the madness.

The Helping Families Save their Homes in Bankruptcy Act, H.R. 1106, aims to do just that.

The bill would allow bankruptcy judges to modify the terms of mortgages, which could potentially help millions of people save their homes and repay their past-due debts.

What You Can Do to Help Save Homes from Foreclosure

It’s time to take part in the democratic process. Tell your elected official you support passage of H.R. 1106.

It’s simple. Take 20 seconds to fill out a form that will e-mail a prewritten message (that you may edit) to your official or call a toll-free number to tell your representative’s office directly.

E-mail: Fill out the 20-second basic form and click “Send E-mail.” www.nacba.org/TellCongress

Call: Phone 877-354-4958 (9 a.m.-6 p.m. EST only). You’ll be told specific suggestions for the substance of your phone conversation and then you’ll be asked to enter your ZIP code to be connected to your representative.

Spread the Word!

Pass this on to friends, family and colleagues. It’s important that our voices are heard when it comes to filing for bankruptcy.

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Posted in Filing Requirements, Home Foreclosure, The Truth about Bankruptcy | No Comments »

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