Sunday, October 11th, 2009
The census bureau’s median income figures are changing effective for bankruptcy petitions filed after November 1, 2009. Median income is used to determine if prospective bankruptcy debtors pass the means test. Florida’s median income has been increasing since the new bankruptcy law went into effect in October, 2005. People whose family income is below the median income for their family size can file for Chapter 7 bankruptcy automatically without having to pass the "means test." As the median income increased it became easier for people to qualify for Chapter 7.
The latest revised median income levels are lower probably because more people have lost jobs or have reduced income during the recession. For example the median income for a single person household in Florida is reduced from $42, 468 to $41,226. For a family of four, the median family income is lowered from $71,124 to $69,009. The recession is making it somewhat more difficult to file bankruptcy. For those debtors above median income, the lower census figures make it a little harder to pass the means test.
posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida
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Saturday, October 10th, 2009
Scott Goodman asked:
Being so much in debt that repaying your debts becomes well nigh impossible is something that many people find them facing and which leaves them with no alternative but to file bankruptcy in order to get their financial situation back on track. However, as good as it may seem that filing bankruptcy will help you out of such financial mess, it can also lead to much confusion in your mind trying to figure out what is Chapter thirteen bankruptcy and how does it differ from chapter seven bankruptcy.
Understand What Bankruptcy Is
However, before looking at what Chapter 13 bankruptcy is, it would be necessary to first understand the meaning of bankruptcy itself. Bankruptcy is a legal process filed in a law court with the intention of eliminating debts and provides the individual or business that is filing bankruptcy with relief from having to pay off the debts, and thus can make a new start in life.
Chapter 13 bankruptcy may cost you about one hundred and eighty-five dollars to file and it is commonly also referred to as reorganization bankruptcy and such a form of bankruptcy is generally filed by persons that wish to eliminate their debts in three to five year’s time. Under Chapter 13 bankruptcy, individuals can keep part of their possessions and also have a means to finance some of their day to day expenses while at the same time still have some money left over to pay off their debts.
So, when you decide on filing Chapter 13 bankruptcy, you will need to present your petition for bankruptcy in which you need to list your schedule of liabilities and also assets. And, following the filing of Chapter 13 bankruptcy, you need to provide a plan for repayment of debts which has already been reviewed by creditor’s to see that it does indeed satisfies their requirements.
Filing Chapter 13 bankruptcy is beneficial to you if you want to hold on to some possessions including your home, and in fact, filing for this kind of bankruptcy can, under certain circumstances, prevent foreclosure and such an instance is known as automatic stay which will give you time to catch up on your outstanding debts. It is only after you still cannot meet your debt obligations in the period of reorganization that your home will be foreclosed.
As with other bankruptcies, filing Chapter 13 bankruptcy should be done through an attorney who is an expert in bankruptcies, and even though such a form of bankruptcy has its advantages, there is no denying the fact that the price you will have to pay is high, because you will have a tarnished credit standing for at least ten years, which means that the future will not look good for you if you are considering applying for credit in that time period.
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Saturday, October 10th, 2009
Jon Arnold asked:
Nobody plans for bankruptcy, especially with the tightening of the bankruptcy laws that has been done in recent years, but whether it is for your business or your personal life, sometimes bankruptcy is your best option. While bankruptcy should always be considered to be your last resort, sometimes it is also your best option.
But how do you know when bankruptcy is right for you? Like anything else, you need to make sure you have investigated and validated all other possible alternatives. With the huge importance of making sure that bankruptcy is the option you want to pursue, this step is critical. Yet it is amazing that many people do not investigate all other possible options, and may not even be aware of the number of other options that are available to them, and they file bankruptcy with no more planning than if they were buying a dozen eggs.
So your financial status is bleak but that does not mean bankruptcy is your only viable option. You see, bankruptcy carries with it a whole series of things which will stay with you for years after your filing, and that is a huge burden to bear. For example, filing for bankruptcy will put a huge red mark, a warning flag, on your credit report for about 7 to 10 years. You may be able to get credit after filing bankruptcy, but be prepared for the fact that establishing new credit is not going to be easy, and the interest rates offered are going to be far from prime.
There are some things that bankruptcy will not absolve you of. For example, if you are responsible for making child support payments each month, those payment requirements will continue even after filing bankruptcy. This type of debt cannot be discharged via bankruptcy, since bankruptcy is more geared towards problems with credit and unsecured debt. Student loans are also usually not eligible for inclusion in a bankruptcy debt discharge, since student loans typically originate from a government source.
The world of bankruptcy is very complex and unless you yourself are a financial expert, you are best advised to seek advice from a qualified attorney who specializes in bankruptcies. There is a maze of legal requirements, and for some types of bankruptcy, believe it or not, you may not even be eligible!
Before you consider bankruptcy, you should sit down and take the time to determine what put you in your current situation, and what can you learn from that. It is always much more than “not enough sales” in the business world, or “too much credit card debt” in your personal world. Take several steps back and really focus on the root cause of how you got where you are. In business, did you try to expand faster than you should have? In your personal life, were you trying to lead a champagne lifestyle on a beer budget? These are tough questions to ask, but you need to ask yourself and get a real answer. During the bankruptcy process, these questions will be asked of you, and one of the things that will be expected is that you will have learned some things from this experience so that it doesn’t happen again in the future after you have re-established yourself.
Your best option is to talk with a qualified attorney who specializes in bankruptcy cases. There is a form at our web site that will allow you to talk with a lawyer who is local to you and make a real determination about your need to file bankruptcy. Like anything else, being informed with the facts and options is more than half way towards winning the battle.
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Friday, October 9th, 2009
Albert Alexander asked: Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due.
Bankruptcy is not something I recommend any more than I would recommend divorce. Along with a divorce, bankruptcy is listed in the top 5 life-altering negative events that we can go through, along with severe illness, disability, and loss of a loved one. In its simplest form, bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors.
Chapter 7 bankruptcy provides for the discharge, or elimination of, unsecured debts in order to start financial recovery. Chapter 13 bankruptcy provides a repayment plan for secured debts, such as a home mortgage. There are pros and cons to each of the consumer bankruptcy options as well as personal financial circumstances that may limit your options.
Because it completely rids you of your unsecured debt, Chapter 7 bankruptcy is the easiest way to come out of debt. Since all your debt is, in essence, wiped clean in a Chapter 7 filing, people have started abusing it. In a bankruptcy case under chapter 7, you file a petition asking the court to completely discharge your debts. Chapter 7 relief is available only once in any eight year period. Chapter 7 bankruptcy, which is sometimes referred to as total bankruptcy, stays on your credit report for 10 years.
Chapter 13 bankruptcy, more like a payment plan, stays on your credit report for seven years. Chapter 13 bankruptcy is the most common type of “reorganization” bankruptcy for consumers: You get to keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debt. The specific amounts of your repayment are determined by the courts.
Although bankruptcy can help with your financial situation, it does not help in every circumstance. Debts that are not eligible to be discharged include child support payments, some taxes, and student loans. Debts that can be discharged include personal loans, credit card debts, and medical bills.
Filing bankruptcy is a very serious move, and you must consider your options in comparison to your financial future. Filing bankruptcy involves a series of steps that you must be aware of. Filing bankruptcy is a major decision, with many benefits, including its ability to stop foreclosure, wage garnishment and creditor harassment. Filing can provide borrowers with clean financial slates either by discharging debt so that the one no longer is liable for its repayment, or by instituting a realistic repayment plan under the discretion of the bankruptcy court.
Filing for bankruptcy may be one of the most difficult decisions a person can make. There will always be those who file bankruptcy because of irresponsible financial behavior while others have simply fallen into unfortunate circumstances. For many who are forced to consider bankruptcy, the actual decision to file is usually the hardest part. Even with the negative implications of filing bankruptcy, most who have filed will agree that the psychological relief is a huge strain removed from their lives. Filing for bankruptcy is not the end of the world.
Bankruptcy is not a substitute for financial responsibility. Bankruptcy is not a quick fix for all credit problems. Bankruptcy is designed as a legal option to help resolve such a crisis, and act as a financial life preserver for those drowning in debt. Bankruptcy is the process by which you are legally allowed to get rid of your debt. Filing bankruptcy should only be used as a last resort effort to help people crawl out of a credit hole and get back on their feet.
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Friday, October 9th, 2009
Legal Helpers asked: When you choose to file bankruptcy, it is a personal decision. Sure you may be thinking about your personal debt and may be thinking bankruptcy is your only option.
However, the final decision on whether or not you should file bankruptcy all depends upon your personal situation. Before you decide to file bankruptcy, you’ll need to fully look at the advantages and disadvantages.
When you’re thinking about bankruptcy filing, you will need a bankruptcy petition. The petition is a collection of your financial information and is usually about 20 pages. Some states may require additional asset or other information as well. The whole process is done because the court will want a full picture of your current assets, liabilities, income, expenses, and recent financial transactions. It is vital you are honest about your finances. If you aren’t honest you could be fined or even be convicted and spend time in jail.
It’s often most helpful to consult a bankruptcy attorney or bankruptcy firm when you’re trying to file for bankruptcy. When you consult a professional, you can be sure everything is being done just as it should be done. You will have to likely pay for any bankruptcy service from a professional. However many offer payment plans that are quite affordable.
Today’s laws allow individuals to file for bankruptcy without professional assistance. As with most legal proceedings, “pro se” (meaning by yourself) is quite acceptable. While you have the right to represent yourself, you likely shouldn’t. An attorney would serve your interests much better because they know the laws well and know how to use the law to best benefit your individual situation.
Throughout the bankruptcy procedures there will be a ton of paperwork that can be quite confusing if you’re not familiar with the process. If you don’t file the paperwork correctly you could end up being seen as fraudulent or even be denied.
You should be careful when choosing your bankruptcy attorney. While it is necessary to hire one, you’ll want to be sure you are choosing one you feel comfortable with. If you can, check into their history of cases to see what their track record holds. Ask around to see if they have a good reputation of working with clients. It will be a difficult time for you and your family and you’ll want to work with someone who will make the process easier.
If you’re behind on your bills, you can bet you’ll be getting collection calls if they haven’t already bombarded you. These calls can cause stress and aggravation. Most collection companies will call you all day long, every day. However, when you file for bankruptcy the calls will stop coming.
In addition to stopping the collection calls, filing for bankruptcy can prevent the shutoff of utilities in Chapter 7. It eliminates the past due balance and in Chapter 13, pays the amount past due through the court-approved plan. Therefore you don’t need to worry about your electric or water being shut off for non-payment.
Student loans are one area of bankruptcy that is not usually changed. Due to many students taking out unusually high loans and then filing bankruptcy after college, student loans are rarely part of court approved plans for bankruptcy. Of course, student loans can often be deferred in financial crisis. It’s best to contact your lender about the options for you.
Bankruptcy can be an effective tool in getting the collection calls to stop. Filing for bankruptcy will eliminate your debt and you’ll be back on your way to a better financial future.
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Friday, October 9th, 2009
If you have been hurt on the job in Georgia and rely on weekly wage benefits from workers' compensation you know that temporary total disability benefits payable per Georgia law will require you to downsize your standard of living. Sometimes the financial strain caused by your loss of a regular paycheck may lead you to consider Chapter 7 or Chapter 13 bankruptcy. What are the implications of pursuing bankruptcy while you are receiving workers' compensation benefits?
My wife and law partner, Jodi Ginsberg, was recently questioned about this subject by a man who she is representing in a Georgia workers' compensation case. This gentleman had been in a Chapter 13, but his case was dismissed after over 3 years when he got hurt and lost his regular income. Now that his Chapter 13 has been dismissed, one of his creditors has filed suit.
Jodi's client wants to know if he should refile his Chapter 13 case to avoid having a judgment rendered against him. He is rightly concerned that a judgment creditor could seize his bank account and/or place a lien on his home.
Here is my take on this: while I think that a refiled Chapter 13 could work, I would be very reluctant to pursue this course of action. First, there is the practical question of whether Jodi's client has enough disposable income to make a Chapter 13 work at all. I have not run the numbers in this case, but it would not surprise me if there is zero or negative cash flow in this prospective debtor's budget – and a Chapter 13 will not work without some positive cash flow.
Second, our prospective client will not face any kind of garnishment of his workers' compensation benefits as Georgia law protects weekly wage benefits from garnishment. I would think that this protection would extend to benefits even after they have been deposited into a bank account but I have not seen any statute or case law on this point – so, in my mind, a workers' compensation claimant should be careful about depositing wage benefits into a (possibly) unprotected bank account.
Thirdly, I think that a Chapter 13 filed on behalf of a workers' compensation claimant would be complicated and expensive. There is a strong likelihood that the case would become ripe for settlement at some point during the 3 to 5 year pendency of the Chapter 13. This means that the debtor's counsel would need to file a motion to ask the court to declare the settlement as "exempt" property. Further, since a settlement means that weekly wage benefits will stop, the Chapter 13 would fail if the debtor could not come up with another source of income. Then, there is the possibility that the debtor might apply for Social Security disability.
The bottom line – as a debtor's attorney, I see a filing by a debtor who is currently on workers' compensation as a time consuming project and I would hesitate to accept such a case without a substantial retainer up front (not a likely prospect for debtor in such a situation).
This is one of these situations where multiple areas of law overlap with the amount of legal work needed greatly in excess of what a prospective debtor can afford.
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Friday, October 9th, 2009
Dean Shainin asked: Bankruptcy law is a federal statutory law contained in title 11 of the United States codes. Congress passed the Bankruptcy Code under its Constitutional grant of the authority to establish a uniform law on the subject of bankruptcy throughout United States. States may not regulate bankruptcy though they may pass the laws that govern other aspects of the debtor-creditor relationship.
Bankruptcy allows a debtor, who is unable to pay his creditors to resolve his debts through the division of his assets among his creditors. Certain bankruptcy proceedings allow a debtor to stay in business and use the revenue generated to resolve his or her debts. A United States Bankruptcy court supervises bankruptcy proceedings and is where bankruptcy is litigated. Proceedings in bankruptcy courts are governed by the Bankruptcy Rules which were promulgated by the Supreme Court under the authority of Congress.
How Do Bankruptcy Proceedings Work?
Informally called "straight bankruptcy," The most common type of bankruptcy proceedings liquidation involves the appointment of a trustee who collects the non-exempts property of the debtor, sells it and distributes the proceeds to the creditors.
Chapter 11 is reorganization. In this chapter the debtors are allowed to continue its operations while paying their debts. The debtor can either enter the bankruptcy proceedings or it can be initiated by the creditors. The creditors may not seek to collect their debts outside the proceedings at the most part, after the bankruptcy proceedings is filed. The latest revisions of the bankruptcy law are now in effect. Before the debtor can file a bankruptcy case, they should undergo credit counseling, budgeting and debt managements before the debt is wiped out.
Bankruptcy Attorney - Choosing the Right One
Bankruptcy attorneys explain the applications of bankruptcy laws and its applications. If the debtors or their lawyers set off the bankruptcy it is called a voluntary bankruptcy. If the courts initiate the bankruptcy it is called an involuntary bankruptcy. A good bankruptcy attorney will take all the problems away from the bankrupt person or company and deal with every aspect of the bankruptcy.
6 Helpful Tips and Considerations For Finding the Best Bankruptcy Attorney
1. Find a bankruptcy lawyer at the circle of your acquaintances. Keep in mind that bankruptcy law is a specialty, so if your lawyer offers to handle the case as part of your usual retainer, make sure he knows his way around a bankruptcy court.
2. Attorneys must be certified by the American Bankruptcy Institute.
3. Spend a day at a bankruptcy court.
4. What time frame do you have for this bankruptcy?
5. How much access will I have to an attorney during my bankruptcy filing?
6. Because bankruptcy law is a volume business, the time you’ll actually be working with a specific attorney may be small. Don’t hire the cheapest lawyer.
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Friday, October 9th, 2009
Thomas Ajava asked: Filing bankruptcy is obviously not something most people want to do. Given the current economic times, however, it goes without saying that many people simply do not have much of a choice. If you are considering it, learn a lesson from the tax implications of the recent Nortel bankruptcy filing.
Nortel Networks is one of the largest communications makers in North American and, indeed, the world. How big? Well, it had both assets and debts of nearly 11 billion dollars when it recently filed bankruptcy. Why file bankruptcy if the ledger looked nearly balanced? The answer is found in debt repayment obligations coming due the company simply could not meet.
Why should you care about the bankruptcy of Nortel Networks? Well, you don’t really have to, but you should take into account something that happened from a tax perspective. Specifically, the IRS filed a claim for unpaid taxes with the Bankruptcy Court handling the matter. The amount of the unpaid taxes? A staggering three billion dollars. Making matters all the more interesting, it seems as though the powers that be at Nortel did not realize taxes would be an issue before making the bankruptcy filing.
So, what is the lesson? The issue at hand is how debt is treated in our archaic and odd tax code. It is treated as debt unless it is forgiven. At that point, it converts to income under the tax code. You know what that means. Yes, you owe taxes on that income! Let’s look at an example.
I started a business during the boom times earlier this decade. I sold an app for iPhones that shot a flame out the end so bank and stock market executives could light $100 bills to light their cigars. Business was so brisk that I ordered $1 million dollars of the product from China and financed it with a loan from a bank. Well, the economy blew up in 2008 and so did my business. I filed for bankruptcy protection and asked the court to eliminate the $1 million dollar loan debt. The court agrees, but here comes the IRS. They view that relief as income. What does that mean? It means I owe income tax on the million dollars!
This is obviously an extreme example, but it does highlight the fact tax issues need to be considered when filing bankruptcy. In getting rid of debt, you might end up with a tax problem..
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Friday, October 9th, 2009
Jon Arnold asked: In the same manner that certain assets are typically not included as part of a consumer’s chapter 7 or chapter 13 bankruptcy filing, there are also certain types of debt and financial obligations which cannot be discharged via bankruptcy. These types of debts are exempt from bankruptcy law, and you still need to pay them, whether or not you file for bankruptcy protection.
For example, one type of financial obligation that cannot be discharged via bankruptcy is child support. If you have gone through a divorce or some type of divorce or separation settlement and you are required to pay child support or child maintenance by court order, the act of filing bankruptcy will not discharge this responsibility for you to continue paying it. Child support payments are exempt from any type of bankruptcy filing that the consumer might do, whether chapter 7 or chapter 13.
Another type of financial obligation that is exempt from being discharged by bankruptcy is an IRS lien. What happens with an IRS lien is that you owe income tax payments from one or multiple years. At a certain amount of money owed, the IRS will put a lien on your house or some other type of asset that you own, or in lieu of that possibility, may garnish your wages via your employer. This type of IRS lien, in addition to being exempt from a bankruptcy discharge, is also on your credit report for about 10 years as a huge blemish, which would be in addition to the blemish on your credit report from your bankruptcy filing. These types of red flags on your credit report can make it more difficult (although not impossible) to get approved for new credit in the future.
Another type of debt that is exempt from a bankruptcy discharge is a court order that may have awarded another company or individual a specified amount of money via a lawsuit brought against you. Since judgments such as these cannot be discharged, you should know if you have any of these pending against you that you have not been paying on, because they will not be discharged via bankruptcy.
If you are significantly behind in one or more debts with your existing creditors, chances are good that in time, one or more of those creditors will file a lawsuit against you to collect that outstanding balance that you owe them. This takes time and most creditors are not anxious to go to this extreme to collect money owed to them, but it cannot be ignored since most of them, in time, WILL go to that extent. If such a lawsuit occurs BEFORE you file for bankruptcy, then that will be a court order to pay the specified amount to that creditor, and that will NOT be discharged via your bankruptcy filing, since their lawsuit occurred before you filed. The bottom line here is that you need to take some action, because you could find that filing bankruptcy is not going to do you any good at all if you have multiple creditors with a judgment against you already.
Government loans such as federal student loans are also exempt from bankruptcy discharge.
If you are considering filing bankruptcy and have thoroughly investigated all your options, you should sit down with your debts and determine how many of them would be exempt from being discharged via bankruptcy. With the recent changes in bankruptcy law, this is no longer a do it yourself project. You need to be familiar with bankruptcy law, or if you don’t have time to study up on that, the money you spend on a good bankruptcy lawyer would be money well spent.
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Thursday, October 8th, 2009
IC asked: In today’s world, bankruptcy mortgages are not uncommon. According to figures from the government’s Insolvency Service, in quarter three of 2007, there were 26,072 individual insolvencies in England and Wales. This was made up of 15,833 bankruptcies and 10,239 Individual Voluntary Arrangements (IVAs) – where you are still unable to borrow but you keep your property.
All of these people could be candidates to apply for bankruptcy mortgages. However, seeking out a bankruptcy mortgage at a time when you are clearly the most financially vulnerable is nothing to be taken lightly. That’s why it’s very important that you seek advice from an independent broker that specialises in this bankruptcy mortgages first, like The Mortgage Broker Limited (TMBL).
Why would I need to look at bankruptcy mortgages?
After you have been made bankrupt, you may be discharged (freed from obligations under the bankruptcy order) after one year, although a bankruptcy will stay on your credit file for at least six years. Your credit file is held (but not determined) by one of three credit reference agencies in the UK; namely Experian, Equifax and CallCredit and lenders will refer to this file before agreeing to lend to you. Bankruptcy mortgages can be your only option during these years as mainstream lenders – that don’t offer bankruptcy mortgages – will not offer you a loan. Unfortunately, this is still the case if the bankruptcy occurred through no fault of your own; for example, your business folded or you got divorced.
How do bankruptcy mortgages work?
Bankruptcy mortgages are also known as ‘heavy subprime’ mortgages. In other words, they fall at the bottom end of the subprime spectrum; by contrast you could be at the top of this spectrum if you had just missed a couple of credit card payments.
What’s the difference between standard and bankruptcy mortgages?
The main point of difference between standard and bankruptcy mortgages is their cost. Depending on when you were made bankrupt and under what circumstances, bankruptcy mortgages can be eye-wateringly expensive – to the point where it may not make sense to get one. This is the kind of information a broker that specialises in bankruptcy mortgages can help you with. The other main difference is that – as you are a maximum risk in the eyes of the lender, bankruptcy mortgages may require a larger deposit than on mainstream deals, as well as come with some hefty upfront fees and restrictive tie-ins.
Where can I get bankruptcy mortgages?
Even if you wanted to search for bankruptcy mortgages yourself, you may find that many of the specialist lenders that offer them only accept applications through a mortgage broker. This is because lenders must be very careful to protect themselves when it comes to bankruptcy mortgages, and taking an application through a specialist broker like TMBL means the risk has already been assessed and the relevant information has been packaged appropriately. So, when it comes to bankruptcy mortgages it makes sense to go to a broker for access to deals and well as to get the best one available.
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