The Benefits and Disadvantages of Filing for Bankruptcy

Posted on August 22, 2013 by Staff Writer

The choice to file for bankruptcy is not an easy one. The benefits need to outweigh the negative results of bankruptcy. It is necessary to have a full understanding of the consequences of bankruptcy in order to make the best decision possible.

The following are possible outcomes of bankruptcy:

1. Weakened Credit Score

Filing for bankruptcy has a negative effect on your credit score. A bankruptcy shows up on your personal report for 7 to 10 years depending on the type of bankruptcy for which you file. Yet, bankruptcy allows for a financial fresh start. You can rebuild your credit over time and there is an opportunity for it to be better than before your bankruptcy.

2. Difficulty Getting Loans

One of the results of having a bad credit score post-bankruptcy is that it will be more difficult to get a loan. You will also have a difficult time being approved for credit cards and financing the purchase of a home. Yet, if you are considering filing for bankruptcy, it might not be the best idea to have new bills to pay.

3. Issues with Finding Employment

Potential employers occasionally review your credit report before offering you a job. Certain states have outlawed or limited such a practice because of the negative cycle it perpetuates. People who can’t pay their bills on time are not able to get jobs that would allow them to pay their bills on time. Arizona is not one of the states that currently regulates such activity.

The benefits of bankruptcy can far outweigh the negative aspects because it will allow you to start fresh. It is important to discuss your situation with an Arizona bankruptcy lawyer. Bankruptcy will eliminate either some or all of your debts depending on what chapter is selected. Filing will also stop harassment from creditors, foreclosure, wage garnishment, or repossession because filing creates an injunction called an automatic stay. In the long run, a bankruptcy will allow you to build your credit back up to a respectable level and allow you to regain your life. Contact a dedicated bankruptcy attorney in Casa Grande who can assist you in deciding if filing is the right step for you.

Fewer People are Filing for Bankruptcy because of New Habits

Posted on August 18, 2013 by Staff Writer

Since the beginning of 2013, consumers in the United States are not filing for bankruptcy protection as much as previous years. The way consumers are carrying debt has also improved. Credit card debt is one type of debt that can be removed or reduced through bankruptcy. Only 2.4% of credit cards were delinquent by thirty days or more, which is the lowest percentage in over 20 years.

“Sharply lower delinquency levels reflect improving consumer balance sheets, steady job creation and a continuing increase in household wealth,” said James Chessen, the American Bankers Association’s chief economist. “Many consumers have learned the hard lessons of recession and have redoubled their efforts to keep debt at manageable levels.”

This decrease in filings is a trend not only nationally, but in the Phoenix as well. Compared to the same period of last year, there was almost a 25% decrease in filings. Overall, bankruptcies have been decreasing since their peak in 2009.

Certain bankruptcy experts look to temper this good news by looking at possible causes for this decrease. They say it is not necessarily a sign that the economy is recovering, but that consumers are reluctant to sign up for new bills. The executive director of the American Bankruptcy Institute, Sam Gerdano, said that consumers have limited the chance of filing for bankruptcy by living on their base income alone.

If you have experienced a change in your life and need a fresh start financially, consider filing for bankruptcy. Large medical expenses, losing your job, and filing for divorce can all put a major strain on your bank account, even if you are frugal with your money. Don’t let an unexpected event get in the way of your future, contact an experienced bankruptcy attorney in Phoenix today. They can see if you qualify for bankruptcy and let you know what options are available to you.

Bankruptcy isn’t a Band Aid for Bad Financial Habits

Posted on July 13, 2013 by Staff Writer

Bankruptcy can be the right solution for those individuals who may need a way out of overwhelming debt, but it is not a band-aid for poor habits. One 28 year old learned that choosing to file bankruptcy is not the fix for money woes. It was made clear that changing those habits will ensure that filing bankruptcy would not be in vain. Not changing these habits will only put one back in a similar financial situation and bankruptcy may not be an option again.

Some people may think that filing bankruptcy will solve money problems when its only focus is on outstanding debt. Bankruptcy does not take care of future debt accumulation. The only thing that can prevent that is better spending habits. Taking a long hard assessment of outstanding debt will also help you determine if bankruptcy is the best option or if debt consolation is best.

Before making a decision to file bankruptcy, it is be best to consider all available options. For example, if the statute of limitation on a credit card debt has passed, this may not be a debt you are obligated to pay. However, it will remain on your credit for seven years. Statute of limitation begins from the time of the last payment or last use of the account whichever is later. Some creditors are willing to settle for 20% of the balance to satisfy the debt. If you are financially able to pay these creditors, bankruptcy may not be the best option.

However, larger accounts where the statute of limitation has not run its course, such as a reposed vehicle or medical bills bankruptcy protection may be in order. Filing a Chapter 7 bankruptcy could resolve all eligible debt if you qualify. Contact a qualified bankruptcy attorney to determine your options.

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Most Common Causes of Bankruptcy

Posted on June 9, 2013 by Staff Writer

Bankruptcy provides a great tool for people who are unable to dig out of financial holes. Rather than lose everything you have, bankruptcy can allow you to reclaim your life. But not all bankruptcies are brought about by crazy spending sprees. Do not let the stigma associated with bankruptcy influence your decision if your finances have gotten out of control.

According to multiple studies of the causes of bankruptcy, there are a handful of common causes of bankruptcy, one of which is excessive spending. The least common cause of bankruptcy is unexpected disasters or calamities. If a catastrophe changes your situation either by taking away your car, your job or other things you need to live, then bankruptcy can help you regain your footing on solid ground. This cause of bankruptcy only influences about seven percent of all filings.

Another cause of bankruptcy is divorce, which is how half of marriages end. From a financial standpoint, divorce can make it difficult to live the life you had before. You need to maintain two households with the income from your married life. It is also necessary to pay for legal fees, alimony, and child support if you become single again. Divorce contributes to eight percent of bankruptcy filings.

Job loss has been a very prevalent cause of bankruptcy in recent years. Almost eight percent of Americans are currently unemployed as of May 2013. These people usually pay for insurance out of pocket which can be a drain on already depleted household income. 22 percent of bankruptcies are influenced by unemployment.

By far the most usual cause of bankruptcy over the years is medical expenses. The bad news is that medical costs will continue to rise as new medicines and procedures are developed to keep us healthy. In 2013, Reuters figured that medical costs would increase by almost eight percent from 2012. When medical costs are already too expensive for most households, bankruptcies will be more prevalent. If you feel that any of these reasons is putting a strain on your finances, then consider reaching out to a skilled bankruptcy attorney from Phoenix today.

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Can You Be Evicted During Bankruptcy?

Posted on May 18, 2013 by Staff Writer

Filing bankruptcy is meant to help filers to eliminate debt and get a fresh financial start. If a bankruptcy filer does not have money to pay their bills, they may wonder: what happens if I cannot pay my rent? Am I protected from eviction?

In order to evict a tenant, a landlord must have definite cause. Before the eviction process begins, a written notice must be sent to the tenant. This notice should list specific reasons why the tenant must leave and a time period in which they must be out.

The notice can be sent if the tenant has broken the lease, failed to pay rent, or failed to move out after the end of the lease term. If, after receiving the notice, the tenant fails to take action or leave the property, the landlord can begin the process of eviction.

The renter is then served with a summons. At that time the renter can file a response and go to the court hearing. If the renter does nothing, the landlord is given default judgment. A Writ of Possession is passed on to a law enforcement official, who assists the landlord in taking possession of the rental property. The renter and their belongings will be removed by the officer. The landlord will change the locks and ensure that the property is secure.

However, all of this can halt if a bankruptcy has been filed prior to a judgment on eviction.
During bankruptcy the renter is given an automatic stay, halting the eviction unless the landlord petitions the bankruptcy courts. A reschedule for an eviction hearing will be made which can take up to four weeks. This allows the bankrupt renter a little time before they have to move.

If you are trying to determine whether bankruptcy is right for you and how to proceed as a renter during the bankruptcy process, contact an Arizona bankruptcy lawyer who will guide you through the process and make it easy to understand.

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A Study of How Sadness can affect Personal Debt

Posted on April 25, 2013 by Staff Writer

People seek different ways to deal with sadness. It seems unfortunate in the grand scheme of things, but a study shows that sadness can have a negative effect on a person’s financial bottom line and also further deteriorate their mental state.

In a study run by students Jennifer Lerner of Harvard’s School of Government and Elke Weber and Ye Li of Columbia reviewed the connection between sadness and debt. The results were published in the Psychological Science journal last year.

They came up with a term called “present bias”. The unhappiness of people makes them value the present more so than the future. This leads them to put more importance on instant gratification rather than the long term consequences. So it seems natural that “retail therapy” would be an avenue that people would use to make them feel better.

The bad news is that when debt becomes a problem then the sadness can turn into depression. Especially if the debt can’t be turned around and necessitates a bankruptcy. “Many of us confuse our self-worth with our net-worth,” clinical psychologist Bradley Klontz said. “As such, financial problems can deal devastating blows to our self-esteem. Bankruptcy can lead to feelings of guilt and shame, and cause us to isolate from our family and friends out of embarrassment.”

For some people, it has to get worse before it can get better. Filing for bankruptcy can alleviate your money issues and allow you to have a fresh start If you feel like bankruptcy is your best option, then contact a legal professional who can help you through the process. An experienced bankruptcy attorney in Phoenix can show you the options for turning around your situation so contact them today.

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Bankruptcy and Employment

Posted on February 13, 2013 by Staff Writer

Many people who have to file bankruptcy have obvious and well-founded fears of losing employment after filing. Section 525 of the Bankruptcy Code, approved in 1943, ensures that no governmental unit can terminate employment or discriminate, with regards to employment, for a person having filed bankruptcy. And yet a U.S. Court of Appeals decision issued in 2011 set a precedent that could hinder this decades-old protective law. In Myers v. Toojay’s Management Corp., an appellate court in Florida decided that while government employers may not deny employment to an individual who has filed for bankruptcy, this does not apply to private employers. The Bankruptcy Code is murky, and other courts may not uphold this controversial decision. Yet anyone who files for bankruptcy should be aware of its implications.

Regardless of this new ruling, most bankruptcy attorneys agree that they’ve never heard of a private employer denying employment based solely on a prior bankruptcy filing. Losing employment after filing for bankruptcy but independent of the filing is another story, and most definitely one many would consider absolute worst-case scenario. If this happens to you, the most important first step is to contact the bankruptcy attorney who handled your bankruptcy filing. He or she will be able to help you explore options, especially if you filed a Chapter 13. You may be eligible to temporarily waive monthly payments while you seek other employment.

According to U.S. Bankruptcy Court statistics, there was a 22 percent drop in the number of bankruptcy filing in Arizona between 2011 and 2012. This figure includes both personal and corporate, but is good news regardless for Arizona residents. Despite the drop, many individuals are still dealing with bankruptcy, and could have subsequent employment concerns because of it. For this and any other reason, if you or someone you know is considering bankruptcy don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Bankruptcy Charges in Arizona

Posted on January 14, 2013 by Staff Writer

It may seem backwards, but if you’re cash-strapped enough to file for bankruptcy, there’s one more major bill you’ll have to pay, and that’s for the filing itself. Some families considering bankruptcy might think it’s a cheaper option to forgo a qualified attorney to handle the proceedings, but even the Federal Bankruptcy Court advises always hiring a competent attorney to walk a person through the process. Not only are filing fees the same to file with or without an attorney, bankruptcy is a complicated process that has plenty of room for error. Bankruptcy crime is a fraud punishable by a fine of up to $250,000 and/or five years in prison. It’s always best to know what you’re getting into, and this means hiring an experienced bankruptcy attorney to take you through the process.

Filing fees vary from state to state, and tend to change every year. In November 2012, Arizona announced its newest bankruptcy charges. The typical Chapter 7 (liquidation), Chapter 13 (reorganization) and Chapter 12 (family farmer) bankruptcies are the least expensive, at $306, $281, and $246 respectively. These aren’t the only fees associated with filing in Arizona—any reopening of a case, copies, the splitting of a jointly filed case, or exemplification of any document are examples of additional fees are applied whether or not the case was filed by an attorney. An amendment to a case will cost $30, and even abandoning the bankruptcy all together will cost $176. This fee alone is a reason to seek counsel to determine if bankruptcy is right for you.

If you or someone you know is considering bankruptcy for any reason, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Declaring Bankruptcy before or after Marriage?

Posted on January 2, 2013 by Staff Writer

When two people forge a bond and want to get married, there are a lot of things to consider. On one hand, there is the planning that goes into a wedding. Finding a florist, booking a venue, and all the other vendors that must be contacted make a long list. On the other hand, there are issues with where you will live, what your goals are, and other important marriage related concerns. So if you have debts, this is the time to consider filing for bankruptcy.

There are many reasons to file for bankruptcy before marriage. The means test is a very important part of being able to declare for bankruptcy because it measures if you are able to recover from being in a bad financial position by yourself. Having a separate income, being single, you may be more likely to be qualified for a bankruptcy. Once you are married, your income is considered with your spouse, even if your debts are not.

This is because Arizona is a community property state. That means that your new spouse is not accountable for the debts accrued before marriage. Those debts will be in your name regardless of your marital status. It behooves you to consider your future spouse’s credit score and income. If they also have a bad credit score, you might be better off trying to work through your debts so that you can get loans for cars or a house.

Help alleviate the stress associated with these major steps in your life. Don’t put too many things on your plate because going through a bankruptcy is as time-consuming as preparing for a wedding. The best advice is to contact a skilled bankruptcy attorney in Arizona who can help you decide the best step for you before your nuptials.

Credit Card Tips after Bankruptcy

Posted on December 26, 2012 by Staff Writer

A Chapter 7 bankruptcy will stay on a credit report for up to 10 years. A Chapter 13 bankruptcy will stay on a credit report for up to 7 years. Everyone who applies for a credit card, car loan, or mortgage, gets their credit report reviewed. Filing for bankruptcy can make you a poor candidate for bowing money or getting credit, but there are ways to rebuild credit.

While it always seems that credit cards are the reason that people declare bankruptcy, they are one easy way to rebuild credit. There are credit cards which are termed secured, which can be used by those who filed for bankruptcy. It is termed secured because the user secures their debt by paying a security deposit to the credit card company.

Before you apply for this type of credit card, do some research and get some counseling. Make sure that the card reports to all three credit bureaus. This will allow your timely payments to affect you credit scores as much as possible. Once you have a new credit card, keep the balance around 10% to 15%. Another common mistake is closing credit cards. If you close a card, it reduces the amount of credit you have available. If you can’t stop using your cards after the balance is paid, then just cut the card in half.

Bankruptcy can be an important tool to secure your financial future. If you have any question about rebuilding your credit or life after bankruptcy, reach out to a professional. Contact a helpful bankruptcy attorney in Tempe who can guide you back into a new financial future.