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.

Chapter 13 Bankruptcy

Posted on July 29, 2013 by Staff Writer

If someone has gone into personal debt, he or she will most likely file under Chapter 7 bankruptcy, however, Chapter 13 is an option as well. Under Chapter 13, the debtor is allowed a three to five year payment plan in which time he or she can pay back all debts.

Chapter 13 bankruptcy is also called a wage earner’s plan because it is specifically for those who have a high enough monthly income to pay back the debts. If the debtor’s monthly income is less than that of the state’s median, the plan will be three years, if it is higher than the state median, the plan will be five years.

Along with creating a payment plan for the individual, the courts also forbid any debt collectors from further pursuing the debts owed to them by the debtor during the length of time that the payment plan continues.

One of the most important advantages of filing under Chapter 13 is that it will save your home from foreclosure, adding mortgage payments to the payment plan.

Chapter 13 also “acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes them to creditors,” according to the U.S. Federal Courts web page. This form of bankruptcy protects the debtors from having to deal directly with the creditors.

Debtors also have the opportunity under Chapter 13 to reschedule secured debts and extend those payment plans over the length of time for the bankruptcy payment plan set by the courts. Lengthening the payment plan may lower the individual payments as well as simply give the debtor more time to pay.

If you are considering filing for bankruptcy, but do not know which Chapter to file under or where to begin at all, contact Arizona bankruptcy attorneys for assistance. These experienced bankruptcy attorneys will assist you in making the best decisions about your money and payments to keep your home and other in important assets Arizona today.

How Filing Bankruptcy Will Affect Child Support

Posted on July 16, 2013 by Staff Writer

There are various reasons why a person may file bankruptcy such as illness, loss of a job, or a divorce, but getting out of paying child support should not be a reason. When a person files bankruptcy, if qualified, certain debts are forgiven. However, with child support this obligation cannot be forgiven. That means that although a person can file bankruptcy if he or she has a court order to pay child support, that obligation will not be dismissed because of the bankruptcy.

Likewise, if you receive child support and the non-custodial parent files bankruptcy, he or she will still be required to pay child support. However, having other debts forgiven may make meeting the child support obligation easier for non-custodial parents.

Although child support is never forgiven, Filing chapter 13 may provide a temporary stay, which means that collection efforts must cease during the process. In addition, filing bankruptcy could provide necessary relief if you are overcome by other debt. If you qualify, Chapter 7 would forgive the debt, whereas a chapter 13 will offer a reschedule of lower payments to your creditors. Once you have filed, your creditors will be notified and must not contact you during the process. Reestablishing credit after filing bankruptcy is also possible.

The process for filing bankruptcy can be complicated. Some people may find the process intimidating and therefore may never consider it. For some Arizona residents and others, filing is their way out from under a mountain of debt. If you or a loved one is considering bankruptcy as a means to a fresh start or if you have questions as to how doing so could affect child support and outstanding debts it may be time to contact an experienced bankruptcy lawyer today. The consultation is free.

Image courtesy of freedigitalphotos.net

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.

image courtesy of moggara12 / freedigitalphotos.net

Bankruptcy and Medical Bills

Posted on May 31, 2013 by Staff Writer

With the implementation of Obamacare getting closer, there are several questions about what the Affordable Care Act will do for Americans facing high medical bills due to an ongoing illness or disease. According to the Washington Post, “the nonpartisan Congressional Budget Office estimates that 30 million more Americans will have health insurance by the end of decade.” That’s a big number, but it doesn’t take into consideration those Americans who will indeed have coverage, but who “will still face big financial burdens after they gain insurance coverage,” a sub-sect that will likely exist, according to two new academic studies cited in the Washington Post.

According to Reuters News Service, “medical bills are behind more then 60 percent of U.S. personal bankruptcies.” U.S. researchers told Reuters that, “for middle-class Americans, health insurance offers little protection,” and even healthcare reform isn’t on the right track. Dr. Sidney Wolfe of the Health Research Group at Public Citizen told Reuters that “expanding private insurance and calling it health reform will fail to prevent financial catastrophe for hundreds of thousands of Americans every year.”

Arizona has long had one of the highest rates of both personal and consumer bankruptcies in the country. Though that number significantly decreased from 2011 to 2012—according to Arizona Bankruptcy Courts, by 22.2 percent—Arizona residents are still at a high risk of bankruptcy. In 2012, there were 27,298 bankruptcy filings in Arizona, the large majority of which were in Phoenix.

As Obamacare is implemented, everyone will be looking to see if the expanded coverage will reduce bankruptcies due to medical bills. Stephanie Woolhandler, a professor at the City University of New York, conducted research to determine this on a smaller scale after the state of Massachusetts expanded healthcare coverage, and found that “in 2009, two years after the insurance expansion took effect, just about half the debtors (52 percent) attributed their bankruptcy at least in part to medical bills,” according to the Washington Post. “In 2007, before the expansion, the number stood at 59 percent.”

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

Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

How Social Media can affect your Bankruptcy

Posted on May 3, 2013 by Staff Writer

We have all heard for many years about employers and divorce attorneys looking into your social media profile to see if you are being honest about everything that you have claimed. Creditors are even turning to social media to see where you are as far as income and assets.

There are so many social media outlets today and it seems that as the time goes by, there are new ones introduced all of the time. Between Facebook, Twitter, LinkedIn, and Google+, you can find out almost anything that you want to find out about a person. This is especially important to remember when you are claiming to have financial difficulty. Remember, your creditors want to be paid and if they can find evidence that you are not being honest about your income and assets, it could be a problem for you.

If you are telling the bankruptcy court and your creditors that you don’t have the means to pay for your current debts but you are taking vacations and posting the pictures to your social media profile, they could use that as evidence against you. If you are claiming that you don’t have any assets but you are posing in a brand new car, this can totally change the way that your case may play out.

Living above your means may be one of the very things that have landed you into a financial pickle. Once your Arizona bankruptcy attorney has advised that filing bankruptcy is a viable option for you, you must be very honest about any assets that you have and disclose all income that you have coming in. if you are putting contradicting statements and photos on your social media profile, it can cause a big headache later. The best thing is to be honest from the beginning.

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.

image courtesy of freedigitalphotos.net

Avoiding the Sinkhole of Medical Debt

Posted on April 10, 2013 by Staff Writer

A recent U.S. News and World Report article reports that debts from medical expenses are one of the most common reasons for filing bankruptcy. As more and more people struggle with the ever-increasing costs of health care, there are a few steps that can be taken in order to avoid falling into insurmountable medical debt.

Staci

First, always at least maintain catastrophic health insurance coverage. A plan with a very high deductible won’t provide you with relief for minor or routine medical expenses, but it will avoid you being stuck with tens of thousands of dollars of medical bills which you may never be able to pay off if you suffer a major illness or injury.

Next, make sure that the care that you choose to receive is the most cost-effective care possible under the terms of your medical insurance policy. For instance, many insurance policies contract with certain doctors or medical facilities that are considered to be in-network providers. In this case, going to an out-of-network provider will likely result in much higher costs than if you simply went to an in-network provider. By taking all reasonable steps to comply with the terms and conditions of your insurance policy, you can minimize your out-of-pocket costs.

Other important steps to avoiding medical debt are to pay only what you owe and negotiate those bills that you do owe. Make sure that you are only charged for the care that you received and that your bills contain no errors. Once you have determined that your bill is correct, try negotiating a payment plan or applying for financial assistance to have some of your debt forgiven, which is available through many hospitals and other medical providers.

You can also use a regular savings account, a flexible spending account, or a health savings account to build up funds that can be used in case of medical emergency. By having money available in case these kinds of expenses occur, you can avoid going into debt to pay medical bills.

Finally, if you have unavoidably racked up thousands of dollars of medical bills, bankruptcy may be a solution for you. Contact your Phoenix bankruptcy attorney today, and discover whether bankruptcy is a viable option for you.

Why Does Bankruptcy Exist?

Posted on April 5, 2013 by Staff Writer

At its core, consumer bankruptcy exists to give people a fresh start and a second chance. Since the “great recession” began several years ago millions of people in this country have filed bankruptcy. People have found themselves trapped in a cycle of endless debt—struggling just to make their minimum payments each month. Often through illness, divorce, death, job loss, or poor choices people find themselves hounded by unrelenting creditors.

These creditors can garnish paychecks and levy bank accounts. In most states a creditor with a judgment can garnish 25% of a person’s gross paycheck. That’s approximately 40% of a person’s take-home-pay! Most people struggle to live off of 100% of their paycheck let alone only 60% of it. Additionally, these creditors can also “levy” bank accounts by seizing the available funds.

A bankruptcy filing gives someone a fresh start. From the minute a bankruptcy is filed it becomes illegal for creditors to ever contact a debtor attempting to collect on a debt. The automatic stay prevents creditors from garnishing, levying, or liening the bankruptcy filer’s property. The unrelenting stress is gone and bankruptcy filer can begin their new financial life. Credit ratings slowly rise, credit becomes available, and it will eventually be as if the bankruptcy had never happened.

Get the fresh start and second chance you deserve by contacting one of our skilled bankruptcy attorneys today!