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.

Your bankruptcy discharge could be denied because of a prior bankruptcy discharge

Posted on August 19, 2013 by Staff Writer

There are many reasons your bankruptcy discharge could be denied. There are a myriad of debtor’s obligations and time restraints that could affect your bankruptcy discharge. One of the most common and the most utilitarian is the bar of discharge if a bankruptcy was discharged in the past. The rules need to be read carefully. There are many specific ways to use this rule, and many ways the rule can use you.

The rules seem pretty straightforward. Bankruptcy Code 727 (a)(8) discusses the restriction as the case In re Blanchette, 54 B.R. 890 (Bankr. D.R.I. 1985). If a debtor previously received a discharge in a Chapter 7 or a Chapter 11 bankruptcy that was commenced within eight years before the petition was filed in the present case.

That simple rule is more complicated than it looks, it does not discuss what happens if a prior bankruptcy was filed without discharge, and it does not deal with a prior bankruptcy discharge under Chapter 12 or Chapter 13. It is, however, very specific in that the eight-year discharge prohibition runs from the date of the filing of the bankruptcy petition in the prior case, to the date of the filing of the bankruptcy petition in the current case. It does not run from the date of discharge.

There is a similar provision, although it is specific to Chapter 7 discharge within six years of the filing of the Chapter 12 or Chapter 13 bankruptcy. The time measurement is performed the same way, but there is an exception found in B.C. 727 (a)(9) if all or a vast majority of the allowed unsecured claims were paid.

If you are filing bankruptcy for any other reason and are not concerned with discharge, do not let these restrictions fool you. The only apply to prohibit a discharge in bankruptcy.

If you are concerned about a prior bankruptcy filing and how it will affect your current debt resolution or bankruptcy plans, there is no reason to guess about the reading or application of these statutes. Representation by a quality bankruptcy attorney is not only a good decision, but it is affordable. You can schedule a free consultation and let a really good bankruptcy lawyer deal with a very serious and unfamiliar, at least to you, issue. GET FREE HELP TODAY.

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.

Deficiency Judgement and Foreclosure

Posted on August 14, 2013 by Staff Writer

According to CoreLogic, there have been over 3 million homes foreclosed on since 2008. Many of those former homeowners are still struggling today, trying to recover from the financial disasters they faced. The majority were forced to leave homes that were then usually auctioned off by the mortgage holders.

Now, what could be a new financial disaster, many of these lenders are filing lawsuits against former homeowners for the balances of the mortgages. As the Washington Post reported, many people thought their home was the security for the mortgage. What they don’t realize is the lender can pursue legal action for a “deficiency judgment”.

For example, a property that with a $300,000 mortgage may have only been worth $100,000 during the housing crisis and the price the bank received during a foreclosure sale. However, the remaining $200,000 that is still owed on the original mortgage is referred to as a “deficiency balance” and that’s the amount that lenders are suing homeowners for.

Both Fannie Mae and Freddie Mac are two of the lenders who are pursing deficiency judgments against former homeowners. Fannie Mae has hired debt collectors to pursue people in thirty-eight states, and Freddie Mac has pursued debtors in seventeen states.

Not only are the lenders pursing the deficiency balance, they are also pursing interest on that money. The Post interviewed one former homeowner who is being sued. He owes $95,500 from a $375,200 mortgage, plus at least $21,000 in unpaid interest. He has been charged $19 per day (almost $600 per month) since the foreclosure. And that interest keeps growing.

Once a lender is awarded a deficiency judgment, there are numerous ways they can go about collecting those funds. Bank accounts can be seized, wages can be garnished and liens placed on properties.

If you have been involved in a past foreclosure, consider consulting with an experienced Arizona bankruptcy attorney to find out what steps you can take to protect yourself before the former lender files a deficiency judgment against you.

Is Your Bank Taking Money Directly from Your Account?

Posted on August 11, 2013 by Staff Writer

Many people don’t realize that if you are in default on a bank loan (for a mortgage, car loan, personal loan, etc.), the bank has the right to take those funds from any accounts you may have at that bank – and without any notice they are doing so. This is known as “right to set off”.

According to the law, when you deposit money into a bank account, the money becomes the property of the bank. This now makes you one of the bank’s “creditors” for the amount of money of the deposit. The deposit becomes essentially the bank’s promise to pay you. When you then borrow money from the same bank, you have now developed a “mutual debtor-creditor” relationship and that’s what gives the bank the right to withdraw money from your account should you default on the money you owe them.

The right to set off only applies to banks you owe money to. For example, if you have a savings account at Bank A and defaulted on a car loan you have with Bank B, Bank B doesn’t have the right to set off your account at Bank A.

There are also other restrictions as well. The account the bank is attempting to withdraw from and the loan that is owed must be the same customer. And the loan and the bank account must be in the same capacity. In other words, if you have an individual car loan with a bank, they cannot withdraw from an account you own jointly with another individual.

If you have accounts with a banking institution where you also have loans, you may want to consider ways to protect yourself from the right to set off. Keep low balances in your accounts. Open up a bank account with a bank which you don’t have debt with. It’s particularly important to research just which banks you owe money to, especially with items such as credit cards, because it’s not always obvious which bank actually owns the “loan”.

If you have had funds seized by your financial institution, consult with an experienced Arizona bankruptcy attorney to contest the seizure and try to get your funds back.

The Bankruptcy Automatic Stay – Good Dog

Posted on August 8, 2013 by Staff Writer

So filing bankruptcy with a good bankruptcy lawyer is supposed to put a leash on your creditors, but when do they stop? What is there to make them stop calling, harassing, or garnishing? There is an injunction from a federal judge called the “automatic stay”. The judge essentially tells your creditors to stay, like a dog. When the judge speaks, they listen.

The automatic stay is a statutory injunction that is issued by the court immediately upon filing of a bankruptcy petition. Bankruptcy Code 362, and 101 (15). It is designed to protect the debtor and provide a break from collection efforts. Before the actual filing of the bankruptcy petition, you have to rely on your bankruptcy attorney to fend off your creditors by taking their calls and enforcing collection rules. This, in itself, is enough of a reason to retain a bankruptcy lawyer right away.

Once your bankruptcy attorney files your bankruptcy petition, the automatic stay goes into effect automatically, as the name would suggest. It is a very powerful tool and applies to nearly every entity involved in the bankruptcy. The automatic stay does not mean your debt is forgiven or discharged, it just calls off the creditors.

As long as your bankruptcy case is active, your bankruptcy attorney can enforce the automatic stay to protect your interests. Beware, once your bankruptcy is dismissed or goes away, so does the automatic stay. However, while it’s in place, most actions are prohibited. A creditor cannot start a new lawsuit or even continue any existing lawsuit to collect a pre-petition claim. Ellis V. Consolidated Diesel Electric Corp, 894 F.2^nd 371 (10^th Cir. 1990). Even if a creditor already has a judgment against you, the automatic stay will stop collection of that judgment through garnishment or execution on your property, immediately. The bankruptcy law even prohibits attempts to collect, especially harassing, bothering, or intimidating the debtor. B.C. 362 (a)(6)

The automatic stay is an amazing tool. There are reasons it might not be granted or might not apply to a specific debt. There are also a bunch of exceptions to the automatic stay where some courts and some creditors may still be able to pursue you. This is a very important part of a Chapter 7 or a Chapter 13 bankruptcy filing. It is one of the best and most immediate manifestations of bankruptcy relief. It is significant to execute and enforce the automatic stay. It is one of the main tools against a creditor. A qualified and affordable bankruptcy lawyer can help you through this. You can retain immediately to assuage the creditor calls and harassment. Payment plans are available, and the consultation is free. GET FREE HELP NOW.

Getting a Mortgage after Bankruptcy

Posted on August 7, 2013 by Staff Writer

At one time, going through bankruptcy had a stigma that was hard to shake when trying to move on with your financial life. However, according to SFGate Home Guides, not only is the stigma around bankruptcy lessening, but it is also very possible to get a new home in as little as a couple of years after the discharge of your bankruptcy. Here are a few things that you can do to get there.

Check for Accuracy

Once your bankruptcy has been discharged, check your credit report to ensure that everything that was included in the bankruptcy has been closed and discharged. You want to make sure that you do not have any inaccuracies there to bring down your credit score.

Open New Trade Lines

If you have any debt that was not included in the bankruptcy, such as student loans, make sure that you make timely payments on them. Remember, the point is to show that you are now creditworthy and financially responsible. Now that your bankruptcy is discharged, you will be getting offers for credit cards. Find the one with the lowest interest rate and fees. Once you acquire your new credit card, never use more than 30 percent of your credit line, and pay the balance every month.

Take Out a Larger Loan

About a year after your discharge, take out a larger loan such as a car note. You need to be able to show that you can handle a larger debt. Make sure that you have zero late payments while you are in the process of rebuilding your credit profile. You have to show your creditworthiness.

If you have questions regarding what you can include in your bankruptcy or about the discharge of your bankruptcy, a qualified and experienced Arizona bankruptcy attorney can assist you.

The Bankruptcy Trustee Can Avoid Fraudulent Transfers

Posted on August 5, 2013 by Staff Writer

It is a common misconception that bankruptcy is as easy as transferring all of your property to your friend while you discharge your debts and get your property back later. Like any other illegal act, you might get away with it, but if you get caught it will go very wrong. There is no reason to expose yourself to this kind of liability. The right bankruptcy lawyer can show you many ways to keep your assets and still discharge your debt legally. A quality bankruptcy attorney is very affordable and worth every penny. You can schedule a free consultation now, but let’s talk about fraudulent transfers.

According to the Bankruptcy Code section 548, the trustee can avoid a fraudulent transfer or obligation of the debtor within one year prior to the filing of a bankruptcy petition, or much longer according to the fraud statutes of the state. A “transfer” can be disposition of property or the granting of a mortgage or lien. B.C. 101 (54). It can be done voluntarily or by foreclosure or suit. Essentially, any transaction that looks like it could be trying to hide assets can be fraudulent. The court has identified five warning signs. They call them badges of fraud, and they come from In re Kaiser , 722 F.2d 1574 (2d Cir. 1983). The court will assume you intended to defraud if any of these are present.

The most obvious is if there was inadequate consideration received for the transfer. Did you give the property away without getting anything in return? The court will assume you were fraudulent instead of benevolent.

Another equally obvious indicator is if the transferee was a close friend or relative. If you trust the person receiving the property enough to give it back, the court will assume that is what is happening.

If you continue to enjoy the use of the property after the transfer, the court will assume it was not a real transfer. For example, if you transfer the Jet Ski for no consideration ($) but still get to use it whenever you like. Similarly, if you transfer to a corporation you own or control, it has the same effect.

The court will also consider the timing of the transfer. If it happened after your financial problems started, that would seem to be motivation.

If you receive less than full value and you were insolvent at the time of the transfer, that’s fraud. B.C. 548. The trustee could get your stuff back and still not allow a discharge, ever. Worse than that, you could go to prison for the fraud.

Don’t do this yourself. An affordable, quality bankruptcy lawyer can show you how to legally discharge your debt, and still likely keep most or all of your assets. GET FREE HELP TODAY. Payment plans are available and the fees are affordable. The best part, the consultation, is free! Call Now.

Planning your Holiday Shopping Wisely

Posted on August 3, 2013 by Staff Writer

Even though there are well over 100 shopping days until Christmas, it is never too early to start planning your financial strategy so that you do not go into debt this holiday season. Holiday shopping is one of the largest catalysts for overspending and maxing out credit cards. Here are a few things that you can do this year to keep away the January blues when those statements start coming in.

Join the Club

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The Christmas club accounts were popular among many banks and credit unions however, many of them do not have those kinds of short-term goal accounts anymore. If they are still available at your bank, go ahead and get started, if not there should be something similar. At the very least, you can do something creative like loading your holiday savings onto a prepaid card.

Curb the Wish List

Many kids are notorious for having huge wish lists of gifts that they would like to see wrapped under the tree. However, if you were to take an inventory, many of those toys either are broken by now or are no longer in use. Depending on the age of the child, ask them to shorten the list to their top three choices. An older child can easily choose one gift that they would like to receive.

Shop Early

Shop smart and look for deals during different parts of the year. Shopping is all about supply and demand. There are a few things that you may want to wait until later to purchase such as some electronic items however take advantage of off-season deals. You will end up spending a lot more money when trying to shop at the last minute. Last minute shopping also leads to more impulse buys.

If your spending habits or circumstances beyond your control have led you to an overwhelming amount of debt, an experienced Arizona bankruptcy attorney can assist you with your case.

Do I Need a Chapter 11 – Small Business Bankruptcy?

Posted on August 2, 2013 by Staff Writer

A Chapter 11 bankruptcy filing is used to reorganize a business that you may want to continue to operate after the U.S bankruptcy court is finished. Chapter 11 may or may not be the best resolution for your business.

If you are running a small business and considering chapter 11 Business Bankruptcy, your business is likely organized as either an LLC (Limited Liability Company) or an S-corporation. There is a reason for these designations. It means there is not supposed to be any personal liability to you, above what you have already invested in the business. If somebody sues the business, and you have followed organizational and corporate rules, your personal assets should not be at risk. Think of it this way. If you own stock in IBM and somebody sues IBM, they don’t get to take your personal assets, just the value of your stock.

The same laws that protect IBM, also protect you from liabilities of your LLC or corporation. As long as you have not signed a personal guarantee and have followed the corporate or organizational rules, a creditor should not be able to sue you personally. Over the years the courts have established some exceptions to this rule making it easier to pierce the corporate veil. If you think you might have personal liability from your s-corp. or LLC, you should schedule a free consultation with an experienced bankruptcy attorney here.

If you are confident you do not have personal liability, it is important for you to delineate personal form corporate debt. If the debt belongs exclusively to your LLC or S-Corp. and there are no corporate assets to satisfy it, the creditor has no right to execute on your personal assets. The creditor is simply out. This is why we pay interest to borrow money. Sometimes the debt cannot be repaid and the lender is left holding the bag.

If a creditor is unable to collect against an LLC or an S-Corp, there may not be a need for a formal chapter 11 declaration that the LLC or S-Corp is not paying the debt. It may be as easy as not paying. However, there are many things that will need to be done to make sure you are not exposed to personal liability. It may also be the case that you need a personal bankruptcy to disclose the corporate debt and protect your personal assets. It is better to be safe than sorry. GET FREE HELP TODAY, by scheduling a free consultation with a great bankruptcy lawyer.