September 19, 2017

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How To Get A Credit Card If You Have Bad Credit

It’s a bit of a catch-22, isn’t it? In order to build your credit, you need to have and use a credit card. But in order to qualify for many credit cards, you need to have good credit. What are you supposed to do when you know that your credit is bad, and you fear that you won’t be able to get a credit card and bring up your credit score? Luckily, all is not lost! You can still qualify for many credit cards even if you have a low credit score. Just follow these tips on getting a credit card with bad credit.

  1. Find out your credit score. You might have a rough idea of what your credit score is, but you won’t be able to truly determine what credit cards you should and should not apply for until you know your credit score. You can get a free credit score report online. Once you know your score, you can plan accordingly.
  2. Know what you qualify for. If your credit score is 600 or above, you will probably be able to qualify for an unsecured credit card. If your credit score is below 600, you will most likely only qualify for a secured credit card. A secured credit card will require that you have the equivalent of your card’s limit available to the card issuer. An unsecured credit card doesn’t carry this requirement.
  3. Shop around. Just because you have a low credit score does not mean that you should be paying outrageous interest and fees. Do some research to determine what the most practical, reasonable credit card is for you. Make sure that you also find a credit card that comes from a reputable bank. Avoid credit cards that have high interest rates, don’t offer a grace period for interest, and that have expensive monthly fees.
  4. When you find the card you want, apply for that card only. You should apply for credit cards one at a time. If you have poor credit, you don’t want to be juggling multiple credit cards. If you are approved for your first choice, stick with this card. If you are denied, apply for your second choice.
  5. When you get a credit card, make your payments responsibly. If you are approved for a credit card, don’t make the company regret accepting your application! Make sure that you make all of your payments on time and that you do not overextend your line of credit. With online payments and credit card apps for phones, staying on top of your credit card has never been easier!

These are my top tips for getting a credit card, even if your credit is less than perfect. For additional advice to help you improve your credit, you can contact me here. I am happy to discuss your situation during a free consultation!

Chapter 7 Bankruptcy Series Part Six: The Chapter 7 Bankruptcy Trustee

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In your Chapter 7 Bankruptcy process there will be 3 main characters: you, your attorney and the Chapter 7 Bankruptcy Trustee assigned to your case.  In short, a Chapter 7 Bankruptcy Trustee is the person who oversees your Bankruptcy Case.

There are currently ten Chapter 7 Trustees in the State of Connecticut who are appointed by the United States Trustee.  The Trustee Program is a part of the Department of Justice.

“The United States Trustee Program is a component of the Department of Justice that seeks to promote the efficiency and prote ct the integrity of the Federal bankruptcy system. To further the public interest in the just, speedy and economical resolution of cases filed under the Bankruptcy Code, the Program monitors the conduct of bankruptcy parties and private estate trustees, oversees related administrative functions, and acts to ensure compliance with applicable laws and procedures. It also identifies and helps investigate bankruptcy fraud and abuse in coordination with United States Attorneys, the Federal Bureau of Investigation, and other law enforcement agencies.” –The U.S. Department of Justice

Upon filing of your Chapter 7 Bankruptcy Petition you will be assigned a Chapter 7 Bankruptcy Trustee randomly by the Bankruptcy Court’s computer system.  I will deliver the name and address of your Chapter 7 Trustee to you by phone or email the day you sign and I file your Petition, and a few days later an official Notice from the Bankruptcy Court will be mailed to you with this and other pertinent information about your Bankruptcy case.

The primary duties of the Chapter 7 Trustee are (1) to examine your Bankruptcy Petition and Schedules, (2) conduct a 341 Meeting of the Creditors (a Hearing you must attend and testify at under oath) and (3) determine if you have any non-exempt assets that can be liquidated to pay your creditors.  Additionally, the Trustee has the power to refer cases to higher authorities to be investigated for Bankruptcy Fraud and/or other crimes, if appropriate.  Therefore, it is imperative that you fully disclose all of your income, assets and liabilities to me during your Bankruptcy process so I may properly prepare your Bankruptcy Petition to avoid any improprieties.

After your Chapter 7 Bankruptcy Petition is filed but before you attend your 341 Meeting we will mail to you a Questionnaire provided by your Chapter 7 Bankruptcy Trustee.  The questions are simple and you should be able to answer them all without assistance (but of course, we are always here to guide you).  An example of one inquiry on the questionnaire would be “have you ever filed bankruptcy before?”  If the answer is “yes,” there will be a few follow-up questions like “What was the case number?” and “Did you receive a discharge?”

Your Chapter 7 Trustee will also provide to my office a list of required documents that the Trustee will examine in conjunction with your Bankruptcy Petition.  The list of requested documents will include such things as Tax Returns, Bank Statements and Paystubs.  Usually I will already have everything that is requested, but I may ask you to provide additional documents to satisfy the requests of your Chapter 7 Trustee.

The next part of my Chapter 7 Bankruptcy series will take you through your 341 Meeting of the Creditors so you are fully prepared to attend the Hearing.

Contact Attorney Theresa Rose DeGray at Consumer Legal Services, LLC (203-713-8877) for more information on this and other Bankruptcy related topics.

Chapter 7 Bankruptcy Series Part Five: Preparing, Signing and Filing a Bankruptcy Petition

In this blog we will explore a very important step in your Chapter 7 Bankruptcy process: Your Chapter 7 Bankruptcy Petition Signing and Filing.

Once you have met with me for your free initial consultation, retained me to file your Chapter 7 Bankruptcy Petition and delivered to me all of the required documents, I will then prepare your Chapter 7 Bankruptcy Petition and schedule a convenient time for you to come in to our office to sign your Petition.

Your Bankruptcy Petition signing is a very serious step in your Bankruptcy Process and you will be required to carefully read your petition.  This appointment will take approximately one hour in which I will go over each and every page with you and answer any questions you may have.  Ultimately, you will be asked to sign several pages of the Petition under oath, swearing that the information provided is true and accurate to the best of your ability, and I will then electronically file your Petition with the Bankruptcy Court.

This blog is intended to give you preview of the many parts of a typical Chapter 7 Bankruptcy Petition. Please keep in mind that your Petition may differ according to your specific financial circumstances and that it is vitally important to always disclose all of your income, assets, debts (liabilities).  Not fully disclosing all of your information could lead could be deemed Bankruptcy Fraud which is a crime.

The first part of your Chapter 7 Bankruptcy Petition consists mainly of identification and general information.  It will list your name, address, and the last four digits of your social security number.  It will give a rough estimate (or a “range”) of how many creditors, assets and liabilities you have.  It will also include your signature (as the “Debtor”) and mine (as your “Attorney”), affirming that the information provided is true and accurate under the penalties of perjury.  Please note that your Bankruptcy Petition is a public document and due to that fact your Social Security Number will always be redacted to the last four digits for anti-identity theft purposes.

The next several pages in your packet will be your Means Test, the assessment used to determine if you qualify for a Chapter 7 Bankruptcy filing.  For more information on your Means Test please consult me, and/or my previous Blog in this Chapter 7 Series.

Your Means Test will be followed by Exhibit D which is your statement to the Court that you successfully completed your Credit Counseling requirement.  Credit Counseling is a mandatory course taken usually on the telephone or internet, which takes about one hour, analyzes your financial circumstances and helps you create a budget.  For more information on the Credit Counseling requirement please consult me, and/or my previous Blog in this Chapter 7 Series.

The next part of your Chapter 7 Bankruptcy Petition will be a Summary of the Schedules to follow.  This is a snap-shot view of your income, assets and liabilities as more fully reported on each individual schedule (described in detail below) and a Statistical Summary of Certain Liabilities (in layman’s terms that mean you “debt-to-income ratio”).

The Summary will be followed by a series of Schedules as follows:

  • Schedule A – Real Property: This Schedule will list any Real Estate that may be in your name according to the Land Records with a brief description and its location, along with the nature of your interest in the property (e.g. whether you own it solely or jointly), its current value and the amount of any liens (e.g. mortgages) against the property.  This list may also include time shares, if any.
  • Schedule B – Personal Property: This Schedule will list all of your personal belongings, such as cash, contents of bank accounts and safe deposit boxes, security deposits with public utilities or landlords, clothes, jewelry, antiques, collectibles, firearms, sports equipment, household goods and furnishings, stocks, bonds, retirement accounts, patents, copyrights, or other intellectual property, future interests in any estates or life insurance policies, legal claims against other persons or entities, vehicles and any other personal property not already listed.
  • Schedule C – Property Claimed as Exempt: This Schedule will list all of your property that is exempt (or, in other words, immune) from being liquidated by your Chapter 7 Trustees in order to pay back your creditors.  It will also list the specific law that provides for each exemption.  A typical exemption is that for the equity in your car, or home (usually referred to as a “homestead exemption”).  Depending on your specific set of financial circumstances, I will determine if it is in your best interests to utilize the State or Federal exemption scheme in order to maximize the protection of your assets under the law.  (Check back to the Consumer Legal Services, LLC Blog site in the future for an extended explanation of the exemption system!)
  • Schedule D – Creditors Holding Secured Claims: This Schedule will list any creditors you have holding a security interest in any of your property.  Common examples of such interests are mortgages for homes and and car loans for cars.
  • Schedule E – Creditors Holding Unsecured Priority Claims: This Schedule will list any of your creditors that are holding unsecured (for which they do not have a lien) priority claims.  These types of claims arise when you have child support obligations, government student loans or tax debt.  These types of debts are considered “priority” and take precedence over your other debts.  They are usually not discharged in Bankruptcy and you will continue to pay them while your Chapter 7 case is pending.  Some exceptions apply, especially with regard to taxes. (Check back to the Consumer Legal Services, LLC Blog in the future for an extended explanation of taxes in bankruptcy!)
  • Schedule F – Creditors Holding Unsecured Non-Priority Claims: This Schedule will list all of your unsecured debt, such as credit cards, personal loans and medical debt.  Unless otherwise determined by the Bankruptcy Court, all of the debts listed on this Schedule will be discharged.  There will be an ancillary document related to this Schedule called the Verification of the Creditor Matrix.  This verification will include a list of your creditors in a matrix format for easy uploading to the Bankruptcy Court.
  • Schedule G – Executory Contracts and Unexpired Leases: This Schedule will list all unperformed contracts and leases that you may be subject to.  The example I often give for an executory (or unperformed) contract is for snow plowing when it has not yet snowed and/or you have not yet paid the plowman.  A lease, for example, for an apartment or a car is an executory contract to the extent that it has not expired.
  • Schedule H – Codebtors: This Schedule will list any persons you have become liable with on a debt, other than a spouse in a joint petition.  Examples often include parents you have co-signed a loan for a child.
  • Schedule I – Current Income of Individual Debtor(s): This Schedule will list all current income you are receiving at the time of the signing of the petition.  If you are married, your spouse’s income must be included whether or not your spouse is filing Bankruptcy.
  • Schedule J – Current Expenditures of Individual Debtor: This Schedule will list all of your expenses that you will continue paying regardless of ever having filed for Bankruptcy, such as your mortgage, utilities, transportation and food expenses.

At the end of all of the Schedules there will be a “Declaration Concerning Debtor’s Schedules” which you will sign under oath stating that all of the foregoing information contained in the various schedules is true and accurate to the best of your ability.

Next there will be a document called “Statement of Financial Affairs.”  This statement will include information about such things as any pending lawsuits you are involved in, how much you paid for debt counseling and information related to any businesses you may own or have owned, among other pertinent information.

That statement will be followed by a Disclosure of Compensation of Attorney for Debtor.  On this document I will list the amount of money you have paid for my services.

The final document in your Chapter 7 Bankruptcy Petition will be your Form B21, otherwise known as your “Statement of Social Security Number.”  This statement is the only non-public part of your Bankruptcy Petition and will only be seen by, you, me and the Bankruptcy Court.  It is not a public document and therefore, your entire Social Security Number will be protected against identity theft.  This is quite possibility the most important document you will read and sign at the time of filing.  In fact, I will require that you re-read this document several times, and even show me your Social Security Card to confirm the accuracy of your Social Security Number.  If your social security number is wrong on this form, your debts will not be discharged…but someone else’s may be!  So always triple check…and then check again!

After you have read and signed all of the documents you will be given a copy of your entire Petition.  After you go home, I will then electronically file your Petition.  During the e-filing process a Case Number, a Chapter 7 Trustee, and a date for your 341 Meeting will be randomly generated and assigned to your Chapter 7 Bankruptcy Case.  I will deliver this information to you by phone or email, and a Notice will be delivered to you directly on the mail by the Bankruptcy Court including this and other pertinent information about your Chapter 7 Bankruptcy Case.

Stay tuned for our next blog entry in this Chapter 7 Series which will explain just who and what the Chapter 7 Trustee is and why the Trustee plays such a vital role in your Chapter 7 Bankruptcy!

For more information or to find out if you qualify for Bankruptcy, please call our office at 203-713-8877.

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Chapter 7 Bankruptcy Series Part Three: Means Testing

After we have our Initial Consultation and you have delivered your documents to me, I will analyze your financial circumstances and perform your Means Test.  A Means Test is an assessment used to determine if you qualify to file a Chapter 7 Bankruptcy.

Before 2005 it was easy to file for bankruptcy; virtually anyone could do so.  In 2005 Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)1 and added the Means Test requirement to prevent abuse of the Bankruptcy process.  Simply put if you “pass” the means test, you are a qualified candidate and can file a Chapter 7 Bankruptcy Petition.  If you “fail” the means Test, you may not file a Chapter 7 Bankruptcy but you may enjoy other alternatives such as a Chapter 13 Bankruptcy (which will be discussed in a future series of Consumer Legal Services, LLC’s blog posts).

The Means Test primarily encompasses a two-step analysis.

STEP ONE: Your (the “debtor’s”) gross income is calculated on an average over a six month period prior to filing for Bankruptcy.  Gross income for means testing purposes includes wages, salary, tips, bonuses, overtime and commissions.  It does not include social security benefits.  The figure derived from taking the average is than considered the Debtor’s Current Monthly Income which is then compared to the median income for your state and household size.  If your current monthly income is less than the median income for your state and household size, than you “pass” the means test and are allowed to file a Chapter 7 Bankruptcy Petition.  If, however, your current monthly income is greater than the median income for your state and household size, you may proceed to Step Two.

STEP TWO: If your current monthly income is greater than the median income for your state and household size, there is, in technical terms, a “presumption of abuse.”2 In order to rebut the presumption, or in other terms, to pass the means test by using the second step, the means test’s second section allows you to subtract from your current monthly income certain allowable and deductible expenses.3 These allowed deductions include, but are not limited to, expenses for living (mortgages and property taxes), transportation (car loans and car taxes), health insurance and charitable donations.  After the calculations are performed, and the allowable deductions are taken, and if you then have no disposable monthly income available, you will than have passed the Means Test (with no presumption of abuse) and may file a Chapter 7 Bankruptcy.  If, on the other hand, you do have remaining disposable income, you may consider a Chapter 13 Bankruptcy.

The discussion above is an overview of the Means Test in basic terms and is in no way intended as a specific analysis of your personal financial circumstances.

For an analysis of your own financial circumstances, please contact Attorney Theresa DeGray at Consumer Legal Services to schedule your free consultation today.

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1See: 11 U.S.C. § 707(b)
2See: 11 U.S.C. § 707(b)(2) and 11 U.S.C. § 707(b)(3)
3See: 11 U.S.C. § 707(b)(2)(A)

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Chapter 7 Bankruptcy Series Part One: Initial Consultation

When you find yourself in debt and want to learn what your options are, the best thing to do is to find a local law firm that offers free initial Bankruptcy consultations.  I offer free initial consultations at various locations around the state of Connecticut (including Milford, Shelton, Hartford and other various locations) and will strive to find a convenient time and place to meet with you.  I have day, evening and weekend appointments available and will even skype with you! 

An initial consultation with a lawyer is a great opportunity for many reasons.  When you meet with me for the first time you will be treated with respect, dignity and compassion.  I understand the hardship you are facing and will give you my full attention.  The meeting will be an opportunity for you to interview me, just as much as it is an opportunity for me to interview you.  Always remember, when you hire an attorney, they work for you, and you must feel comfortable with them as you will have to trust your attorney to guide you through each and every step of the Bankruptcy process. 

During our consultation I will ask pointed questions that are focused on painting a picture of your financial circumstances.  This inquiry will include questions pertaining to your income, assets and debts.  Through your answers I will be able to analyze your financial circumstances and offer you options. 

Next I will show you various disclosure statements that I am required to give to you by the United States Bankruptcy Court under the Bankruptcy Code1.  These documents will explain the Bankruptcy process, the difference between the various chapters of Bankruptcy, what a Discharge is and what credit counseling services are, among other important things.  You will be asked to sign these documents, acknowledging that you received them. 

Finally, if I determine that you are a likely candidate for Bankruptcy and you are interested in hiring me to file your Bankruptcy Petition, I will conclude my presentation by guiding you through a checklist of documents I will need from you to perform a Means Test.  A Means Test is a formal assessment used to determine if you qualify for Bankruptcy.  Do not be alarmed, it is not a test like the SATs and does not require you to pencil in any bubbles!  On the contrary, you will gather the documents and my staff and I will prepare the test for you as part of our package services. 

Throughout the consultation and especially at the end, I will ask you if you have any questions.  I will be happy to answer all of your questions and you should not hesitate to ask any question or ask for clarification if something is unclear. 

At the conclusion of the initial consultation I will give you a folder with all of my contact information and copies of all the documents you read and signed during the meeting.  A follow-up appointment will be made with you for either a telephone conference or an in-person meeting to go over any further questions you may have and to help you with the gathering of your documents. 

The next part of this series will go into more depth about the specific documents you will gather so that we will be able to analyze your financial circumstances and prepare your Means Test.  

To schedule your initial consultation with Attorney Theresa Rose DeGray, please call 203-713-8877.

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111 U.S.C. §§ 101-1532

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“Do I need to bring anything?”

     “Do I need to bring anything?” This is the most frequently asked question I get when making an appointment for an initial consultation with a new client. The answer is always “no.” All I need to help you…is you!

     If you, or someone you know, has a legal issue, the best thing to do is to find a local law firm that offers free initial consultations. I offer free initial consultations at various locations around the state of Connecticut and will strive to find a convenient time and place to meet with you. I have day, evening and weekend appointments available…and will even Skype with you!

     An initial consultation with a lawyer is a great opportunity. When you meet with me for the first time you will be treated with respect, dignity and compassion. The meeting will be an opportunity for you to interview me, just as much as it is an opportunity for me to interview you. Always remember, when you hire an attorney, they work for you, and you must feel comfortable with them.

     During our consultation I will ask pointed questions that are focused on painting a picture of your circumstances. Through your answers I will be able to analyze your situation and offer you options.

     At the conclusion of the initial consultation I will give you a folder with all of my contact information and copies of any documents you read and signed during the meeting. A follow-up appointment will be made with you for either a telephone conference or an in-person meeting to go over any further questions you may have.

     If you, or someone you know, would like to schedule a free initial consultation with me, please call, text or email me:

The Law Office of Theresa Rose DeGray

Call: 203-713-8877 | Text: 203-814-0600

Email: TRD@ConsumerLegalServicesLLC.com

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Q: What is Chapter 13?

A: Chapter 13 of the Bankruptcy Code provides for adjustment of debts of an individual with regular income.  Basically it allows you to re-organize your debts and save your home and cars.

A Chapter 13 Bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period “for cause.” (1) If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

For more information, a Free Consultation and/or Free Means Test, please contact Consumer Legal Services, LLC.

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Answers to Common Bankruptcy Questions

A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems.  This blog can not explain every aspect of the bankruptcy process.  If you still have questions after reading it, contact Consumer Legal Services, LLC for a FREE consultation today!

What Is Bankruptcy?

Bankruptcy is a legal proceeding in which a person who can not pay his or her bills can get a fresh financial start.  The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court.  Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

What Can Bankruptcy Do for Me?

Bankruptcy may make it possible for you to:

* Eliminate the legal obligation to pay most or all of your debts.  This is called a “discharge” of debts.  It is designed to give you a fresh financial start.

* Stop foreclosure on your house or manufactured home and allow you an opportunity to catch up on missed payments.  (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)

* Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.

* Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

* Restore or prevent termination of utility service.

* Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

What Bankruptcy Can Not Do

Bankruptcy can not, however, cure every financial problem.  Nor is it the right step for every individual.  In bankruptcy, it is usually not possible to:

* Eliminate certain rights of “secured” creditors.  A creditor is “secured” if it has taken a mortgage or other lien on property as collateral for a loan.  Common examples are car loans and home mortgages.  You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money on the debt if you decide to give back the property.  But you generally can not keep secured property unless you continue to pay the debt.

* Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, most student loans, court restitution orders, criminal fines, and most taxes.

* Protect cosigners on your debts.  When a relative or friend has cosigned a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.

* Discharge debts that arise after bankruptcy has been filed.

What Different Types of Bankruptcy Cases Should I Consider?

There are four types of bankruptcy cases provided under the law:

* Chapter 7 is known as “straight” bankruptcy or “liquidation.”  It requires an individual to give up property which is not “exempt” under the law, so the property can be sold to pay creditors.  Generally, those who file chapter 7 keep all of their property except property which is very valuable or which is subject to a lien which they can not avoid or afford to pay.

* Chapter 11, known as “reorganization,” is used by businesses and a few individuals whose debts are very large.

* Chapter 12 is reserved for family farmers and fishermen.

* Chapter 13 is a type of “reorganization” used by individuals to pay all or a portion of their debts over a period of years using their current income.

Most people filing bankruptcy will want to file under either chapter 7 or chapter 13.  Either type of case may be filed individually or by a married couple filing jointly.

Chapter 7 (Straight Bankruptcy)

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts.  The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep.  In most cases, all of your property will be exempt.  But property which is not exempt is sold, with the money distributed to creditors.

If you want to keep property like a home or a car and are behind on the mortgage or car loan payments, a chapter 7 case probably will not be the right choice for you.  That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

If your income is above the median family income in your state, you may have to file a chapter 13 case.  Median family income is different in each state.  For example, in 2009, the median income for a family of four ranged from a low of just under $60,000 inOklahomato almost $100,000 inMaryland.  Other states fall in between.  Higher-income consumers must fill out “means test” forms requiring detailed information about their income and expenses.  If the forms show, based on standards in the law, that they have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that they can not file a chapter 7 case, unless there are special extenuating circumstances.

Chapter 13 (Reorganization)

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years.  The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors.  In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.

You should consider filing a chapter 13 plan if you:

* Own your home and are in danger of losing it because of money problems;

* Are behind on debt payments, but can catch up if given some time;

* Have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

You will need to have enough income during your chapter 13 case to pay for your necessities and to keep up with the required payments as they come due.

What Does It Cost to File for Bankruptcy?

It now costs $299 to file for bankruptcy under chapter 7 and $274 to file for bankruptcy under chapter 13, whether for one person or a married couple.  The court may allow you to pay this filing fee in installments if you can not pay it all at once.  If you hire an attorney you will also have to pay the attorney fees you agree to.

If you are unable to pay the filing fee in installments in a chapter 7 case, and your household income is less than 150 percent of the official poverty guidelines (for example, the figures for 2009 are $21,855 for a family of two and $33,075 for a family of four), you may request that the court waive the chapter 7 filing fee.  The filing fee can not be waived in a chapter 13 case, but it can be paid in installments.

What Must I Do Before Filing Bankruptcy?

You must receive budget and credit counseling from an approved credit counseling agency within 180 days before your bankruptcy case is filed.  The agency will review possible options available to you in credit counseling and assist you in reviewing your budget.  Different agencies provide the counseling in-person, by telephone, or over the Internet.  If you decide to file bankruptcy, you must have a certificate from the agency showing that you received the counseling before your bankruptcy case was filed.

Most approved agencies charge between $30/-/$50 for the pre-filing counseling.  However, the law requires approved agencies to provide bankruptcy counseling and the necessary certificates without considering an individual’s ability to pay.  If you can not afford the fee, you should ask the agency to provide the counseling free of charge or at a reduced fee.

If you decide to go ahead with bankruptcy, you should be very careful in choosing an agency for the required counseling.  It is extremely difficult to sort out the good counseling agencies from the bad ones.  Many agencies are legitimate, but many are simply rip-offs.  And being an “approved” agency for bankruptcy counseling is no guarantee that the agency is good.  It is also important to understand that even good agencies won’t be able to help you much if you’re already too deep in financial trouble.

Some of the approved agencies offer debt management plans (also called DMPs).  A DMP is a plan to repay some or all of your debts in which you send the counseling agency a monthly payment that it then distributes to your creditors.  Debt management plans can be helpful for some consumers.  For others, they are a terrible idea.  The problem is that many counseling agencies will pressure you into a debt management plan as a way of avoiding bankruptcy whether it makes sense for you or not.  You should not consider a debt management plan if making the monthly plan payment will mean you will not have money to pay your rent, mortgage, utilities, food, prescriptions, and other necessities.  It is important to keep in mind these important points:

* Bankruptcy is not necessarily to be avoided at all costs.  In many cases, bankruptcy may actually be the best choice for you.

* If you sign up for a debt management plan that you can’t afford, you may end up in bankruptcy anyway (and a copy of the plan must also be filed in your bankruptcy case).

* There are approved agencies for bankruptcy counseling that do not offer debt management plans.

It is usually a good idea for you to meet with an attorney before you receive the required credit counseling.  Unlike a credit counselor, who can not give legal advice, an attorney can provide counseling on whether bankruptcy is the best option.  If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions.  The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust.

What Property Can I Keep?

In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors.  It is important to check the exemptions that are available in the state where you live.  (If you moved to your current state from a different state within two years before your bankruptcy filing, you may be required to use the exemptions from the state where you lived just before the two-year period.)  In some states, you are given a choice when you file bankruptcy between using either the state exemptions or using the federal bankruptcy exemptions.  If your state has “opted” out of the federal bankruptcy exemptions, you will be required to choose exemptions mostly under your state law.  However, even in an “opt-out” state, you may use a special federal bankruptcy exemption that protects retirement funds in pension plans and individual retirement accounts (IRAs).

If you are allowed to use the federal bankruptcy exemptions, they include:

* $21,625 in equity in your home;

* $3450 in equity in your car;

* $550 per item in any household goods up to a total of $11,525;

* $2175 in things you need for your job (tools, books, etc.);

* $1150 in any property, plus part of the unused exemption in your home, up to $10,825;

* Your right to receive certain benefits such as Social Security, unemployment compensation, veteran’s benefits, public assistance, and pensions–regardless of the amount.

The amounts of the exemptions are doubled when a married couple files together.  Again, you may be required to use state exemptions which may be more or less generous than the federal exemptions.

In determining whether property is exempt, you must keep a few things in mind.  The value of property is not the amount you paid for it, but what it is worth when your bankruptcy case is filed.  Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.

You also only need to look at your equity in property.  That means you count your exemptions against the full value minus any money that you owe on mortgages or liens.  For example, if you own a $50,000 house with a $40,000 mortgage, you have only $10,000 in equity.  You can fully protect the $50,000 home with a $10,000 exemption.

While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind.  In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law.  In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.

What Will Happen to My Home and Car If I File Bankruptcy?

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt.  Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.

However, some of your creditors may have a “security interest” in your home, automobile, or other personal property.  This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt.  Bankruptcy does not make these security interests go away.  If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.

In a chapter 13 case, you may be able to keep certain secured property by paying the creditor the value of the property rather than the full amount owed on the debt.  Or you can use chapter 13 to catch up on back payments and get current on the loan.

There are also several ways that you can keep collateral or mortgaged property after you file a chapter 7 bankruptcy.  You can agree to keep making your payments on the debt until it is paid in full.  Or you can pay the creditor the amount that the property you want to keep is worth.  In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt.  If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

Can I Own Anything After Bankruptcy?

Yes!  Many people believe they can not own anything for a period of time after filing for bankruptcy.  This is not true.  You can keep your exempt property and anything you obtain after the bankruptcy is filed.  However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

Will Bankruptcy Wipe Out All My Debts?

Yes, with some exceptions.  Bankruptcy will not normally wipe out:

* Money owed for child support or alimony;

* Most fines and penalties owed to government agencies;

* Most taxes and debts incurred to pay taxes which can not be discharged;

* Student loans, unless you can prove to the court that repaying them will be an “undue hardship”;

* Debts not listed on your bankruptcy petition;

* Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;

* Debts resulting from “willful and malicious” harm;

* Debts incurred by driving while intoxicated;

* Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

Will I Have to Go to Court?

In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come.  Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.

Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear at a hearing.  In a chapter 13 case, you may also have to appear at a hearing when the judge decides whether your plan should be approved.  If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney.

What Else Must I Do to Complete My Case?

After your case is filed, you must complete an approved course in personal finances.  This course will take approximately two hours to complete.  Many of the course providers give you a choice to take the course in-person at a designated location, over the Internet (usually by watching a video), or over the telephone.  Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust.  If you can not afford the fee, you should ask the agency to provide the course free of charge or at a reduced fee.  In a chapter 7 case, you should sign up for the course soon after your case is filed.  If you file a chapter 13 case, you should ask your attorney when you should take the course.

Will Bankruptcy Affect My Credit?

There is no clear answer to this question.  Unfortunately, if you are behind on your bills, your credit may already be bad.  Bankruptcy will probably not make things any worse.

The fact that you’ve filed a bankruptcy can appear on your credit record for ten years from the date your case was filed.  But because bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.

If you decide to file bankruptcy, remember that debts discharged in your bankruptcy should be listed on your credit report as having a zero balance, meaning you do not own anything on the debt.  Debts incorrectly reported as having a balance owed will negatively affect your credit score and make it more difficult or costly to get credit.  You should check your credit report after your bankruptcy discharge and file a dispute with credit reporting agencies if this information is not correct.

What Else Should I Know?

Utility services–Public utilities, such as the electric company, can not refuse or cut off service because you have filed for bankruptcy.  However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.

Discrimination–An employer or government agency can not discriminate against you because you have filed for bankruptcy.  Government agencies and private entities involved in student loan programs also can not discriminate against you based on a bankruptcy filing.

Driver’s license–If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

Cosigners–If someone has cosigned a loan with you and you file for bankruptcy, the cosigner may have to pay your debt.  If you file under chapter 13, you may be able to protect cosigners, depending upon the terms of your chapter 13 plan.

How Do I Find a Bankruptcy Attorney?

As with any area of the law, it is important to carefully select an attorney who will respond to your personal situation.  The attorney should not be too busy to meet you individually and to answer questions as necessary.  Contact Consumer Legal Services, LLC for a FREE consultation today!

What is Bankruptcy?

Are you maxed out on your credit cards? Have you recently been laid off? Do you have unexpected medical bills? Is your phone ringing off the hook with aggressive bill collectors? Has your mortgage ballooned out of control? In a nutshell, are your bills more than you can pay?

Fortunately, there’s a bailout available to you, the” little guy.” It’s called bankruptcy. It’s a relatively simple legal procedure that wipes out your debts.

WHAT GOES AWAY

Annoying Bill Collector Calls
Foreclosure
Credit Card Bills
Medical Bills
Court Judgments
The Mortgage On Your Home (IF you choose to walk away from the house)
Your Automobile Note (IF you choose to walk away from your car)

Interestingly enough, you will receive dozens and dozens ofoffers from car dealers to sell you a brand new car, many times at better terms than you currently have. Often, by going bankrupt, you can actually upgrade your vehicle.

WHAT YOU KEEP

Your Automobile (in most cases)
Your House (in most cases)
Your Utilities
Your Career
Your Possessions
Your Pension

Many famous people found themselves in a position similar to yours and did the smart thing. They declared bankruptcy and got a fresh start in their lives. The fact that they are famous proves that they were able to reach their potential BECAUSE of the clean slate they gained from declaring bankruptcy. Here’s just a few of the famous people who once went bankrupt.

Mark Twain, MC Hammer, Dee Snider, Kim Basinger, Suge Knight, Abraham Lincoln, Francis Ford Coppola, Oscar Wilde, Burt Reynolds all went bankrupt to clean up the financial mess they found themselves in

While you may not think highly of lawyers, it makes sense to at least talk to a bankruptcy attorney Almost all of them offer a free consultation during which they will lay out your options so that you can make an informed choice as to whether bankruptcy makes sense to you, and if it does, whether it’s something you can do yourself.

The Bankruptcy Laws are complex and vary from State to State. This is why it’s important to use a bankruptcy attorney where you live.  For a qualified bankruptcy attorney in your state, My Credit Hell provides a list of board certified bankruptcy attorneys in your state who offer FREE CONSULTATIONS. Moreover, there was a massive re-write of the Federal Bankruptcy Laws in 2005. Bankruptcy Lawyers knows the bankruptcy laws. By understanding and knowing how to apply all existing and relevant state and federal exemptions (things you can keep) can often permit you to keep your car and house. Your pension, future wages remain yours.

In many cases, the fee you pay your bankruptcy attorney will be more than offset by the value of the additional property and assets they’ll manage for you to keep. In other words, retaining a bankruptcy attorney can not only pay for itself and then some, it will result in less work and stress for you.

Contact us here.

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This firm is a debt relief agency. We help people file for bankruptcy relief amongst other things, under the Bankruptcy Code.