- I will lose all my property if I file Bankruptcy. Bankruptcy is intended to help those facing financial hardship. Taking away assets would do more harm than good. The bankruptcy code has various exemptions which protect people’s assets. These include social security, unemployment, home and car.
- Everyone will know I filed for Bankruptcy. Although bankruptcy filings are public record, that chances that an individual’s bankruptcy will become news is very rare. Bankruptcy filings are not indexed by search engines online. Unless one is searching for an individual’s financial information or the debtor shares that information with others, there is little change that their bankruptcy will be known.
- Both husband and wife must file bankruptcy. While in some cases it makes sense for both spouses to file joint bankruptcy, it is not required by California state or Federal law. Every bankruptcy case is unique, and sometimes it does not make sense to file jointly. For instance, if the majority of the debt is in one spouse’s name, then that spouse may file bankruptcy individually and protect the other spouse’s good credit.
- Back taxes are not discharged in bankruptcy. In some instances it is possible to discharge federal and state back taxes. There are specific rules on when this is possible and how much can be discharged. Certain types of taxes may not be discharged and others may be mitigated. It’s always best to check with an attorney.
- I can only file bankruptcy once. Bankruptcy is meant to get people back on their feet and give them a fresh start, but they may fall into debt again due to unforeseen circumstances such as, illness, divorce, unemployment, etc. The law is that people can get a discharge for Chapter 7 bankruptcy once every eight years. Additionally, they can file for a Chapter 7 after filing for a Chapter 13 or file for a Chapter 13 one year after their previous filing.
I am often asked about the debt settlement or debt consolidation option prior to filing bankruptcy. More than 500,000 Americans with $15 billion of debt are currently enrolled in debt settlement programs, according to industry estimates. Only a tiny proportion of debts are actually settled by these companies, clients are typically left worse off than they were when they started. NACBA
BEWARE, while most consumers want to believe that they can make it, Ask yourself this basic questions, do you think you can resolve your financial difficulties within one year? Would you see a light at the end of the tunnel in one year? If not, you are only delaying the inevitable. Within one year after bankruptcy, your credit score will begin to improve and you will receive offers for new credit.
There is now across-the-board agreement on the danger debt settlement schemes pose (National association of consumer bankruptcy report). The Better Business Bureau designates “debt settlement” an “inherently problematic business.” The New York City Department of Consumer Affairs calls it “the single greatest consumer fraud of the year.” The U.S. Government Accountability Office, the Federal Trade Commission, 41 state attorneys general, consumer and legal services entities and consumer bankruptcy attorneys all have substantial evidence of its abuses.
The Federal Trade Commission charged Ohio-based United Debt Associates and its owner Ryan Golembiewski with fraudulently claiming on 17 websites that consumers can quickly get out of debt using its debt settlement companies. He agreed to a settlement barring deceptive claims and to a $390,000 judgment. It was entered Oct. 4 by the U.S. District Court for the Southern District of Ohio, Eastern Division.
The means test is the test that determines whether a debtor qualifies for chapter 7 or must file chapter 13. In certain borderline situations, debtors that are receiving social security income may be mistakenly including the social security income in the means test calculation. Section 101(10A)(B) excludes Social Security income from a debtor’s Current Monthly Income. Section 105(10A)(B)’s definition of “Current Monthly Income” specifically excludes benefits received under the Social Security Act. Therefore, Social Security income is not included when calculating disposable income.
When determining a Chapter 13 debtor’s projected disposable income, the Supreme Court in Lanning said the starting point is the debtor’s disposable income. In unusual cases this amount may be modified to account “for changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation.”The 10th Circuit found additional support for its conclusion in the Social Security Act, which shields payments made pursuant to the Act from “execution, levy, attachment, garnishment, or other legal process,” or from “the operation of any bankruptcy or insolvency law.”
The issue of whether Social Security income is included in a Chapter 13 debtor’s projected disposable income is currently on appeal in the 4th and 5th Circuits. In both cases, In re Ranta, No. 12-2017 (4th Circuit), and In re Ragos, No. 11-31046 (5th Circuit), the National Association of Consumer Bankruptcy Attorneys has filed an amicus brief in support of the debtor. The debtors are the appellants in Ranta and the trustee is the appellant in Ragos.
Its summer break time and that means a slow down for bankruptcy attorneys around the country. Traditionally there is about a 25% drop in traffic to the bankruptcy attorneys office during this time. As a bankruptcy attorney since 1997, even I plan my vacation around this time if possible.
So what does summer break have to do with bankruptcy? Well the typical clients who file bankruptcy are families. They have children. Children need summer activities and parents have to accommodate that even if they have financial difficulties. Children don’t understand your financial issues and why should they? When they leave the nest, they will have to worry about their own finances. But for now, let them enjoy their summer. Letting your kids enjoy the summer is more important than bankruptcy if you do not have to file right now. That is what the statics says when there is a drop during a specific period as summer break. there is also a spike right after summer break which is yet another fact that says some things are more important then bankruptcy and client can wait.
Taking care of your finances is definitely one of the most important things you have to do. And sometimes that means having to file bankruptcy. If you do not have an urgent event forcing you to file bankruptcy like a wage garnishment or a foreclosure or a lawsuit that was actually filed. Let summer pass, keep the kids happy, and when they get back to school, you can get back to the business of dealing with your finances. A good attorney will tell you when is the best time to file. So call a local bankruptcy attorney. Bankruptcy is important, but sometimes it can just wait.
Often I get clients who have incurred huge amount of debt, over $150,000 in credit card debt, while trying to run their business. Usually these clients are concerned because they have to explain what happened to incur so much debt. the Magic words are “business debt.”
Did you know that the means test, the test which determines if you qualify to file chapter 7 bankruptcy, does not even apply if your debts are mostly business debt? So long as more than 50% of your debt is business debt, you don’t even have to complete the means test. The means test was introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act to make it more difficult for debtors to file a Chapter 7 Bankruptcy. But its was really targeted to consumers or chapter 7 debtors whose majority of debt was for consumer purchases. So just make sure you let your attorney know that if most of your debt was for business expenses, they are listed as such.
Now in some jurisdictions, mortgages on primary residence are considered consumer debt. Since most debtors may have mortgages that are more than any credit card debt, the above may sound pointless. Not so. Listing the debt properly as business debt on your schedule “F” will get you a long way from the red flags that a large amount of credit card debt may raise.
At the end of the day, the truth is the best policy you have, just let your bankruptcy attorney know the truth of what you did with the charges. The experienced bankruptcy attorney will prepare the petition in a way to properly document your petition and qualify you for the means test and get you the discharge.
Student loans, while might help students obtain an education, are inherently part of a capitalistic system whose primary objective is generating profit for their investors. American consumers owe more than $150 billion in outstanding private student loan debt (department of education report). Some students who graduate with enormous amount of none dis-chargeable student loans are effectively in an indentured servitude to these institution.
Student loan financing is fueled by investor appetite for asset-backed securities. The financial institution private student loan market grew from less than $5 billion in 2001 to over $20 billion in 2008. From 2005 – 2007, lenders increasingly marketed and disbursed loans directly to students, reducing the involvement of schools in the process; indeed during this period, the percentage of loans to undergraduates made without school involvement or certification of need grew from 40% to over 70%. As a result, many students borrowed more than they needed to finance their education. Additionally, during this period, lenders were more likely to originate loans to borrowers with lower credit scores than they had previously been. These trends made private student loans riskier for consumers and more profitable to creditors who have banked heavily on the fact that student loans are not discharged in bankruptcy.
After 2008 lenders rapidly increased the share of loans with a co-signer, from 67% in 2008 to over 85% in 2009. Creditors preyed on the uninformed parents to further secure their capital investment. In 2011, over 90% of private student loans were co-signed.
Many private student loan borrowers did not exhaust their federal Stafford Loan limits before turning to the private loan product. Some borrowers reported that they did not know they had fewer options when repaying their private student loans than they did with their federal student loans.
The private student loan industry is not some benevolent institution for providing opportunity to education, they are a money making machine whose sole objective if profit. They do not deserve any special protection that may be available to the federal student loan system.
A very common concern among our clients is whether they will be able to reestablish their credit after filing bankruptcy. In most cases, we tell them that they will be in a much better circumstance after their bankruptcy discharge is granted. When someone is on the brink of filing a bankruptcy their credit is already damaged . Filing bankruptcy doesn’t make it any worse. Bankruptcy actually helps the debtor get relief and begins the process of rebuilding their credit score.
A bankruptcy will remain on your credit report for 10 years from the date of bankruptcy filing. However, you will soon begin reestablishing your credit after discharge. Chapter 7 debtors will begin receive credit card offers within six (6) months of their discharge. Creditors are willing to extend credit because debtors can not receive another bankruptcy discharge for 8 years. Chapter 13 (reorganization)debtors will not receive such offers until after they receive the bankruptcy discharge. Since Chapter 13 can take up to 5 years, their options are somewhat limited. A Chapter 13 debtor who is planning to incur more than $500 in debt while in bankruptcy will require court approval during their 5 year bankruptcy term.
There are simple things you can do to reestablishing your credit after bankruptcy. How fast you will rebuild your credit depends on varying factors. It also depends on your resources. Those with a higher income will be at an advantage. If you were able to hold onto your home, paying your mortgage on time will help you improve your credit. The following is our guideline to help our clients bounce back after bankruptcy and reestablish their credit.
- The first step is to establish a budget by comparing monthly expenses against income and setting priorities for spending and saving.
- Purchase only what they need and only with cash. This way they end up saving more money.
- Pay your bills on time, even the small ones. This helps you reestablish credit.
- Watch your credit report closely. You need to make sure that your bankruptcy is accurately reflected on your credit report and that any old debts are removed from the reports.
- Get a credit card. Some debtors may be offered unsecured credit cards soon after their discharge because lenders will not consider them a risk since they are not carrying any debt and cannot file another bankruptcy for years. However, the interest rate and fees on those unsecured cards will be very high and costly. Instead, we encourage our clients to get a secured credit card, and tell them to shop for one with the best rates and least fees. Use the card sparingly for 6 months to one year and pay off balances in a timely manner. Then call the credit call issuer to negotiate for an unsecured card. We also suggest that you don’t apply for too many credit cards at once. Each time you apply for a card, your credit may potentially be lowered.
- Adopt a positive attitude. Your attitude and persistence can make all the difference. Building a savings account and not carrying a debt, shows you can control your spending behavior. Those consumers who takes the positive approach are going to recover much faster.
As Los Angeles bankruptcy attorneys, we understand how overwhelming debt can be. Feelings of powerless, confusion, and fear all go along with the bills when you can’t afford to pay them. But at Kedikian and Kedikian, we’re here to help. Let us help you take the necessary steps to getting out of debt and get your life back on track.
Is filing for bankruptcy the right move for you? As experienced Los Angeles bankruptcy lawyers, we don’t encourage just anyone to file. We will, however, provide you with a free consultation where we review your situation with you. We’ll help you explore the options and your choices for getting out of debt and into a new life.
You don’t find too many attorneys who offer something for free these days. That’s why we’re proud of our free consultation policy. Here at Kedikian and Kedikian, we’re the Los Angeles bankruptcy attorneys who offer exactly that. Call our offices today to schedule a meeting with me, I will meet with you personally to discuss your unique circumstances, and answer any questions about the process you may have, at no charge.
Filing bankruptcy is not an easy decision. But it can be a solution. Don’t underestimate the value in taking the necessary steps to resolve difficult financial circumstances. Whatever your situation, money problems are not worth sacrificing your health and family relationships over the long term. Take advantage of our free consultation offer and speak to a knowledgeable Los Angeles bankruptcy lawyer today.
At Kedikian and Kedikian, we charge flat fees. That means you know exactly what you will be billed for your Los Angeles bankruptcy attorney-at all times. No surprises, no inflated rates, no mystery charges that appear on your final bill. We appreciate your business, and the financial stresses that go along with the decision to file bankruptcy. That’s why we strive to keep costs manageable and straightforward at all times with our clients.
Any Los Angeles bankruptcy attorney will tell you that in some circumstances, filing for bankruptcy may be your best option in handling credit card debt. Looking at your financial situation realistically, if you don’t think you’ll be able to pay back your credit card debtors within one year, a bankruptcy filing may be the fastest way to resolve your situation legally and without further incurring further negative consequences to your future credit, your health, and your well being.
The question you should ask yourself is, “Do you see a light at the end of the tunnel? can you get there in one year?” if you answer no to both questions, you should move forward and file bankruptcy. Within one year of filing, your credit will start to improve and you will be set on rebuilding your credit. Doing nothing will not start the rebuilding and moving forward process.