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Posts Tagged ‘bankruptcy’

Falling Income

In Uncategorized on October 19, 2011 at 9:40 am

Household incomes are shrinking. Over the last two years average income dropped more than 6 percent. The median income now stands at $49,909. If you look at income since the start of the recession in 2007, income has dropped nearly 10 percent. That is the largest drop in income in several decades.

The reason wages are falling? People who lost jobs during the recession have taken pay cuts in order to get hired again. They average 17 percent less income in their new jobs.

News on the job front is not much better. Unemployment remains over 9 percent. The average time a person remains unemployed averages 40 weeks, the longest in more than 60 years.

If you are experiencing financial difficulties, you are not alone. Bankruptcy offers protection of your wages and assets from creditors. Give me a call if you need help.

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Strip Down Vehicle Debt

In Uncategorized on July 22, 2011 at 10:33 am

Its possible to reduce the debt on your vehicle by filing a bankruptcy case. This benefits vehicle owners who owe more than their car is worth. Both chapter 7 and chapter 13 allow for reducing the vehicle loan.

In chapter 7, you can reduce the debt if you qualify for a redemption loan. The new creditor pays the vehicle’s fair market value to your lender. The remaing debt is discharge by the bankruptcy court.

In chapter 13, you may propose a plan that pays the fair market value provided the loan is at least 2.5 years old. The payment for the vehicle is included in the monthly payment you make on all your debts.

Debt Consolidation Is Not The Way To Go

In Uncategorized on July 14, 2011 at 2:52 pm

Debt consolidation companies advertise that they can negotiate with your creditors for lower payments and interest rates. They claim they can help you repay your debt quickly and improve your credit score immediately. If this sounds too good to be true, that’s because it is. Problems with debt consolidation include:
1. It is an unregulated industry under investigation by the federal and state authorities
2. These companies are not forced to deliver what they promise
3. People using these services can pay thousands of dollars in fees before any money goes to creditors.

Debt consolidation scams abound. I see many people who are being sued even though current on their debt plan payments. Take my advice. Chapter 13 is a much better alternative to debt consolidation.

Change Your Chapter 13 Plan

In Uncategorized on July 6, 2011 at 1:23 pm

A client told me recently that her employer reduced her hours. She expects to earn $500 per month less that her previous income. Fortunately, chapter 13 provides flexibility in situations like hers. In many cases, its possible to change the payment amount. The law requires a showing of a substantial change in circumstances. She should have no trouble in meeting this requirement.

We can’t always change the amount of a chapter 13 plan payment. For example, plans must pay out in a maximum of five years. If the proposed payment change is too great, then the court does not approve it. But if you have a change, don’t hesitate to call to see if we can’t change the plan payment.

Bad Credit Score Can Hurt Job Prospects

In Uncategorized on June 2, 2011 at 3:05 pm

About 60 percent of employers now check credit reports on job applicants. In the 1990’s, only 20 percent of employers used credit reports. The bottom line is that your poor credit score can hold you back from getting a job.

Bankruptcy helps you to clean up your credit history. In my experience, about 9 out of 10 of my clients see an improvement in their credit score within a year of filing for bankruptcy.

Accuracy in credit reports

In Uncategorized on May 26, 2011 at 7:52 am

From today’s New York Times editorial:

The credit reporting industry has vast reach and power. The information it gathers and sells is used to determine eligibility for credit cards, mortgages and even some jobs. Federal regulators haven’t had the authority or the means to protect consumers who have been victims of inaccurate reports. The new Consumer Financial Protection Bureau will have that authority. It has a big job ahead.
Reporting agencies gather consumer payment histories from creditors that are sometimes less concerned with accuracy than they should be. Those aren’t the only problems. As The Times reported earlier this month, the agencies sometimes merge the credit records of people with similar names and Social Security numbers.
Estimates of the error rate in credit reports vary anywhere from 3 percent to 25 percent. But even 1 percent would mean that two million people could be saddled with erroneous credit histories that cause them to pay higher interest rates or to be denied credit altogether.
Judy Johnson of Louisiana told The Times about how a credit reporting company confused her records with those of another woman. She tried for nearly seven years to get a credit bureau to correct errors in her record, finally suing the reporting company after being denied a credit card. She has since reached a settlement, but a sheriff recently showed up at her door to serve her papers for a debt she says she does not owe.
Its important to check your credit report. I obtain a credit report for all my clients when preparing a bankruptcy case. Its just as important to check your credit report at the end of the bankruptcy. You want to see that the credit agency shows the debts as discharged by the bankruptcy. You need to bring errors to the attention of the credit agency. Write to them. They must respond within 30 days.

How To Avoid A Deadly Trap

In Uncategorized on May 3, 2011 at 9:20 am

Credit cards are so useful and convenient. At least until you suffer a loss of income. Or unexpected medical expense. Or divorce. Or any other problem that impacts your ability to make monthly payments. Then credit cards become a trap. Think you can talk to the credit card company about lowering payments? Don’t count on it. My clients tell me that they get nowhere when they ask for a break. Miss three payments and watch your interest rate climb to 30%. Good luck trying to catch up payments after that.

You could get lucky and have a way to pay off the card. You could borrow against your home, but that is getting hard to do. You may have a retirement account you could tap into. If you can get together a lump sum payment, your creditor may settle for 50 cents on the dollar.

Other alternatives include debt consolidation companies and bankruptcy. Be careful with debt consolidation. I hear many horror stories from clients about them. It’s an unregulated industry. Many companies are being sued for false promises and fraud.

Chapter 13 bankruptcy lets you adjust payments on your debts based on an amount you can afford. You get the payment amount approved by a court trustee. You don’t need your creditors to agree.

If you are in default on your payments, your credit score has already taken a hit. Bankruptcy can stop the downward slide and help you to rebuild it. It’s a way to avoid the deadly credit card trap.

Home Values Keep Falling

In Uncategorized on April 22, 2011 at 9:38 am

Local property values fell by eight percent compared with last year’s values. This from a new report by the Hamilton County Auditor. Values declined in nearly every county neighborhood. Other reports show that home sales and prices continue to fall across the Greater Cincinnati and Northern Kentucky region. Forty-five percent of all sales in March were lenders selling properties recently in foreclosure or a short sale.

All this is bad news from people trapped with a house payment that can no longer afford. Declining values make it more difficult to borrow or sell their homes.

Bankruptcy can help in a couple of ways. Chapter 13 gives people a way to catch up missed house payments. It some cases it allows the home owner to eliminate a second mortgage. Chapter 7 protects the owner from the mortgage debt if the owner wants to give up the house.

Family Matters

In Uncategorized on April 12, 2011 at 9:15 am

I see people every day who get into financial trouble when dealing with family. One problem involves paying back loans from family before filing for bankruptcy. The second consists of giving loans or paying bills for family. I’ll talk about each of these two problems below.

You may want to pay back family member for a loan. The payment often come from tax refund. But paying family back before bankruptcy causes a problem. The law allows the bankruptcy trustee to sue any family member who received $600 or more loan payback or more during the last 12 months. Avoiding this problem is simple. Pay back the loan after you file bankruptcy. Not before.

Another common problem is helping family. Parents help children, girl friends help boy friends, adult children help parents. Lending money or paying debts for family are one way to get in trouble. Another is to let someone use your credit card. I estimate that one out of five of my clients get into financial trouble as a result of helping family. The worst part is that people ruin their credit as a result. The person who tries to help ends up filing a bankruptcy. Don’t extend your credit to family because it can cause a problem for you later. You have to learn to say no.

If these problems sound familiar, call me. I may be able to help you.

Many Can’t Keep Up With Medical Expenses

In Uncategorized on April 1, 2011 at 9:06 am

The number of people who skipped seeing a doctor so they could pay for food and housing more than doubled during the last five years. the number who went without prescription medications doubled during the same period. Overall, 16%of adults in the Cincinnati area went without medical care, up from 10% in 2005. 25% of adults in the region having trouble paying medical bills. This information comes form a survey conducted by the Health Care Foundation of Greater Cincinnati and the University of Cincinnati.

Filing bankruptcy helps people keep up with medical expenses. It eliminates past medical and other debts. That allow them to pay ongoing expenses without having to make debt payments at the same time.