Some of the statistics are quite surprising. New York, for example, has some of the lowest foreclosure rates in the country, at 1 in 2,000 homes for July 2010 when some states were at 1 in 200 to 1 in 400 homes going into foreclosure. California has been hit hard by the housing crisis, with more foreclosures than any other state in July, thought it is the largest state. What is more important is the statistics: 1 in 200 California homes went into foreclosure in July.

Unemployment across the country is high too. Unemployment has gone up so far from 2009 to 2010, though only by a few tenths of a percent. Still, almost 10% of Americans are unemployed. This number is causing more bankruptcies.

Foreclosures have increased over 20% from 2009 to 2010 according to some estimates. Foreclosures are being blamed on more than unemployment, as tight credit standards and lost medical coverage is also affecting many Americans.

For some fair reasons bankruptcies get a bad name. However, to stop foreclosure and to discharge debts, there are few better solutions than filing bankruptcy. When used correctly, Chapter 7 bankruptcy can save you tens of thousands in debt. When used correctly, a Chapter 13 bankruptcy can stop a foreclosure. If home owners who recently became unemployed filed for Chapter 13 bankruptcy before foreclosure papers had been filed they could save their homes.

Over 1 million people took advantage of bankruptcy in 2009, and we are on track to get even more in 2010.

Chapter 7 bankruptcy has some affects on foreclosure too, especially when you are unemployed. For some, the debt repayment plan in Chapter 13 may not be affordable. But Chapter 7 discharges most all credit and medical debts, the main problems for many, and can also discharge mortgage debt (though you will likely lose the home in this case).

Are things getting better before they get worse? Foreclosures and unemployment are big problems. Bankruptcy is not a solution for everyone.

In order to slow foreclosures, bankruptcy is an option. In order to create more jobs, we need more businesses, especially small businesses, to start and expand. The good news is that we still do have options for financial protection. There is no better time to save your retirement money and 401Ks rather than spend it. There is no better time to start a business or buy a home for a good price.

Job growth is not enough just yet, but using what the financial system gives consumers – by filing for bankruptcy or at least consulting with financial help – should not be overlooked.

In the article, Dugas quotes Gerri Detweiler, a personal financier, on how you may not be able to afford bankruptcy. This is a common problem. While the filing fee of $299 for Chapter 7 and $274 for Chapter 13 may seem minor to some, to many that is money which might take months to collect.

The point addressed in the article is that if you lack the funds in such a way, you likely have little to no assets a creditor can take. Since bankruptcy lawyers are not free, you can use what’s been called the “do nothing” approach. Though it rarely works, for some who have no assets to lose, it’s an option. You have nothing they can take. You write the creditor a letter explaining you cannot repay the debt. And you ask them to stop collections against you. Sometimes it can be as simple as that.

But what if you own some assets and/or have a job? Dugas highlights how you should find out if your state has wage garnishments, and also to see your rights when it comes to your assets. If you have a job, creditors can try to get money from you by using a wage garnishment, though state laws differ on this. If you have a lot of assets, these can legally be taken and sold to pay off your debt. If either of these circumstances occur, you need to really consider bankruptcy. It may very well be your best option.

Whether you have decided to file bankruptcy or not, you should be aware many scam artists are out there looking to cash in on your mistakes. This occurs most commonly to home owners who are told they can save their home by paying the scam artist.

Foreclosure is of course a bad ending for your home. Once again, you may want to consider bankruptcy. It may very well be your best protection against losing your home.

Finally, the USA Today article makes another good point that should be addressed. Retirement money, 401Ks, and pensions should be off limits. The article does not take long in addressing this, so let’s be clear. If you have to choose between spending retirement money or filing bankruptcy, the majority of the time you want to file bankruptcy. Using this money may only buy you a few months. If you’re only buying time and not solving the problem, bankruptcy is a better choice.

There are both reasons to avoid bankruptcy and reasons to file. It’s good to educate yourself on the laws, but it’s okay to be somewhat confused on how it works. At the least, consult with a financial consultant if you feel your finances are out of your control. If you are considering bankruptcy, make the best choice and hire an experienced lawyer.

This is an uphill battle with a lot of problems, including high unemployment rates, the mortgage bust, and millions of Americans lacking in proper medical coverage.

According to government data, the U.S. bankruptcy filings have reached the highest point since 2005. The Reuters article points out how clearly unemployment is part of the problem. But it is more than that. With over 1 million filing bankruptcy in 2009, it would not have been wrong to see that as a watershed moment.

However, instead of improving, the economy is struggling. Consumer bankruptcies have not just gone up: since the calendar year as of June, we are looking at over 20% increase in filings.

Quarterly filings between April and June, cited in the Reuters piece, note how the problem is still less serious than the economic slump of 2005. In 2005, in one quarter over 600,000 consumers filed for bankruptcy.

Of note is that this is the year that new bankruptcy code made it more difficult to file for Chapter 7 bankruptcy.

According to the bankruptcy code changes of 2005, if you make more than the median income of your state, which can vary from $30,000 to about $50,000 per year for individuals, you are not eligible for Chapter 7 bankruptcy.

On the other hand, pushing consumers to file Chapter 13 not only encouraged financial responsibility but opened the door for less foreclosures to occur. If used correctly, a Chapter 13 bankruptcy can be more effective in protecting your home.

Because of the changes, filings for Chapter 13 increased. Whether this had a clear affect on the foreclosure rates may not be obvious. What we do know is that bankruptcies have once again increased. In the quarter of April to June, over 400,000 bankruptcies were filed, the first time the limit has gone that high since 2005.

This does not mean growth isn’t coming, nor does it mean filing bankruptcy is a bad idea. This news does mean there is a lot of work to be done.

If you are unsure of whether bankruptcy is right for you, it’s time to consult with a lawyer. If you’re scared you’ll lose your home, it’s best to act now. And if you have a huge debt over your head, understanding how the laws work can be invaluable.

So when should you file for bankruptcy?

There are many theories posted online about this subject, but keep in mind few bankruptcies are exactly the same. In some cases, you might be trying to save the home you spent your life paying for. In other cases, you may have fallen into debt due to a medical condition. Even simple credit card overspending, or less than simple job loss, can lead to bankruptcy

Bankruptcy does have advantages, especially when you consider personal Chapter 7 and Chapter 13 bankruptcy. Filing for bankruptcy is not about giving up; it’s about reworking your finances so you can get a second chance.

The question posed in the title–how long does it take to file bankruptcy–is easier to answer than why you should file.

The process for Chapter 7 bankruptcy typically only lasts 3-4 months. You hire an attorney, file with the courts, get a trustee who liquidates your nonexempt assets, and then you are for the most part free of creditor harassment, demanding letters from the bank, and huge interest rates on your credit card debt. Still, Chapter 7 bankruptcy should only be used in certain cases: in some respects, it’s the best form of bankruptcy available; but in others, you might lose many of your assets such as your car and home. It depends on what assets will be exempt and nonexempt. For instance, you cannot cancel mortgage debt, so this won’t save your home from foreclosure. You can eliminate the majority of your debt, especially credit card debt.

Before Chapter 7 bankruptcy begins, hire a professional bankruptcy attorney to look over your case. As you’ll have to follow court guidelines such as taking debt management classes and showing your income and debt.

Chapter 13 bankruptcy typically lasts 3-5 years. You hire an attorney, file with the court, create a plan to pay back your debt over this period, and hopefully at the end you’re back on your feet. If you still have an income, can pay monthly expenses, and follow court guidelines, you will be better off financially within a few years. Many debtors who make enough money are now being told by courts to file for Chapter 13 bankruptcy; this is because Chapter 7 bankruptcy involving canceling credit card debt is much more common.

So we know how long Chapter 7 and Chapter 13 bankruptcy take. How long should it take for you to get a fresh start? If you have to file bankruptcy again, can you? Getting financially solvent is another complicated question, but with the right plan, with the advantages of bankruptcy, you can. However, this bankruptcy will remain on your credit report for 10 years, which can limit your spending.

You can file for Chapter 7 or Chapter 13 bankruptcy again after six years time has passed. At this point, it may seem like you can never get your finances in order. However, a good bankruptcy attorney can help you beyond the court room: he or she can also help you stop creditor harassment.

The advantages of bankruptcy are many, the time it takes most often a few months or a few years, and the costs small in comparison to what you gain. If you’re interested in filing for bankruptcy, if you want a fresh start, contact a good bankruptcy attorney today.

With bankruptcy law changes, if you make too much money you may be forced to file for a Chapter 13 bankruptcy repayment plan instead of filing for Chapter 7 bankruptcy. If you’re unsure, hire a professional bankruptcy lawyer in your state today.

So when is Chapter 13 bankruptcy a good option? How are you eligible? And how can you fund the repayment plan? Let’s go over these questions.

When Chapter 13 Bankruptcy is a Good Option
Chapter 13 bankruptcy does have advantages over Chapter 7 bankruptcy, but clear disadvantages as well. This is again a case where professional counsel, a bankruptcy lawyer, can help.

In essence, Chapter 13 bankruptcy does not liquidate your assets and discharge certain debts like Chapter 7 bankruptcy does. You are not free and clear a few months after filing. Chapter 13 bankruptcy is about getting more time to pay back debts; it’s often a solution for those who earn a lot of money but still cannot pay all their bills. Also, rich or not, if you fear your house will go into foreclosure, Chapter 13 bankruptcy and the court can grant you an “Automatic Stay” to buy you several months time. You still have to make your initial mortgage payment, but the repayment plan grants you several years to catch up in a fair way.

Eligibility for Chapter 13 Bankruptcy
As noted earlier, businesses are not eligible to file for Chapter 13 bankruptcy. Businesses typically file for Chapter 11 bankruptcy. However, business owners can file for Chapter 13 bankruptcy as an individual.

For individuals, the key to Chapter 13 bankruptcy filing is to show the court you have enough disposable income for the repayment plan. This means that after your allowed expenses and secured debts, you can still have enough money to complete the 3-5 year repayment plan. Your repayment plan must show how you will pay all these debts back in full, or the court will deny the filing.

Funds You Can Use for Repayment Plan
There is a variety of income you can use to fund your Chapter 13 plan. These can get complex, and that’s where professional bankruptcy lawyers can help you. You can definitely use regular wages or income from self employment, for example, and also Social Security benefits.

Other Rules of Chapter 13 Bankruptcy
You cannot owe too much money and file for Chapter 13 bankruptcy. The number changes every few years, but if you have over one million dollars in debt you might have too much to file. You also must be current on income tax filings.

Hiring Counsel
Hiring a professional bankruptcy lawyer can help you navigate all these laws with ease, save your home from foreclosure, grant you time to pay back debts, and give you a fresh start.

In many cases, filing bankruptcy is a logical, if somewhat scary decision you make when you’re out of options. If you are financially in trouble when it comes to your home, job, health insurance, and credit card debt, filing bankruptcy is wise.

This needs to be said because many individuals and families struggle for far too long before they admit they need to file Chapter 7 or Chapter 13 bankruptcy. It’s almost considered giving up. By the time you do make the decision, you’ve lost a lot already and you’re worse than you would have been if you’d made the decision earlier. That goes against why bankruptcy was created–for helping individuals rebound from tough economic times, joblessness, and outstanding debts.

So when do you make the decision? Instead of blaming yourself, file early and take advantage of the law. “You can use Chapter 7, the most popular type, only once in eight years, so draw up a ‘no kidding’ plan for living on your income when you’re finally clear,” says Jane Bryant Quinn for Newsweek.

When to file Chapter 7 or Chapter 13 bankruptcy:
-When you still have assets to protect but you’re financially stuck
-Before you decide to pay back huge bills
-When tap IRAs and 401(k)s
-When you have outstanding medical bills (which can be canceled by bankruptcy)

Speaking of IRAs and 401Ks, you should never use these as an alternative to filing bankruptcy. After all, these are your future, and are meant to provide for you later, not now. These are mainly protected by bankruptcy, so ask your bankruptcy attorney about them.

Never wait for medical treatment–dental, eye, or otherwise–because you are out of money. These can be part of your Chapter 7 bankruptcy filing, or paid back in a reasonable amount of time with Chapter 13 bankruptcy.

Since you can use Chapter 7 bankruptcy once every 8 years, it’s a clear alternative to tapping into funds your future depends on.

So how do you make the decision between Chapter 7 and Chapter 13 bankruptcy? With new bankruptcy laws, Chapter 7 bankruptcy is off the table for many. Now, people are being told to file for Chapter 13 bankruptcy. In short, Chapter 7 bankruptcy clears the majority of your debt, from mortgages, to medical bills, to credit cards. There are some nonexempt items which you may lose here.

Chapter 13 bankruptcy is less about canceling debt and  more about creating a longer time frame for repayment. If you make too much money, you may be forced to file Chapter 13 bankruptcy instead of Chapter 7.

Choosing between the two calls for 1) research and 2) professional counsel. Hiring a professional bankruptcy attorney ensures your financial future will be safe.

]]> http://www.pricelawgroup.com/bankruptcy-blog/2010/03/bankruptcy-decisions-when-it-makes-sense-to-file-for-chapter-7-or-chapter-13-bankruptcy/feed/ 0 http://www.pricelawgroup.com/bankruptcy-blog/2010/03/how-bankruptcy-can-eliminate-tax-debt/ http://www.pricelawgroup.com/bankruptcy-blog/2010/03/how-bankruptcy-can-eliminate-tax-debt/#comments Fri, 26 Mar 2010 05:42:24 +0000 jmalewitz http://www.pricelawgroup.com/bankruptcy-blog/?p=328 If you’ve fallen behind in tax payments and have no chance of paying back the debt, it used to be you had few options. However, with the bankruptcy laws changing in recent years, you can now eliminate tax debt anywhere in the US with Chapter 7 bankruptcy. And with Chapter 13 bankruptcy you can pay in installments.

There is some fine print to those statements. The best thing you can do is a contact a professional bankruptcy attorney in your state who can consult with you on options. A bankruptcy attorney can tell you restrictions and requirements on eliminating tax debt by filing Chapter 7 bankruptcy. The attorney can also explain how Chapter 13 bankruptcy is now much more common than ever before.

Let’s go over the 5 requirements you have to meet in order to eliminate tax debt.

1-Your tax return must have been due at least three years ago. That means, if you file behind one year or two years ago, you cannot get the tax debt discharged yet.

2-The return then must have been filed at least two years ago with the IRS.

3-The tax debt must have been assessed a minimum of 240 days ago. The IRS must recognize the tax debt at a minimum of 240 days ago, in other words.  So if you file for bankruptcy and want the tax debt eliminated, the debt needs to have been present for 240 days or longer, and the IRS must have in some way recognized this debt.

4-The tax return itself must be completely truthful. If there are errors, intended or not, the tax return is fraudulent in many respects, and the debt cannot be discharged.

5-Last, you cannot be guilty of tax evasion.

As you can see it can get complicated. However, in a nutshell, all you really have to worry about is the time frame, that the  IRS recognizes the debt, that the tax return is correct, and you’re not guilty of tax evasion. That likely keeps most options on the table.

What a Bankruptcy Attorney Can Do
There are some more footnotes to this discussion.  You should at a minimum consult with bankruptcy attorneys. While it’s true you can discharge your tax debt completely with Chapter 7 bankruptcy, in some cases home owners may have to pay back in other ways. This is because you cannot discharge a federal tax debt. If the IRS reported a tax lien on your home, you may have to pay back that lien before you can sell it.

A professional bankruptcy attorney knows how to handle not only situations in the courtroom, but all the paperwork involved in handling back taxes. This can be quite complex. You may try and do it yourself, but a few mistakes and you may be in trouble.

But if you successfully file Chapter 7 bankruptcy, you can expect major debts to be eliminated. If you file for chapter 13 bankruptcy, debts like taxes can be paid over a more reasonable time frame. Choosing between the two is a discussion between you and your bankruptcy attorney.

You can learn more by hiring a professional California bankruptcy attorney to go over your case. Even a brief consultation with a lawyer could save you a lot of headaches.

Before deciding if bankruptcy is right for you, let’s go over the bankruptcy basics.

For individuals, you’re going to be filing Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankrupt has for years been the more popular one, but new bankruptcy code has made it difficult for many to file under Chapter 7 in California and across the nation. Now, Chapter 13 bankruptcy is often advised.

Chapter 7 bankrupt liquidates your assets, clears you of most debts, and does so within a matter of months. Chapter 13 bankruptcy pays back assets over time, and you usually don’t lose much if anything as long as you stay with the repayment plan. If you feel you cannot pay back outstanding debts, Chapter 7 bankruptcy is wise. If you don’t want to lose your home and have income coming in regularly, get with a Chapter 13 bankruptcy attorney who can go over the advantages of Chapter 13 bankruptcy.

Now let’s go over the decision making process of California bankruptcy.

Alternatives
There are many alternatives to actually filing bankruptcy, including working with debt counseling agencies. This is another point where professional counsel is valuable. You often have more options than you think.

Limits on Bankruptcy
Did you know that if you have enough income, you may be forced to file Chapter 13 bankruptcy? That’s what was alluded to earlier: sometimes you are forced away from Chapter 7. On the other hand, if you wanted to save your house or car, you might think Chapter 13 is the way to go. If your debts are too high and your income too low, you will likely have trouble filing. These are things you should really study as filing bankruptcy is not usually a quick fix.

Debts Canceled
Not all debts will be canceled, even if you file Chapter 7 bankruptcy. Some debts can be canceled but do not limit what the creditor can do to take back property. This is a called a secured debt, and  some items can be lost.

Credit Cards
There are many good things about filing bankruptcy, especially in times when you feel debts are piling up. You can, for example, wipe your credit card debts by filing Chapter 7 bankruptcy. This is perhaps the biggest benefit of filing bankruptcy, as credit card debts and interest rates sometimes only grow.

Keep All Your Property
One big advantage of Chapter 13 bankruptcy is the options you have the time you can buy. For instance, you might be falling behind on house payments, have other outstanding debts, but have a good job about to start. You might be able to pay back all these debts, including your house payments, over an extended period of time. Chapter 13 bankruptcy typically gives you 3-5 years to pay these back. If you love your home, and would do anything to keep it, Chapter 13 bankruptcy is a good option.

Personal Life
Filing California bankruptcy is a way to clear debts, save property, and give you a fresh start. However, it will not make all your problems go away, nor will it be easy to file for. The best thing you can do is hire a California bankruptcy attorney who can help.

So what  exactly does a bankruptcy lawyer in San Diego help with? We noted several key reasons hiring a bankruptcy lawyer is smart, but you should also know how to hire one.

How to Hire a Bankruptcy Lawyer in San Diego
Typically all it takes is a phone call or an email to get a lawyer of any kind, but not all lawyers are equal. You should definitely hire a lawyer specializing in bankruptcy, who works locally and knows California bankruptcy laws, who can help you through the process, who can help stop foreclosure of your home, and who can handle all the documentation and court hearings.

That’s not an easy task, so be thorough in researching your bankruptcy lawyer.

How Do They Specialize in Bankruptcy?
Did you know with recent laws it’s now harder to file Chapter 7 bankruptcy, and that many are forced to file for Chapter 13 bankruptcy? Did you know if your home or car is valued too high, it could be a nonexempt item and lost in a Chapter 7 bankruptcy? These are the type of things bankruptcy lawyers in San Diego should be clear with you on. For example, if you sell a nonexempt item and use it to buy exempt items, that is technically legal. A professional bankruptcy lawyer in San Diego can offer tips just like that.

What Help in the Hearing?
Before the hearing there is a lot of paperwork to do. That is actually more time consuming than the short hearing. While it may seem short, there’s a lot that goes on in any bankruptcy hearing, and you need a professional to handle all the details.

Prices of Bankruptcy Lawyers in San Diego
You can expect to pay a fee of some kind, but some bankruptcy lawyers will charge you just for a consultation. This isn’t always unfair, but you should be clear on that before speaking with them. While hiring a lawyer of any kind if never cheap, this is perhaps the biggest decision of your life and you need professional counsel.

Chapter 7 Bankruptcy San Diego
Since Chapter 7 bankruptcy is now tougher to file for, a bankruptcy lawyer in San Diego can help you successfully file and handle all items you own. It’s important to know what property is exempt and nonexempt in any Chapter 7 bankruptcy hearing.

Chapter 13 Bankruptcy San Diego
Sometimes Chapter 13 bankruptcy is in fact the best move. If you’re home is about to go into foreclosure and you’re willing to do anything to keep it, Chapter 13 bankruptcy in San Diego can not only save your home but sometimes cancel 2nd and 3rd mortgages on the home. It can also buy you more time.

Professional bankruptcy lawyers in San Diego mean the difference between success and failure in the process of getting a second chance, so be picky when you hire one.

It doesn’t always work out that way, as each person’s reasons for filing any kind of bankruptcy are rarely the same. There are ways to 1) buy yourself some added time to pay back bills and 2) save your home from foreclosure. It’s file for Chapter 7 in San Diego, right?

That’s a decision this guide is going to help you make, along with how to file for Chapter 13 bankruptcy. If at the end of this post you think Chapter 7 bankruptcy is your only option, it’s time to call a professional bankruptcy attorney in San Diego. If you feel Chapter 13 bankruptcy is best, hiring professional bankruptcy lawyers is just as important.

Choosing Between Chapter 7 and Chapter 13 Bankruptcy in San Diego
This blog goes over these topics a lot, but all you need to know is where you’re at financially. If you face foreclosure of your home and want to keep it, filing for Chapter 13 bankruptcy in San Diego buys you years to pay back debts in installments and keep your home. If you feel you need to be rid of all your debts immediately, that 3-5 years just isn’t enough, filing for Chapter 7 bankruptcy in San Diego may be the best choice.

How  to File for Chapter 13 Bankruptcy
You file a petition with the bankruptcy court in the San Diego area where you reside.

You must file, according to the US Courts: “a schedule of assets and liabilities;  schedule of current income and expenditures;  a schedule of executory contracts and unexpired leases; and a statement of financial affairs.

There is more to it than that, because after you must also file a certificate of credit counseling and a copy of a debt repayment plan you created through credit counseling. That means you need to show the court proof you’re actively working on creating a feasible budget to pay back assets, as no debts are being eliminated.

Next, you need to show evidence of payment from employers if you have any, within 60 days before filing. The last three steps are to show a statement of monthly net income,  note any expected increase in income, and any records you have in Federal or California (or your state) education accounts.

The Next Steps in Filing for Bankruptcy
There are more steps. The problem with filing Chapter 13 bankruptcy by yourself becomes clear here. It can be done and has been done, but hiring professional bankruptcy attorneys in San Diego can save you from making mistakes in documentation and at the hearing.

So you need to follow these steps too.
-Create a list of credits, debt amounts, and nature of their claims
-The source, amount, and frequency of your income
-A list of all your property, such as homes and vehicles
-A detailed list of all your monthly living expenses, from food to rent

Hire Professional Bankruptcy Attorneys in San Diego
Filing Chapter 13 bankruptcy is now more common than ever, though still most debtors try to file Chapter 7 bankruptcy, a liquidation. How to choose between types of bankruptcy, how to file all documentation, and how to handle creditors are all complex tasks. With the right bankruptcy lawyer in the San Diego area, you can focus on the future instead of the past.