Many consumers have been finding the tough economy a bit too much to handle of late and the number of bankruptcy filings are practically on the rise. In fact, the financial trend has changed so much that what was once considered a social stigma is now being embraced as an opportunity that’d help clear the slate plus provide for a fresh financial start. The different types of consumer bankruptcy and the costs

It’s undoubtedly hard to face at times, but when financial conditions become difficult so much so that it’s impossible to continue any longer financially, then unwittingly enough you’ve got to call for   personal bankruptcy. Following are the 2 most commonly used forms of personal bankruptcy -

  • Chapter 7: This happens to be one of the most common forms of bankruptcy filing. As a bankrupt person you’ve got the opportunity to retain essential property. As for those properties that are non-exempt, then they’re sold off and the proceeds from it happen to be distributed to the creditors. However, fact remains that in maximum Chapter 7 bankruptcy cases, there are no assets.
  • Chapter 13: This Chapter of bankruptcy on the other hand allows you as a consumer to keep most of your assets or at least some of it. Rather a schedule for repayment of these debts is worked out and it’s based on your future income.

The time frame involved for consumer bankruptcy

Yes, there’s a certain time frame involved for consumer bankruptcy. However, it varies depending on your individual circumstances as well. As for Chapter 7 bankruptcy, then it’d be a matter of a few months. However, you’re required to go through a consumer counseling course within 6 months prior to filing bankruptcy. Now, this is essential and don’t make the mistake of avoiding it for otherwise your bankruptcy petition would be rejected. As for Chapter 13 bankruptcy, then it’d take anywhere between 3 to 5 years for the repayment scheme to be fully realized.

The effect bankruptcy has on your FICO score

Bankruptcy will always be considered a rather negative impact on your FICO score undoubtedly. Now, as for the level of impact that it’ll have on your FICO score is something that completely depends on your entire credit profile. For instance, if you’re one who had spotless credit and a rather high FICO score, then you might as well expect a huge drop in it. Again on the other hand, if you already had negative items listed on your credit report, then a modest drop in score is expected with bankruptcy filing. Most importantly, the more accounts included in the bankruptcy filing, the greater will be the impact felt on your credit score.

The requirement of a bankruptcy attorney

In case you find it completely difficult to stop your collectors from calling you, then you might as well consider a bankruptcy attorney. When looking for a bankruptcy attorney, take care to find the right one.

Keep in mind the above facts when filing for insolvency, and then you’ll be better equipped at handling the process altogether.

Author Bio:

This Guest Post has been written by Christina Haze who’s known as insolvency expert and has written a lot of well-researched stuff on it. Her articles are widely read and sought after. For more information on bankruptcy you may visit:

Many people have suffered the loss of a job due to an illness. When that happens, your debt can build up very quickly. In addition, many times when you loose a job, you also can loose your health insurance, and then face staggering medical bill due to your illness. When this happens, bankruptcy may very well be your salvation from debt and harassing creditor phone calls.

Preventing Debt over the Holiday Season

December 19th, 2012, 8:07 am

During the holiday season, Americans take on more debt than during any other time of the year. Buying presents for family, friends, co-workers, and others is just a part of the holiday tradition, but without proper planning, holiday spending can quickly lead to a serious debt load that may be difficult to manage in the New Year.Fortunately, there are ways to avoid going into this kind of debt during the holidays. The following is a brief list of some of the most common (and most effective) ways that holiday shoppers can help prevent themselves from going into too much debt during the holidays:

  1. Establish a budget - knowing what you can afford to spend before making any of your other holiday plans is a simple but extremely effective way of helping to reduce the temptation to spend unnecessarily.
  2. Make a list of presents - rather than shopping around and buying gifts on impulse, know what you plan on getting the people in your life beforehand. That way, you can also help to ensure that your planned gifts are within your budget.
  3. Shop online - buying gifts online can add expensive shipping costs, and as the holidays come closer, getting presents in time for Christmas can increase these costs. But comparing prices for the gifts you plan on purchasing online can help you know where to get the best deals.
  4. Make travel reservations early - the earlier you make your travel reservations, the better. Prices typically increase the closer you get to your travel date, so making plans at the earliest possible date can help to lower your travel costs.
  5. Make your own gifts - homemade gifts obviously vary in quality, but if you put enough thought and effort into making something that you know your loved ones will like, these types of gifts can actually be better than store-bought presents.

These are just some of the many ways that holiday debt can be reduced or avoided altogether. However, for those who already have serious debt problems, preventing debt may not be enough to resolve their financial situation. In these cases, consulting with a qualified bankruptcy lawyer can help to return a debtor back to financial independence.

If you filed a Chapter 13 bankruptcy in Massachusetts and have either filed a motion to voluntarily dismiss your case or your case has simply been dismissed due to a motion by another party prior to confirmation, then you may not get all your money back, even though creditors have not been paid anything.

The Massachusetts Bankruptcy Court has created a new rule that changes the ability of a Trustee to retain more of your fees paid, then the $150 fee which has been the standard for quite some time. Massachusetts Local Bankruptcy Rule 13-19(f) which authorizes a flat payment of $150.00 to the chapter 13 trustee as an administrative expense is has been amended to allow the Trustee to retain in accordance with 28 U.S.C. §586(e), which can be up to 10% of the fees the Trustee is holding in escrow. In addition to any outstanding filing fees owed to the Court out of the $281 required may be held.

Trustees watch your facebook profile

November 24th, 2012, 4:28 pm

It seems that some people who file for personal bankruptcy simply don’t get it.  The idea is not to charge up a whole lot of debt on your credit cards with the intent to walk away from your financial obligations a few weeks or months later.  Rather, bankruptcy offers a fresh start to people who are looking to get out from under insurmountable debts stemming from financial hardships, loss of a job, divorce, illness, or other situations in ones life that makes paying back the debt difficult if not impossible over any reasonable period of time.Most clients who walk into bankruptcy law office understand this and are simply looking for a way to get back on their feet.  And then there is the couple who decided they would try to game the system by taking a luxury vacation and use the money not disclosed in their schedules to pay for it.  They then made an even bigger mistake; they posted their pictures on Facebook.  So what happened next, the Trustee in their case prior to the 341 Meeting, reviewed their public facebook account and determined that these Debtors filed their case in bad-faith and tried to hide assets.

At the Meeting of Creditors, the Trustee simply asked this question, “You took a vacation last month on the Canadian Railway from Vancouver, British Columbia, to Banff in Alberta, ending in Calgary, didn’t you?”  The pictures on your Facebook page show you at Lake Louise. Who paid for that hotel?” “And you paid for this vacation didn’t you?”

The Debtors had no choice, as they were not about to commit perjury so they of course had to answer in the affirmative.  As a result of this conduct, the Debtors were forced to increase their Chapter 13 plan payment by the amount of the trip.

Now, this is not to say that the mistake the Debtors made here was posting pictures on Facebook.  Although, that was stupid.  The Trustee has an obligation to determine the veracity of the Debtors representations on their schedules and statements and finding these photos, simply made the Trustee’s job easier.  The real mistake was failing to disclose income that could be used to pay creditors, and instead use it for a luxury vacation.

There are two lessons Debtors should take from this story.  First, when filing for bankruptcy, you have a duty to cure your creditors to the best of your ability pursuant to 11. U.S.C. 1325, and you must disclose all of your assets and not hold back you’re your own use.  Secondly, you need to tell a consistent story.  It could have been possible that a family member took the Debtors on this vacation, and none of their own money was used, but even the appearance on a social media site like facebook or YouTube of this extravagant purchase needs to be considered.  The Trustee is going to go by the old saying, if it looks like a duck, and it smells like a duck, it probably is a duck.

What does your Trustee want at a 341 Meeting

November 19th, 2012, 4:58 pm

Once you have filed for personal bankruptcy, you will be expected to appear at a hearing called a Meeting of creditors or a 341 meeting. This is the meeting where an attorney appointed by the United States Trustee’s Office called a Trustee will ask you questions about why you filed for bankruptcy, and review certain documents to determine that all of the information you provided on your schedules and statements is true and accurate. Additionally, the Trustee will ask questions to determine if there are any assets which can be liquidated to pay your creditors.Prior to your Meeting of Creditors, you will be expected to supply the Trustee with certain documents. If you own a home, you will need to provide the Trustee with a copy of your deed, and proof of the value of your home. In some states, such as Massachusetts, you will also provide the Trustee with a copy of your Declaration of Homestead. In addition to the real estate documents, you will need to provide the Trustee with a copy of your last Federal tax return filed, and two months of pay stubs. In some cases, if you are a landlord, you may also have to provide proof of rental income, or a business profit and loss statement for independent contractors.

Once your case has been called on the day of your 341 Meeting, the Trustee will also expect you to have a copy of your drivers license and social security card to prove you are in fact you. You will then be asked several questions to confirm your information such as your name, address, where you work, how much money you make and how much money you had in the bank on the date you filed your case. The Trustee will also want to confirm the value of your home, car and whether you are owed money from anyone else, or have the right to sue anyone else.

The real key to these 341 Meetings is simply to testify truthfully and ensure the Trustee that you have disclosed everything required under the bankruptcy laws. Typically these hearings last only a few minutes and after that you will not have to appear again. However, from time to time, a Trustee will have some extra questions based upon your unique set of facts and continue the meeting to review some additional documents.

As of November 1, 2012, the United States Census Borough has released new median income statistics for each state separated by number of family members.   This is important to note because if you are considering a debt relief strategy of filing for bankruptcy, in order to qualify for the highly desirable chapter 7 case, where you receive a discharge of unsecured debt without the need to make a payment plan back to your creditors, your household income must fall below the median income for your state and family size.  This is called the Means Test.In Massachusetts to qualify your income must be below the following:

  • Single person:             $54,475
  • Family of two:             $66,076
  • Family of Three:          $80,822
  • Family of Four:           $101,523
  • Family of Five:            $109,023

After the recent economic downtown, credit card debt came to light as a major financial problem facing a large number of Americans. While some of this debt was accrued through no actions on the part of credit card companies, many debts were increased or made less manageable for consumers due to policies put in place and actions taken by these companies. As a result, the Credit Card Accountability Responsibility and Disclosure (CARD) Act was passed in 2009, offering American consumers a large number of protections from unfair credit practices.

In an effort to keep cardholders’ debt from spiraling out of control or becoming unmanageable for reasons largely beyond their control, this act set in place numerous regulations. Some of the most important benefits that credit card users now have as a result of the CARD Act include the following:

  • APR – the Annual Percentage Rate is not allowed to be increased without notifying the person ahead of time and not before one year has passed since the account was opened, except under the following exceptions: the credit card company or bank had announced an increased APR prior to the account being opened, a factor beyond the issuer’s control causes the APR to increase, the payee fails to follow a “workout” agreement that was agreed upon by the issuer and payee, or the payee does not make minimum payments within a sixty day period. If the APR is raised, regardless of the reason, that APR only applies to payments made afterwards. In other words, it cannot be applied retroactively.
  • Management of payments – although several types of payment protections were put in place, one of the most beneficial was forcing credit card companies to put any payments made by a consumer towards the debt that had the highest APR, if they had different lines of credit with differing APRs.
  • Notifications and disclosures – Many changes were made to policies regarding how and when consumers must be notified of changes or impending action and what they must have disclosed to them. This includes being told at least forty-five days prior to an APR being raised, given the option to cancel within forty-five days of being notified of major changes being made to their plan or agreement, and told the dates payments are due and any fees that will be charged for failing to provide payment prior to that date.

The CARD Act includes a large number of other benefits and protections for American credit card users, many of which may be difficult or confusing for a person to understand. As such, it may be beneficial for a person to speak with a bankruptcy lawyer about how this law affects them, particularly if they are considering filing for bankruptcy due to credit card debt or are wondering if this action would be helpful in their situation.

How Debt is Divided in a Divorce

October 26th, 2012, 9:37 am

One of the more frequent causes of marital discord, and eventual divorce, is money problems. When debts become unmanageable, stress rises, and sometimes it contributes to spouses deciding to part ways.While much of the discussion about divorce focuses on property division, debt division is also an issue of contention. As a general rule, debt is divided the same way that assets are — equitably. This means that, generally, the debt that is acquired during the marriage and leading up to the marriage, will be divided equally. This may not be the case in a short-term marriage, and you should speak with an attorney to discuss how a court might handle your individual set of circumstances.

There are situations where debt that is accrued during the marriage is not divided, however. For example, if one spouse is accruing debt by spending money on a boyfriend or girlfriend outside of the marriage, the other spouse should not be obligated to pay down that debt. Another example could be gambling debt. However, if the other spouse was aware of the gambling habit, and had benefited from gambling winnings during better times, a judge would likely divide the new debt under a traditional analysis.

About the Authors: Christopher J. Finn and Jonathan R. Eaton are divorce attorneys in Saugus, Massachusetts, at Finn & Eaton, P.C. To find out more about your options with divorce, visit their blog or call them at 781 484-1066 to schedule a free initial consultation.

Steps to repair your credit after bankruptcy

October 21st, 2012, 8:52 am

After one files for bankruptcy, and receives a discharge of debt, you will find yourself in a unique position to quickly improve your credit score. In fact, the are Federal mortgage programs that allow a Debtor to get a new home mortgage as soon as 2 years after they file for bankruptcy. However, you need to repair your credit not just from the bankruptcy, but also the long history you had which put you in that position to begin with.You need to ensure that your use of credit and payment history meets the standard expectations. That is , ensure that the amount of credit you are using in total is less then 30% of the total credit at your disposal. For example, if you have a credit card with a $2,000 limit on it, you should not carry a balance over $600. Additionally, when a bill is due, make sure to pay it on time. If you are going to be late, ensure that your payment is posted to the Creditor no later then 29 days from the date it is due. Finally, only apply for credit you actually need. The more times you apply for credit, the lower your actual score becomes. Each time someone runs your credit, the FICO score drops a few points.

The next step to repair your credit is to ensure that your personal financial history is being reported accurately. You have a right to request your credit report for free once a year. Each year, you should do this and review the report in detail. Look for any negative comments, such as 30, 60 or 90 days late, or balances on credit cards that is not accurate, or even creditors claiming you owe money you do not owe. If you find any of these, go to the credit agency’s website and file a dispute. If you can provide documentary evidence to support your dispute that will greatly help. Once you do this, the Creditor has the burden of demonstrating the report is accurate and if they can not, the negative information must be stricken from your credit report.

Remember, that credit is a living breathing thing, so just because you fix it once, does not mean you can forget about it. Pay close attention and follow these steps and you will have great credit for life.