St. Charles Bankruptcy Attorney

Proposed Bill to speed up the short sale process: Prompt Notification of Short Sale Act

Tue, 21 Feb 2012 08:00:00 EST

A new bill was introduced which would require mortgage companies to respond faster to inquiries about a possible short sale: The Prompt Notification of Short Sale Act. Bankruptcy attorneys know about this issue: a client would like to avoid foreclosure by selling his house to a third party below the mortgage amount. The mortgage company would lose money through a short sale but might receive more money than through a foreclosure. However, the process takes often a long time. Even though someone from the mortgage company talks with the house owner about the short sale process, someone else at the mortgage company might start the foreclosure process. Every so often, we see that clients have to file bankruptcy to stop a foreclosure and have more time for the short sale process.

The legislation is known as the Prompt Notification of Short Sale Act. It will require a written response from the mortgage company within 75 days after the house owner sends a request to the mortgage company.

If the act becomes law, it will not change anything in my opinion because the bill requires only a response from the mortgage company. The response could be that the mortgage company needs more time to review the house owner's request. However, the mortgage company or better: the servicer of the mortgage company can extent the response deadline only once by 21 days.

If the servicer does not respond within 75 days after receiving the written request, the buyer could receive $1,000 in statutory damages. That means the buyer does not have to proof any real damages. Reasonable attorney fees would need to be paid by the servicer as well.

A short sale is favorable for two reasons, the seller avoids a foreclosure on his credit and a short sale is better for the neighborhood. A short sale does not bring down the value of other properties in the neighborhood as a foreclosure normally does.

A short sale normally takes four to nine month to complete. This is not only too long for a potential buyer but it is sometimes too long for the mortgage company itself which might foreclose on the property before the short sale process is finished.

Will the new bill be successful? A similar bill was introduced last year which required a response deadline of 45 days. The bill did not make it to a debate in the house....

Options for Property in Bankrtupcy

Tue, 21 Feb 2012 08:00:00 EST

Redemption

Redemption will require you to have a certain amount of cash up front that you can put towards the balance. Redemption applies to cases where the property value has depreciated to lower than the amount of the loan. When this happens the creditor is considered under secured. Essentially, to redeem a debt, you make a payment of the current secured value of the debt.

For example, if a debtor owes 10,000 dollars on a vehicle and the vehicle is now only worth 6,000 dollars, the creditor is under secured by 4,000 dollars. To redeem this vehicle a debtor would make a payment of 6,000 dollars to the creditor. Then, through filing for bankruptcy, a debtor can eliminate responsibility for the remaining 4,000 dollars as it is unsecured. After the bankruptcy the debtor will own the property free and clear.

Reaffirmation

Another option for individuals filing for bankruptcy is a reaffirmation agreement. Reaffirmation agreements can be used on any type of property regardless of the value. Reaffirmation agreements do not require a lump sum payment. Rather, a reaffirmation agreement is an agreement to continue making payments under the original loan agreement despite the bankruptcy proceeding. After the bankruptcy the debtor is still financially responsible for the property and will be subject to repossession or foreclosure if the debtor is unable to remain current on the obligation.

Surrender
When filing for bankruptcy a debtor may also choose to surrender property. A debtor may surrender property regardless of the value of the property or the current amount of the mortgage or the loan. This option will require you to turn over the property to the trustee, usually at an arranged time. Surrender allows you to walk away from the bankruptcy not without any further responsibility or obligation to pay for the property.

If you have questions, or would like more information, schedule an appointment with a St. Louis Bankruptcy Attorney now.

Reaffirmation

Thu, 16 Feb 2012 08:00:00 EST

When filing for bankruptcy debtors are faced with a number of important decisions. Throughout bankruptcy a debtor has the option to surrender property, even property that still has a loan balance. Through bankruptcy a debtor is able to surrender property without penalty or worrying about deficiencies. However, some debtors may wish to keep certain types of property, i.e. a vehicle. If a debtor chooses to keep property it would still need to be disclosed on the bankruptcy petition, however, it would be listed that the debtor is keeping the property. In some cases lenders will require the debtor to sign a reaffirmation agreement.
A reaffirmation is a voluntary agreement that must be filed within 60 days of the creditors meeting or before the case is closed, which ever is sooner. The agreement will state that the debtor is continuing the loan and will continue to make payments in accordance with the agreement. If a debtor chooses to sign a reaffirmation agreement the debtor is responsible for that particular debt as if he/she never filed for bankruptcy. Even if a debtor chooses to sign a reaffirmation agreement the debtor has sixty days after the agreement is filed with the court or the order of discharge to rescind the agreement.
Whether a debtor should sign a reaffirmation agreement is a very important decision and there are a number of factors to consider. Signing a reaffirmation agreement may allow the debtor to keep certain types of property that may be very sentimentally important to the debtor, like a house. A reaffirmation agreement may allow a debtor to keep very practical types of property, like a vehicle. When filing for bankruptcy a debtor may be hesitant to surrender property that he/she is not required to surrender.
However, in making this decision, a debtor should consider whether or not he/she can actually afford the payment. A reaffirmation effectively eliminates some of the "fresh start" offered by a Chapter 7 Bankruptcy. It would be very unfortunate to reaffirm the debt, not be able to continue payments, and eventually lose the property anyways. Debtors should also consider, even if he/she can afford the debt, whether it is truly worth signing. In signing a reaffirmation agreement a debtor will incur attorney's fees, fees from the lender, and still have to pay according with the original contract terms. While debtors may be concerned about acquiring a new vehicle, there are lenders that specialize in helping people that have filed for bankruptcy.
If you still have questions about bankruptcy and reaffirmation agreements you can schedule an appointment with a St. Louis Bankruptcy Attorney.

Differences Between Secured and Unsecured Debt

Wed, 15 Feb 2012 08:00:00 EST

When considering bankruptcy, the most meaningful difference between unsecured and secured debt is that unsecured debt can be discharged. Secured debt can be discharged, however, any lien on the asset still remains. Basically, this removes the contractual obligation to pay for the asset is eliminated, however, you still own the asset subject to a the lien. There me be other options available for certain types of secured debt, like cram down.
A secured debt is a debt where the debtor uses an asset as collateral for the loan. If you do not make payments on the debt as required the lender can take possession of the collateral and sell the item to recover losses if the item is not reaffirmed within 45 days of the 341 hearing. Until this time, an automatic stay generally protects the debtor from collection or repossession efforts, unless the creditor sucessfully obtains a motion for relief. The most common examples of this type of loan are a car or property. Very often the loan is a purchase money security interest, which simply means that the loan is secured by the item that you are purchasing, meaning, if you purchase a car from a dealership with a loan the car is collateral and can be repossessed if you do not pay in accordance with the loan.
When an individual has equity in a house or other property it is often possible to take out loans on that equity. When taking out a loan on equity that debt is considered secured by the home or property in which you had equity, thus not a purchase money security inserest, regardless of what you spend the proceeds on. Meaning, if you take out a loan based on equity in a house to purchase new furniture for your home that loan is secured by your house. In the event that you do not make payments on the loan the creditor could attempt to foreclose upon your house. It is important to remember that even a second mortgage holder may forclose upon your house.
There are many types of secured debt, including, mortgages and liens. These types of voluntary secured debts are created by agreement of the debtor and the creditor. It is also possible to have secured debt that is involuntarily created, like a mechanics lien. Mechanics liens can attach with the consent of the title holder under limited circumstances where property value has been increased by work or materials that have not been paid for by the debtor. In some courts, depending on both the court and county in which you reside, judgments create liens that may not be dischargable in bankruptcy.
Conversely, unsecured debt is a general debt not attached to specific collateral. The lender cannot take possession of assets to satisfy the debtor's obligation. Common examples of unsecured debts include signature loans, personal loans, credit card debt, and pay day loans. It is possible to discharge unsecured debt through bankruptcy. Generally most unsecured debts can be discharged through a Chapter 7 bankruptcy, with the notable exception of student loans. Even in a Chapter 13 bankruptcy proceeding, depending on the individuals disposable monthly income as calculated by the means test, it may still be possible to eliminate some or all of the unsecured debt.

If you still have questions, make an appointment to speak with a St. Charles and St. Louis Bankrupty Attorney today!

Five Avoidable Mistakes When Considering Filing for Bankruptcy

Fri, 10 Feb 2012 08:00:00 EST

Often times in the months leading up to filing for bankruptcy individuals try to rectify certain debts or take extreme measures to avoid filing for bankruptcy. There are numerous things that people commonly do before filing for bankruptcy that may end up causing more problems in the long run. Some of the most common pitfalls are as follows:
1. Do not take out additional mortgages on your house or loans on retirement accounts to pay off debts. Often times people take out additional mortgages, which are secured loans, to pay off other unsecured loans like credit cards and medical debt. This may have a few unwanted implications. If you take out additional mortgages and are unable to make payments towards that the debt is then secured by your home and debtors may foreclose upon your house to recover the amount owed. Once your house is foreclosed upon all of your legal rights to the house are lost permanently. Even if your house is not foreclosed upon the debt which is now secured, and bankruptcy will not eliminate this debt. At this point, if you wish to protect your house you will have to file a Chapter 13 bankruptcy, which does not modify the ongoing mortgage payments, but would allow you to catch up on arrearages over 48 months.
2. Do not make any payments to family members or friends in the year leading up to filing for bankruptcy. This rule includes money given as a gift and money repaid, even when owed, to a friend or family member. This would not include payment of rent if you live with a family member or friend. The reason you should avoid these types of payments is that any payment made to a family member or friend in the year before filing is considered fraudulent by the Bankruptcy Code, without consideration of the actual merits. This transfer can then be voided and the trustee may sue your family member or friend to recover the money which may lead to further issues. While your bankruptcy would discharge the debt the the family member or friend you could certainly opt to voluntarily repay the debt after completion of the bankruptcy.
3. Do not transfer personal property within the two years leading up to bankruptcy in an attempt to hide assets. You will be asked about this type of transfer and either the trustee or the courts can avoid the transaction.
4. Do not attempt to pay off particular creditors before a bankruptcy. If you make a payment of more than 600 dollars to any one creditor in the months leading up to bankruptcy the trustee may void that payment, sue the recipient, and recover that money.
5. Try not to cash out retirement accounts or IRA's unless you truly do not have any other options. Many retirement accounts are protected by bankruptcy law. This means that if you do not cash them out they are protected by bankruptcy and they will still be available in accordance with the terms of the account after filing.

If you are considering filing for bankruptcy you should speak with a St. Louis Bankruptcy Attorney as soon as possible.

Cram Down in Bankruptcy

Fri, 10 Feb 2012 08:00:00 EST

One advantage to filing for a Chapter 13 Bankruptcy is the option to "cram down" certain types of secured debts, including cars, trucks, and motorcycles. Cramming down quite simply means that the amount owed will be reduced to the fair market value of the items. Often times the value of an vehicle depreciates much faster than the payments are made. For example, let's consider that an individual purchased a vehicle in July 2010 for $15,000 dollars. The monthly car payment is $250 dollars. For ease of understanding we will exclude interest calculations in the example. In February of 2012 that individual will have paid $5,000 dollars towards the vehicle, leaving a remaining balance of $10,000. However, in the time the person has owned the vehicle it has depreciated due to normal use and age. So now, if the car is valued at $7,000 dollars the individual owes $3,000 dollars more than the value of the car. In a Chapter 13 proceeding it is possible to cram down the amount owed to the fair market value of the vehicle. Fair market value can be determined by appraisals or commonly accepted authorities, such as Kelley Blue Book values. It is important to note that where an individual has a substantial amount of equity in the vehicle and they owe less than what the vehicle is worth the individual will be required to pay the amount owed under the loan.

There are certain qualifications for cramming down the amount owed to the fair market value. The asset must be personal property guaranteed by a secured loan. This simply means that the creditor can take a vehicle used for personal use in the event the debtor defaults on payments. The most common example of a secured loan is a vehicle purchased from a dealership. Furthermore, when talking about vehicles for personal use, the loan must have been taken out more than 910 days prior to filing for bankruptcy to be eligible for cram down.
When a debt can be crammed down it is then rolled into the Chapter 13 reorganization plan and paid back over 36-60 months, depending on the plan you choose. This means that not only is the amount the individual pays back decreased, but the payments may still be lower as the individual will have more time to make payments. As with anything in a Chapter 13, at the end of the repayment plan the vehicle is yours and you will not own anything further on the vehicle.
In the example above we ignored interest for ease of calculation and understanding. However, when a debt is crammed down interest will still be calculated, though it will not be the amount of interest on the original loan. Missouri uses the formula approach to calculating interest on the loan. The court will first look at the national prime rate for credit worthy lenders. The court will then adjust that rate to account for the increased risk a non-payment with a debtor in bankruptcy and will account for duration of the plan, feasibility of the plan, and the type of security.
There are a few more things to consider concerning cram down. If there is a co-signer on the loan who is not a part of your bankruptcy, i.e. a friend, parent, or significant other, the cram down will not apply to that persons obligation. Using the example above, if our debtor had a co-signer that was not a part of his bankruptcy the debtor would only owe $7,000 dollars, however, the co-signer will still be responsible for the full 10,000 left on the loan. This means that creditors can take action to recover the $3,000 difference between the cram down and the original loan value from the co-signer.

If you still have questions about cram down contact a St. Louis Bankruptcy Attorney today.

New Exemption bill introduced to Missouri Legislators

Thu, 09 Feb 2012 08:00:00 EST

You find the new bill introduced by Senator Crowell here:

http://www.senate.mo.gov/12info/pdf-bill/intro/SB683.pdf

Among other things, the new bill will include earned income credits as being exempt from creditors. This can be helpful in filing for bankruptcy when the tax refund comes in and someone has to turn over a portion of the tax refund to the trustee. The Earned Income Tax Credit will be exempt. The remaining part of the tax refund might be exempt by applying other exemption or by planning the time of the bankruptcy filing.

Will Filing Bankruptcy Stop a Foreclosure?

Wed, 08 Feb 2012 08:00:00 EST

Many people who are considering bankruptcy may also be in the process of losing their home due to foreclosure. In fact, oftentimes, these two situations are closely related. Yet, depending upon your circumstances, you could actually be able to save your home from foreclosure – or at least delay the process - by filing for bankruptcy. This could be tricky, however, and it is highly advised that you seek the advice of an attorney before moving forward.

How the Procedure Works
First, it is important to understand the primary types of bankruptcy and how each can affect your debt repayment obligations. The two types of bankruptcy that are filed by individuals include Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy will completely cancel all of the mortgage debt – including second mortgages and home equity loans – that you owe on. You want to differentiate two things here which is causing some headache to understand for most people. There are two different rights your mortgage company has. One is the right to demand payment for you that is based on your contract (the note) which says you pay to the mortgage company a monthly amount. You don’t have that obligation anymore after filing for bankruptcy. However, you also pledged your home as security to the bank in the case you don’t pay anymore (the mortgage). That’s means you can stop paying if you are willing to surrender (meaning giving it back to your mortgage lender) your home. If you want to keep it, you still need to continue paying on it. Chapter 7 bankruptcy will also usually eliminate your unsecured debt such as credit card balances.
By going with a Chapter 7 bankruptcy proceeding, you can keep your home, car and any other personal property you own. However, this filing may very well postpone foreclosure, giving you some additional time to find alternate living arrangements if you choose to surrender your home.
In many cases, the procedure for Chapter 7 bankruptcy takes around four months. You can remain in your home until the mortgage company forecloses on your home. Foreclosure will change title to your home, meaning someone else owns the home. In some instances, the procedure may take longer.
Chapter 13 Bankruptcy
If you opt for – and are eligible for – Chapter 13 bankruptcy, you may have a chance to save your home from foreclosure. This is especially true if you are able to make up missed mortgage payments in the future.
This bankruptcy option allows you to essentially restructure your existing debts. Therefore, with a Chapter 13, you may be able to make up for missed mortgage payments over a certain period of time. This time frame is in the St. Louis area (Eastern District of Missouri) three years. In the St. Louis Metro East area (Southern District of Illinois), you can stretch out the arrearage over up to 5 years.
Proceed With Caution
Many people will do whatever it takes in order to save their home. If, however, for some reason you are unable to keep up with the mortgage payments during the repayment time frame, your mortgage lender could ask the court to lift your bankruptcy protection and subsequently start the procedure of foreclosure again. Therefore, it is important to be sure that you will be able to afford the mortgage payments when putting together your debt repayment plan.
Before moving forward with any option, it is a good idea to speak with a qualified attorney who specializes in the area of bankruptcy. This way, you will be more assured of getting the correct advice that will work in your specific situation as well as that is in compliance with the laws in your particular state of residence. Our attorneys in the St. Louis and Metro East area offer a free consultation.

Bankruptcy and Debt

Wed, 01 Feb 2012 08:00:00 EST

Filing for bankruptcy can be a very personal and emotional decision. You are probably worried about a number of things, including what filing for bankruptcy will do to your credit now and in the future. Bankruptcy certainly will affect your credit, but it is important to realize that if you are currently considering bankruptcy, your credit is probably already suffering.
To truly understand the impact that debt, late payments, and even bankruptcy have on your credit it you first must understand how credit is calculated. Credit is calculated by evaluating five different areas, including: payment history, amounts owed, the length of your credit history, and new credit, and the types of credit you use. Your payment history accounts for about 35% of your credit score and the amounts owed accounts for about 30% of your credit score, for a combined total of about 65%. If you are currently making all of your minimum payments on time you are doing well in that area, but depending on how much debt you have your credit may still be lower than you would like. If you are not currently making your minimum payments on time and you owe a substantial amount of money your credit score is taking a hit in both areas. It is also important to remember that the types of credit your use affect your score, so if your debt is primarily consumer your credit score may be negatively affected.
Bankruptcy can eliminate your unsecure debt. This means that you will not owe any money and you will not continue to take negatively affect your credit every month with late or missed payments. In fact, filing for bankruptcy actually increases some individual's credit scores. Even for those individuals that do not see an immediate credit score increase, we can provide you with advice on how to begin to improve your credit after filing for bankruptcy.
Many people like to have a credit card available for emergencies or unexpected expenses. Others prefer to charge small amounts monthly, like gas, and then pay the balance in full each month. Whatever your preference, you are likely curious about obtaining credit after bankruptcy and when you are eligible for more credit. In many cases, after you file for bankruptcy, you will begin to get a number of unsolicited credit card offers in the mail. You should be wary of these offers. A lot of times, though they offer to help you rebuild your credit, these are not good offers. Many of those credit cards charge annual fees, usage fees, and have high interest rates and you will likely have a large balance right away. If you want to rebuild your credit you should ask your St. Louis Bankruptcy Attorney for a referral or make an appointment with your bank or credit union to discuss the best options for you.

Missouri Bankruptcy Exemptions

Wed, 11 Jan 2012 08:00:00 EST

In all bankruptcy proceedings certain assets are exempt from being taken, meaning that you are entitled to keep them. These assets are protected by exemptions and are defined by the state. Federal exemptions are not available in Missouri. These state exemptions are automatic and do not require any other qualification. For many of the exemptions listed below the amounts can be doubled if you are filing for bankruptcy with your spouse. However, it is important to note that there are some exceptions to doubling, including the homestead exemption. If you have questions specifically related to your case and want to talk to a bankruptcy attorney in the Metro East, Florissant, St. Charles, or St. Louis, please contact the A & L, Licker Law Firm, LLC.

Some of the most commonly applicable exemptions are as follows:

The Homestead Exemption. Individuals filing for bankruptcy may exempt up to $15,000 of real property or up to $5,000 of a mobile home. However, in some cases, where a husband and wife own real property in a tenancy by the entirety, the entire value of a home may be exempt if only one spouse is filing for bankruptcy. To have a tenancy by the entirety a husband and wife must own the property together and must have come into ownership of the property at the same time, by the same deed, and must share complete possession and ownership. Finally, to exempt the entire value of the home to the husband and wife must not have any other joint debt. It is important to note that medical bills are considered to be joint debt in the State of Missouri. This means that if one or both spouse have medical bills this exception does not apply, however, the standard $15,000 exemption still applies.

Motor Vehicle Exemptions. Individuals filing for bankruptcy may exempt up to $3,000, or $6,000 for married filers, for a motor vehicle. Married joint filers may each apply $3,000 to one car, or if you jointly own only one shared vehicle you may apply the full $6,000 exemption to one vehicle. An individual filer may not split the exemption among vehicles, regardless of value.

Household Goods Exemptions. Individuals filing for bankruptcy may exempt up to $3,000, or $6,000 for married filers, in household goods. Household goods include clothing, appliances, furnishings, books, animals, musical instruments, and crops.

Jewelry Exemptions. Individuals filing for bankruptcy may exempt up to $1,500, or $3,000 for married filers, for wedding rings. Much like motor vehicles, a married couple may split the $3,000 exemption between two rings, one belonging to each spouse. Here, the couple may not combine the individual exemptions to one ring owned by either spouse under any circumstance. In addition to wedding rings, individuals filing for bankruptcy may exempt any other jewelry up to $500, or $1,000 for married filers.

Burial Grounds Exemptions. Individuals filing for bankruptcy may exempt up to $100, or one acre, of burial grounds.
Retirement Accounts Exemptions. Individuals filing for bankruptcy may exempt certain tax exempt accounts, including: IRA's, 401(k)s, profit sharing, and money purchase plans. However, it is important to note, that certain life insurance policies and annuities may not be exempt if there is a current cash value.

Tools of Trade Exemptions. Individuals filing for bankruptcy may exempt up to $3000, or $6,000 for married filers, for professional books or tools of a trade. In some cases, a vehicle may fall under this designation, however, using a vehicle to commute to and from work does not qualify under this exemption.

Head of Household Exemption. An individual filing for bankruptcy may exempt any asset up to $1,250 if the filer provides a majority of the income for the household. If a filer qualifies for a head of household exemption he/she may also exempt $350 for each child under the age of 18 living in the household.

Wildcard Exemption. Individuals filing for bankruptcy may exempt any asset up to $600. This amount can be stacked on top of other exemptions to increase the exempt value of a particular asset or interest.

The Basics of the Bankruptcy Process

Wed, 11 Jan 2012 08:00:00 EST

The decision to file for bankruptcy is a very important and personal decision. If you are considering filing for bankruptcy there are a number of things to consider and a number of common pitfalls to avoid. Even after making the decision to file for bankruptcy you probably still have many questions about how the process works and how long it will be until the bankruptcy is final.

As bankruptcy law is quite complex, the first thing you will want to do is schedule a consultation with an attorney. At this consultation we will take some information, evaluate the case, and answer any questions you may have. At the end of the consultation we will advise you about whether you qualify to file for bankruptcy, and if so whether you should file for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Should you decide to retain A & L, Licker Law Firm, LLC, an attorney will go over a contract with you. At this time we will discuss attorney fees, possible payment plans, and all court fees. We will then go over the information you will need to provide. This will include creditor information and other personal information. It is advisable to begin working on this as soon as possible.

Once you have made your final payment on attorney fees and have submitted all of your information we will begin work on your case. From this time it may take a few weeks to work on your case. Once we have finished our work and you have paid at least half of the court fees we will then file your case.

The filing date is the most important date in a bankruptcy proceeding. As of the filing date creditors are legally barred from contacting you or trying to collect any money from you. Should creditors attempt to make contact or collect you should advise them that you have filed for bankruptcy and that you are represented by an attorney. You may give them your attorney's name and contact information.

Once you have filed your case it generally takes about four months until the bankruptcy is finalized. At some point you will be called before a trustee who oversees bankruptcy proceedings. This is a very short meeting where you will be asked a few questions. Should you retain counsel a lawyer will be at the meeting with you. When the bankruptcy is finalized you will be notified my mail that your debt has been discharged.

Discharge of Debt

Wed, 11 Jan 2012 08:00:00 EST

A debtor can obtain a discharge of debt by filing for bankruptcy. A discharge debt releases the individual's personal liability for many types of unsecured debts. A discharge prevents creditors from making any collections efforts upon the debtor including phone calls, letters, and threats.
Many types of unsecured debt can be discharged, including credit card debt, pay day loans, and medical bills. Howwever, there are other types of debt that cannot be discharged through bankruptcy. Some examples of debts that cannot be discharged are certain tax liabilities, student loans, financial responsibility for any injury caused while driving while intoxicated, child support, alimony, condo and subdivision fees, and debts to governmental agencies. Further, if there are existing liens on property they will not be discharged. The individual is still responsible for anything not discharged by the bankruptcy proceedings.
Discharge varies slightly between Chapter 7 and Chapter 13 filings. In a Chapter 7 Bankruptcy filing creditors are given notice of the proceedings and are given time to object. If no objections are received the debt is generally discharged automatically. The court also has certain requirements and regulations for discharge and may dismiss a case if the requirements are not met in a timely manner. Some of the requirements of the court are that the individual provide tax documents and complete a course on financial management. The court may also dismiss a case without discharge for any type of fraud, concealment, or failure to account for assets. In a Chapter 13 Bankruptcy discharge of debt occurs when the reorganization plan is paid in full. In Chapter 13 filings, like Chapter 11 filings, creditors are given the opportunity to object at the plan confirmation hearing. Creditors may not object to the discharge upon completion of payments under the plan.
It is important to note that in Chapter 7 proceedings the court may revoke a discharge under limited circumstances. The grounds for a revocation closely resemble the grounds of the court to dismiss the case without discharge, including fraud or concealment. In a Chapter 13 filing the court may revoke either confirmation or the discharge of the plan for fraud.
After your debt is discharged is it not legally enforceable and creditors are not legally allowed to attempt to collect a discharged debt. Should a creditor attempt to collect discharged debt a motion can be filed with the court to reopen the case to address tthe creditor. The court may sanction creditors for violating a discharge order.
Though a creditor may not attempt to collect a discharged debt, you may opt to voluntarily pay the amount that was discharged. It is imperative to note that this may only be done after a final order has been issued and the bankruptcy is complete. This most often occurs when the relationship between the parties is of personal importance to the individual, for example, if debts to family or friends were discharged.

Car loan - Bankruptcy Seminar, Free

Thu, 22 Dec 2011 08:00:00 EST

Car Financing Seminar

This is a free seminar to help solve car financing problems because of a low credit score.
Weiss Toyota, Prestige Financial, St. Louis Community Credit Union and the Licker Law Firm, will be present to answer all questions about how to optain a loan for car financing.

Attendance is limited, please register by either calling (314) 644-9501 or online at: http://www.thecreditrepairman.net/home/free-seminar-to-help-solve-car-financing-credit-problems.html

The seminar will be on Wednesday Evening, January 25, 2012, 6:30pm to 8:00pm at the Marriott Hotel, St. Louis Airport, 10700 Pear Tree Lane, St. Louis, MO 63134.

Free Seminar to Help Solve Car Financing Credit Problems.
Let Our All-Pro Team Show You How To Tag All The Bases As You Get Home SAFE And Score With A New or Pre-Owned Car!
1st Base – Jimmy Kavadas, The Credit Repairman
15-years of helping people with credit problems including bankruptcy. Testimonials at www.thecreditrepairman.net
2nd Base – Attorney Tobias Licker
A specialist in bankruptcy filing and client counseling.
A good man! www.lickerlawfirm.com
3rd Base – Christine Feeney – Prestige Financial
A lender that specializes in helping people with credit problems
and obtaining car financing now. https://www.gopfs.com/
HOME – St. Louis Community Credit Union – Leonard Riley, Vice President,
SLCCU helps consumers re-establish credit through an easy-to-understand program that helps with saving and paying on time. Welcome to the community.™ www.stlouiscommunity.com

Wage Garnishment in a Chapter 7 Bankruptcy

Tue, 20 Dec 2011 08:00:00 EST

A wage garnishment is one of the most devastating forms of collecting a debt. General creditors, such as credit cards and medical bills, can often take up to 25% of the debtor’s net pay. Debts owed to taxing authorities, such as the IRS, more may be taken. With many people living paycheck to paycheck, a wage garnishment can ruin a family budget.

Fortunately, the bankruptcy code provides an equally powerful countermeasure. Once a bankruptcy petition is filed, the powerful “automatic stay” goes into effect. The automatic stay is an order of the bankruptcy court for creditors to cease collection efforts on a debt. Since wage garnishments are collection efforts, wage garnishments must cease.

When the Stay Applies.

The stay takes effect when a Voluntary Petition is filed. When filed, a notice is sent to all creditors, informing them of the stay. The notice is usually sent out within a day or two of filing. Rather than waiting, a copy of the Notice can usually be obtained from the Clerk of the Bankruptcy Court where the case was filed. For St. Louis and St. Charles residents, the Bankruptcy Court is located downtown St. Louis.

It can then be hand delivered, faxed or electronically delivered to the creditor. Since an employee’s wages are being garnished, a copy should go to the employer’s HR department. If the debtor’s wages are presently being garnished, it is best to notify the creditor and the employer as soon as possible to stop the garnishment.

The stay remains in effect until the court orders otherwise. Most debts are discharged, so the wage garnishment will cease permanently. If the debt is not dischargeable, such as recent tax obligations, the creditor can reinstitute a wage garnishment. However, the debtor is at least provided breathing space to arrange a payment plan with that creditor.

If the nondischargeable debt is a tax obligation, the debtor may consider filing a Chapter 13 bankruptcy. In those cases, the debtor may pay back the tax obligation, without incurring further interest, through a repayment plan. Those in Missouri may consider consulting a St. Louis bankruptcy attorney for guidance.

When the Stay Does Not Apply.

The stay does not apply to domestic support obligations, i.e. child support and alimony payments. If a wage withholding order is in effect for either of these obligations, the bankruptcy court will not stay the order, and the support will continue to be deducted from the debtor’s wages.

Under the newer Bankruptcy Abuse Prevention Act, if a debtor had a previous bankruptcy dismissed within a year of commencing the present case, the stay will not be automatic. Thus, a garnishment could continue. However, the debtor may file a motion with to extend the stay.

Under the new law, a new petition filed within a year of dismissal of the earlier case is presumed to have been done in bad faith. This is only a presumption and the debtor may demonstrate facts to the court showing that the second filing is done in good faith.

A wage garnishment can be devastating, but there may be methods of stopping it. In Missouri, contacting a St. Charles bankruptcy attorney should be consulted as soon as possible.

A Brief Guide About the Chapter 7 Bankruptcy Means Tests

Thu, 15 Dec 2011 08:00:00 EST

Many Missouri residents wonder what the Chapter 7 bankruptcy test are and how they are used to determine eligibility for Chapter 7 bankruptcy relief. It turns out that the means tests used to determine Chapter 7 bankruptcy eligibility are a series of number-based tests that use information about a debtor's income and expenses to determine eligibility for Chapter 7 bankruptcy relief.

Here is a quick overview of how these means tests are used to determine eligibility for Chapter 7 bankruptcy relief.

--The first test determines if a debtor earns less than the median Missouri household income for a given year.

This is an important calculation because debtors who earn less than Missouri's state's household's average income are automatically eligible to file for Chapter 7 bankruptcy.

--If the debtor fails this first test, debtor's attorney must then determine the debtor's disposable income.

Bankruptcy courts determine debtor's disposable income because they use this information to determine if a debtor can afford to pay at least some of his debts. As a result, debtors who fail the first means test must provide information about how much they spend for different items such as childcare, charitable contributions and secured payments on car and house. Bankruptcy courts use this information to determine a debtor's disposable income by subtracting the sum of these expenditures from the debtor's monthly income.

If the remaining income is greater than what is allowed by the U.S. bankruptcy code for your household, you will not be allowed to file for Chapter 7 bankruptcy in most cases. Instead, you could be required to file for Chapter 13 bankruptcy reorganization that will require you to pay at least some of your debts back to your creditors.

The factors used to determine your household's income vary in Missouri because each city and county uses income guidelines that vary by population.

Therefore, if you need help understanding how the means tests are used to determine Chapter 7 bankruptcy process, please contact a St. Louis bankruptcy attorney or a St. Charles bankruptcy attorney for a free consultation.

Asking a St. Louis bankruptcy attorney or a St. Charles bankruptcy attorney for information about these means tests can help you determine if filing for Chapter 7 bankruptcy relief is worthwhile. This is the case because they can help you use the results of the means tests to help you develop the best way to handle your overwhelming debts.

To ask for your free consultation, please call us today for an appointment. We'd be happy to help you see how hiring a St. Louis bankruptcy attorney or a St. Charles bankruptcy attorney can help you use the U.S Bankruptcy Code's means tests to your advantage.

The Difference Between a Bankruptcy Discharge and a Reaffirmation Agreement

Wed, 14 Dec 2011 08:00:00 EST

Those who are considering bankruptcy oftentimes have questions regarding the various terminologies – as it can be confusing. When going through the bankruptcy process, it is important to understand the difference between a bankruptcy discharge and a reaffirmation agreement.

How Does a Bankruptcy Discharge Work?

Many people view bankruptcy because it discharges, or releases them from their debts. This discharge is a type of court order that allows people to have permanent relief for some or all of their debts. However, not all debts can be discharged.

Debts that cannot be discharged include:

• Some Taxes, including income taxes and property taxes if they are owed for specific time period

• Alimony and child support

• Certain student loans

• Court fines

• Criminal penalties

• Personal injury as a result of driving under the influence of alcohol or drugs.

• Property received as a result of fraud.

In addition, debts incurred after you file your bankruptcy are not able to be discharged.

Before filing your bankruptcy petition, make sure that you have ALL of your debts listed, as these are in general the only debts allowed to be considered for discharge. If you forgot to include a debt that you owe, you might not be able to add it later.

Your discharge could also be denied if it discovered that you hid assets or did other fraudulent or dishonest things in conjunction with your bankruptcy filing.

You also must be sure that you are in a position to comply with the terms of the bankruptcy because once you file a Chapter 7 bankruptcy and are discharged from your debts, you are not allowed to file another Chapter 7 for eight more years.

In addition, some of your creditors may hold a secured claim. The bank that holds the mortgage on your house or the loan company that has a lien on an auto that you own are the most likely creditors to do so. You are not required to pay the amount of the secured claim if that debt has been discharged. However, the creditor is still allowed to repossess the property.

How Does A Reaffirmation Agreement Work?

In certain situations, even though you have been discharged from having to pay a particular debt, you may still want to pay it. A good example is you car. You may need to keep your car in order to get to your job. Therefore, if you continue to pay your car loan, even if you have been discharged, it is less likely that the bank that holds the car loan will come and repossess your car.

In order to do so, however, you need to work out an agreement with that particular creditor. In doing so, you will be required to sign a reaffirmation agreement with the court. This states that you promise to pay that debt.

Reaffirmation agreements:

• Are not mandatory. Only you decide if you want to sign a reaffirmation agreement.

• Should not place you into another hard financial situation.

• Must only be signed if it benefits you in some way.

• May be canceled at any given time prior to the time that the court issues your discharge or within the 60 days following the time that the agreement is filed with the court – whichever option allows you the most time.

Although you may sign a reaffirmation agreement and agree to pay the negotiated debt to the creditor, the court must still hold a hearing in order to approve the agreement. (This is done in cases where you are not represented by an attorney).

If, after you sign a reaffirmation agreement, you are still unable to pay the debt, your debt balance reverts back to what it was before you claimed bankruptcy, as if you had never claimed bankruptcy at all. In this case, your creditor has the right to come and repossess the item, as well as take legal action against you.

It is also important to note that bankruptcy trustees are not qualified to give you legal advice. Only an attorney who is experienced in the matter of bankruptcy is truly qualified to provide you with this information.

How Debt Settlement Works

Tue, 13 Dec 2011 08:00:00 EST

If you are seeking to avoid bankruptcy and truly are attempting to pay off all of your debt, then a debt settlement program could be an option for you. Debt settlement companies typically can negotiate a settlement for you with your creditors and oftentimes this helps to reduce your debts to approximately half of their current amount.

How Debt Settlement Works

Once a debt settlement company has negotiated a settlement amount with your creditors, then you will need to begin sending in one monthly payment to the debt settlement company. At that point, the debt settlement company will forward the appropriate amount of money that is due every month to each of your creditors.

Some debt settlement companies will require that a type of escrow service or other account be set up. In addition, the debt settlement company will normally require that you transfer power of attorney to the creditors.

By transferring power of attorney, this will actually force your creditors to work directly with the debt settlement company. This should also stop your creditors and / or collection agencies from continuing to call you.

Debt Settlement Services

It will typically take up to two years in order for all of your debtors’ accounts to be settled. This time frame, however, will be based on a number of factors such as the affordability of payments, the number of creditors that you have, and who the creditors are.

Settlement with your creditors can cost money, too. For example, the debt settlement companies normally charge somewhere in the range of between 15 and 30 percent in fees for their services. However, your new payment to pay off your debts will still likely be approximately 25 percent less than the payment that would have originally been required by paying each of your creditors separately every month.

What is a Debt Management Program?

One of the primary differences between a debt settlement company and a debt management program is that through a debt management program, your creditors are paid on a regular monthly basis. In a debt settlement program, however, the creditors are no longer paid until you have built up enough money that will subsequently allow for the debt settlement company to start the negotiation procedures in order to move towards reducing the amount of your debt and to then secure a lump sum settlement.

A debt settlement program can also have a negative effect on your credit score and your credit rating, as versus a debt management program that – after a certain amount of time has passed – could actually have a positive effect on your credit score. In any case, however, either option may still be damaging to your overall credit worthiness.

There is one other alternative that could be an option. This is called a 60/60 settlement option whereby, under certain circumstances, you may be able to make an offer to repay at least 60 percent of your debt over the course of 60 months. It is important to discuss this option with an attorney that specializes in bankruptcy or debt settlement prior to moving forward though.

Debt Settlement Pros and Cons

Overall the pros and cons of debt settlement include the following:

Advantages

• Your payments are roughly half of what they were prior to debt settlement

• You cut the time until you are out of debt from approximately 18 years down to 5 years

• You will no longer be charged high credit card fees and interest charges

• You will likely no longer receive calls from collection agencies or your creditors

• It will decrease your overall amount of debt

Disadvantages

• It can harm your credit score

• You can no longer use your credit cards

• You must rebuild your credit

Lien Stripping in Chapter 13 without discharge

Sat, 03 Dec 2011 08:00:00 EST

First, what is a chapter 20? One files first a chapter 7 to discharge all unsecured debt. After receiving a discharge which takes around 4 months, one can file a chapter 13 if it benefits the debtor. One benefit has been pointed out by the U.S. Bankruptcy Appellate Panel (PAP) of the Eight Circuit, on August 29, 2011. The panel pointed out that a debtor can file a chapter 13 after a chapter 7 to strip a wholly unsecured junior lien (meaning a second or third mortgage, the first mortgage would be older and higher in rank and would be senior) from his residence. The word "residence" is important, it cannot be a rental property, in order to strip off (meaning wiping out or eliminating) the second lien, the debtor must live in the property. The fact that the debtor does not receive a discharge in the chapter 13 (because one would have wait 4 years from after filing the chapter 7 in order to receive another discharge in a chapter 13) does not bar the effective lien avoidance. What happens if the case gets dismissed? Then, the lien would not be avoided even though the adversary proceeding was approved by the court, the plan must complete in order to avoid the lien. What does it mean if the lien is avoided? Who pays for the mortgage (lien) that is stripped off? Nobody, the mortgage company has the loss. The holder of the avoided lien is an unsecured creditor.

Is Bankruptcy Right for You?

Fri, 02 Dec 2011 08:00:00 EST

Everyone has heard the term “bankruptcy,” and many believe that it is a simple matter of going before a judge and ridding themselves of all of their debt. This is not the case, and both traditional and newer laws may impact one’s decision to file.

Definition of Bankruptcy

At its core, bankruptcy is a legal filing, in which an individual declares that s/he does not have the money to pay existing debt. The filing is put before a federal judge, who then determines how the debt will be discharged (“wiped out”). For individuals, there are two types of bankruptcy – Chapter 7 and Chapter 13. Which chapter to select depends on some very specific factors.

Bankruptcy law has it beginnings at the federal level, and the types of filings and criteria are generally established by Congress. Each state has added to those federal laws, however, and now, all states have their own “rules of play” as well.

Chapter 7 Bankruptcy

The majority of people who cannot pay their debts file for Chapter 7, often known as the “wipe the slate clean” bankruptcy. Generally, there cannot be steady wages that provide any disposable income to the person, and the goal is to be rid of all “unsecured’ debt, such as credit card accounts, personal loans and medical bills. The debtor must prove, however, that s/he does not have the assets or the regular income to pay off even a portion of the amount owed. Social Security, insurance proceeds, and certain other types of income cannot be considered income.

The Chapter 7 filer must list all assets, including jewelry, artwork, stocks/bonds, and even pedigreed pets. (Note: Generally, clothing, furniture, basic personal items and an older or un-paid for car will not be considered assets). State law determines how much equity you may have in a newer car and home, in order to keep them. It is important not to “fudge” or hide assets, because “bankruptcy fraud” carries serious consequences.

If you have valuable assets, the judge can appoint a trustee to dispose of them for distribution to your creditors. If not, and you qualify for Chapter 7, your bankruptcy will be “discharged” by the judge, and you are free of the debt you have listed in your filing.

Chapter 13 Bankruptcy

If individuals have steady income, and an analysis of their income shows that they have some amount to pay on debt, they must file for Chapter 13. In this filing, the person keeps all of his/her assets and agrees to a repayment plan to creditors, usually amounting to less than the original debt amount and spread over 3-5 years. The debt is “discharged” once the final payment is made. Payments are usually made to a court-appointed trustee who in turn distributes the correct amounts to each creditor.

Important Changes to Federal Bankruptcy Law: In 2005, Congress passed a law intended to make bankruptcy filing more difficult. Important parts of that law are the following:

1.    Individuals must wait 8 years between two chapter 7 bankruptcies.
2.    Chapter 7 requires a “means test”, a formula for determining debt vs. income. If there is a specific amount of disposable income, the debtor will have to file for Chapter 13.
3.    Anyone filing for bankruptcy must receive a credit counseling certificate as a condition of the debt discharge. The certificate can be obtained through the internet or a phone consultation with an approved credit counseling agency.

In this economy, filing for bankruptcy is common and does not carry the “stigma” it once did. Your credit score will suffer, but there are specific things that you can do to repair that credit faster than you think. Clients who filed bankruptcy have often a better credit score one or two years later than they had before filing.

Who will benefit from filing Chapter 13?

Tue, 29 Nov 2011 08:00:00 EST

Filing for a Chapter 13, also known as a wage earner’s plan, can help those who have tried all the other means in ditching their outstanding debt. By filing for Chapter 13, the debtors can not only avoid foreclosure or repossessions but can also pay back a part of their debts over three to five years depending on their income.

Home at Risk

Most people file Chapter 13 bankruptcy to save their homes. If the foreclosure proceedings are completed before filing the bankruptcy proposal the debtor can still lose his home.

Chapter 13 could be particularly useful for debtors stuck in the following situations:

Those wanting to protect their assets from liquidation.
Those wishing to pay off secured debts.
Debtors unable to pay their monthly mortgage payments.
If a property lien far outweighs the value of your collateral.
If you are unable to discharge your debts by filing Chapter 7 bankruptcy.
Income is more than the prescribed limit for a Chapter 7.

By the Numbers

Anyone with regular income can file for Chapter 13 if unsecured and secured debts are not more than $336,900 and $1,010,650 respectively. Before filing for bankruptcy, you will need to complete a credit counseling course which can be done over the phone or through the internet. It takes approximately 30 minites to complete.

If you have filed for Chapter 7 earlier, you have to wait for at least 4 years before filing for Chapter 13 again in order to discharge your debt. However, in order to stop a foreclosure or repossession, you can get bankruptcy protection immediately.

As a first step for filing for Chapter 13, your attorney has to work out a repayment plan that includes all debts, which will then be submitted to the court.

The Advantages of Filing for Chapter 13

Filing Chapter 13 will make you immune to any legal action initiated against you.
You can remove your debt while retaining your personal property and real estate.
The debt can be paid off through an easy repayment plan based on your income.
You can be relieved from the intimidating calls from collection agencies and creditors.

It is recommended that you complete documentation under the guidance of a bankruptcy lawyer because any errors while filing may result in the rejection of your bankruptcy plan. Also, if you fail to attend trustee’s meetings or don’t submit required documents the court can prevent you from filing for Chapter 13 bankruptcy.

Advantages of Filing for Chapter 7 Bankruptcy

Tue, 29 Nov 2011 08:00:00 EST

Mounting debts and a slow economy have made the repayment of loans an uphill task for most debtors. Debts may spiral out of hand especially when faced with unforeseen incidences, such as the loss of a job or significant hospitalization. There are many options to bail you out of these tight spots, such as debt management plans, refinancing options, and bankruptcy. If assets are at rock bottom and there are no immediate solutions to make the loan payments, then bankruptcy could be the only choice for many.

Most consumers file for Chapter 7 bankruptcy which provides a fresh opportunity for the lenders as it wipes off a lion’s share of unsecured debt. Chapter 7 bankruptcy is an ideal option for those with limited or no income to pay off the severe debt they find themselves in.

There are many benefits of filing a Chapter 7 bankruptcy, which can be completed within 3-6 months from the filing date. Once the process is concluded, the debt will be removed and the lender can start afresh. This also provides the borrower with immunity from the nagging calls coming from creditors in their attempt to collect the debt as well as ending the possibilities of repossession and other foreclosure proceedings.

The Expected Process

Chapter 7 can be filed easily and typically includes the petition, schedule of debts, a statement of finances, and a listing of property and assets. Once accepted, a meeting with the trustee assigned to the case is conducted. Normally the cases are closed and the debt discharged (wiped out) within four months from the filing date. With the discharge, all debts are erased from credit history.

Chapter 7 bankruptcy is often the simplest option to eliminate debts. It is recommended to engage a lawyer who can ensure the bankruptcy papers are filled properly and the procedure of bankruptcy is completed swiftly.

A Powerful Teammate

Filing Chapter 7 bankruptcy also protects you from any collection procedures initiated by creditors, which in turn allows you to safeguard valuable possessions. Chapter 7 bankruptcy is thus designed to remove unsecured debts and is well suited for debtors with heavy unsecured debt. It’s a perfect option for those who have minimal properties, merchandise, and material objects of value but wish to retain essential items such as a car or home. Having a bankruptcy attorney by your side will help protect your financial position by showing the court chapter 7 bankruptcy is the most feasible option in combating your dues.

Everything You need to Know about Consumer Bankruptcy

Tue, 29 Nov 2011 08:00:00 EST

The Bankruptcy Code, which is listed in the United States Code as Title 11, has undergone various amendments since its enactment. The Bankruptcy Code ensures a well laid out legal procedure to deal with the debts of both individuals and businesses and forms a common federal law to govern all bankruptcy cases.

Typically a major part of the bankruptcy processes is carried out away from the courthouse and the debtor need to appear only once for the trustee’s meeting, which is not in a court room.

A Massive Number

The present bankruptcy law, which came into effect in 2005, offers ample opportunities for the general public to rebuild a credit score and ensure a stable future. In the current economic down turn, bankruptcy has become a common issue as people grapple with various issues such as massive layoffs, hospitalization expenses, or factors not in their control. In the current year, it is expected that over 1,500,000 Americans might be going through bankruptcy procedures.

The Honorable Thing

Though bankruptcy continues to be a dreadful choice for many, in reality it is a safe and legal way to start rebuilding credit history and begin again. People burdened with debts may find bankruptcy a superlative option for putting things back in order.

Advantages of Bankruptcy Filing

There are many advantages for those who have decided to file relief under the Bankruptcy Code. Filing for bankruptcy automatically relieves obligation from paying off debts such as credit cards, unsecured loans, hospital bills, and certain types of taxes. In most cases school loans are not dischargeable. Debtors also have the option of reorganizing car (and other types of loans secured by personal property) which the debtor wishes to keep after bankruptcy filing, making payments more manageable.

Another benefit of filing for bankruptcy is the automatic stay on law suits, repossessions, foreclosures, IRS seizures, etc., which also prevents creditors from harassing borrowers for debt collection. In the event of bankruptcy cases, the borrower also obtains a respite from eviction from a past mortgage. Lastly, you can prevent a driver’s license from being taken away for any unpaid bills resulting from a car accident.

Realistic Outcome

Often people end up in bankruptcy as they wait until foreclosure, which might leave them with little time to react and salvage the situation. If you have defaults of more than three months, or you have dues in the form of enormous medical bills, it is high time you take stock of your finances and avail professional help to set things in order. Timely intervention could go a long way in avoiding hard hitting measures such as bankruptcy, which may cost you your home!

Bankruptcy and Military Security Clearances

Wed, 23 Nov 2011 08:00:00 EST

Every member of the military must apply for a personal military security clearance. A person entering the military does not automatically receive a security clearance; it must be formally applied for and granted. Along with relevant personal data, the security clearance application requires specific disclosure about financial delinquencies, which include personal Chapter 7 and Chapter 13 bankruptcies occurring within the last seven years

It usually takes over a year from the time of security clearance application to successful granting of the security clearance. A good portion of this time may be the investigation stage of the approval process. During the investigation stage a credit check is performed. If a credit problem (such as bankruptcy) is discovered, further investigation is performed which may include requests for additional information and interviews. A PRSI, or Personal Subject Interview, is a regular part of the security clearance process which all applicants, regardless of credit history, must complete.

Grounds for denial of security clearance include being found to have serious, repeated financial problems or intentionally giving false statements regarding your finances. A security clearance is usually successfully granted if one can honestly present plausible reasons for financial problems in the past, including a bankruptcy. Financial mitigation of security concerns includes the following: behavior that happened long ago or infrequency; financial problems outside of one’s control, such as illness or loss of a job; good faith efforts to repay debts; evidence of successful counseling for past issues; and sudden affluence from a legal source of income such as an inheritance.

On the other hand, if there are repeated bankruptcies or ongoing financial problems that are not resolved a security clearance will most likely be denied. Often times it has been reported that underlying unacceptable actions in the eyes of the military, such as alcohol, drug or gambling problems, result in denial of the security clearance. In addition, frivolous or irresponsible spending and an unwillingness to pay debt (as well as fraudulent or illegal financial practices) can also be cause for denial of a security clearance.

Conclusion: If you are truthful and specific on your military security clearance application you will most likely not be denied a security clearance if the reasons that led you to bankruptcy have been eliminated.

Where Will I Live After the Bankruptcy?

Thu, 17 Nov 2011 08:00:00 EST

Plenty of my clients are worried about where they will live if they file for personal bankruptcy and hand over their (usually far under water) house. They've heard horror stories about people with bankruptcies being incapable of finding a place to rent. But things aren't as horrible as they fear.
My usual recommendation is to not check out the traditional large apartment complexes. Many will, indeed, decline applicants possessing a recent personal bankruptcy on their credit.
Much more inclined to rent are private landlords. They are usually far more concerned about you, the person, than about your credit. A good job and first and last month's rent are often sufficient to satisfy these landlords.
Another option is a "Lease with Option to Buy," or LWOB. A LWOB gives one who has filed for bankruptcy more than a few advantages. First, you are usually able to get a nicer condo, townhouse or single family home than what would ordinarily be available for rent. Second, the owner usually offers the LWOB because he or she can't sell the property and is actually desperate for cash flow. The owner often cares much less about poor credit and the bankruptcy. Third, you are locking in the possible purchase of the property at today's lower prices, rather than the price the property might sell for in 2-3 years. And finally, you are developing a considerable down payment if you decide to buy the property later.
"Lease with Option to Buy", or LWOB, typically involves three provisions in addition to the usual rental clauses:
1. You have the first right to buy the property at some point in the future (usually 2 or 3 years);
2. Some (or all) of the monthly rent payment is credited towards the purchase price if you decide to buy the property.
3. You can set the purchase price at the beginning of the lease.

Start Thinking About Bankruptcy Before You Are Broke

Thu, 17 Nov 2011 08:00:00 EST

Oftentimes folks wait until they've spent every last penny they have before contacting a lawyer regarding bankruptcy. This seems like common sense: You go broke and then you go bankrupt. However, this is not how you should go about it. There's a saying that goes, "Bankruptcy is not for people who are broke. Bankruptcy is a process that costs money and therefore you don't want to wait until you are without funds". Go figure!
So what is a person in financial trouble supposed to do exactly? This depends on your particular situation.

Situation 1: You still have some savings.
In this case the smart move is to take an honest look at your budget. Calculate the number of months you have left to burn through your cash while living and paying your ongoing bills and contact a bankruptcy lawyer a few months before the end of this period. If bankruptcy is recommended to you, the lawyer will be able to acquire his fee out of the funds you would have otherwise spent on bills and help you get a break from the ongoing need to pay debts. If the lawyer advises bankruptcy is not a good idea for you, then you can go about your regular business.

Situation 2: You have no savings, have significant debt, and now you lost your job that's been keeping you afloat. Unless you can rebound and find another job quickly, you need to start thinking about obtaining a source of funds to start the bankruptcy process. One source of funds may be your tax return. Another source is to borrow the money from a family member or a really close friend. After the bankruptcy case is closed you are not legally bound to pay them back, but that does not mean you can't pay them back if you choose.

Situation 3: Same as situation 2, however you don't have a big tax return coming or you can't ask any family members for the money to start the bankruptcy process.
All is not lost. You will have to stop paying your bills and start saving whatever you can for the bankruptcy. This can be done by taking a job or two at a much lower pay rate and save whatever you can for the bankruptcy. Some lawyers, like myself, recommend payment plans to help make this a bit easier, but you must finish the payment plan before your case can be filed. Why? This is true for all lawyers because continuing a payment plan after a Chapter 7 bankruptcy case is filed is illegal.

Conclusion: Do the smart thing and seek out a bankruptcy lawyer where you live to consult with before you run completely out of money. The attorney can give you free advice and help you decide if Chapter 7 or Chapter 13 bankruptcy is an option for you.