Filing Bankruptcy Is Not As Taboo As Yesteryear

In the past, the subject of bankruptcy was taboo. The subject of financial problems is something that people just don't want to talk about. It's probably a pride thing because financial problems make people feel like a failure. With what's happened to the economy over the last five years in the US, there is nothing to be embarrassed about filing bankruptcy. Last year alone, there were over 1.5 million Americans that had to file for bankruptcy. Those people have good reasons of why they have to file. Back in 2005, Congress amended the bankruptcy code because they felt too many people were abusing the bankruptcy system. No longer is this a case, people just don't have the money. Unemployment has been hovering right at about 9% for three years now. This number really doesn't show where the economy is. Many people have maybe gone back to work, but not at their regular job, instead they might be delivering pizzas so technically they are working. If their lifestyle was used to making $80,000 a year in their household and now they're cut back to making about $30,000 it's next to impossible to survive especially if they are buried under credit card debt. This is why filing Chapter 7 bankruptcy is the best exit strategy to alleviate this problem. It's nothing to be embarrassed about, in fact it would be better if people would discuss this more openly.

Trying to keep on paying the minimum payment on credit card bills will only dig a deeper hole for the individual. The interest rates on credit cards are astronomical and continued to mount when paying a small amount each month. Filing Chapter 7 bankruptcy will eliminate all unsecured bills. The list includes, credit cards, medical bills, payday loans and personal loans. It just about covers everything. Facing the problem head-on by filing bankruptcy will stop further damage and allow the debtor to breathe freely and live again. Many people tell their bankruptcy attorney of the feeling of freedom after they get their bankruptcy discharge. Filing for bankruptcy is not for everyone as every case is completely different and that's why it's important to seek the help from a bankruptcy attorney to evaluate the debtor's individual circumstances.

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Top bankruptcy filing myths

Since the launch of the Internet, there has been a wealth of information posted about filing bankruptcy. There are our blog websites, lawyer websites, bankruptcy court websites and general “how to” information websites. With all this information to sort through, someone filing for bankruptcy needs to be able to decipher between what's true and what's a myth. The best way to make sure the information you are getting is correct, is to cross reference it with different content of reliable sources. After gathering answers to all your bankruptcy questions, make a list and take these with you and talk with a bankruptcy attorney. Sometimes the information might be true, but not be applicable to the individual’s bankruptcy situation.

Many of the bankruptcy myths that are swirling around deter people from filing bankruptcy. This makes you wonder if these myths were created and put out there by the credit industry. They are the only ones that benefit from people staying away from a bankruptcy filing. The credit industry would like the debtors to believe that if they file for bankruptcy the court will come with a big truck and load up all of their belongings to sell them at an auction, leaving them penniless and homeless. This is probably the biggest myth out there. In fact, it's completely the opposite. When an individual enters into a bankruptcy filing, their bankruptcy attorney will select exemption laws to protect as much property as possible. In most Chapter 7 bankruptcy filing, rarely does the debtor lose any property at all. Typically, the property that's given up in a bankruptcy filing is voluntary. Most of that property is secured property like an automobile or a home, where the debtor can no longer afford to keep making the payments and want to surrender it back to the creditor.

File Bankruptcy And Keep Your Stuff

When someone is considering filing for bankruptcy one of the first questions they have is “Can I keep my stuff”? This is an important question that must be discussed with the expertise of their bankruptcy attorney since this can vary from state to state depending on the exemption laws that apply. Exemptions are basically provisions in federal bankruptcy laws as well as state regulations that allow a debtor to protect assets from being included in their Chapter 7 bankruptcy filing. Assets that can be protected include property such as their home, their car, tools of the trade required for one’s business, and their 401(k). In addition, veteran’s benefits, unemployment compensation, worker’s compensation, group life policies, and accident or disability benefits may also be exempt.

The bankruptcy laws can be complicated but an experienced bankruptcy attorney in your area will know the state’s exemption laws as well as federal exemption allowances and be able to choose accordingly to allow the debtor to keep the maximum amount of property and possessions. If the debtor has a lien on their property and they are current on the payments and can afford to continue to make the payments, then during the bankruptcy the attorney can have the debtor reaffirm the debt and they will be able to retain the property. In our current economy, the last thing a trustee wants to do is take someone’s property if it cannot be liquidated easily. Many times the cost and time of selling the property will outweigh the amount of money they would get to divide among the creditors. 

The bankruptcy court trustee’s job is to make sure that the creditors receive as much money as possible from the bankruptcy. However, a bankruptcy attorney’s job is to make sure that the debtor keeps as much of their assets as possible. This is why it is imperative to seek the advice of an experienced bankruptcy attorney. Many people have realized that filing for bankruptcy may be the most responsible way to alleviate debt without losing everything they own.

Can I Qualify To File Chapter 7 Bankruptcy?

Since the bankruptcy code change back in 2005 it become more complicated to qualify to file Chapter 7 bankruptcy. In the past, when someone thought of filing bankruptcy they thought of Chapter 7. Now it's not that easy. People that are buried under a pile of credit card bills may not qualify to file Chapter 7 bankruptcy unlike before. Prior to 2005, Congress felt that too many Americans were abusing the bankruptcy system and they needed to make changes to fix that. When you hear the other side of the coin, it was more about the lobbying going on from the credit industry to make the changes to the bankruptcy code and not abusive bankruptcy filings.

Now, if a person wants to file for bankruptcy under Chapter 7 they will have to pass a means test. Basically, the means test uses the individual’s income, expenses and compares it to the median income chart for the individual state. How it works is the debtor is required to show the last six months income for their household, then divide it by six and multiply that by 12. The look back period that the court uses is the month prior to filing for bankruptcy and back six months. This will give the average income for the year for the debtor. Next, the debtor will compare their average household income against the median income chart for the individual's state. If the individual filing for bankruptcy falls under this number they have passed the first step of the means test. This still doesn't mean they qualified. Now the debtor will be required to fill out a monthly household expense report. After adding up all the bills for the month they need to deduct this amount from the average monthly income. If the debtor has more than $170 left over at the end of the month they will not qualify to file Chapter 7 bankruptcy.

Why Do I Need A Bankruptcy Attorney To File Chapter 7?

It was no surprise in 2010 to hear that over 1.5 million Americans had to file for bankruptcy to eliminate their debt. This year the number of those filing for bankruptcy has dropped a few points even though the economy has not rebounded. Many bankruptcy attorneys were starting to believe that it might be a money thing where the individuals are so broke they can't even file for bankruptcy. Over the last 10 years there has been a huge growth across the nation of the do-it-yourself business industry. The idea of saving money instead of hiring a professional entices many, especially the ones that are financially strapped. The bankruptcy industry is no different as many Internet companies have popped up advertising do-it-yourself bankruptcy. The typical ad will say why spend the money on hiring a bankruptcy attorney, when you can file a do-it-yourself bankruptcy. It is true that all Americans have a legal right to represent themselves in a court of law. What most people don't understand is there are  many landmines for the do-it-yourselves filing bankruptcy. They weren't put there with the intent of making it harder on a person filing for bankruptcy representing themselves, but were added back in 2005 by Congress to prevent abusive bankruptcy filing.

First of all, the individual filing for bankruptcy will have to decide on which chapter they are filing. If an individual hires a paralegal to help them or a do-it-yourself service, even though they might have that knowledge they won't be able to share it with the debtor as that is practicing law. Next, the individual will be required to qualify to file Chapter 7 bankruptcy under a means test. The means test seems simple, but any mistake could send the debtor into an unnecessary Chapter 13 bankruptcy. A bankruptcy attorney will know how to navigate the complexities of the different issues that the individual filing for bankruptcy might run into. When considering weighing the benefits between saving a few thousand dollars and possibly losing a lot more in property versus having the peace of mind by having an expert bankruptcy attorney defending you. All the debtor needs to do is look at the amount of debt they are trying to discharge and compare that to the price they would pay a bankruptcy attorney, it will suddenly all makes sense as they see the value.

Living Like A Celebrity Can End Up In Bankruptcy

Americans these days are fascinated with the lives of celebrities and rock stars. They spend their lives trying to imitate these lifestyles even though they can't afford them. Today in the US most Americans are living way beyond their means with the use of credit cards. Having a credit card with an available balance on it has allowed people to buy stuff they don't need just because a celebrity is using or wearing it. The ad guys on Madison Ave. have done their job selling the products at the expense of forcing many Americans into filing bankruptcy.

When watching the ads it seems these actors have perfect lives. Who wouldn't want that? The credit and the ad industry make people believe that this lifestyle is affordable and anyone can do it even on their salary. The terrible news is the salary of a housekeeper isn't enough money to put food on the table for their family and by a designer purse. Not everyone can afford a Hawaiian vacation, but you can if you use your Visa card. Anyways, that's what they want you to believe. At some point in time, the creditor will want their money and depending on how far in debt these families get, will decide on whether or not they can pay it back or if they will have to file for bankruptcy. 

Before filing bankruptcy most Americans will try to continue paying down the American dream. The typical person in today's society doesn't like the idea of losing their charging privileges. Even though they should be considering filing for bankruptcy, the creditors talk them in to sending off another minimum payment to keep that credit card open. The credit card industry wants consumers to believe that if they file for bankruptcy, they will never see another credit card again. In reality, this is not such a bad thing, even though it's still not true. Usually, shortly after a debtor wipes out their debt in a Chapter 7 bankruptcy they start getting the bombardment of credit card offers. Creditors know after a person exits bankruptcy, many are virtually debt-free and as long as they are employed they could be a good risk.

Filing bankruptcy to stop an eviction

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In the past, when the family got behind on their rent and was facing an eviction many times they would file for bankruptcy to buy themselves some time so they didn't end up on the street. Many landlords used to call these people professional tenants, using whatever means possible to not pay rent. With the changes to the bankruptcy code in 2005, this is no longer a problem for the landlords that are trying to evict a tenant. Now, if a tenant decides to file for bankruptcy to avoid eviction, as long as the landlord had begun the process to evict the tenant, they will be able to continue on with the eviction as planned. Not even a bankruptcy attorney will be able to stop it by trying to file some fancy motion. Anti-creditor groups feel that this is one of the harshest changes to the bankruptcy code that involves consumers.

This blocks the group of individuals that use a bankruptcy filing as a way to stop collection or eviction efforts. This does not stop an individual that is  down on their luck and is filing for bankruptcy and can't afford to pay their rent during the process. If a tenant is already in the process of filing bankruptcy when the landlord begins the eviction process, the automatic stay will block the landlord's efforts. If the landlord wants to continue on with the eviction, they will have to file a motion for relief of stay with the bankruptcy court to allow them to kick the tenant out of their property. This will take a little bit of time to go through the whole process. Any time an individual is filing bankruptcy, they are protected by the automatic stay stopping all collection and legal action against the debtor. With the economy we are in now this law will probably be used extensively as many are having trouble making ends meet in paying their rent. Experts are predicting that the slowdown in 2011 is the calm before the storm. Many feel that 2012 will ramp up and be another record year for those filing bankruptcy.