What Is Bankruptcy: Five Things You Might Not Know

Posted on January 23, 2014January 23, 2014 by Ted Greene

What Is Bankruptcy Really? Five Things You Didn’t Know About This Option

We’ve all heard of bankruptcy, whether we’ve seen it in a movie or read about in the newspapers. Bankruptcy is a means to resolve the issue of a debtor ETF, personal finance, bankruptcy, personal debt, being unable to repay his or her debts. You may not know anyone who’s been through the bankruptcy process, but the fact of the matter is it can happen to anyone. Here are some things about filing for bankruptcy that you may not have known.

1. You don’t necessarily need to give away your assets

Not all types of bankruptcy involve giving away your assets like most people believe. One type of bankruptcy lets you keep them, specifically Chapter 13 bankruptcy. Chapter 13 bankruptcy involves creating a repayment plan so that you’ll be able to repay your creditors without giving up the assets you require.

2. Bankruptcy does not release you from all debt obligations

There are certain types of debt that are impossible to discharge through bankruptcy. The most commonly known type is student loan debt, but those who’ve been through divorces also won’t be able to discharge payments to spouses or children of spouses. Some types of money owed to the government, like fines or recent back taxes, also must be paid regardless of bankruptcy status.

3. Filing for bankruptcy requires credit counseling

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act requires everyone filing for bankruptcy to receive credit counseling. The organization providing the counseling must be approved by the government, and individuals must have taken part in such counseling in the six months before they file for bankruptcy. For those dealing with bankruptcy, bankruptcy specialists like us might be able to help.

4. Getting credit after a bankruptcy won’t be as difficult as you think

Most people believe getting credit after filing for bankruptcy is nearly impossible. As it turns out, many lenders will let you take out loans just six months after a bankruptcy if a down payment is provided, and credit cards companies are generally also willing to issue cards with which you can rebuild your credit after you file. The reason for this is that once you file for bankruptcy, you won’t be able to file again for four to seven years.

5. You can repay some of your debt, but not all types of bankruptcies require it

It’s not necessary to repay any of your debt through Chapter 7 bankruptcy, though it requires you to liquidate all your assets. With Chapter 13 bankruptcy, however, you’re required to repay some of your debt.

Most people who live within their means and don’t need to borrow enormous amounts of money with a risk of losing all or part of their income will not need to worry about bankruptcy. But for those with no other options, bankruptcy can be a means to solve the problem with advantages and disadvantages that many people aren’t aware of.

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Chapter 7 vs. Chapter 13

Posted on January 21, 2014January 21, 2014 by Ted Greene

Which Chapter Does Your Bankruptcy Belong In?

In 2005, a major change was made to how Chapter 7 Bankruptcy is processed in the United States. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 instituted a means test to determine whether an individual should file for Chapter 7 or Chapter 13 as well as some other new requirements. Chapter 11 is typically for small businesses and will not be addressed in this article. Many may dispute how much abuse has been prevented and just how consumers are being protected by this law. Anyway, let us now focus on the means test requirement.

Test Your Means, Does It Amount to More Than a Hill of Beans?

The means test will determine whether you are eligible for Chapter 7 or 13. If you make more than the median income for your state, California’s median income for a single earner is $48,415, then you will have to file for Chapter 13. Why is this important? Chapter 7 liquidates your debts quickly whereas a Chapter 13 filing entails a 3-5 year payment plan with a strict budget. More on that in a moment.

What Does Chapter 7 Bankruptcy Mean to Me?

Chapter 7 bankruptcy is the most common form filed and we are experts on it here at the Law Offices of Ted A. Greene. Many of our clients ask what Chapter 7 requires. We do not need all of this information in the first consultation but as we work with you we will require:

A complete list of all creditors as well as the specific amounts and the nature of each claim
The origin, amount, and frequency of our client’s income
Last 2 years of most recent tax returns
Previous 6 months of bank statements
A list of our client’s property and all assets
A detailed breakdown of each client’s monthly living expenses including: food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Regardless of whether a married person is filing jointly or individually, the court requires this information for their spouse as well to evaluate the financial position of our client’s household. The state of California has its own exemption systems as allowed by federal law and requires each debtor filing for bankruptcy to use one of two schedules. We won’t get into the specifics of the property exemptions allowed in this article but it is extensive. Once you have properly filed for Chapter 7 bankruptcy your debts can be resolved in as little as 4-6 months.

Why Would I File Chapter 13?

The main reason many people file for Chapter 13 is because they make too much money to qualify for Chapter 7. An income that is higher than $48,415 for a single earner in California will typically push you over into Chapter 13. There are some deductions that can keep you in a Chapter 7 if you are slightly over the median income but we won’t address their complicated nature here.

The main feature of Chapter 13 is the repayment plan. This plan allows you to address your debts in payments as negotiated by the bankruptcy trustee. The plan is proposed in “good faith” with the full intention of completing the payments. The Chapter 13 repayment plan may take 3-5 years to complete. Many creditors owed for unsecured debts may receive as much as they would have in Chapter 7 bankruptcy, meaning nothing. If one is unable to complete a payment plan on Chapter 13, a Chapter 7 may be allowed after the failure of the payment plan. Many may use an emergency Chapter 13 filing to stall a foreclosure long enough to complete a short sale. There are restrictions in Chapter 13 which will require one to seek approval before applying for substantial new debt such as a car loan. While we do not process Chapter 13 filings here at the Law Offices of Ted A. Greene, we can refer you to someone who is quite capable.

What Should I Do?

If you are a California resident and are tired of creditors harassing you, tired of feeling overwhelmed and under-informed, or you just want to know what your options are please contact me, Ted A. Greene, today at 916.442.6400. Either a member of my experienced staff or I will talk to you. Your initial consultation will cost you nothing more than your time. You can also complete the form on our Contact Us page and we will call you. I personally guarantee I can process your Chapter 7 bankruptcy for less than any other attorney in the Sacramento metropolitan area, come in, sit down, and we can help you chart a better financial future for you and yours.

Five steps to repair your credit history

Posted on January 21, 2014January 21, 2014 by Ted Greene

If you feel like you`re overwhelmed by a mountain of credit debt, you’re not alone. With today`s economic recession, families all over the country are increasingly swamped by credit obligations that they can’t meet.

Whatever the reason for their financial distress, millions of people are in far more credit debt than they ever imagined possible.
If your credit score has taken a nosedive and you’d like to get it back on the road to recovery, here are five tips to help you get started on the right path.

1) Stay on top of your credit score. This means getting a copy of your credit report and making sure that there are no erroneous charges or late penalties listed. If you find that your credit report is mistaken in any of its figures, contact your credit bureau and your lenders to get the erroneous charges corrected.
2) Use a credit counseling service. This is one of the most important things you can do to repair your credit debt. A credit counseling service professional can give you the advice you need to manage your credit and become debt free. Credit counseling services operate by consolidating your monthly debt into one single bare minimum payment. In doing this, they work closely with credit card companies so that you can pay a reduced payment every month. In addition, if they know that you`re working with a counseling service, some creditors might be willing to reduce the amount you owe by as much as half, in return for a lump sum payment.
Credit counseling services charge a very small fee every month, but their services are absolutely invaluable when it comes to helping you get out from underneath a mountain of debt.
3) Stop using your credit cards. If you use a credit counseling service, this is the first thing that they`ll tell you to do. By eliminating credit cards from your life, you’ll be starting off with a clean slate and you’ll prevent yourself from incurring further debt.
4) Pay as much as you can afford on your cards each month. If you`re left with any disposable income at all at the end of the month, try your best to pay more than the minimum payment on as many cards as you can. Otherwise, it could take years, or even decades, to completely pay off the cards.
5) Make sure you pay all of your bills on time. Whether you`re paying through a credit counseling service or handling your remaining bills on your own, it`s crucial to pay everything on time every month. If you pay late, you`ll not only accrue late charges, but you’ll also be whittling away at that good credit score that you want to maintain. Even one late payment can damage your score, so budget yourself carefully so that you can pay on time from now on.
Whether you`re looking at debt relief or considering other resources to help you get out of debt, you`ll want to get advice from a reputable professional. By taking these important steps, you`ll eventually find yourself debt free and ready to face a better financial future.

Bankruptcy Signs

Posted on January 21, 2014January 21, 2014 by Ted Greene

There can be numerous signs of a person heading towards bankruptcy, but when times get tough, we may be too blindsided at the moment to realize it. Here are some signs that you may be heading to bankruptcy.

Inadequate coverage for your health. Medical bills are one in the five factors of bankruptcies.
Maxing out your credit cards or as some say, “wining and dining on a beer budget”. Credit card debt is one of the biggest reasons people go into bankruptcy. Sometimes, we may end up overspending and not realize it — or realize it but fail to act upon it. A good tip is to use no more than 30-40% of your available credit. This provides help in case you run into situations such as a job loss, illness, divorce, or any other threats to your income.
Taking out more than you can handle on your home equity loan. Talk to a friend or a family member before taking out a credit line you’re your home. Will you be able to pay it off? Is it important? Sometimes it’s better to keep that credit line only for home improvements. If you decide to pull it out, make sure you can make your payments comfortably.
No backups. If you’re living from paycheck to paycheck with little to no savings for emergencies, you can be at a higher risk for bankruptcy.
Only paying the minimum on your credit cards. Because paying off your credit cards—while paying the minimum—can take 20-30 years, make sure what you’re buying now is really worth 20-30 years of paying it off.
Co-signing troubles. Careful who you co-sign for, especially if you know that they aren’t so good with their own financials. It’s common factor for many bankruptcies when the person you sign for defaults, and you are held responsible by their lender.
Receiving a tax lien or your home becomes foreclosed because you fail to make payments on time.

Manage Your Credit – The Do’s and Don’ts!

Posted on January 21, 2014January 21, 2014 by Ted Greene

Credit management is a plus!

Credit scores affect everyone and everything! Everyone’s got to have a credit score to survive.
Whether you plan to purchase a car, rent an apartment, or want to pick up a cell phone, having credit in your name is part of being approved.
Here’s a list of what to do’s and what to don’ts!
DO:

Open a bank account – it doesn’t appear on your credit report, but bank account numbers are usually asked for in a credit application.
Apply for a credit card – to avoid being denied, only apply for credit cards with the requirements you are likely to meet. A simple department store or gas credit card can be easier to obtain than a bank issued card because they don’t revolve.
- If you have bad credit already, apply for a secured card – if it’s hard to get qualified, you can apply for a secure card. A secure card has a credit limit based on the deposit you make. A secure credit card works the same way a regular credit card does.
Charge purchases and make payments on time – this shows responsibility and can help you open new credit accounts if you need it. Remember that a $5000 credit limit is not an additional income!

DO NOT:

Overdraw your bank account – you will be charged with heavy fees and could damage a good reference.
Avoid missed / late payments – your credit rating will be damaged!
Cash advances – avoid cash advances! They’re expensive, and you can be charged a hefty upfront fee of 2-4%, plus the high interest rates. Also, there are no grace periods for a cash advance.

More Information:

If you’ve been denied credit, be sure to ask why. Reasons can include anything from income, employment, or credit history. It’s important to know because if you are denied multiple times on your credit report, you can be viewed as a negative to a potential creditor. View your credit history and if there are mistakes, be sure to have corrections made.

Credit Card Debt

Posted on January 21, 2014January 21, 2014 by Ted Greene

In 2012 Equifax reported that the Sacramento region’s credit card debt had fallen 1.4 percent. This comes as no surprise as many people decide to be more frugal and responsible with their money in tougher economic times.

“In places where the housing bust was the worst, such as Florida, California and Nevada, and in places like Detroit and Ohio where the recession was particularly deep because of a dependence on manufacturing, consumers are continuing to be prudent about using credit,” said Trey Loughran, president of the personal solutions unit at Equifax.

On average a household in Sacramento carries nearly $5,000 in credit card debt per household. This is lower than other cities in the state such as Los Angeles, San Diego, and San Francisco. Those three cities’ averages are much closer to $6,000 on average.

Equifax said that the total credit card debt of Sacramento fell from about $4.47 billion as of January 2012 to about $4.4 billion by January 2013. Contrast that to the $4.65 billion total regional credit card debt for January 2011. Our region’s numbers are piddling in comparison to larger cities. New York City, the number one city on the report led the country with a total credit card debt of $51.4 billion and Los Angeles came in a distant second at $35.3 billion.

If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 877.442.4577 or send me an email at tgreene@tedgreenelaw.com or just visit my website at TedGreeneLaw.com.

Ted Greene

California Attorney and

licensed Real Estate Broker

Wage Garnishment! How do I stop it?

Posted on January 21, 2014September 23, 2014 by Ted Greene

The worst of the worst imagine this: As if your situation wasn’t bad enough and things financially tense enough, to make matters worse now you have people taking money out of your hard-earned – hard worked for paycheck. This is called a wage garnishment, and it happens to thousands of Americans day after day.

If you get deep enough in debt due to unforeseen reasons, your creditors may get court orders to garnish your wages. By law they can take your money right out of your paycheck.

However, bankruptcy is a law driven initiative designed to stop creditor collection efforts, including wage garnishment. If your paycheck is getting taken away from you and you are keeping less and less in your wallet, you need to talk to an attorney about your legal options. The worst thing you can do is ignore the issue and turn the other way. Wage garnishments do not disappear, wage garnishments are only dismissed until the debt is paid or discharged in bankruptcy.Stop the bleeding and contact us today! Our team of paralegals and attorneys will help you put a stop to your wage garnishment.

Kecia K. Lawson
~Paralegal
The Law Offices of Ted A. Greene, Inc.

Student Loan Debt Is Driving Life Insurance Sales

Posted on January 21, 2014January 21, 2014 by Ted Greene

As a 20-something adult I recently read a blog posting about parents getting life insurance policies for their children. This is a very wise decision for parents that are cosigning for their children’s student loans. In my case my mother had a valid concern, a number of health issues just make it a good idea for me. What about those without the bodily ailments I possess? Why are their parents getting life insurance?

Student loan debt is a very special case in American law. In 2005 there was a change in how private student loan debt was handled. It is very difficult to have any student loan debt discharged, even through bankruptcy. Many universities are now charging exorbitant tuition that is limiting to many young career professionals’ finance. The bankruptcy limitations on student loans and the high cost of education make this kind of debt even harder to pay. For parents whose child has passed life is already miserable; on top of mourning their child they now also have 10s of thousands of dollars in unexpected debt. Life insurance policies just make sense.

There are two kinds of life insurance policies, term and whole life. Term is for a very specific timeframe and is rather inexpensive. Whole life is much more costly but can provide a good investment for a family’s primary breadwinner. The majority of parents’ student loan life insurance policies will most likely be term. Life insurance for an under-40 non-smoker can be as little as $10 a month dependent on the payout and health of the person.

According to some reports from 2011, nearly 51% of California students graduate with student loans with average debt being approximately $19,000. Should their child unexpectedly pass those California parents who cosigned for their loans are stuck with a large burden that they may not ever be able to pay or discharge. Here in Sacramento, CA the average home sale price for the first quarter of 2013 is still less than $200,000. At 10% or more of the average home’s value in today’s market, a dead child with student loan debt is bad news.

The situation is unlikely to change any time soon. The Obama administration has been gunning for private education for some time and many of the gaffes the private education industry have led to reform in policy and law at the collegiate level. While it seems a macabre recommendation, life insurance for a child whose parents have cosigned for student loans is probably the best bet for all involved.

-Matt Parsons

http://blog.brazencareerist.com/2013/03/21/overwhelming-student-debt-has-parents-getting-life-insurance-policies-on-their-kids/

http://money.cnn.com/2012/10/18/pf/college/student-loan-debt/index.html