chapter 13 Southern California Legal Group

Keeping a Credit Card Out of Bankruptcy

June 16, 2011 By Southern California Legal Group

Life without a credit card is complex, so it is no surprise that those contemplating bankruptcy often ask us whether they can “keep a credit card” out of their bankruptcy – in order to have access to emergency funds, for business expense purposes, for frequent flyer miles or other so-called loyalty rewards.

Not so fast

The bankruptcy and credit bureau systems are set up to prevent this strategy. The bankruptcy code provides that all creditors listed in a bankruptcy petition must receive written notice of the bankruptcy filing. Credit card companies and others who extend consumer credit receive regular reports from the three credit bureaus – and the credit bureaus will pick up the bankruptcy filing and report it to creditors, even those who were “left out” of the filing.

This results in the card being cancelled even though the debtor did not list it.

Credit cards after bankruptcy

Bottom line, there is no way to “keep a credit card out of a bankruptcy.” It is our clients’ experience that Chapter 7 debtors will receive credit card offers in the mail about six months after the date of filing (not the date of discharge), and Chapter 13 debtors will receive credit card offers about six months after the entry of their discharge (about five and a half years after the date of filing).

Interest rates will be higher due to the bankruptcy, and credit limits may be lower; however, the most significant consideration appears to be the debtor’s income, and what debt it can service.

While it is a myth that debtors can never get credit again, it is true that debtors should not expect to have credit cardsduring their bankruptcy case.

Filed Under: Bankruptcy Tagged With: bankruptcy process, chapter 13, chapter 7, credit card and bankruptcy, credit card debt, UNITED STATES BANKRUPTCY LAW

Foreclosures Heating Up: Chapter 13 Bankruptcy Might Be a Solution

May 9, 2011 By Southern California Legal Group

The March jump in foreclosure activity(35% over February) is seen by many as a sign that lenders are coming to grips with the documentation problems that led to the robo-signing scandal last fall. Meanwhile, private mortgage loan modifications were up significantly in March while the government’s Home Affordable Modification Program (HAMP) rates have not been updated as of today.

What to do if you can’t get a mortgage modification

Most people DO NOT successfully modify their mortgages. There are too many built-in incentives for mortgage companies to deny them. We’ve said before that those facing foreclosure might, under certain circumstances, be able to keep their homes through a Chapter 13 bankruptcy filing.

Where an individual is on the verge of losing their homes or vehicles, filing a Chapter 13 bankruptcy can halt the process. The court will issue an automatic stay and will then restructure the debts so that mortgage and car payments become more manageable.

By lowering the interest and reducing monthly payments, Chapter 13 bankruptcy provides a way to catch up on payments.

If you are behind in making your mortgage payments, but you still have income and can pay the monthly mortgage payment, a bankruptcy counseling session will help you determine whether Chapter 13 or some other strategy is in your interests. Call our offices today.

Filed Under: Real Estate News Tagged With: automatic stay, bankruptcy, chapter 13, foreclosure, HAMP modification, INSOLVENCY LAW, making houses affordable, RESTRUCTURING, statistics on HAMP success, UNITED STATES BANKRUPTCY LAW

Bankruptcy and Your Credit Score

April 19, 2011 By Southern California Legal Group

Last week the Daily Bulletin filed a story about rebuilding credit scores after bankruptcy. The article broke down the credit score by contributing factors as follows:

35% of a credit score reflects a payment history (missed payments, collections, bankruptcies, etc.),
35% is the amount of credit you have used compared to your available credit,
15% on how long you’ve had various accounts open,
10% is based on credit inquiries,
10% reflects the types of credit a consumer has, including mortgages, auto loans and revolving credit.

Rebuild credit or file for bankruptcy protection?

Many clients we see tell us they have delayed filing for bankruptcy protection because they don’t want it to hurt their credit scores. This USAA article demonstrates that if you’ve already missed payments or succumbed to a foreclosure the damage is already done.

1. Bankruptcy: 165 to 365 points, depending on number of delinquent accounts and your score when it’s reported. Scoring models usually give the most weight to payment history, and bankruptcy is included in that category.

2. Foreclosure: 105 to 160 points.

3. Short sale mortgage A lower sales price than outstanding balance was negotiated, but a delinquency was reported: 115-140 points.

4. Settling a credit card debt for less than is owed: 65 to 125 points.

5. 30-days late on a payment: 60 to 110 points.

6. Maxing out a credit card: 10 to 45 points.

Begin your journey to a good credit score with a bankruptcy counseling session

During your initial consultation with a bankruptcy attorney your financial situation will be evaluated and alternatives to bankruptcy considered. Next, the attorney will discuss the suitability and benefits of filing a Chapter 7 or Chapter 13 bankruptcy.

If you are an individual with relatively few assets and most of your debt is unsecured, filing a Chapter 7 bankruptcy would be in your best interests.

On the other hand, if you are a high income individual or have substantial assets which you want to protect or want to restructure the repayment of secured debts over time, a Chapter 13 bankruptcy would be more appropriate.

For more information on consumer bankruptcy, please visit the following links:

Chapter 7 Bankruptcy (Liquidation)
Chapter 13 Bankruptcy (Reorganization)

Filed Under: Bankruptcy Tagged With: bankruptcy, bankruptcy counseling, bankruptcy process, chapter 13, chapter 7, credit score, FICO score, foreclosure, short sale

What’s it Cost to File Bankruptcy in the Inland Empire?

March 30, 2011 By Southern California Legal Group

You’re surprised that it costs money to file for bankruptcy protection? Even if you attempt to file for yourself the courts must be paid.

Face it, no one WANTS to file for bankruptcy protection. But this reluctance is why so many people find they can’t afford to file – they’ve exhausted their resources trying to avoid it.

Money down the drain

We see people who’ve sent their hard-earned money down the drain with so-called debt relief programs; they or pursue a mortgage modification that doesn’t come through; they hire a litigator to fight their foreclosure; and many drain their savings or, worse yet, their retirement plans trying to maintain a lifestyle they can no longer afford.

Court Costs, Attorney’s Fees and Credit Counseling Counseling

At the time of this writing, get ready to pay $299.00 to the Clerk of the US Bankruptcy Court for the privilege of filing Chapter 7 bankruptcy. The attorney’s fee begins at $799 for Chapter 7 bankruptcy and from $1999 for a Chapter 13 bankruptcy depending on the complexity of your situation.

Prior to the petition being filed, the debtor is required to take a credit counseling class. Our firm works with credit counseling providers to assist clients complete this requirement, which can be completed online or over the telephone.You will also need to put approximately $100.00 to the side for a pre-filing credit counseling briefing and a post-filing personal financial management education course.

Begin with a free bankruptcy counseling session

It costs nothing to explore whether you’re a candidate for bankruptcy protection in a bankruptcy counseling session. If we determine that you are a candidate for bankruptcy, and you hire us, you’ll pay for the session and our services.

Since the passage of new bankruptcy legislation in years past, the laws have become so complex that it is virtually impossible for lawyers who do not handle bankruptcy cases, much less a paralegal or document preparer, to be able to properly analyze a debtor’s situation, recognize the applicable exemptions and handle the debtor’s case from petition through discharge.

In addition to completing the debtor’s petition, an experienced bankruptcy lawyer can advise which banks are quicker to freeze deposited funds when bankruptcy is filed or which lenders will immediately repossess your car despite timely payments by a debtor.

Filed Under: Bankruptcy, Uncategorized Tagged With: bankruptcy filing fees, chapter 13, chapter 7, court costs, united states bankruptcy code

Chapter 13 Bankruptcy: A Court-Supervised Mortgage Modification

March 29, 2011 By Southern California Legal Group

With 65% of applicants having their homes foreclosed upon instead of their mortgages modified, we suggest that homeowners consider Chapter 13 bankruptcy, a court-supervised way to keep their homes.

How Chapter 13 works for homeowners who are behind in making payments

Immediately upon filing for Chapter 13, wage garnishment ceases and creditors are relegated to receiving payments through the restructuring plan.

By lowering the interest and reducing monthly payments, Chapter 13 bankruptcy provides a way to catch up on payments.

The Power of the Federal Bankruptcy Code

Chapter 13 has the power of the Federal Bankruptcy Code behind it, and provides many advantages for people seeking debt relief.

Other types of debt consolidations don’t have any stay provisions. Without bankruptcy protection, there is no Court Order protecting you. We see reports in the news almost daily about mortgage companies and other creditors reneging on modification and debt relief offers and there is nothing the homeowner can do in response without the rule of law.

Filed Under: Chapter 13, Featured Articles Tagged With: automatic stay, bankruptcy counseling, bankruptcy process, chapter 13, foreclosure, HAMP modification, home in default, statistics on HAMP success, UNITED STATES BANKRUPTCY LAW

How Long does the Bankruptcy Process Take?

February 7, 2011 By Southern California Legal Group

We are often asked this question and always respond that it seems to take people longer to do what’s required of them than for the courts to do what’s required of them. But we’ll answer this question assuming you’ve done your part.

In a Chapter 7, you attend the 341(a) Meeting of the Creditors about a month after you file your bankruptcy petition. Your discharge is roughly two months afterwards.

In a Chapter 13, the 341(a) Meeting of the Creditors is held about 45 days after your bankruptcy petition is filed. The Confirmation hearing may be between 7 and 45 days after the 341(a) Meeting of the Creditors, depending on where your petition is filed. You receive the discharge after the plan is confirmed and you successfully make your payments over the three years.

The entire process begins with a free bankruptcy counseling session. Together, we’ll walk you through the options that apply for your situation, including alternatives to bankruptcy.

Filed Under: Bankruptcy Counseling Tagged With: bankruptcy counseling, bankruptcy court, bankruptcy process, chapter 13, chapter 7

Foreclose, Modify or Seek Bankruptcy Protection?

October 15, 2010 By Southern California Legal Group

Most people we talk to would like to be spared the agony of moving out of their existing home before they’re ready. If they can’t pay their existing mortgage some will apply for a modification before simply succumbing to the foreclosure process. Unfortunately, the federal Home Affordable Modification Program (HAMP) has failed more people than it has helped.

Only 35% of applicants receive a permanent modification

In a recent interview with HAMP officials, the Washington Post uncovered this statistic: roughly 1.3 million trial modifications have resulted in about 460,000 permanent modifications. This means only 35% of people applying for a modification have been helped.

Chapter 13 or Chapter 7 bankruptcy to avoid foreclosure

Bankruptcy is a way to keep your home without a modification. A bankruptcy attorney can help you navigate the options whether you file Chapter 13 or Chapter 7.

A Chapter 13 bankruptcy plan pays off most secured loans first, taxes, and co-signed debts second, and delays payment of unsecured debts to last. The majority of the initial Chapter 13 payments can be applied towards mortgage and automobile payment defaults. Then, your money goes to pay overdue taxes and co-signed debts. Credit cards and medical bills can be paid after these secured and other priority claims have been paid off. Credit counseling repayment plans, for instance, don’t have the power to delay payments to unsecured creditors without penalty or to give preferential treatment to your car or home finance companies.

As with Chapter 13, a Chapter 7 process begins with a petition filed in bankruptcy court that triggers an automatic stay (prohibiting further collection efforts of creditors). While the court appoints a trustee to liquidate assets to pay existing creditors, most assets are subject to existing liens or are be exempt from liquidation. I you do not want to lose certain assets in a Chapter 7 bankruptcy, you may be able to reaffirm certain assets, which keeps the property outside of the bankruptcy by entering into a reaffirmation agreement. While bankruptcy laws are federal statutes, a competent bankruptcy advisor will persuade the court to use state exemptions to maximize the assets you can protect from creditors.

There is no way to walk through the various ways bankruptcy protection can keep you in your current home here. That’s the reason to contact us for a bankruptcy counseling session.

Filed Under: Bankruptcy Counseling, Featured Articles Tagged With: bankruptcy counseling, chapter 13, chapter 7, foreclosure, HAMP modification, making houses affordable, statistics on HAMP success, strategy

The Means Test for Chapter 7 Bankruptcy

October 8, 2010 By Southern California Legal Group

When you’re in financial distress there’s a great deal of mis-information out there designed to sell you a so-called quick fix. Most of our clients don’t want to file for bankruptcy protection and they’ve done a fair amount of internet searching trying to figure out how to avoid doing so.

Bankruptcy counseling is the first step

As often as not, what people learn about bankruptcy online confuses them more than helping. That’s why we offer a free bankruptcy counseling session. We’ll listen to your goals, your fears and analyze your situation briefly to help you decide whether bankruptcy is your best option.

Chapter 7 does not require repayment of unsecured debt; the debts are simply wiped away. If you’re going to file for bankruptcy protection and you qualify for Chapter 7, it’s the simpler process and can help you re-launch your life immediately. However, Chapter 7 is not available to all debtors.

Chapter 13 is an option for individuals who either have too much disposable income to qualify for a Chapter 7 bankruptcy, or who wish to retain real or personal property with equity that creditors could otherwise reach.

Enter the means test

In truth, most of the time the decision of filing Chapter 7 or Chapter 13 is made for you by the MEANS TEST. The U.S. Trustee Program (a branch of the U.S. Department of Justice that is responsible for overseeing bankruptcy cases) provides more information on the “means test” – including links to income figures and other information you will need in order to determine eligibility for Chapter 7.

Under the “means test,” if your current monthly income is less than the median income in your state, you can file for bankruptcy under Chapter 7.

When you come to our offices for a bankruptcy counseling session, we’ll walk you through the options that apply for your situation. That’s what we’re here for.

Filed Under: Bankruptcy Counseling Tagged With: bankruptcy counseling, chapter 13, chapter 7, means test for bankruptcy, qualify for chapter 7 bankruptcy

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