Bankruptcy

Declaring Bankruptcy and Cosigning Loans

Cosigned loans serve an essential role in letting people who would otherwise be unable to obtain a loan to do so. If a person defaults on a cosigned loan, however, the cosigner can end up becoming liable for the entire amount of the loan. If you are experiencing financial difficulties and have a cosigned loan, speak with an experienced bankruptcy attorney who can help you determine your best course of action. The Effect of Defaulting on a Cosigned Loan Parents frequently cosign for children who have not yet established a line of credit. In some situations, however, adults sign for the loans of other adults, which can result in many complications. Often, if a person cannot make the required payments, the financial institution will pursue the cosigner for payments. To stop collection efforts from credit agencies, individuals in these situations often decide to file for bankruptcy, which results in an automatic stay that prevents a court from collecting on a debt. Even though filing for bankruptcy prevents creditors from pursuing the person who has taken out the loan, these protections do not apply to a cosigner.  As a result, credit collectors in these situations frequently pursue the loan’s cosigner. Chapter     Read More

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Financing the Bankruptcy Process with Your Tax Refund and Other Preparatory Steps

One of the largest obstacles that people face in filing for bankruptcy is deciding how to pay for the process. Many people argue that it is a Catch 22: If they were able to come up with several hundred or even a thousand dollars, they would not need to file for bankruptcy in the first place. In the last few years, numerous articles have been published about people paying for the bankruptcy process through the use of their tax refunds. The lesson to be gleaned from these articles is that there are numerous ways to pay for the bankruptcy process even if you cannot immediately think of one. Obtaining sufficient financial resources for the bankruptcy process is just one of the many complications for which a person who is interested in filing for bankruptcy must prepare. This article will review some of the important steps that should be performed in preparation of filing for bankruptcy. Stop Borrowing Money After you decide to file for bankruptcy, it is important to immediately stop borrowing money or using any credit cards. If you continue to do so, there is a risk that this might be construed as fraud and will result in additional     Read More

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Establishing Trusts When a Family has Debt

More than many other estate planning tools, trusts are capable of protecting a family’s assets for future generation. However, if either the person creating the trust or the beneficiary has debt, the trust will likely not be able to protect the assets from creditors. This means that if someone in the family files for bankruptcy, there is a risk that the trust could be seized for the repayment of debts. The Difference Between Revocable and Irrevocable Trusts The role of debt in the creation of a trust emphasizes the distinction between irrevocable and revocable trusts. A person who creates a revocable trust is in control of the trust until his or her death, which means that assets in this type of trust are considered property during the creator’s lifetime and will pass to beneficiaries after the creator’s death. Irrevocable trusts are not in control of the trust’s creator, but sometimes a “spendthrift”  provision can be added to the trust to protect it from creditor seizure if a beneficiary of the trust later files for bankruptcy. The Advantages of a Trust There are some distinct advantages to both irrevocable and revocable trusts. Irrevocable trusts offer the benefit of reducing estate tax,     Read More

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Common Questions About Creditor Harassment and Reporting After Bankruptcy

If you have to obtain a bankruptcy discharge after declaring either Chapter 7 or Chapter 13 bankruptcy, you are likely anxious to begin the process but are uncertain about how to proceed. While there are numerous areas in which questions arise, one of the most common types of questions that people who have to obtain bankruptcy discharge ask are about creditor harassment and credit reports. This article will provide some of the most commonly asked questions regarding these subjects. As always, while navigating the bankruptcy process, it can help significantly to rely on the assistance of a seasoned attorney who has helped others navigate the process. Question # 1: What if a Creditor Tries to Collect on a Discharged Debt? If a creditor contacts you after your debt has been discharged through bankruptcy, the best way to respond is to notify the creditor that the debt has been discharged. If the creditor contacts to you despite knowing the discharge has occurred, this is viewed as a serious violation of the Bankruptcy Code and likely violates the Fair Debt Collection Practices Act. As a result, a creditor can end up paying significant fines. Question # 2: What if You Forgot to     Read More

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Things Not to do if You are Debating Filing for Bankruptcy

People who are debating filing for bankruptcy frequently think about what they must do to prepare for their case. There are, however, several things that a person should not do when debating proceeding through the bankruptcy process. To provide a better understanding of what actions should not be taken during bankruptcy, this article will review five mistakes that you should avoid when navigating the bankruptcy process. Things to Avoid: Paying Off Creditors The purpose of bankruptcy is that it helps all or some of a person’s debts be dismissed. Certain unsecured debts including credit cards and medical bills are capable of being discharged through Chapter 7 bankruptcy, while a person who files for Chapter 13 bankruptcy will create a new payment plan. Things to Avoid: Maxing Out Credit Cards It might be tempting to make frivolous purchases prior to filing for bankruptcy, but courts will review all of a person’s financial documents. Many of these last minute bills will not be discharged through bankruptcy, which means that a person will still be required to pay the amount. Things to Avoid: Cashing Out Retirement Savings Workers under the age of 59½ are permitted to take a loan against their retirement accounts.     Read More

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Unexpected Benefits of Bankruptcy

Bankruptcy offers a person relief from the pursuit of creditors, but many people fail to realize that there actually a large number of unexpected benefits that arise from bankruptcy. This article will review some of the important but little known benefits that individuals are often able to realize through bankruptcy. Avoid Paying Former Spouses Some Debts Bankruptcy allows a person to discharge some or even all non-support obligations associated with a divorce, which can result in individuals saving a significant amount of money in some cases. Bankruptcy can Reduce the Impact of a Tax Lien In some situations, bankruptcy can result in tax liens being made either entirely or partially ineffective, which can save a person a significant amount of money. Change the Payment Terms for a Loan In many cases, people discover that declaring bankruptcy lets them reduce the monthly payments for a loan. In some cases, bankruptcy can even help a person escape a repayment plan altogether. Erase Judgment Liens on a House Bankruptcy, in many cases, allows a person to avoid judgment liens that have been placed on his or her house, which can prove to be particularly beneficial. Escape Unaffordable Payment Plans Bankruptcy often lets individuals     Read More

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Things to Avoid During the Bankruptcy Process

For people who have a significant amount of debt, filing bankruptcy is often a wise idea. The bankruptcy process not only lets a person eliminate debt, but in many cases a person is also able to obtain manageable payments and begin planning for a better future. Many people discover that a seasoned bankruptcy attorney is able to help them overcome their financial hardships and determine their available legal options. There are some important things, however, that a person should avoid while declaring bankruptcy. Avoid the Accumulation of New Debt Many people feel the temptation to obtain a new credit card or even personal loan during difficult financial times. There is a risk, however, that creditors might view any financial agreements entered shortly before bankruptcy as a sign that the individual did not intend to repay the amount. In some cases, a person might even be charged with fraud. As a result, individuals should avoid obtaining any type of new debt during this time. Avoid Moving or Transferring Assets As part of the bankruptcy process, a person must list all of his or her assets, which includes any assets that were recently disposed. Some people who recently sold or transferred assets     Read More

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Supreme Court Hears Bankruptcy Case

Investors who rely on safe harbor provisions in the Bankruptcy Code should begin to consider new methods to obtain some types of shelter. The United States Supreme Court in Merit Management Group LP v. FTI Consulting Incorporated recently ruled in a unanimous decision that one portion of the safe harbor provision under Section 546(e) does not prohibit a bankruptcy trustee from obtaining clawback transfers that are constructive fraudulent conveyances or preferences when a “financial institution” was acting in the role of an intermediary. This case is important to study because it has lasting implications for many people who file for bankruptcy. What are Clawback Protections? A clawback provision enables a trustee to look at a financial transaction prior to filing for bankruptcy to determine if he or she improperly transferred or gave away property that should have remained part of the estate. If it is determined that real estate was improperly transferred, a trustee is able to claw back the property by undoing the transaction and bringing that property back into the estate. If the property is not exempt, a trustee can sell the property for the benefit of creditors. There are two types of transactions that are covered by     Read More

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Steps to Quickly Improve Your Credit Score

For people who have struggled with debt and/or bankruptcy, their credit score plays an important role in helping them obtain a new car, mortgage, or even a new job. While one of the best steps that people with credit card problems can take is to obtain the assistance of a knowledgeable attorney, it is also good advice to understand the various available ways to improve your credit rating. Ask for a Credit Line Increase Rather Than a New Card Requesting an increase in your credit limit is a better idea than obtaining a new credit card because each time a person fills out an application for a new credit card, a company will check his or her credit. The mere presence of an error on a person’s credit report will not automatically weaken that person’s credit rating. Some of the major factors that can be associated with a person’s credit rating and impact his or her credit score include payment history, amount of debt, age of accounts, account mix, and history of credit applications. Create a Plan to Improve Your Credit Score If the information reflected in your credit report is accurate and you want to take plans to improve     Read More

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Bankruptcy and Co-Signed Loans

Co-signed loans arise when a lending institution does not feel that a person should have sole financial responsibility and requires a more creditworthy person to sign the loan agreement. If you can no longer afford your co-signed loan or are going through the bankruptcy process and are confused about how the process affects your loan, you likely feel confused and uncertain about how to proceed. One of the best steps that you can take in this situation is to obtain the assistance of a knowledgeable bankruptcy attorney. What to Expect if You Default on a Co-Signed Loan The role of a co-signer is to make sure that your loans are repaid. Parents co-sign loans for their children because young adults often have not yet built sufficient credit. In other situations, an adult will co-sign other adult’s loans, which can create complications if a default occurs. In these situations, the financial institution will often attempt to force the co-signer to take over payments. The Effect of Bankruptcy Filing for bankruptcy results in an automatic stay, which is a type of court order directing creditors to stop attempting to collect debts from a person. As a result, declaring bankruptcy offers a form     Read More

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