Archive for the ‘Bankruptcy’ Category

Bankruptcy Tips: How to Take Control of Your Finances in 2021

The new year is always a time for self-assessment and self-improvement, and if your financial situation has led you either to file for bankruptcy or to consider doing so, then making resolutions regarding your money management will be an essential step as you enter 2021. Whether you end up filing for bankruptcy or simply want to improve your saving skills and become more regimented about paying off your debt, here are some tips to consider.

  • Budgeting is often the key to getting your finances under control. Whether you’re trying to avoid filing for bankruptcy or trying to recover from just having filed, there are plenty of budgeting tools available. At its most basic, budgeting is understanding the amount of money that you have coming in and going out, and it requires diligence and practice. Research several tools and choose the one that is easiest for you to use, because that’s the one that you’re most likely to stick to.
  • Think about picking up a part-time job. Even though you may think of yourself as too mature or too accomplished to work as a cashier or a delivery driver or too busy to apply your skills to a consulting job, doing so can put the extra money in your pocket that will make a real difference.
  • Review your subscriptions. In the last few years, the technology that has made our lives so much easier has allowed invisible expenses to creep into our lives. As easy as it is to opt into a meditation app, a cable subscription, an online newspaper subscription or a podcast or streaming music service, these things all add up. Take a look at what you’re paying every month with an eye to whether they are necessary or not, and you will probably find a lot of extra money that you can put into paying down your debt.
  • Consider what you’re spending on fitness or food. Are you a gym member? What do you pay monthly or annually? Can you access the same equipment at a gym with fewer amenities? Are you eating out or spending $4 a day on a cup of coffee that you could brew for yourself at home for far less? Every little bit that you can save can be put to better use, whether to pay down debt or to put into savings.

If you are struggling financially and believe that bankruptcy might give you the fresh start you need, we are here to help. Contact us today to set up a time for us to discuss your options.

Tips for Millennials Filing for Bankruptcy

Bankruptcy can feel like defeat, especially to people who are just starting out. If you are a millennial – defined as reaching young adulthood in the early 21st century — it can be particularly disheartening, as your generation is viewed as optimistic, resilient and bent on success. Having to start over financially may be frustrating, but if you view it as the opportunity to start over with the benefit of learning from previous mistakes, you will find that the emotional downside is temporary, and you have a bright future ahead.

Here are some important tips for you to remember as you move forward:

  • As demoralizing as it may be to think about a bankruptcy remaining on your credit report for several years, the truth is that once you stop focusing on it, it will mean a lot less to you. Spend your energy working on rebuilding your credit instead of on the damage that’s been done. You’ve stopped digging the hole you were in and have started climbing out.
  • You may feel like you’re the only one this has happened to, but the truth is that you’re one among millions who have filed in the last decade, and in light of the global pandemic there are likely to be many more. You’re in good company, and you have a very good chance of rising above your past difficulties.
  • If you qualify for Chapter 7, it will leave you in far better financial condition than filing for Chapter 13, which will force you to continue repaying your debts over a longer period of time. Under Chapter 7, you can start fresh and move forward more quickly.
  • If private student loans were part of your debt, you may be able to discharge them as part of the bankruptcy, and even federal loans can be included in cases where your bankruptcy is due to a catastrophe such as suffering a severe and permanent disability.
  • Bankruptcy does not prevent you from obtaining a loan in the future, but it should give you pause. A bankruptcy filing is one of the most clarifying messages you can get about taking on only the debt that you can afford to pay back. When you become financially stable again, applying for credit cards is a good idea, as it will help you to build credit. Just make sure that you are not biting off more than you can chew.

Most importantly, if you’re considering bankruptcy, an experienced attorney can help guide you through the process. Contact the Reinherz team today to discuss your situation with one of our bankruptcy attorneys.

 

Should I Wait Until After the Holidays to File for Bankruptcy?

Filing for bankruptcy is one of the most stressful financial decisions that a person can make. Your bills are piling up at the same time of year that you’re supposed to be spending on holiday gifts and celebrations for friends and loved ones. With all of this going on, it’s easy to find yourself thinking that you should just forget about your troubles, enjoy the holidays and spend as much as you want, and then file for bankruptcy once it’s all over. But is that the right thing to do?

Here’s what you need to know about whether it’s better to file before or after the holidays.

The most important thing you need to know is that if you go out and run up big credit card bills right before Christmas, the debts that you incur are going to be yours to pay. That’s because debts that are incurred within three months of your filing cannot be discharged. The only exception to this rule is for expenses that you’ve charged that are considered essentials.

Another important consideration is whether your company pays out holiday bonuses at the end of the year. If you are given a big bonus check each year and you wait until after the holidays to file, then the money you receive has to be counted as income, and the more income you have to report from the 6 months prior to your filing, the less likely you are to qualify for a Chapter 7 bankruptcy that allows you to discharge all of your debts. On the other hand, if you’ve filed for bankruptcy and receive the bonus afterward, you will be able to hold onto the bonus.

Taxes are the final thing you need to consider before filing for bankruptcy around the holiday. If you are filing for a Chapter 13 bankruptcy, it is to your benefit to file for bankruptcy after your taxes are due. This is because the filing will protect you from having the IRS pursue you or debt, providing more flexibility for repayment and avoiding any interest or penalties.

As you can see, there are pluses and minuses to filing before or after the holidays, and they are situation-specific. For advice on the best time for you to file, contact our bankruptcy attorneys today.

 

What Happens to My Investments During Bankruptcy?

Filing for bankruptcy is a big step. It is an admission that you are simply unable to keep up with your bills or repay your debt, and that you need significant help. When you decide to file for bankruptcy under Chapter 7, non-exempt assets will be sold or used to pay off your debts, and this includes many of the financial instruments and investments that you own.

The first thing that you need to know about how filing for bankruptcy will impact your investments is that anything that is considered an ERISA-qualified retirement plan will not be touched. There are no limits on the amount of money that you can have in a plan that is specifically designated as being for your retirement. What qualifies as an ERISA plan, however, can be complicated, and other types of accounts including general savings accounts, investment accounts and stock option plans will simply be taken.

What you can hold onto will be the type of traditional retirement account that many employers offer. Even if the amount that is held in those accounts could pay off your debts, you will not be forced to liquidate them in order to pay your creditors, though any income that you receive from them will be considered in determining whether you qualify for a Chapter 7 bankruptcy or need to apply under Chapter 13 and create a payment plan.

The plans that fall into the category of being ERISA-qualified (and therefore protected from being included as an asset in a bankruptcy) include:

  • 401(k)s
  • 403(b)s
  • IRAs (Roth, SEP, and SIMPLE up to $1,283,025 per person)
  • Keoghs
  • Profit-sharing plans
  • Money purchase plans
  • Defined-benefit plans

Though some may be confused as to why these types of accounts are exempted from inclusion in a bankruptcy, the reason is simply: by allowing people to hold onto their retirement savings, they are truly able to start with a clean slate rather than being ‘behind’ by virtue of not having enough money to live on once they are no longer working. Leaving retirement accounts gives people who file for bankruptcy a better chance of avoiding getting into financial trouble in the future.

The rules around bankruptcy are complex, so if you are considering filing it is a smart move to consult with an attorney who has experience in what can and cannot be protected. To learn more, contact our office today.

Can My Spouse and I File for Bankruptcy Separately?

The marital vows may say “for richer, for poorer,” but when it comes to dealing with debt, you and your spouse need to think carefully about whether to file for bankruptcy separately or together. Both options are available, and you can also limit a bankruptcy filing to just one of you, but it’s important to know all the potential advantages and drawbacks before moving forward, and an experienced bankruptcy attorney is going to be the best source of guidance available.

When you and your spouse meet with a bankruptcy attorney, they will ask you several important questions about the property you own together and separately as well as the debts, each of your credit scores, and your income both separately and combined. Based on your answers,  your attorney will assess whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy filing is appropriate, and whether you are better off filing jointly, separately, or whether it’s best for just one of you to file.

In many cases, the most sensible approach for a married couple that is deeply in debt is to file their bankruptcy petition together. This permits all debt to be discharged at once, regardless of whether the debt is marital or individual while realizing significant savings on filing fees and attorneys’ fees. Doing so limits the amount of paperwork required, the number of meetings that the couple and their creditors need to attend, and the number of hearings with the court and the trustee. Perhaps the best reason for a couple to file a joint bankruptcy is to take advantage of double property exemptions which can protect more of their assets.

If your situation is such that only one of you should file for bankruptcy in order to protect separate nonexempt assets that would be lost in a Chapter 7 bankruptcy, or if debts are individually held in the name of each spouse, then filing a joint bankruptcy may not be the right approach. But people considering filing individually need to understand that doing so will require that both spouse’s income be included in the bankruptcy paperwork. Add to that the fact that two individual cases lead to two separate filing fees and attorney fees, and you can see where separate filings have drawbacks.

To determine what approach is best for you, contact our experienced bankruptcy attorneys today.

If You’re Struggling with Student Debt, Can Bankruptcy Help?

Are you having a hard time paying your bills? Is a big part of your problem your student loan debt?

If so, you’re not alone. According to Investopedia.com, 54% of all college attendees assume student debt at an average of over $35,000, and almost 15% carry that debt into adulthood. Even more troubling is the fact that over 10% of student debt is currently at least 90 days past due. If you are one of those who sees no way to paying this debt off, you may be considering bankruptcy. You may also have heard that student debt will not be discharged in bankruptcy. Here’s what you need to know.

Though student debt is traditionally and generally considered a debt that is not dischargeable, there are situations where you can include it in your list of debts and have the court agree that it should be included, but this is the exception rather than the rule. In order for a bankruptcy trustee to include your student loan debt alongside your personal loans, credit card debt, medical bills, and other debt that is making your economic life a challenge, there are certain things that you will need to prove.

The way that discharging debts in bankruptcy works, some debt is what is known as a priority debt that cannot be discharged. Child support is an excellent example of a non-dischargeable debt, where credit card debt is considered a nonpriority, dischargeable debt. Student loans are non-priority, but generally cannot be discharged unless you as the debtor can prove that they are putting you and your dependents through undue hardship. The standard for this varies from court to court but is generally based on several different hardship tests. These tests gauge whether your student debt is leading to your inability to maintain a minimum standard of living for yourself or your family based on your income and expenses; whether the challenges of your economic situation are expected to be persistent; and whether you’ve made a good-faith effort to pay your loan as per the schedule that you committed to. The bankruptcy court will consider these three questions and others and may be willing to discharge your debt if they believe that you are facing undue hardship.

If you need assistance with your own debt situation and paying your student loan debt, then bankruptcy may be the right answer for you. For assistance in assessing your situation, contact us today.

What Kind of Property is Liquidated During Chapter 7 Bankruptcy?

If you’ve been struggling to pay your bills and your income is simply not enough to cover your debts, it’s probably time to file for a Chapter 7 bankruptcy. Of the two types of bankruptcy filings most frequently used by consumers, Chapter 7 is the one that will entirely discharge most of your debts rather than simply reducing, reorganizing or recalibrating your existing debts (which is what happens under a Chapter 13 bankruptcy). Though the discharge of debts has the obvious advantage of presenting you with a brand-new financial start, it also comes with the downside of having to sell of many of the assets that you own. This process is known as liquidation, and before you embark on a Chapter 7 bankruptcy you should be aware of exactly what that asset sale will mean to you.

When you file for Chapter 7 bankruptcy, your attorney will ask you for a comprehensive list of all of your debts as well as your assets and your income information. With that in hand, they will calculate whether you are eligible for Chapter 7 bankruptcy and begin preparing the paperwork for presentation to the bankruptcy court. Once your application has been filed, a trustee will be appointed to administer the process of discharging your debts and overseeing the liquidation of your non-exempt assets. Cash from the sale of those assets will then be used to pay off at least a portion of your debts, providing your creditors with some level of satisfaction in the face of the loss of the monies that you initially committed to pay them.

The rules around the liquidation of assets under Chapter 7 vary by state, but under federal laws, only $23,675 of the value of your home or other real property including mobile homes or burial plots can be exempted. You may be able to retain a vehicle up to a value of just over $3,775, and you will be able to hold on to clothing, most furniture and possessions that have sentimental value up to a total of $12,625. You can also exempt cash up to $1,250 and up to $11,850 of any unused portion of the homestead exemption. Beyond that, anything else is considered available for liquidation.

If you are considering filing for a Chapter 7 bankruptcy and you need a better idea of which of your possessions you will be able to hold onto, contact us to set up a time for a conversation.

 

Can a Bankruptcy Filing be Denied?

For most people, filing for bankruptcy is not an easy decision, but once they’ve made up their mind to move forward, the idea of a fresh start becomes very appealing. Unfortunately, the process is not as easy as simply filling out some paperwork. There are strict eligibility rules for a Chapter 7 bankruptcy filing, and if you don’t qualify you are likely to be shuffled into a different category of bankruptcy, Chapter 13. Though both can eliminate the harassing phone calls and collection notices that often drive people to file in the first place, the two are very different. Under Chapter 7 you are able to discharge almost all of your debts, where under Chapter 13 your debts will be reorganized and you’ll be given a more forgiving payment plan that keeps you on the hook for what you owe but gives you more time or better terms.

So what would lead to your Chapter 7 bankruptcy filing be denied? First, the majority of Chapter 7 filings that are denied have been filed directly by the debtor rather than by an experienced bankruptcy attorney. Working with a lawyer who knows what they are doing significantly improves the chances that your petition meets all of the eligibility requirements and is filed correctly.

In order to ensure that you qualify, your attorney will ask you a long series of questions, as well as for specific information about all of your assets and their value. This is essential information, as in order to qualify for a Chapter 7 bankruptcy, your income needs to be lower than can reasonably support your necessary and reasonable monthly expenses as well as paying off your debts. The information is also important because any assets of value that you have may need to be sold in order to pay off part or all of your debts.

Generally speaking, there are five reasons why a bankruptcy claim could be denied. These are:

  • Failure to attend the credit counseling that is mandated by the bankruptcy laws
  • Ineligibility due to income, thus shifting the claim to a Chapter 13 bankruptcy filing
  • Fraud on the part of the debtor against either the court or creditors
  • Too little time passed since previous Chapter 7 bankruptcy (8 years)
  • Too little time passed since previous Chapter 13 bankruptcy (6 years)

Though you can always reapply for a Chapter 7 bankruptcy if you are denied, you can avoid the situation by making sure that your filing is done correctly in the first place by using an experienced bankruptcy attorney. For information on how we can help, call today to set up a time to chat.

 

 

 

Is Debt Repayment Easier After Chapter 13 Bankruptcy?

When you’ve decided to file for Chapter 13 bankruptcy, it puts you in a position that is different from that of people who file for Chapter 7 bankruptcy. Where a Chapter 7 bankruptcy discharges almost all of your debts, under Chapter 13 the terms of your debts are modified with the specific mission of making it easier for you to satisfy your creditors.

In most cases, a Chapter 13 bankruptcy will allow you to pay off your debts in a five-year period. The repayment plan may extend the amount of time you have to pay off the debt as well as reducing the amount that you have to send for each payment. It may also allow you to simply relinquish ownership of the item that you’re paying the debt on.  In many cases a creditor will even lower the original debt amount, viewing it as more beneficial to secure a partial payment then to have the entire thing discharged under a Chapter 7 order.

Not only will spreading out the amount of time you have to pay off a debt or lowering your monthly payment relieve you of a lot of stress, if you file for a Chapter 13 bankruptcy and are still unable to pay off some of your debt, you may be able to file for bankruptcy again within six years. This is not true if you choose to file a Chapter 7 bankruptcy, which includes a six-year bar against filing for bankruptcy again. Additionally, you avoid the stress of having to relinquish some of your assets.

A repayment plan under Chapter 13 bankruptcy is planned around your income and your debts. In some cases, it may make things easy enough that you are tempted to pay off the balance of your debt early in order to put it behind you, but this would be a mistake.  By beginning to accelerate payments, you alert your creditors to your access to cash, and they are able to increase your payments or revise your payment plan.

For more information on the many advantages and disadvantages of filing for a Chapter 13 bankruptcy, contact our experienced bankruptcy attorneys today. We are here to help.

Do You Qualify for Bankruptcy Exemptions in Pennsylvania?

The idea of filing for bankruptcy is extremely stressful, especially when you’re faced with the very real possibility of losing assets.  Though there are certain exemptions available, the state of Pennsylvania has particularly strict rules regarding exemptions. It’s important for any Pennsylvania resident filing for bankruptcy to work with an attorney who truly knows and understands the rules and who can guide you through the process.

When an individual who lives in Pennsylvania files for bankruptcy, they have the choice of using either the federal bankruptcy exemptions or the ones offered under Pennsylvania’s state laws. Though you’ll want to review the details, there’s a good chance that the federal exemptions will allow you to hold on to more of your belongings. Though you can’t choose both federal and Pennsylvania exemptions, if you choose Pennsylvania’s exemptions you will still be able to take advantage of non-bankruptcy exemptions.

Pennsylvania residents who file for bankruptcy have a few advantages available to them under state rules. For example, couples who file their income taxes jointly can each claim the full amount of the exemption as long as they both have ownership interest in the property that they are trying to exempt.

Also referencing spouses, Pennsylvania offers no homestead exemption, though the equity in your home cannot be liquidated to repay debts of just one spouse.

Beyond that, Pennsylvania’s most commonly-used exemptions include:

  • The Wildcard exemption, which allows up to $300 of any personal property other than real estate, or $300 cash.
  • Personal property including your clothes or uniforms, school books and bibles, and sewing machines
  • Any unpaid wages that you have earned or compensation for having been a victim of abuse or crime
  • Tax-exempt retirement accounts including 401(k) accounts, 403(b) accounts, profit-sharing and money purchase plans, SEO and SIMPLE IRAs and defined benefit plans
  • IRA and Roth IRA accounts up to a maximum amount
  • Pension accounts for county, city, state or public school employees, police officers, municipal employees
  • Any private retirement benefits whose plan specifically indicates that proceeds cannot be used to pay creditors
  • Workers’ compensation and unemployment compensation
  • Veteran’s benefits or benefits for the veterans of the Korean conflict
  • Many insurance policies or their proceeds.
  • Business partnership property
  • Applicable federal nonbankruptcy exemptions

Understanding what you can keep and what you will lose is an important part of knowing whether moving forward with a bankruptcy is right for you. For assistance, contact our office today to set up a time for us to discuss your situation.

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