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215 922 2055

856 302 3989

Philadelphia
New Jersey

215 922 2055

856 302 3989

Philadelphia
New Jersey

Helping Good People Through Hard Times for Over 30 Years.

Archive for the ‘Bankruptcy’ Category

What Information do I Need to Provide My Bankruptcy Attorney?

Moving forward with a bankruptcy filing can be an emotional decision and one that many people only make when they believe they have no other options. If you’ve just made that decision, or are looking for advice as to whether there are alternatives you’re not aware of, the best thing you can do is to seek help from an experienced bankruptcy attorney who will patiently review your documents, assess your situation and give you their opinion on your best path forward. To make sure that your bankruptcy attorney has a complete sense of your financial situation, you need to provide them with as much information as possible.

Though you may dread the idea of gathering all of your financial documents, they are what will provide your attorney with the clearest possible picture of which assets you will be able to keep and which you may need to sacrifice, as well as whether you are likely to qualify for a Chapter 7 bankruptcy as compared to a Chapter 13 bankruptcy. They may even be able to help you find a way out of your situation without pursuing a bankruptcy at all.

So what should you bring to your first meeting?

The documents that you provide your bankruptcy attorney for review will serve as a starting point to help them determine whether your debt is indeed too overwhelming for you to overcome. They will serve as the foundation for their presentation to the court. Though there will likely be more information needed in the future, you’ll begin with a complete list of both your outstanding debts and your major assets such as your home, any vehicles you own, and what you have in the bank or investments. You’ll also want to provide a recent pay stub and a summary of your monthly expenses. Bringing bills and statements is helpful, but as long as the information that you provide is accurate it will be unnecessary for your first meeting. If you choose to move forward you will be given a checklist of all the documents you need, which will include receipts, copies of titles and tax returns, and more.

For assistance in making sense of what you should do in the face of overwhelming debt, contact our bankruptcy attorneys today. We can help.

Will Bankruptcy Ruin My Financial Future?

Though there is no doubt that filing for bankruptcy will have a strong negative impact on your credit score – the most significant negative impact of any single event – to say that it will ruin your financial future is probably overstating reality. The truth is that even though filing for bankruptcy will have a big effect initially, it is probably the biggest step towards improving your credit that a person who is unable to pay their bills can take.

For some people who have gotten themselves into intractable debt, filing for bankruptcy actually raises their credit score. This may sound impossible, but bankruptcy eliminates debt that has previously been weighing your score down.

The reality of the impact of filing for bankruptcy is that it will show up on your credit report for several years, and that can serve as a potent warning to potential lenders. But what is more important is what you do in the months and years between your bankruptcy filing and your new credit applications. To offset the negative impact of a bankruptcy filing you need to prove to the world that you’ve learned your lesson. You do this by applying for new credit cards, even though they are going to offer you less favorable terms. Then you need to pay them off every month.

Having a bankruptcy filing on your credit report is not going to keep you from being able to borrow money in the future. What it is likely to do is to force you into loans that have less favorable terms. You’re going to have to pay higher interest rates and any potential for a grace period is going to be unlikely. But the same was probably true before you got around to filing for bankruptcy because your debt situation and payment history were probably so bad before you took action to address the situation. If you were behind on your bills before your filing and now you are up to date on your bills, that will be obvious to potential creditors and may offset the bankruptcy itself.

To rebuild your credit after a bankruptcy filing, you should start by applying for a secured credit card and then staying up to date on payments. Doing so will allow you to show potential creditors that you have learned from your mistakes and are deserving of their trust. It’s a building process that is only made possible by taking the step of getting yourself out of your overwhelming debt.

For assistance in assessing the best way for you to approach and deal with your debt, contact our bankruptcy attorneys today to set up a time to talk.

Will Bankruptcy Allow My Ex to Stop Child Support Payments?

Filing for bankruptcy is a legal action that seeks the discharge of an individual’s debts. It is essentially a statement that their financial situation makes it impossible for them to meet their obligations, and looks to the bankruptcy court to allow them to start fresh. There are two different types of bankruptcy filing, with Chapter 13 allowing the individual to pay their in a more extended way or reducing the interest charged or amount owed, and Chapter 7 eliminating their debt entirely. In both types of bankruptcy filing, child support is not considered dischargeable and the individual is expected to continue to meet their family obligations.

The bankruptcy courts have acknowledged that certain categories of debt cannot be dismissed, and the obligation to pay child support is one of them. In fact, it is considered so important that a person filing for a Chapter 13 bankruptcy must provide proof to the court that they are up-to-date on all domestic support obligations before a discharge will be granted.

For many ex-spouses of people filing for bankruptcy, the fact that an obligation to pay child support will continue is a point made moot by the fact that their ex has long skipped those payments. That’s why the bankruptcy rules for child support go beyond ensuring that they continue to stand and placing child support debt in front of all other creditors in a Chapter 7 bankruptcy. That means that any assets that your ex is required to relinquish or sell as part of their bankruptcy filing will go towards resolving any shortfall in previous support payments that are owed you. Payments to your child will go in front of credit card companies, mortgage companies, car loans and all other debts. Of course, there is a chance that there are no assets available with which to pay off outstanding debt, but whatever value exists will be distributed to your child first, and if your ex’s filing is a Chapter 13 bankruptcy and they have child support arrears, the back payments will be incorporated into their monthly Chapter 13 plan payment until the debt is satisfied.

It makes perfect sense for a parent to worry that the support their child relies upon would be impacted by their ex-spouse’s bankruptcy filing. For more information on how bankruptcy impacts this and other family issues, contact us today.

How Badly Will Bankruptcy Affect My Credit?

Individuals deal with debt in different ways. For some, the knowledge that they are not going to be able to keep up gives them the freedom to simply stop making payments, allowing their credit rating to fall rapidly. Others work hard to maintain their positive credit to the very end, making payments in a timely way and paying as much as they possibly can in order to prop up their score. But when you have to face up to the reality that your debts surpass your ability to pay, you are also going to need to deal with the fact that your bankruptcy filing is going to have a terrible impact on your credit.

A bankruptcy — and especially a Chapter 7 bankruptcy – will wipe out your debts and give you a fresh start. Unfortunately, it will also wipe out the credit score that you’ve worked so hard to maintain. Filing for bankruptcy will be reflected as significant downward pressure on your credit score. How long its impact lasts depends on several different factors, including the type of bankruptcy you file for and what you do to rebuild your credit following your filing.

A Chapter 7 bankruptcy will show up on your credit report for as long as ten years from the date of your first filing, while Chapter 13 may only show for around seven years. Within a few years of discharging your Chapter 13 debt, it will disappear from your credit score and give you the chance to start climbing back to fiscal stability. But the longer your bankruptcy is reflected on your credit, the less impact it will have and the more impact timely payments you make will have. The same is true for establishing new credit via small installment loans or secured credit cards and keeping your credit card balances under 30% utilization.

Because under Chapter 13 bankruptcy debtors make payments on their debt, they have less of an impact on credit scores, but that doesn’t change the fact that a bankruptcy filing will have a significant impact. How much of an impact is hard to predict, but it is important to remember that the debts that existed prior to your filing will still show on your credit report, with some persisting for several years. To offset this effect, apply for credit cards, even if it means putting down an upfront security deposit and then work at rebuilding your credit. It will take patience and diligence, but it is possible and well worth your time to reestablish yourself as worthy of a lender’s trust.

Bankruptcy Tips for the Unemployed

Whether you loved your job or hated it, once you are unemployed you realize how much it meant to you, and how much you relied on it to support the things that are most important to you. Suddenly your checking account can no longer support your debts, and you have no sense for when or whether you’re going to have an income again. If you are not working and unable to pay your debts, bankruptcy may provide you with the lifeline you need. Here is what you need to know to navigate the process when you don’t have a job.

One of the first things that people who lose their jobs and income turn to when it’s time to pay their bills is their savings, and sometimes even their retirement funds. They find themselves with few options other than pulling money from their IRA or 401(k) in order to hold on to their homes or cars, to say nothing of to pay for their living expenses like food, medication, and utilities. Unfortunately, taking these steps can create a domino effect of financial woes, as taking early distributions of these funds can lead to penalties and tax liabilities. As tempting as it is, taking an early distribution from these accounts is a mistake that many people make because they believe that they will have to be sacrificed in the course of a bankruptcy anyway – and that is not true. Retirement accounts and qualified savings accounts are exempt from forfeiture in a bankruptcy.

Knowing this, your first step in considering bankruptcy should be figuring out whether you are eligible to file for bankruptcy or not. This is determined through a means test, which determines not only whether you qualify, but also which type of bankruptcy you qualify for. Where a Chapter 7 bankruptcy will allow you to discharge your debts, thus alleviating you of having to pay many of the bills you were previously struggling with, a Chapter 13 bankruptcy will reorganize your bills, giving you more time to pay them off and adjusting your payments to a lower amount.

One of the most important things for an unemployed person to understand about this process is that this means test considers your average income based on the last six months, so applying for bankruptcy right away or in the first few months after losing your job might work against you, especially if you were earning a high income. By the same token, unemployment benefits are included in your income calculation too. It’s also important to remember that without an income, you are required to file for Chapter 7 bankruptcy.

Facing unemployment is difficult enough without having to worry about the ins and outs of applying for or qualifying for bankruptcy. For help, contact our experienced attorneys.

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 21^st 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.