Monthly Archives: January 2010

Filing bankruptcy can be a difficult decision that is often unavoidable for some people. Rebuilding your credit after bankruptcy is a long road, but you must navigate it with grace and knowledge about the financial world. Getting a fresh start after bankruptcy is something many people struggle with but don’t need to. Learn how to start anew after bankruptcy and begin rebuilding your financial life an responsible and satisfying way.

• Get a copy of your credit report and ensure that you are familiar with everything on the report. Enroll in a credit monitoring program or at least obtain a copy of your credit report for free every year to keep track of what is happening with your credit.
• Know your bankruptcy terms so you are fully aware of how long your bankruptcy status will stay on your report. Most bankruptcies stay active on people’s credit reports for five to seven years. Pay all of your bills on time. For creditors who were not included on your bankruptcy settlement, make arrangements to pay them off in a reasonable amount of time to prevent further credit damage.
• You can do some things to help rebuild your credit like obtain a secured credit card (Make sure they report to all three credit bureaus) or make a major purchase such as a car or a house within two years of filing for bankruptcy (if you can afford it) and make the payments on time. Shop for viable interest rates, but be prepared to pay a higher rate for your purchases because of your credit.
• Budget your money and steer clear of multiple credit accounts that you are unsure of whether you can pay or not. Apply for a credit card with a relatively low credit limit and make smallish purchases in order to rebuild your credit history. Always pay your credit card payment on time. Preferably do not pay them in full, since keeping your credit lines open builds your creditworthiness.
• Start a retirement fund and a savings account. Contribute to those accounts on a regular basis. Gradually open up new but small balance accounts and establish a good credit record to show that you are a responsible and credit worthy consumer.

Bankruptcy is designed to help people who are struggling with a debt burden they cannot pay get out of debt and get a fresh start. Most types of debts may be included in bankruptcy. Many of the type of debts that may be included in bankruptcy is the same no matter if you are filing Chapter 7 or Chapter 13 bankruptcy. A chapter 13 bankruptcy is a “Reorganization” type of bankruptcy. Meaning that many of the debts discharged in a chapter 7 are repaid through a chapter 13 bankruptcy plan.  An attorney will help you setup a chapter 13 repayment plan. A bankruptcy attorney should be used to ensure all eligible debts are included in the bankruptcy.

Types of debt that can be included:

Secured Debts

Debts secured  by property may be included in a bankruptcy. These loans are backed up by the value of the loan. Lenders may proceed with foreclosure proceedings if you stop making payments on the property. A bankruptcy can halt foreclosures for the short term but eventually the property will be discharged or you will be entered into a new payment plan for the property. Lenders will work to keep property out of a bankruptcy as much as possible.

Medical Debt

Medical and dental debt may be included in a bankruptcy proceeding. Each debt will be included individually in the bankruptcy to ensure that that it has the proper discharge.

Credit Card Debt

Most credit card debt is considered unsecured debt and therefore it is discharged as such in a bankruptcy. Some lenders may dispute the claim and try to repossess assets purchased with the credit. This usually happens with high end electronics or jewelry or another large purchase.

Non-Dischargable Debt

Court fines and fees, student loans, tax debt, fraudulent debt, child support and alimony are types of debt that are non-dischargable. Any debt incurred to pay off a non-dischargable debt is also deemed non-dischargable. These debts must be paid in full.

To find out more about debt types that can be included and to discuss your particular case call The Law Offices of Jill McDonald today and setup your free consultation.

You wouldn’t go get a haircut without being prepared would you? Just the same you’ll want to make sure that you are prepared to meet your attorney.You will want to make your initial meeting as productive as possible. A bit of preparation on your part could save your attorney some time and yourself some money, if it helps get your case filed sooner.

Your attorney will want know about you. How to get in contact with you and a bit about your background. There will also be lots of questions about your current financial situation and also some historical questions as well. Be sure to tell your lawyer everything and to be completely honest and upfront. If you could jot down some notes beforehand of your finances that may be helpful. You will be asked to fill out a complete packet later on so this would help you out as well.

If you’re in a foreclosure proceeding be sure to bring copies of anything you have pertaining to that. Any correspondence that you’ve had with creditors will be helpful. If you have upcoming pre-trial or trial dates you should also know those.

Questions to ask your potential lawyer

There is no silly question, keep in mind that this is your financial situation that you are discussing. You should ensure that you completely understand everything that the attorney is telling you. Prepare a list of questions to take with you to your first meeting. Some questions you might ask a bankruptcy lawyer would include:

• Should you file bankruptcy?
• What might your other options be?
• How many bankruptcy cases has he or she handled?
• What percentage of his or her practice is in the area of expertise that you need?
• Does the lawyer usually represent debtors or creditors?
• What problems does the lawyer foresee with your case?
• How would the lawyer go about handling your situation? What is the process?
• How long will it take to bring the matter to a conclusion?
• How would the lawyer charge for his or her services?
• Would the lawyer handle the case personally or would it be passed on to some other lawyer or support staff in the firm? If other lawyers or staff may do some of the work, could you meet them?

Along with these questions you might want to ask about their charges and how they charge. Do they charge hourly, is it a flat fee and if so what is the fee for their services. Before you settle on the attorney if you haven’t seen it yet ask them for a copy of their retainer agreement and have it explained to you before you hire them.

Keep in mind that in the end the Attorney you hire is working for you. If the attorney doesn’t understand this relationship, then you may want to keep looking.

There are a couple of options for an individual that owes the IRS.

• Payment Agreement – Installment Agreement / Payment Plan
• Settlement – Offer a compromise on payment
• Discharge - File Bankruptcy
• Expiration – Let the Statute of Limitations expire
• Abatement – Adjust the amount owed

Bankruptcy is the process that affords relief to taxpayers who are unable to alleviate their liability through other means. Many income tax types that are subject to severe constraints otherwise, are fully dischargeable in a bankruptcy proceeding. In a Chapter 7 Bankruptcy you would liquidate or wipe out your obligations (non-dischargeable types only). The majority of chapter 7 cases are without assets because the debtors are able to protect their assets. However, if there exist non-exempt assets, a chapter 7 bankruptcy will result in non-exempt assets being liquidated for the benefit of the IRS or other creditors.

Chapter 13 Bankruptcy is a reorganization whereby taxpayers can restructure their debts and protect their assets. Often, debtors use Chapter 13 Bankruptcy to save their homes from foreclosure and their cars from repossession. Chapter 13 repayment plans are typically 3 to 5 years. Often a Chapter 13 Bankruptcy will stop interest and penalties from accruing throughout the repayment period.

In order for a tax liability to qualify for discharge under Chapter 7 of the Bankruptcy code, all of the following criteria must be met:

1. Tax is for a year for which a tax return is due more than 3 years prior to the bankruptcy filing;

2. Tax returns were filed more than two years prior to the bankruptcy filing;

3. The tax liability was assessed more than 240 days prior to filing of the bankruptcy petition;

4. The liability is not due on Trust Fund Tax;

5. The taxpayer did not attempt to evade or defeat the tax, nor was the tax liability due to a fraudulent tax return;

6. The tax was not assessable at the time of the filing of the bankruptcy petition; and

7. The tax was unsecured.

If you would like to learn more about your options then contact Jill at The Law Offices of Jill McDonald.