Month: July 2019

Obtaining Credit After Bankruptcy

in Bankruptcy

People who come into our office considering bankruptcy are often concerned that they’ll never again be able to get credit after bankruptcy.  These fears are perpetuated by credit repair companies and debt settlement scam artists who are trying to convince people that THEY can fix their problems without the “stigma” of bankruptcy.

I’ll say this one time and one time only with as much emphasis as I possibly can.

UNDER NO CIRCUMSTANCES DOES BANKRUPTCY PRECLUDE YOU FROM GETTING CREDIT IN THE FUTURE.

 

Yes, credit after bankruptcy will be harder to come by and you’ll likely pay a higher interest rate, but you can find credit.  Yes, a bankruptcy can stay on your credit for up to 10 years after your file but as time goes on, it plays a much smaller role in decisions relating to your credit worthiness.  Truthfully, you’re probably less of a credit risk now than you were before you filed bankruptcy. After your case is over there is less demand on your income and your debt to income ratio will be vastly better.  You may even see your credit score go up.

Within two to three years after the discharge of your case, you’ll likely be eligible for a mortgage loan on terms that are similar to what you would have received if you had not filed bankruptcy.  You’ll likely be on the same playing field as those with similar financial situations who haven’t filed bankruptcy.

Alas, there is no “right” to credit.  People who look at your credit (landlords, banks, credit card issuers) are completely within their right to consider your financial history when it comes to making a decision about whether to rent you a home or apartment, giving you a line of credit or a personal loan. However, you are protected from discrimination in employment or governmental licensing based solely on the fact that you’ve filed bankruptcy.

If you feel that bankruptcy is right for you, please contact our office to schedule a free,  no obligation consultation to determine what we can do to help you get back on the road to financial freedom. 

The Great Things about Chapter 13

in Bankruptcy

Most people come in to our office wanting to do a Chapter 7.  They think it’s the best thing possible because it lets them cancel all their debts. While for some people, that’s a good thing, for others it can cause a lot of problems.  I happen to think that Chapter 13 bankruptcies allow for the most flexibility which is why I believe that should a 13 be a good option for someone, they should definitely pursue it.  Below, I lay out a list of reasons why I believe a Chapter 13 is a great option for certain people.

Chapter 13 cases are great because:

  • The amount of money you repay to your creditors can be as little as 0%. While that sounds too good to be true, it is, depending on your individual situation of course.
  • You keep your stuff, unless you don’t want to.  You keep your house, your business, your car, etc.  No one is snooping around trying to find things to sell.  
  • You can amend a Chapter 13 during the case.  If your income goes down, you lose a job, or you just go out on maternity leave, the plan can be amended to accommodate those life changes.     
  • You can dismiss your case if you want.  You can literally just walk away. While that isn’t necessarily a good idea, you can do it, unlike in a Chapter 7 plan.
  • The automatic stay protects you for the entirety of your case.  You can’t be a victim of foreclosure or repossession if you abide by the plan.
  • If you’re behind on your mortgage, the amount you’re behind can be included in the plan and caught up over the course of the plan.  
  • If you have a really big interest rate on your car, the amount of the interest rate can be reduced to a lower rate.  
  • The IRS HAS to abide by the plan and let’s be honest, no one likes the IRS.
  • Your attorney’s fees are included in the plan.  You don’t have to come up with the money to pay your lawyer up front.  

Other advantages to Chapter 13s

If you do have to file a Chapter 13 case, you’re eligible for another Chapter 13 (should you need one) a whole lot sooner than you can if you had filed a Chapter 7.  In fact, its ok to file a second Chapter 13 two years from the filing of your first case.  

Generally speaking, a Chapter 13 is off your credit a whole lot sooner than a Chapter 7.  Usually, a 13 is gone two years after you complete a 5 year plan.

Unlike working with a debt settlement agent, your Chapter 13 Bankruptcy is enforced by the full weight of the federal court system.  ALL your creditors must abide by it or the face severe penalties. NO creditor can opt out and at the end of the Chapter 13 Plan, the debt you owe them is gone, one way or another.

In the end, a Chapter 13 case is a great way to get back on your feet after a period of financial difficulty.  Our attorneys have filed THOUSANDS of Chapter 13s and we have decades of experience successfully shepherding cases through the court.  Contact our office today for a free, no obligation consultation to find out of you qualify for a Chapter 13 case.  

Don’t Chance Your Future Financial Stability

in Bankruptcy

I often find my clients asking, how do I avoid having to file bankruptcy and are there any alternatives that I should look into before I do this?  The answer is yes, there is a way out of debt without bankruptcy. It involves the following steps, but be careful as it can compromise your future financial stability:

  1. Find a way to make more money, then
  2. Find a way to cut your expenses in a meaningful way and finally
  3. Use your savings to pay off the debt

IF you can do these three things for a long enough period of time AND your debts aren’t already unmanageable then you can probably find a way to make all this work. The better question to ask yourself is, IF I can do this, is it even a good idea?

There’s a cost to paying off debt

If you’re trying to achieve what I outlined above there are some things that you can cut from your daily expenses.  If you’re cutting things like visits to the coffee shops for a cappuccino, your membership at the golf or tennis club or you’re cutting the cord on your cable company then go ahead.  Those are wants, not needs. IF, however, you’re going without those things that are necessary like an emergency savings fund, skipping medicine or doctor visits or dipping into your retirement savings you’re playing with fire.  Continuing down this dangerous path is a very bad choice. One financial mistake or misstep in this situation can lead to complete catastrophe.

YOUR future is important

Whether this financial mess was caused because of bad choices you’ve made or due to a spate of bad luck, you don’t need to make the problem worse by not having a safety net just because you’re acting out of pride.  Chances are, by this point, your credit is probably ruined anyways. Far too many people come into our office with the strong conviction that because they incurred this debt they’re going to pay it, come hell or high water.  While having convictions is important in life and I applaud your desire to fulfill your obligations, I would advise against repaying all of these debts IF it means that the repayment of these debts would leave you no room for improving your finances in the present or in the future. You should NEVER risk your financial stability out of some sense of pride of conviction.  You’ll literally trade one bad situation for another. The biggest part of reforming your finances is looking to the future. You MUST look past the trees and see the whole forest. Your financial future starts TODAY and stretches into the next decade and into the rest of your life.

The attorneys at Harmon and Gorove are experts at providing you with all the facts you need in order to make the best decision for your financial future.  We want to provide you with all the tools you need to make the best decision for you. That’s why we provide a free, no obligation consultation so we can discuss what is best for you and your individual situation.  Contact us today so we can help start you down the path to financial stability today.

Alternatives to Bankruptcy: Usually a Bad Idea

in Bankruptcy

Pardon my bluntness, but the alternatives to bankruptcy often just suck.

I’ve heard countless horror stories about alternatives to bankruptcy over the course of my career but the one that has stuck with me was one that happened about two years ago.

A client hired a debt settlement company thinking they’d get her out of a big mess she’s gotten into.  She didn’t want to file bankruptcy because she was worried about the “stigma.” Because she was worried about the “stigma” she ended up with 5 different judgments against her and three separate garnishments.  The cost of her bankruptcy was higher than it otherwise would have been and she’s still out the $2,000 she paid to the debt settlement company. (For the record, my fee in her case would have been less than that amount.).

Living Large on Fear

Stories like this one exist all over the country.  People get ripped off every day because they’re scared of bankruptcy.  Alternatives to bankruptcy are blasted all over the internet and TV.  They are a shining example of the way these firms profit from the fears of people who think bankruptcy makes them a bad person or will, “cost them everything.” Most people will do just about anything they can think of in order to avoid bankruptcy for one reason or another.  Maybe they’re ignorant of the process of bankruptcy or they have some moral obligation they need to fulfill by paying their debts.

If you’re one of those “debt relief” companies, feeding the fear of bankruptcy will make you very rich.

Appeal to the inherent desire to do right by creditors, and you get your money before it’s obvious the debt is simply too large to pay off.

When can Bankruptcy be the Best Choice?

I’ll be very honest, Bankruptcy isn’t for everyone.  In terms of my finances, that isn’t the best thing I can say, but that’s not why I’m here. Bankruptcy can vastly improve the lives of many more people than actually use it. I have several instances when bankruptcy is a good idea. Generally speaking, the following statements apply:

  1. The greater your debt to income ratio, the more it would benefit you to file bankruptcy.
  2. If you don’t have a substantial amount of money saved up for retirement, you should probably consider filing.
  3. If you’re older, you should look at filing.

ALWAYS do your Homework

Even though I’m married to a teacher, I don’t claim to be one myself. I can, however, tell you this.  If you’re going to pay money to someone who is PROMISING to get you out of debt, you should at least meet with a bankruptcy attorney.  Our firm offers free, no obligation consultations. A lawyer can tell you about how bankruptcy should work and the risks that come with working with a debt settlement firm.

Unlike debt settlement, a bankruptcy can usually wipe out debts, often with no payments necessary so you can obtain immediate relief without the chances that the creditor will send you a 1099-C.

Other people with higher incomes or significant assets that can’t be protected in a Chapter 7 Bankruptcy can often file a Chapter 13 case.  Chapter 13s are known as debt reorganization cases.  Depending on your circumstances, you’ll pay back anywhere from 1% to 100% of your unsecured debt.

The bottom line is, there are alternatives to bankruptcy, but a lot of them stink.  If you truly want to be debt free in the fastest, most pain free way, bankruptcy is the way to go.  However, you should always decide the course that’s best for you. Meeting with one of our attorneys is free of charge and we can tell you the best course of action.  In the end, we want to help you any way we can, even if it’s to tell you that bankruptcy isn’t the best option for you. If you feel you’ve reached the end of your financial chain, don’t wait until it’s too late. Contact us today for a free, no obligation consultation.