A Fresh Financial Start


Each year when the New Year rolls over, we all begin to think of New Year’s resolutions and how we want to improve our lives from the previous year. We start to set goals for our future to improve certain aspects of our lives whether it is health, personal hardships, or financial difficulties. We sometimes take a step back and realize life did not take us down the path we were expecting to be on and instead of sitting back and relaxing on a beach somewhere we are stuck with piling personal debts from student loans, credit cards, home foreclosure and are now feeling the sting of bankruptcy. Making the first steps after bankruptcy can sound difficult but you can and will bounce back from it and below are some tips on how to get started.

Let Go of Your Shame and Negativity

When hearing the word “Bankruptcy” we instantly are given such a negative image of this situation. Growing up, we are taught what obligations and responsibilities we have and as adults, we pay our bills no matter the circumstance. Unfortunately, life is never that simple and the honest truth is that it is not always possible to repay all of our debts even when trying our best to do so. If thinking that bankruptcy is your only answer, you are not alone. The fastest growing group of bankruptcy filers is people older in life. A study done in May 2011 by University of Michigan Law School found that 1 in 8 adults in the U.S. which is about 13% of general population have thought about filing for bankruptcy.

Even when people know that bankruptcy is a common practice, people still can’t help but feel guilt and disappointment when filing. The best advice is to turn those negative emotions into a more purposeful thought and think of bankruptcy as a learning experience. Truly take the time and look at what you could have done differently to prevent this situation from occurring. The next step is to accept your failure and free yourself by forgiving your mistakes and start to move on.

Recovering From Foreclosure

Studies done by AARP’s Public Policy Institute shows a record amount of homeowners above the age of 50 that went through foreclosure or at least 90 days or more overdue on house payments from 2007 through 2001. One of the biggest issues after losing your home is a good chance you have probably drained most of your savings as well. Some people may never want to own a home again and are content just renting the rest of their life but one way to bounce back from foreclosure is to start rebuilding your savings account or rainy day funds. These accounts typically have $500- $2000 saved in them. The reason of having this type of account is to help deal with emergency or unexpected expenses like a car or home repair that suddenly needs attention. Without this type of savings, you would be forced to use payment options like credit cards to pay everyday expenses that will in turn make you overuse them and hurt credit even further.

Setting Up an Emergency Fund

An Emergency fund differs from a rainy day mainly by being a larger amount saved in a separate account. This account should accumulate anywhere between $3,000 and $10,000 or above if can afford it. The reason for this larger amount saved is for this fund to assist you longer term if something should occur in a personal dilemma such as losing your job or medical issues arise for example. An emergency fund can also help you in a financial disaster such as a bad business investment or loaning money to a family member that never got repaid. These funds should have enough money saved to be able to keep you afloat for 3 to 6 months by paying all your current bills in that time frame. Of course it will take time and energy to make a savings such as this but is a important goal to have in mind.

Get Help From the Professionals

Investment mistakes whether it is watching your 401(k) change drastically or you invest in a friends/ family’s business that doesn’t make it will always take a toll on your confidence. If you are uncertain and nervous on how to manage your assets, it may be best to consult with someone who specializes in this field like a financial planner. A professional can help evaluate your needs and develop a plan to guide you through your financial plan and set new goals after a setback has occurred.

Repairing your credit after divorce

Divorce’s can be very draining on an emotional standpoint as well as financially. Once the worst part is over, you can start to move on from this set back as well. To start fresh from a financial view, you will first need to reestablish your credit in your own name. You can find where you stand credit wise by obtaining a credit report from three of the credit bureaus- Equifax, Experian and TransUnion. Secondly, it is best to get rid of any joint credit accounts with previous spouse and be sure to pay all new bills on time to sustain your credit rating. Some people may not have very much credit in their own names so it may be a good idea to look into a secured credit card. These types of cards need to be paid cash up front for the credit line. It can be somewhat surprisingly how quickly after filing bankruptcy an bank will allow regular unsecured credit cards mainly because lenders know that a user can not file for bankruptcy protection again for several years.

 Bohikian Law Group specializes in bankruptcy services including chapter 7 and 13 bankruptcy.  More information can be found at https://bohikianlaw.com.



This is the real reason most Americans file for bankruptcy

  • Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
  • While the high cost of health care has historically been a trigger for bankruptcy filings, the research shows that the implementation of the Affordable Care Act has not improved things.
  • What most people do not realize, according to one researcher, is that their health insurance may not be enough to protect them.
Money flies

SIphotography | Getty Images

Filing for bankruptcy is often considered a worst-case scenario.

And for many Americans who do pursue that last-ditch effort to rescue their finances, it is because of one reason: health-care costs.

A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found.

Other reasons include unaffordable mortgages or foreclosure, at 45 percent; followed by spending or living beyond one’s means, 44.4 percent; providing help to friends or relatives, 28.4 percent; student loans, 25.4 percent; or divorce or separation, 24.4 percent.

While the findings are consistent with past studies on bankruptcy, the data also highlight a key new factor: whether the Affordable Care Act has reduced the burden of medical debt for people.

“Despite gains in coverage and access to care from the ACA, our findings suggest that it did not change the proportion of bankruptcies with medical causes,” an article on the study published in the American Journal of Public Health states.

The number of debtors who cited medical issues as a contributing reason for their bankruptcy actually increased slightly after the law’s implementation — 67.5 percent in the three years following the law’s adoption versus 65.5 percent prior.

The culprit for the lack of improvement was inadequate health-care insurance, according to a co-author of the research, Dr. David U. Himmelstein, a distinguished professor at Hunter College and founder of advocacy group Physicians for a National Health Program.

“Unless you’re Jeff Bezos, people don’t have very good alternatives, because the insurance that is available and affordable to people, or that most people’s employers provide them, is not adequate protection if you’re sick,” Himmelstein said.

Most families do not have enough saved for a simple emergency, let alone thousands of dollars in unexpected medical costs. A recent study from personal finance website Bankrate found that only 40 percent of Americans have enough saved to cover a $1,000 emergency expense.

To help combat this problem, Physicians for a National Health Program is advocating for a national Medicare for All program that would broaden insurance coverage for Americans.

“Health insurance is only very partial protection,” Himmelstein said. “I liken it to a hospital gown that looks like coverage until you actually inspect it.”

The research included 910 Americans who filed for bankruptcy between 2013 and 2016.

Original Source: https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

Original Date: Feb 11 2019

Written By: Lorie Konish

Is Bankruptcy The Solution?


The prospect of declaring bankruptcy is frightening.  Not feeling like you are in complete control over your finances can make you feel like a failure.  When you are in a situation in which you are contemplating the pros and cons of bankruptcy it is important to note that you are in complete control.  Bankruptcy allows individuals to regain control over their finances.  It gives you the ability to start over from scratch. There is no need to live in debilitating debt any longer. 

Bankruptcy can be the solution if you can answer yes to 2 or more of the following questions:

  • Are you only making minimum payments on your credit card?
  • Do bill collectors call you regularly?
  • When you are paying bills or sorting through your finances, do you feel anxious?
  • Are you paying for necessities with credit cards?
  • Have you considered debt consolidation?
  • Do you have any idea to how much you owe?

Accessing Your Financial Situation

Answering yes to two or more of these questions is a sure sign you should give your financial status a bit more thought.  Bankruptcy is a situation where relief is offered when you owe more than you can afford to pay. 

It is important first to review your liquid assets.  This includes checking and savings accounts, retirement funds, stocks, bonds, real estate, college savings accounts, and other bank and non-bank assets.  A rough estimate will do.

The next step is to create a list of your debts including all credit cards, car payments, monthly bills, house payments, and such. Declaring bankruptcy is an option out of a tricky financial situation when your assets are less than your debt.

Steps in Declaring Bankruptcy

There are two ways in which an individual can declare bankruptcy.  The most common method is to voluntary file.  The second is for creditors to ask the court to order an individual bankrupt.  For the best outcome and restart to your financial future consulting with a bankruptcy lawyer is important. An attorney specializing in bankruptcy can determine the best option for your individual circumstances. 

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common option for individuals when filing bankruptcy.  Some of the most common reasons that individuals are forced into bankruptcy include unemployment, medical expenses, overextended credit, and divorce.  Chapter 7 bankruptcy is a straightforward option to settle debts.  In this type of bankruptcy any assets you may have that are considered above and beyond necessary will be liquidated.  The cash from these assets will be liquidated and distributed to your creditors. 

Four months later a discharge will be received.  The bankruptcy will stay on your financial record for the next ten years.  This doesn’t have to mean your financial life is over.  Even with a bankruptcy on your record you can begin to rebuild your credit.  Chapter 7 offers a fresh start to individuals quicker than other bankruptcy options such as Chapter 13

If you are experiencing financial hardship take time to schedule a free consultation with Bohikian Law Group.

Bohikian Law Group specializes in bankruptcy services including chapter 7 and 13 bankruptcy.  More information can be found at https://bohikianlaw.com.



Whats the income limit for Chapter 7?

What is the Income Limit for Chapter 7?

In order to file a Chapter 7 bankruptcy, you must pass a means test which compares your disposable income to the average median income for a family of the same size in your state. Because median incomes vary by state and household size, the income limit for filing a Chapter 7 varies as well.

Why Take a Means Test?

A Chapter 7 bankruptcy is a short process, typically lasting only three to six months. During this time, a trustee helps you to liquidate (sell) your non-exempt property to pay off part of your debt. The Chapter 7 means test is a method of qualification designed to reserve Chapter 7 bankruptcies only for those who truly can’t afford to repay their debts in full.

Taking a Means Test

To begin a means test, compare your current pre-tax annual income to the median income for the same size household in your state. If you make less than your state’s median income, you qualify and are free to file a Chapter 7 bankruptcy. If you make the same, or more than, the median income for your state, then you must continue on with the test.

For second part of the means test, you use your average monthly income for the six months before you plan on filing bankruptcy. By deducting your monthly expenses from your current average monthly income, calculate your disposable income. The lower your disposable income each month, the more likely you may qualify for Chapter 7.

When calculating your disposable income, you subtract your allowed monthly expenses like food, clothing, and living expenses. These can include your utility bills, as well as credit card, mortgage, and car loan payments.

Comparing Median Income

If you’re still wondering whether or not your income qualifies you to file a Chapter 7 bankruptcy, there are a few steps you can take:

  1. Calculate your family’s average gross annual income – To find your gross annual income, multiply your pre-tax monthly income by 12. For example: if your gross monthly income is $2,500, your annual gross income would be $30,000 (2,500 multiplied by 12 equals 30,000).
  2. Compare your annual gross income to your state family median income – Make sure to compare your income to the median income for a family of the same size in your state. You can find the current family median incomes on the US Trustee website at www.justice.gov/ust (go to the means testing information section).
  3. Continue to part two of the means test – If your income is at or above that of a same sized household in your state, you need to continue on to the second part of the means test. If it falls below the median income, you can proceed with filing your Chapter 7 bankruptcy.

When You Don’t Qualify for Chapter 7 Bankruptcy

When you take the means test and continue on to the second part, but it shows that you have a large amount of disposable income, you don’t qualify to file Chapter 7. In this case, you should be able to use this disposable income to repay debts. If you’re a high-income earner that doesn’t qualify for a Chapter 7, you can file a Chapter 13 bankruptcy, instead. A Chapter 13 is known as a repayment bankruptcy and can help you repay your debts over either a three- or five-year period.

The Bottom Line

If you’re thinking about filing bankruptcy, but aren’t sure if you should move forward, make sure you consider all the possible outcomes. For instance, in some cases, you’re required to give up some of your property in order to pay back your creditor’s during a Chapter 7. Consider your options carefully – bankruptcy isn’t to be entered into lightly.

Original Source: https://www.autocreditexpress.com/blog/what-is-the-income-limit-for-chapter-7/

Original Date: Jan 28 2019

Written By: Meghamn Carbary

How to Recover After Declaring Bankruptcy?


Some of the most responsible people find themselves in financial trouble.  At times these issues becomes so bad that there is simply no way they can get out from under them.  One solution for individuals that find themselves in such a situation is to file bankruptcy

Filing for bankruptcy is known to take a toll on individuals both emotionally and financially.  It takes years after filing for bankruptcy for you to rebuild your credit profile.  It is estimated that in 2017 there were upwards of 750,000 bankruptcy filings, not including businesses.  Bankruptcy is a legal action that individuals or businesses can take in order to dismiss a portion or all of an accumulated debt.  It is important to note that this is not done without meeting certain criteria and without consequence.  There are advantages and disadvantages to the bankruptcy process. It is important to understand bankruptcy, how it can impact your financial future, and just how you can survive and thrive after.

Bankruptcy is a legal process that is used to eliminate or lessen the debts that individuals and businesses are responsible for paying.  Due to the complexity of the process it is important that a bankruptcy attorney is hired.  Each bankruptcy is unique and will be evaluated as such.  Courts need to determine what the financial burden is and the ability the individual or business has to pay it. Hiring a bankruptcy lawyer is crucial because of the ramifications it has on your credit, getting new loans, and new credit. 

Bankruptcy is not always a good idea however, for many it can be the only way to achieve financial stability.  Bankruptcy can relieve you from a portion of or all of your debt.  If only a partial portion of your debt is relieved the bankruptcy court will assign a repayment budget for the remaining debt.  Once you have started the bankruptcy proceedings foreclosure on your home, repossession of your car, wage garnishments, utility shut offs, and so forth will cease.  Creditors and collection agencies will no longer be allowed to call you without a fine. 

Each bankruptcy case is unique and requires a one on one evaluation.  Some debts are commonly reduced or dismissed such as credit cards, medical bills, past utility bills, and even sometimes rent.  Others, however, are rarely dismissed through bankruptcy including child support, alimony, taxes, and student loans.  If you are no longer required to pay on your car there is a high probability that it will be repossessed. 

Once the bankruptcy process has been concluded it is time to get back on the saddle.  Let’s face it, we all need credit at one point or another.  Using credit and credit history is how many people buy homes, cars, and larger purchases. Bankruptcy will impact your credit and have a negative effect on your credit report.  You will not be able to get a loan or credit for a while after bankruptcy.  When you do start to accumulate credit again you should expect to pay higher interest rates, increased security deposits, and larger down payments.  When accumulating new credit after bankruptcy it is important to stay within your budget, pay your bills on times, and avoid accumulating debt. 

Filing for bankruptcy is not a decision that should be made without a lot of thought.  If you think you have no way out of your debt it is best to meet with a bankruptcy attorney for a free consultation to determine the pros and cons of this action in regards to your unique situation. 

Bohikian Law Group specializes in bankruptcy services including chapter 7 and 13 bankruptcy.  More information can be found at https://bohikianlaw.com.



Bankruptcy filings are at a 10-year low, but not for the reasons you might think

There are varying reasons for the light case load over the past decade

New bankruptcy filings are at their lowest point since 2007, according to new court data.

Bankruptcy courts are quiet places these days, at least compared to previous years.

Corporate and consumer bankruptcy filing rates are at their lowest point in about a decade, according to a new report from Supreme Court Chief Justice John Roberts.

September 2010 court statistics show that during the depths of the Great Recession, almost 1.6 million bankruptcy petitions were filed, with 1.53 million consumer cases making up the vast majority of the case load.

Eight years later, the amount of new cases has been cut by more than half. In September 2018, there were more than 770,000 cases filed from broke businesses and individuals looking to get their finances together through court-ordered debt-forgiveness and repayment plans. Consumers accounted for 97% of the cases.

People may not be filing for bankruptcy because it’s too expensive to do so, and they might have too few assets to protect.

In fact, bankruptcy petitions haven’t been so low since 2007, Roberts said Monday in his annual summary of the federal courts.

Yet the relative silence in bankruptcy court halls, at least when it comes to consumer cases, might not be entirely golden.

People may not be filing for bankruptcy because it’s too expensive to do so, and they might have too few assets to protect, bankruptcy experts told MarketWatch. Besides, some added, more cases might be around the corner.

“People can’t afford paying lawyers to file for bankruptcy,” Chicago attorney Lorraine Greenberg said. She cited a 2005 legislative overhaul. The Bankruptcy Abuse Prevention and Consumer Protection Act generated more work for lawyers, who were forced to raise their own rates for clients, she said.

Bankruptcy cases can be expensive

Greenberg said she charges $1,500 up front to file a Chapter 7 case, where debtors sell off their assets and can have certain debts forgiven. That price doesn’t include the court costs and fees debtors also have to incur, she said. Those prices can hover around $350, she noted.

She has about three feet of shelf space devoted to documents from people ready to file bankruptcy cases once they get the money to hire her. “I’m never going to see it. … They have no disposable income to pay their attorney,” she said.

‘Bankruptcy trails recovery. When people have something they have to protect, they file for bankruptcy.’ —Ricardo Kilpatrick, a Michigan-based attorney

One 2017 study pegged average attorneys’ costs on Chapter 7 cases at around $1,200, paid up front. Debtors typically paid around $3,200 for lawyers to file Chapter 13 cases; those fees were paid over time as a part of the case’s resolution. (Chapter 13 allows for court-confirmed installment plans to creditors.)

The flip side of the findings was the fact that older Americans are filing for bankruptcy at out-sized rates, grappling with too little income and health-care costs that are too expensive.

But Ricardo Kilpatrick, a Michigan-based attorney representing creditors in consumer bankruptcy matters, said there were a number of reasons behind the drop-off in petitions, including attorney costs. “Bankruptcy trails recovery,” he said. When people have something they have to protect, they file for bankruptcy,” he said.

Still, Kilpatrick, a past president with the American Bankruptcy Institute, said consumer filings could increase as more people return to the workforce and take on more credit.

Bankruptcy petitions on the decline.
Some bankruptcy lawyers say December has been busy

A strong jobs report Friday said the American economy gained 312,000 new jobs in December. The unemployment rate edged up to 3.9% from the 49-year low of 3.7%. The slight rise could actually be a good thing, indicating that people think it’s easier to land a job.

Kilpatrick recalled conversations last month with four separate lawyers for debtors. Three of the four told him it was the busiest December they’ve had in the last six years, Kilpatrick said.

Chicago attorney Lorraine Greenberg said the Affordable Care Act could help people avoid bankruptcy due to unpaid medical bills.

Reasons for the drop-off might not all be gloomy. Greenberg said there could be a link with increased health care coverage under the Affordable Care Act. “Less people need bankruptcy to wipe out medical bills,” she said.

Another explanation: Recession-era federal mortgage programs that enabled distressed homeowners to work out deals with lenders also helped people avoid filing for bankruptcy, lawyers told MarketWatch. Creditors “became much more accommodating on doing out-of-court work-outs,” Kilpatrick said.

Roberts’ recent report said filings “rose steadily” from 2007 to 2010, “but they have fallen in each of the last eight years.”

That slide in bankruptcy petitions largely coincides with a historic nine-year bull run on Wall Street — a streak that could be close to an end amid worries about an economic slowdown.

The slide in bankruptcy petitions largely coincides with a historic nine-year bull run on Wall Street, a streak that could soon come to an end.

But bankruptcy rates don’t necessarily mirror the country’s overall economic health. “It really has not tracked the economy exactly,” said Henry Sommer, a past president of the National Association of Consumer Bankruptcy Attorneys. Filings were high in the late 1990s when the economy was humming along and consumer credit was easy, he said.

Bankruptcies seem to more closely follow Americans’ debt-to-income ratio, according to Sommer. The figure shows how leveraged a household is, dividing its monthly debt payments by its income. Aggregate household debt to income ratios ramped up in the early 2000s and then started falling in 2008, Federal Reserve data showed.

Despite record levels of credit-card debt, households are still in a better position to pay off their debts than they were during the recession.

The $1.5 trillion gorilla

Another possible factor in the decline of bankruptcies: America’s student-loan crisis. Americans now owe $1.5 trillion in student debt, and the repayments efforts can be soul-crushing for some.

But borrowers have a difficult time legally proving the repayments are an “undue hardship,” which means filing for bankruptcy wouldn’t help them much.

“As a practical matter, it’s virtually non-dischargeable in all cases,” Sommer said of student debt. Courts won’t wipe out “non-dischargeable” debts.

And cash-strapped student-loan borrowers may not be driven to bankruptcy simply because they do not have enough money to rack up other forms of debt, like debt from credit cards, Sommer said.

In fact, consumers between the ages of 18 and 34 had fewer bankruptcies over the last decade per every 1,000 people, compared to people age 65 and older, Foohey’s research has found. “These are people who are saddled with student loans,” she said, making it tough for them to build up other assets.

Original Source: https://www.marketwatch.com/story/bankruptcy-filings-are-at-a-10-year-low-but-thats-not-necessarily-good-news-2019-01-07

Original Date: Jan 8 2019

Written By: Andrew Keshner

Bankruptcy: When There Is No Where Else to Turn For Debt Relief


You have hit the point where there is nothing else you can do, bankruptcy is the only way out of the financial avalanche that is weighing you down.  You tried cutting back, you sold what you could, you have been working day in and day, and still find that you are not making a dent in your debt let alone continue to live a feasible lifestyle.  It is a conclusion that no one wants to get to because it comes with the stigmatism of failure.  The shame that comes with filing bankruptcy maybe real to you, it may be what you are feeling and experiencing however, you should know that there is no disgrace in finally deciding that you need help.  This help can make all the difference in your future.  A future that your past self wasn’t considering when mismanaging income vs debt.

Filing for bankruptcy can be quite confusing.  It is a very serious legal matter that should only be done with proper representation from a bankruptcy attorney.  Here are some things to take into consideration as you take the first steps towards financial freedom.

Bankruptcy is a legal proceeding that puts you in front of a judge where you explain that you can no longer financially afford to pay your debts.  The judge will work with trustees to look into your assets and liabilities to decide if the debt should be discharged or there are means to repay a portion or all of it.  If the court concludes that you cannot payback these debts, they will declare you bankrupt. 

Although bankruptcy can stop foreclosure, repossession, and garnishment of wages it doesn’t cancel all of your debts. Bankruptcy does not clear:

  • Student loans
  • Government debt: taxes, late fees, and penalties
  • Child support
  • Alimony
  • Expenses purchased right before declaring bankruptcy

Once you have filed the paperwork for bankruptcy, all creditors receive notice that they can no longer take steps to collect money from you.  Creditors will no longer be allowed to call, write, or take legal action of their own against you once the bankruptcy process has begun. 

There are many types of bankruptcy that can be filed both consumer and commercial.  The most common consumer bankruptcies files are Chapter 13 and Chapter 7.

In chapter 13 bankruptcy the court will approve a plan for you to repay some or all of your debt over the span of three to five years.  You will keep all of your assets and follow a strict timeline and monthly payment schedule set forth by the court.

In chapter 7 bankruptcy the court will decide what reasonable assets are vs “luxury” items. Things will be sold to pay off debt if they are deemed over and above what is reasonable.  Once you have paid back as much as is thought to be reasonable the remaining unpaid debt will be erased. 

Bohikian Law Group specializes in bankruptcy services including chapter 7 and 13 bankruptcy. More information can be found at https://bohikianlaw.com.



Why 20 Million Americans Should File for Bankruptcy

A few years ago, Chris Saltzburg found himself at the intersection of an expensive divorce, the loss of his job and the rapidly declining health of his mother. The debts started piling up. American Express seized his bank account. After making a six-figure salary for most of his career as a model, Saltzburg was broke.

He began researching his options and found that filing for bankruptcy made the most sense. But the process seemed incredibly daunting, and he couldn’t afford to hire a lawyer. Saltzburg’s situation is all too familiar — it happens to people all over the country every day. While many fear the unknown or make false presumptions about filing for Chapter 7 …

More than 20 million Americans would benefit from declaring bankruptcy.

But in 2017, fewer than 500,000 actually did, according to a data analysis by Upsolve, a nonprofit software platform that helps people file for Chapter 7. Saltzburg came across Upsolve while looking for bankruptcy resources, and the company guided him through his filing, free of charge.

Rohan Pavuluri, the founder of Upsolve, was inspired to start the company two years ago after volunteering with Harvard Law School’s Access to Justice Lab, which focuses on finding legal solutions for people who can’t afford lawyers. While developing a method for assisting in bankruptcy filings, Pavuluri quickly realized that tech could be the solution. He joined forces with bankruptcy attorney Jonathan Petts, who helped optimize Upsolve’s toolkit and resources, while the rest of his team coded the platform. Today, users who sign into the app are prompted to upload pay stubs and tax forms, which are then autofilled into their Chapter 7 filing. Other information is autofilled in by a credit check.

Pavuluri zeroed in on bankruptcy because he realized its potential was vastly underutilized, particularly for low-income Americans. Bankruptcy wipes their slate clean, improves their credit scores and can help them get a job. “It’s one of the most powerful poverty-fighting tools around, and we aim to make it accessible at scale,” Pavuluri says. Especially because the reasons people end up in debt resonate with most Americans. “The No. 1 reason [for filing bankruptcy] is medical debts,” he says. “Divorce and people who are victims of an abusive partner are also common.” By offering a free service, Pavuluri is helping people who may never have known that Chapter 7, a type of bankruptcy that liquidates a person’s existing assets to pay their debts, was an option. Currently, the organization is funded through philanthropy — the Chan Zuckerberg Initiative is one of its donors — as well as through the government. It also asks Upsolve clients who’ve had successful outcomes to donate a small amount if they can.

Bankruptcy filings go up when people get their tax refunds.

Michelle White, professor of economics at the University of California, San Diego

In 2005, Congress made changes to the U.S. Bankruptcy Code in an attempt to make it more difficult for some consumers to file for Chapter 7. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) now requires anyone filing to meet certain criteria: Your income must fall below the median income for your state, and you must also pass a “means” test that calculates your debt to determine if you qualify. Before BAPCPA, anyone could file for bankruptcy, regardless of their income. “You could be wealthy and still file for bankruptcy — there was no income cap at all,” says Michelle White, professor of economics at the University of California, San Diego, who has studied bankruptcy since the 1990s. Some celebrities even filed for Chapter 7 before the code change went into effect. R&B singer Toni Braxton filed for Chapter 7 bankruptcy in 1998, alleging she was broke after being insufficiently paid by her recording label at the time, LaFace Records.

When White first began studying bankruptcy, she too was surprised at the number of people who not only qualified but would benefit from filing. It’s understandable, though, White says, that so many people don’t file. “The deterrent is usually the cost [of legal fees],” she says. “Bankruptcy filings go up when people get their tax refunds.” Surprisingly, the number of Americans who could benefit from filing for Chapter 7 is slightly higher than it was prior to BAPCPA. As of May, consumer debt levels were predicted to reach an all-time high by the end of 2018, according to consumer lending company, LendingTree. “Now, more than ever, people need the lifeline of bankruptcy to get back on their feet,” Pavuluri says.

Still, there are some financial situations that can’t be helped simply by filing for bankruptcy. Sometimes Pavuluri has to turn away people who don’t qualify for Chapter 7, usually because they’re homeowners or they earn above the median income, and direct them to a local attorney.

But the people who do file aren’t the only ones who could benefit. A crop of Americans with improved credit scores and the chance to increase their incomes could drive further economic growth. If Upsolve and other bankruptcy advocates can move the needle on the number of Americans who file for Chapter 7, the whole country would likely reap the benefits.

Original Source: https://www.ozy.com/acumen/why-20-million-americans-should-file-for-bankruptcy/90717

Original Date: Nov 29 2018

Written By: Molly Fosco

Five Things To Not Do Before Filing Bankruptcy

Believe it or not there are some things that you should not do before you file for Chapter 7 and 13 bankruptcy.  Finding debt relief in bankruptcy is not as simple as filing a few pieces of paper, appearing before a federal judge and whoosh all of your bills are gone.  There are a lot of considerations that go into the act of declaring bankruptcy and seeking relief from your debt.

One of the first steps to take when considering the different options available to you is to determine your totally debt.  When you are in a situation where you are experiencing stress financially, it may be tempting to do whatever you can to free yourself from that pressure.  However, bankruptcy discharge is a very serious, legal action therefore it is crucial that you understand what is going to happen before, during, and after bankruptcy.

Don’t Rush

Bankruptcy is a federally governed method of debt elimination.  There are limitations on how often you can file for bankruptcy.

  • Chapter 7 bankruptcy discharge is something that can only be done once every eight years.
  • Chapter 13 bankruptcy discharge is something that can only be done once every six years.

If you are considering bankruptcy due to medical debt but are still experiencing severe health issues it is probably important to wait until your health has stabilized before filing.  The last thing you want to do is to find yourself accumulating more and more debt after you have already discharged your initial debt. There are a number of problems that crop up when bankruptcy comes into view like unemployment, foreclosure, eviction, and car repossession.   It is important to file bankruptcy at a point when you know you are going to be able to get back on your feet once a discharge is granted.  The last thing you want is to have your debt cleared only to find yourself swimming in debt a year later when no relief can be given.

Don’t Wait Too Long

There are times however that bankruptcy can’t wait and that it is in your best interest to file for bankruptcy right away.  If a wage garnishing is in place, it is important to file sooner rather than later so that you have more money to pay bills.  Filing for bankruptcy in a timely manner is also important if a creditor has a lawsuit against you.  Your bankruptcy attorney will want to make sure to look at the complaint to see if it includes any allegations of fraud.  If it does, the matter will go into judgment and you likely won’t be able to wipe out this debt in bankruptcy.

A creditor that has won money in a judgement against you, the lien that accompanies it allows the creditor to take wages directly from your check, attach to your bank accounts, repo cars, and foreclose on your home in an effort to reclaim the money that is owed.  If you file for and receive a bankruptcy discharge before the creditor wins a case against you, filing bankruptcy will stop the lawsuit in its track and wipe out that debt as well.

Don’t Drain Retirements Account

Retirement funds are protected from bankruptcy.  It is important not to withdrawal funds from your retirement accounts in order to pay off debts.  Before taking money from any type of account that is labeled for retirement speak with a bankruptcy lawyer to figure out the best option for you.  Most often you will find that your attorney will recommend that you do not deplete your accounts to better your financial situation.

Don’t Provide Information That Is Inaccurate

It is crucial to be completely open when it comes to your bankruptcy paperwork.  You are required to provide accurate information on your paperwork including your assets, debt, income, expenses, and financial history.  Misrepresenting information could lead to penalty of perjury.

Don’t Add in New Debt or Move Assets

Any debt that is incurred seventy to ninety days before filing bankruptcy paperwork, unless it is a necessity, a creditor may object.  Debt within this time frame may be considered fraudulent. As a rule, don’t take out cash advances or use credit cards to buy luxury items.  It is also critical that you don’t try to hide or move assets for safekeeping before filing for bankruptcy.  If you have sold property to pay for expenses before declaring bankruptcy it will be important to document the way in which you spent the money to pay for necessities.

As with any legal procedure it is important that the rules are followed to prevent any sort of confusion when it comes to discharging your debt.

 

Bohikian Law Group specializes in bankruptcy services including chapter 7 and 13 bankruptcy.  More information can be found at http://bohikianlaw.com.

Bouncing Back From Bankruptcy

Original Source: https://www.fool.com/credit-cards/2018/11/01/bouncing-back-from-bankruptcy.aspx

Written By: Kailey Fralick

Published On: Nov 1, 2018