Bad Credit Advisor

An Atlanta-area bookstore surprised its fans last week when it filed for Chapter 7 bankruptcy protection to deal with its $508,673 in debts. At the time of the filing, it seems, Outwrite Bookstore had less than $300 in its checking account, a circumstance that underscored the dire financial straits the bookstore found itself in.

Part of a Larger Trend

While Outwrite’s Chapter 7 filing in particular came as a surprise (the bookstore had admitted financial troubles in recent months, but had apparently held a fundraiser to help with relocation costs even as it was paying a bankruptcy lawyer to help it draw up plans for winding down), its place in the grand scheme of booksellers these days is nothing new.

With online giants like Amazon underselling most of its competition, many independent (and even not-so-independent, ahem, Borders) brick-and-mortar sellers have felt a serious strain.

Individual Chapter 7 vs. B

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What should you do if you’re underwater on your mortgage and you are considering a Chapter 7 or Chapter 13 bankruptcy?  The term “underwater home” refers to houses that have lost so much market value that they are now worth less than the outstanding balance on the home mortgages.  In many cases, a bankruptcy may be able to bring some relief to the owner of the underwater property so they can begin a financial fresh start.

• If a Chapter 7 debt discharge bankruptcy is being planned, the automatic stay will hold off any foreclosure until the Lender obtains Relief from the Automatic Stay or possibly until the discharge of the Chapter 7 case, typically 2-5 months. This could possibly buy the homeowner enough time to catch up with their payments and save the home from foreclosure.
• If the homeowner is significantly behind on the home mortgage, a Chapter 7 will buy the debtor a few months to find a new place to live.  A Chapter 7 bankruptcy will also be of help if the debtor is burdened with significant amounts of credit card debt and other unsecured loans, and it erases the burden of continuing to owe money to the lenders after the home has been foreclosed.

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One of the most important things that people have to do is to take care of their finances. They need to make sure that they have enough money for the regular services and products that they use on a daily basis and they also need the money for all sorts of other reasons such as maybe saving up for the children’s education or maybe for an unforeseen medical crisis. In any case it is incredibly important that people stay constantly aware of what is happening with their money. That is why the credit report and in particular the free credit report is such a valuable help to people.

The credit report is in essence a reflection of how a person handles their debt and acts really as an evaluation tool for the many financial institutions. There is then a need for people to make sure that the credit report will be an honest representation of themselves and the only way that people can do that is to see it for themselves. T

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A recent article on Forbes.com lashes out against the state of student lending and student debt in the United States. The author makes several salient points regarding the problems surrounding student debt, which cripples many graduates largely because it is very difficult to discharge in bankruptcy.

But what makes a loan “predatory?” The nation conspicuously lacks a legal or official definition for “predatory lending,” but the Forbes article cites many attributes of student loans that suggest they might fall into this category. These include:

• Student loans do not come with “free-market consumer protections.” Student loans cannot easily be discharged in bankruptcy (compared to other unsecured loans); borrowers do not have the option to restructure their student loans; and these loans come with no real statute of limitations in most cases. Lacking the

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A Sacramento-based Bankruptcy Attorney serving Roseville discusses the means test and changes made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005:

There is a lot of confusion surrounding the changes that were made to the Federal Bankruptcy Laws in 2005.  Many people believe that they are no longer eligible to file, or are confused about which of their debts they would be able to discharge through bankruptcy.  So how did the BAPCPA impact consumer’s ability to file for bankruptcy?

The implementation of the B22 worksheet, also known as the “Means Test” is the biggest change made by the BAPCPA.  The act sets out a method to calculate a debtors income, and compares this amount to the median income of the debtors state for their family size, as determined by the IRS.  If the debtors income is above the median income amount of the debtors state, the debtor is required to complete the B22 worksheet.

If your income is higher than the median income for your state, this does not necessarily mean that you are not eligible to file for a chapter 7 bankruptcy.  The B22 allows you to deduct expenses that are necessary for you to live, as well as some of your actual expenses.  A debtors “current monthly income” is reduced by a set of allowed deductions for food, shelter, and utilities as specified by the IRS .   You are also able to take most of the deductions that are actually taken out of your paycheck for taxes, insurance, etc.  If you are financing your home and/or car, the actual amount paid to the lender will also be deducted from your monthly income.  Money owed to the IRS, for child support, and other “priority debts” is also deductable.  There are other eligible deductions, including some charitable donations, expenses for grade and high school , life insurance costs, and some telecommunications costs, that are frequently used.  The B22 is a very complex worksheet, which is why it is important to have an experienced Attorney analyze your case.

Even if after claiming all eligible deductions, your income is still above the state’s median income for your family size, you still may be eligible to file a Chapter 13, where you re-pay a percentage of your debts, the exact amount depending on a variety of factors including the B22.  Some debtors who can qualify for a Chapter 7 actually prefer to file a Chapter 13, for various reasons including stripping off a second and even third mortgage, “cramming down” the value of a car or other secured asset, and making one payment that the Trustee distributes rather than making numerous payments each month.

There are many factors that go into filing a successful bankruptcy.  The BAPCA of 2005 put certain parameters and restrictions on filing bankruptcy, but with the assistance of a qualified attorney, most debtors can still file a successful case that suits their needs.

In 2008, credit card debts raise for about $18B. It was said by CNN money department in New York that it drastically increases of around 66% just in the 2^nd quarter of the same year. The debts that Americans have gathered in the same quarter of 2009 ballooned to 368% which makes credit analyst and experts alarmed. 2008 became a crucial year for lots of people especially those with debts because this was the time when recession is rampant and the balances of credit card went up to $25B.

In the current data gathered by CNN people are still engaged in shopping and in spending but they never consumed the same debts that was accumulated in the past years. The rate this year is still lower when compared to previous years. Do you know that as of July 2009 the rate was about $790B which is said to be lower of about 18% from the last quarter of 2008?

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