Filing Bankruptcy While Unemployed
Many of us are just one paycheck away from financial hardship. If you’re faced with an unexpected lay off or job loss, you could be in the same boat. If your period of unemployment is extended, bills can start to pile up and you may depend on credit cards to get by. When your debt becomes unmanageable, you may consider turning to bankruptcy for relief, which is completely understandable and common. The fact that you don’t have a job adds some factors to consider as you prepare to file. Chapter 7 The first thing we’ll decide is which chapter of bankruptcy will be the best fit for you. Since you may not have much disposable income, we’ll consider Chapter 7. This type of bankruptcy is designed for people who are not able to pay off their debt in a reasonable length of time. To determine if you’re eligible, we’ll conduct the means test, which is a calculation using your income, assets, debts, and living expenses. Being unemployed will make it more likely that you’ll pass the test and qualify for a Chapter 7, even if you’re receiving unemployment benefits. Additionally, if your total household income is below the median for a similar household where you live, you’ll automatically pass the Means Test. There is a chance that Chapter 7 filers may lose property, such as their home or car, but there are many exemptions we can use to protect your property. Most Chapter 7 cases are considered no-asset. After exemptions, most filers do not have any non-exempt property which could be seized and sold in order to repay outstanding debts, unsecured debts, such as medical bills and credit cards, are typically discharged completely in a Chapter 7. Chapter 13 If you have a car payment or mortgage and would like to keep all of your property, it may be worthwhile to consider a Chapter 13. A Chapter 13 is also a good choice if you have income, but just not enough to make full payments on all of your debts each month. Debts are reconfigured and you’ll make reduced payments over a three- to five-year time period. At the end of that time, most remaining debt is discharged. This may allow you to roll mortgage arrearages into your payment plan, and you may also be able to discharge a second mortgage or cram down a car payment. Your payment plan takes your non-dischargeable debts, such as student loans and child support, into consideration, and it may be easier to keep up with these payments. If you’re attempting to file a Chapter 13 while unemployed, it can be challenging to prove to the court that you’ll be able to keep up with your proposed plan, unless you have another source of income, are receiving unemployment benefits, or have an employed spouse. Without this, the court will likely require that you file a Chapter 7. If anything changes related to your employment status or income during the bankruptcy process, just let me know and we can make changes accordingly. A New Chapter Losing your job can feel pretty hopeless, but it could be the new start you didn’t even realize you needed. You may be able to explore new career options that are even more lucrative, or this may be just the push you need to truly take control of your finances and get your debt in order. If you’re uncertain about how to move forward, please contact me so that we can make a...
read moreRebuilding Your Credit: Billing Disputes
It’s no joke that filing bankruptcy takes time and hard work. And while you’ll be able to let out a sigh of relief once your debt is behind you, you’ll still need to take some strategic steps to rebuild your credit. As you do this, it’s important to ensure that your credit report doesn’t include any errors; if you do find any, you’ll need to get them corrected. You’ll also want to monitor your bills and credit card statements monthly to keep an eye out for errors and incorrect charges. You may discover that you were billed for something twice or your payment was never processed. Some people are shocked when they figure out they’ve been a victim of credit card fraud. Mistakes and crimes happen, and the Fair Credit Billing Act (FCBA) has set up procedures to get these problems resolved and protect consumers. Procedures Credit cards and revolving charge accounts fall under the Fair Credit Billing Act, but loans, mortgages, and similar accounts do not. This is due to the fact that mortgages typically do not vary from month to month, so they are rarely disputed. If you find a discrepancy on your credit card statement (for example), contact your creditor by phone right away; you’ll also need to give them a written notice of your dispute. After this, the creditor has 30 days to meet the requirements set forth by the federal government. They must acknowledge, in writing, that they’ve received your dispute. They then have two billing cycles (not to exceed 90 days) to either correct the problem or send you an explanation. During this waiting period, you and your account are safe; they cannot close your account or report that you’ve skipped a payment to the credit reporting agencies. They also must not attempt to collect the amount that you’re disputing. Preparing Your Written Notice It’s important that you have all of your information ready to go when you contact your creditor. Your written notice must be addressed to your creditor and include all of the information they’ll need to research the dispute. They’ll need your account number and full name, as well as the date, amount, and vendor of the transaction you’re disputing. Write in your notice that you believe your bill or this charge is incorrect, and also explain why you’re disputing the bill; this could be because you didn’t make that charge, you were charged twice, you were a victim of identity theft, or many other reasons. Time is of the essence, so you’ll need to send your notice within 60 days of receiving the errant bill. There are many examples of dispute letters online that you can use as templates. Minor Bump in the Road After sticking to your budget and working hard to rebuild your credit, it can be disheartening to discover an error on a bill. But don’t worry. While you do have some tedious tasks ahead of you, these errors can be corrected without affecting your credit report or score. Soon you’ll be able to focus on continuing to build your financial future and taking care of your family....
read moreCan I File Bankruptcy While I’m in the Military?
Military personnel still have their finances to take care of, and it seems no one is exempt from debt that becomes unmanageable. Members of our armed forces have families with financial needs, and unexpected, unfortunate circumstances can happen to anyone. If you’re in the military or a veteran, you may wonder if you’re able to file bankruptcy for relief. The good news is that you can, and you may even have additional protection and benefits. Before filing though, it’s important to get all the facts, including the pros and cons. Active Duty If you’re active duty military, you’re protected under the Service members’ Civil Relief Act (SCRA.) This is in addition to the automatic stay and can postpone or stay bankruptcy and other proceedings against you. While this is a positive, it’s possible that filing bankruptcy could affect your security clearance, which could keep you from promotions. Before making any changes to your security clearance, your situation will be evaluated. You’ll be given the opportunity to explain why you filed bankruptcy, and your job performance, work ethic, and working relationships will all be taken into consideration. As you talk to your superiors, you may be able to explain why bankruptcy is the best choice for you because you’re taking control of your finances, rather than accepting the debt you’ve accrued. Having excessive debts can also affect your security clearance, so before you take any action, it’s good to do some research. Other Military Personnel One of the first steps in filing bankruptcy is to complete the means test to determine which chapter of bankruptcy is the right choice for you. This calculation looks at your income, debt, and assets to determine if you have the disposable income to pay off your debts. If you’re a disabled veteran, you may be exempt from the Means Test. Your debt must have been incurred while you were on active duty or part of homeland security defense. Additionally, you must be at least 30% disabled, and your disability or injury must be why you were discharged. If you were in the National Guard or in a reserve unit of any branch of the Armed Forces, but were called to active duty or to participate in a homeland defense activity, you may also be exempt from the Means Test. You need to have served for a period of at least 90 days after September 11, 2001. This exemption is good for 540 days after you left active duty. New Start Serving our country is an honor, and it can also be a financial sacrifice. If you’ve served in the military and are facing debt you can’t keep up with, bankruptcy may be a viable option for you. I can help you consider all your options and come up with a plan to start a new financial...
read moreJob Loss and Bankruptcy
Many Americans live paycheck to paycheck, but manage to cover their bills and expenses. But when an unexpected job loss happens, it can be jarring and challenging to know how to handle things. If you’ve already been struggling to keep up with payments and have been considering bankruptcy, a lay off or job loss can be the deciding factor. However, losing your job doesn’t make bankruptcy a necessity. There are many things you can do to get through this difficult time with your credit intact. Proactive Steps Your first step should be to take a close look at your budget and try to work with your new income. Are there some luxuries you can cut out? Can you negotiate with your cable or cell phone companies for better rates? If you owe debt payments, can you work with your creditors for deferment or reduced payments? It’s best to be proactive and make these changes before you begin falling behind. It’s also important to check your credit report to ensure it’s accurate. Many employers will pull a credit report and use it as they evaluate you as a potential employee. You’ll also want to apply for unemployment benefits. This not only will give you some income as you job search, but the unemployment office may also have employment assistance available, such as resume and interview workshops. If you’re leaving your employer on good terms, they also may be willing to connect you with other employers or help with your job search. Update your LinkedIn page to show you’re looking for work, and consider joining other professional organizations in your field that could help you make networking connections. Tell everyone you know and meet that you’re looking for work; you never know who may be able to help. This might be time for you to consider a career change that you hadn’t previously considered. Check out https://www.careeronestop.org/ to look at other options you may be able to transition to, with or without additional training. In addition to job searching, you may also be concerned about health care. Think about what you’ll need to do to continue or change your health insurance. Your employer may offer COBRA coverage for a period of time, but this can be quite expensive. Do some shopping around to see if you can find an affordable plan or even qualify for some kind of assistance. Bankruptcy Can Help Being unemployed can be incredibly stressful, especially if it takes a while to find new employment. If your budget was already tight, you may start falling behind on bills, and before you know it, you’re in over your head. If this happens to you, don’t panic. Many people who experience a job loss find relief through bankruptcy. This could be just the new start you need and the best way to get back on your feet. If your debt is starting to get out of control, give me a call so that we can discuss...
read moreResolving Identity Theft
Being a victim of identity theft comes as a shock to most, especially if you’re also dealing with a bankruptcy. You don’t expect to be victimized in such a way, and when it happens, the first question that comes to mind is, what do I do now? We will speak about what you should do not only to prevent identity theft, but how to deal with it if it happens. What is Identity Theft? Identity theft can happen in many different ways. It is illegal for anyone to use another’s social security number, bank account, credit card, or PINs for personal gain. It doesn’t matter how they may have come across the information such as digging through trash, stealing a purse or wallet, or hacking into your computer system. This is one of the nation’s fastest growing crimes. In response to these crimes, most states have identity theft laws that cover various types of fraud involving a person’s finances. In 1998 the Identity Theft and Assumption Deterrent Act made identity theft a federal crime. This law states that it is illegal to use another person’s identity or identification with the intent to commit a crime. In 2004 the Theft Penalty Enhancement Act passed, which made sentences increase. It also established that several federal government agencies such as the FBI, Secret Service, and the Federal Trade Commission start an investigation in these cases, especially if the identity theft was related to an act of terrorism. Preventing Identity Theft If you don’t pay close attention to your credit report, it is possible that you may not even be aware that you have been victimized. One of the best ways to protect yourself from becoming a victim is to shred any documents that have personal information on them. Don’t carry your social security card on you, and keep your computer software and virus protection up to date. Most people pick simple or easy to predict passwords. Take the time to establish complex passwords with capitals, numbers, and special characters. Be aware of your surroundings if you are entering your debit card PIN; make sure no one is watching you or looking over your shoulder. You could do all of these things and still have your information stolen if a large bank or organization were to get hacked. The best thing you can do overall is keep an eye on your credit report for any accounts opened without your knowledge. What do I do if I’m a Victim? If you discover that you have become a victim of identity theft, there are several steps that you should take. First, contact the three main credit reporting agencies (Equifax, Experian, and Trans Union) to initiate a fraud alert on your reports. The next step is to file a report with your local police department, as well as the Federal Trade Commission. If you know specifics on a bank or institution that has been affected, you should contact them directly. If you need help with your finances or have been a victim of identity theft. I may be able to help. If your finances have become unbearable and you are considering bankruptcy, let me answer your questions and help you make a plan to get back on financial...
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