Archive for July 2011

Will Bankruptcy Wipe Out All Of Your My Debts?

Will Bankruptcy Wipe Out All Of Your Debts?

Yes, with some exceptions.  Bankruptcy will not normally wipe out:                                             

* Money owed for child support or alimony;

* Most fines and penalties owed to government agencies;

* Most taxes and debts incurred to pay taxes which can not be discharged;

* Student loans, unless you can prove to the court that repaying them will be an “undue hardship”;

* Debts not listed on your bankruptcy petition;

* Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;

* Debts resulting from “willful and malicious” harm;

* Debts incurred by driving while intoxicated;

* Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

Written and used with the permission of the National Consumer Law Center. Visit the National Consumer Law Center at nclc.org 

Proposed Loss Mitigation Program in the United States Bankruptcy Court for the District of New Jersey

The United States Bankruptcy Court for the District of New Jersey has proposed a Loss Mitigation Program available to individuals who file bankruptcy.  I proposed this idea to one of the Bankruptcy Court Judges back in approximately April 2011.  The Bankruptcy Court was very interested very similar programs which already have been established in New York, Rhode Island (my home state), and Vermont.   (The proposed Loss Mitigation Program really means that my bankruptcy clients could apply for a mortgage loan modification with the bankruptcy court overseeing the process).

The Court moved immediately and organized a meeting which included Bankruptcy Court Judges, Consumer Bankruptcy practitioners (including yours truly) and mortgage companies’ attorneys.  Most of the individuals at the meeting believed the Loss Mitigation Program was a great idea.  Some Consumer Attorneys are not so sure.  My personal feeling is, if it saves one of my client’s homes it will be worth it!!!  I am sure my clients agree.

You can find more information below.

http://www.njb.uscourts.gov/notice/2011_07_01_NOTICE_TO_THE_BAR-07-01-11_LOSS_MITIGATION.pdf

Public comment is invited.  Send comments to:  loss_mitigation@njb.uscourts.gov

Life After Bankruptcy…….

LIFE AFTER BANKRUPTCY……

The most commonly asked question I get when I consult with a new client is, “It is on my credit report for 10 years, right?  I cannot get credit for 10 years, right?”  The good news is that there is life after bankruptcy and no, it does not take 10 years before you can rebuild your credit!  In fact, for a lot of people filing bankruptcy is necessary in order to rebuild their credit.  Why, you might ask?

Well, how can you rebuild your credit without first wiping out the debt you already have?  For example, if you make $40,000.00 a year, how can you rebuild your credit if you are carrying $25,000.00 worth of debt?  Many people attempt to consolidate their debt prior to filing for bankruptcy only to find out they have paid thousands of dollars before realizing they need to file bankruptcy because in 99.9% of cases debt consolidation or debt settlement simply does not work.

Your credit score will increase within the first year after filing for bankruptcy.  After bankruptcy you will want to begin applying for secured credit cards.  My clients have advised me that the credit card companies begin soliciting them directly after they complete their bankruptcy.  These are credit cards which you prepay for so that you can use them as a credit card.  This will assist you in rebuilding your credit score.  Just remember to be cautious as many of these credit cards charge annual fees and monthly charges.

You should open a savings account after filing for bankruptcy and begin saving some money.  Remember that you should always pay yourself first.  Set amount to have deposited directly from your paycheck into your savings account.  You need to try to forget you have the account.  Some people find it helpful to open an online savings account such as, ING Direct, as it is more difficult to dip into the account on a whim. 

Be sure to pull your credit report regularly.  You should pull one free credit report per year from the 3 major credit bureaus.  You can do this at annualcreditreport.com.  It is recommended that you pull one report every four months so that you are continuously checking your credit reports throughout the year.  Be sure to review the credit report very carefully and dispute any information that is incorrect.  You can dispute any incorrect information online or through the mail.  You should be sure that any debt you had that was listed in the bankruptcy is marked as discharged debt on your credit report once you have completed your bankruptcy.

It is possible to buy a car and even a home after filing for bankruptcy.  You should initially expect higher interest rates when you apply for credit cards, cars and mortgages.  The more distance you get from the bankruptcy the better the offer on interest rates for consumer purchases.  Remember never to take out adjustable rate loans of any kind.  Always opt for a fixed interest rate loan whether it is a mortgage, student loan, or a personal loan and never ever cosign for anyone.

Always, always pay your bills on time.  Paying ahead of due dates can assure you do not forget to pay the bills on time.  Be sure that if you pay your bills through your checking account’s online bill pay option that you account for the time it will take for the payment to post.

The most important thing to remember when rebuilding your credit is to be very careful not to fall into the same situation again.

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