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Written by Canterbury Law Group

What Does The Chapter 7 And 13 Bankruptcy Trustee Do?

What Does The Chapter 13 Bankruptcy Trustee Do?

Learn more about Chapter 13 bankruptcy trustees, including what they do, how they are compensated, and how they manage your repayment plan.

When you file for Chapter 13 bankruptcy, the court will appoint a trustee to manage your case. You’ll learn about the Chapter 13 trustee’s responsibilities, how the trustee is compensated, and the role the trustee will play in your case in this article.

The Chapter 13 Bankruptcy Trustee’s Responsibilities

The trustee’s job in a Chapter 13 bankruptcy is to:

  • Make sure your proposed Chapter 13 repayment plan complies with all legal requirements.
  • Before you file, make sure you’ve filed your tax returns for the previous four years.
  • take advantage of the plan’s payments
  • Distribute plan payments to your creditors according to the law.
  • keep track of the required monthly income and expense reports in a Chapter 13 case, and
  • If you owe back child support, you must provide certain information to the payee and your state’s child support enforcement agency.

How are Chapter 13 Trustees compensated?

Trustees in Chapter 13 keep about 7%–10% of the payments they make to creditors. When deciding whether Chapter 13 is right for you, keep this fee in mind.

The Function of the Chapter 13 Trustee in Your Case

Many Chapter 13 trustees are involved in the cases they oversee. This is particularly true in small suburban or rural judicial districts, as well as in districts with a high number of Chapter 13 bankruptcy cases. A trustee might, for example:

  • provide you with financial advice, such as assisting you in the creation of a realistic budget (the trustee cannot, however, give you legal advice)
  • assist you in making any necessary changes to your plan
  • if you miss a payment or two, give you a temporary reprieve or take other steps to help you get back on track, or
  • Participate in any hearing about the value of a piece of property, and consider hiring an appraiser if necessary.
  • Your financial relationship with the trustee has its limits, despite the trustee’s interest in your finances.
  • You will have control over any money or property you obtain after filing, as long as you follow your repayment plan’s instructions and make all regular payments on your secured debts.

However, if your income or property rises during the course of your plan (for example, if you get a big promotion or win the lottery), the trustee can seek to amend your plan to pay your creditors a higher percentage of what you owe them rather than the lower percentage originally specified. If your income drops and you have to convert from Chapter 13 to Chapter 7, the trustee may become involved.

When you file for Chapter 7 bankruptcy, the court appoints a bankruptcy trustee to oversee the administration of your case. You’ll learn about the specific responsibilities of the Chapter 7 bankruptcy trustee in this article, so you’ll know what to expect before, during, and after the 341 meeting of creditors—the mandatory hearing for almost all filers.

What Does a Chapter 7 Trustee Do?

The Chapter 7 trustee examines the debtor’s bankruptcy paperwork and verifies his or her identification. However, these are minor responsibilities. The Chapter 7 trustee’s primary responsibility is to sell any property that the debtor is not entitled to keep and to distribute the proceeds to the debtor’s creditors. Thus, in any Chapter 7 bankruptcy case, the trustee’s primary interest will be in your personal property and any property you claim as exempt (that you have the right to keep).

Certain individuals believe that the trustee’s role is to assist the debtor throughout the process. The trustee’s role is to protect creditors, not debtors—although the trustee will be courteous and assist the case in moving forward. The best way to grasp this dynamic is to understand how the trustee is compensated. Continue reading.

Payment to the Chapter 7 Trustee

A Chapter 7 trustee is compensated a pittance of $65 per case for performing a cursory review of a debtor’s bankruptcy petition (as of August 2020). A Chapter 7 trustee, on the other hand, stands to earn significantly more. The trustee is compensated by the court a percentage of the funds distributed to the debtor’s creditors.

The funds could come from a variety of nonexempt sources (property that the filer cannot protect with a bankruptcy exemption), including money in the debtor’s bank account, nonexempt property that the trustee liquidates (sells), or funds that the debtor agrees to pay in exchange for the right to keep nonexempt property (more below). The trustee receives 25% of the first $5,000, 10% of the next $50,000, and 5% of any additional funds up to $1,000,000.

The Chapter 7 Trustee conducts an examination of the Bankruptcy Petition.

If all of your property is exempt (you get to keep exempt property), your case is considered a “no-asset” case—creditors will receive nothing. The bankruptcy notice sent to creditors will inform them that they are not required to file proof of claim forms because there will be no money available to pay them. However, they will be informed that this may change.

Under the supervision of the United States Trustee, the trustee is required to review your bankruptcy papers for accuracy and indications of possible fraud or abuse of the bankruptcy system. The trustee will review the documentation and look for indications that you are concealing or mischaracterizing assets. The petition and schedules, as well as the 521 documents you submitted prior to the hearing, will be reviewed (bank statements, paycheck stubs, profit and loss statements, tax returns, and the like).

After discovering nothing, the trustee will lose interest in the case. When the trustee has no property to seize and sell in order to pay your unsecured creditors, there is no commission to motivate the trustee.

The 341 Creditors Meeting Is Conducted by the Chapter 7 Trustee

You’ll meet the Chapter 7 bankruptcy trustee at your creditors’ meeting, which you must attend in order to avoid having your bankruptcy dismissed. The trustee will verify your identification, ask the mandatory 341 questions (along with any other issues raised by your paperwork), and allow any creditors who appear to ask questions (they rarely show up).

Generally, if all of your assets are exempt, the trustee will call the meeting to a close and you will not hear from the trustee again. You’ll complete your debtor education course and await the discharge of your debt.

If, however, you are unable to fully respond to the trustee’s questions, the trustee will postpone the creditors’ meeting and request that you submit appropriate documentation in the interim. Occasionally, the trustee may retain an attorney to pursue nonexempt assets you appear to own, or may refer your case to the United States Trustee’s office for further action if it appears as though you engaged in fraudulent activity.

Nonexempt Assets Are Seized by the Chapter 7 Trustee

If the trustee needs to seize and sell nonexempt assets, you must cooperate in delivering them to the trustee for disposition. Additionally, you can “repurchase” nonexempt assets from the trustee at a negotiated price or substitute exempt assets for nonexempt assets. Numerous trustees discount the property’s value by 20% and occasionally grant the debtor a few months to pay.

Search by the Trustee for Non-Exempt Assets

Many people are unsure whether a trustee has the authority to search their homes to ascertain whether they are concealing property. While such searches are unusual, as part of your obligation to cooperate with the trustee, you may be required to give the trustee a guided tour of your home or storage space. And if you refuse to cooperate, the trustee can obtain a court order compelling you to comply.

Abandonment of Non-Exempt Assets by the Trustee

If you own nonexempt property that is not worth much or would be difficult for the trustee to sell, the trustee can — and frequently will — abandon it, allowing you to keep it. For instance, regardless of how much your used furniture is theoretically worth, many trustees will avoid selling it. Arranging for the sale of used furniture is time consuming and rarely results in a significant profit for the creditors.

The Chapter 7 Trustee Issues Notices of Support Arrears

If you owe back child support, the trustee must notify the support claimant and the state child support agency in order to assist them in locating you following your bankruptcy discharge. Specifically, the trustee will inform the payee of his or her bankruptcy-related rights. The trustee will notify the state child support enforcement agency of the back support, the discharge, the debtor’s address and employer information, and the identity of any creditor holding a nondischargeable, reaffirmed, or a claim.

Both the payee and the child support enforcement agency have the right to request your last known address from these creditors. These creditors are permitted by law to release such information without incurring any penalties.

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Written by Canterbury Law Group

What Does The Chapter 13 Bankruptcy Trustee Do?

What Does The Chapter 13 Bankruptcy Trustee Do?

Learn more about Chapter 13 bankruptcy trustees, including what they do, how they are compensated, and how they manage your repayment plan.

When you file for Chapter 13 bankruptcy, the court will appoint a trustee to manage your case. You’ll learn about the Chapter 13 trustee’s responsibilities, how the trustee is compensated, and the role the trustee will play in your case in this article.

The Chapter 13 Bankruptcy Trustee’s Responsibilities

The trustee’s job in a Chapter 13 bankruptcy is to:

  • Make sure your proposed Chapter 13 repayment plan complies with all legal requirements.
  • Before you file, make sure you’ve filed your tax returns for the previous four years.
  • take advantage of the plan’s payments
  • Distribute plan payments to your creditors according to the law.
  • keep track of the required monthly income and expense reports in a Chapter 13 case, and
  • If you owe back child support, you must provide certain information to the payee and your state’s child support enforcement agency.

How are Chapter 13 Trustees compensated?

Trustees in Chapter 13 keep about 7%–10% of the payments they make to creditors. When deciding whether Chapter 13 is right for you, keep this fee in mind.

The Function of the Chapter 13 Trustee in Your Case

Many Chapter 13 trustees are involved in the cases they oversee. This is particularly true in small suburban or rural judicial districts, as well as in districts with a high number of Chapter 13 bankruptcy cases. A trustee might, for example:

  • provide you with financial advice, such as assisting you in the creation of a realistic budget (the trustee cannot, however, give you legal advice)
  • assist you in making any necessary changes to your plan
  • if you miss a payment or two, give you a temporary reprieve or take other steps to help you get back on track, or
  • Participate in any hearing about the value of a piece of property, and consider hiring an appraiser if necessary.
  • Your financial relationship with the trustee has its limits, despite the trustee’s interest in your finances.
  • You will have control over any money or property you obtain after filing, as long as you follow your repayment plan’s instructions and make all regular payments on your secured debts.

However, if your income or property rises during the course of your plan (for example, if you get a big promotion or win the lottery), the trustee can seek to amend your plan to pay your creditors a higher percentage of what you owe them rather than the lower percentage originally specified. If your income drops and you have to convert from Chapter 13 to Chapter 7, the trustee may become involved.

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Written by Canterbury Law Group

Chapter 13 Bankruptcy Cost 2021

Chapter 13 Bankruptcy Cost 2021

If you’re attempting to get out from under a mountain of debt, you’re undoubtedly thinking if Chapter 7 or Chapter 13 bankruptcy can help. Your next queries are likely to be how much Chapter 13 will cost and whether it will work for you once you’ve decided it’s the best option for your financial position. We polled readers throughout the country about their recent bankruptcy experiences in order to acquire some real-life answers to these issues. What we gathered from people who filed for Chapter 13 is as follows.

What Are the Fees for Chapter 13 Lawyers?

The law of bankruptcy is complicated and perplexing. Cases involving Chapter 13 can be very complicated, and mistakes might lead to major financial troubles down the road. So it’s no surprise that almost all of our readers (97%) hired a lawyer to assist them with the Chapter 13 bankruptcy procedure. Their legal fees often ranged between $2,500 and $5,000. However, the majority of readers (63 percent) paid $3,000 or less. Nonetheless, the average cost of $3,000 was more than double what other readers spent their lawyers to handle Chapter 7 bankruptcy cases. Because Chapter 13 cases take longer and need more labor, attorneys charge more for them. However, Chapter 13 has a benefit in terms of how attorneys’ fees are normally calculated: While the great majority of bankruptcy lawyers charge a flat fee for their basic services, they usually only require a down payment before filing the Chapter 13 bankruptcy petition. (You’ll also have to pay the filing cost, which is $313 as of December 2020.) The remainder of the attorney’s fee is then included in your Chapter 13 monthly payments, which means it comes out of the money that would otherwise go to your creditors.

When a Chapter 13 Lawyer Might Cost You More or Less

The fees charged by bankruptcy lawyers are determined by numerous factors, including their level of experience and location of practice. Attorneys’ fees, like other expenses, tend to be higher in large urban centers on the coasts. However, in Chapter 13 bankruptcy situations, there is another crucial issue to consider: The amount you pay your attorney must be approved by the court. Many courts set fee standards that they will automatically consider reasonable in order to make the approval process easier (known as “presumptive” or “no look” fees). The rules may also include a list of fundamental services that should be covered, as well as additional costs for business cases and additional services that may be required (such as filing plan modifications or motions). These assumed costs differ from one state to the next, as well as between districts within bigger ones. In a few populated states, examples of the range of presumed costs for essential services include:

  • $3,300 to $5,000 in California
  • $3,000 to $3,825 in Texas
  • $3,500 to $4,500 in Florida
  • $2,600 to $3,650 in Michigan
  • $4,000 to $5,100 in Virginia

Our findings backed up the conventional assumption that most lawyers will charge that amount or less for basic services in regions where the courts have set guidelines. However, if your case necessitates additional labor, such as when:

  • You own a firm as a solo owner.
  • Your home is worth less than what you owe, and you want to get rid of your mortgage obligation (or “discharge” it).
  • you wish to get rid of your college loans, or
  • When you declare for bankruptcy, you become a defendant in a lawsuit.

Source: https://www.nolo.com/legal-encyclopedia/chapter-13-bankruptcy-what-will-it-cost-and-will-it-work.html

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Written by Canterbury Law Group

How Do Bankruptcy Exemptions Work

How Do Bankruptcy Exemptions Work

If you’re one among the millions of people who lost their jobs as a result of COVID-19, bankruptcy can help you clear your debts while keeping your retirement assets intact. You won’t lose your stimulus cash, though, because the new bankruptcy “recovery rebate” law preserves stimulus checks, tax credits, and child credits.

Exemptions from bankruptcy play an important role in both Chapter 7 and Chapter 13 bankruptcy. Exemptions are used in Chapter 7 bankruptcy to determine how much of your property you get to keep. Exemptions in Chapter 13 bankruptcy help you keep your plan payments modest. Learn more about bankruptcy exemptions and how they work by reading on.

What Are the Different Types of Bankruptcy Exemptions?

Exemptions allow you to keep a specific amount of assets, such as a cheap car, professional tools, clothing, and a retirement account, safe in bankruptcy. You don’t have to worry about the bankruptcy trustee appointed to your case taking an asset and selling it for the benefit of your creditors if you can exclude it.

Many exclusions cover specific property kinds up to a certain dollar value, such as a car or furnishings. An exemption can sometimes protect the asset’s total worth. Some exemptions, known as “wildcard exemptions,” can be used on any of your properties.

Is it okay if I keep my baseball cards? Jewelry? Pets?

The goal of bankruptcy is to give you a fresh start, not to take away all of your possessions. You’ll probably be able to protect other items as well, such as religious literature, a seat in a building of worship, or a burial plot, in addition to the fundamentals. Chickens and feed are even exempt in some states. However, you should not make the mistake of assuming that everything will be well.

  • Items of high value. There are no exemptions for boats, collections, pricey artwork, or holiday homes. Instead of filing for bankruptcy, owners with such valuable assets often sell the property and pay off their debts.
  • Jewelry. Many states provide protection for wedding rings up to a certain value. Don’t expect to preserve your Rolex, diamond necklace, or antique broach collection, though.
  • Pets. The dog or cat you rescued from the shelter is unlikely to fall into the trustee’s hands. Why? It’s not that you’ll have a specific exemption to protect it; rather, the trustee would have to pay more to sell it than it’s worth in most circumstances. However, if you own a valuable show dog or a racehorse with high breeding costs, you may be forced to sell it or pay for it in bankruptcy.

Exemptions: What Are They and How Do They Work?

Whether you’re filing a Chapter 7 or Chapter 13 bankruptcy, exemptions play a significant role.

Bankruptcy under Chapter 7

A liquidation bankruptcy is one in which the appointed trustee sells your nonexempt assets to satisfy your creditors. Because the bankruptcy trustee cannot sell exempt property, exemptions assist you protect your assets in Chapter 7 bankruptcy. If your state offers a $5,000 motor vehicle exemption and you only own one automobile worth $4,000, for example, you can keep it. See Exemptions in Chapter 7 Bankruptcy for more details.

Bankruptcy under Chapter 13

You can keep all of your property and rearrange your debts with a Chapter 13 bankruptcy (which can mean paying less on some of them). The amount you must pay specific creditors, however, is still determined by how much property you can exclude. Unsecured creditors who are not priority (such as credit card companies) must be paid an amount equal to your nonexempt assets. Exemptions assist keep your Chapter 13 bankruptcy plan payments modest by lowering the amount you must pay creditors. See Exemptions in Chapter 13 Bankruptcy for more details.

Bankruptcy Exemptions at the State and Federal Level

There are bankruptcy exemptions in each state. A series of exemptions is also provided by federal law. (See The Federal Bankruptcy Exemptions for further information.) Some states force you to use their exemptions, while others allow you to choose between their exemptions and the federal system (you cannot mix and match the two).

The state exemption rules you’ll be able to use will be determined by where you lived in the previous two years (called the “domicile requirements.”). Read Which Exemptions Can You Use In Bankruptcy? for more information on the distinctions between state and federal exemptions and domicile requirements.

Nonbankruptcy Exemptions in the United States

In addition to state and federal bankruptcy exemptions, there are a number of federal nonbankruptcy exemptions. These exemptions work in a similar way to bankruptcy exemptions in terms of preserving your assets. Nonbankruptcy exemptions from the federal government are only available if you use your state’s exemptions (you cannot combine the federal bankruptcy and nonbankruptcy exemptions). You can use nonbankruptcy exemptions in addition to state exemptions if you are using state exemptions. See The Federal Nonbankruptcy Exemptions for further details.

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Written by Canterbury Law Group

Debt’s Emotional and Mental Toll

Debt – it is a word that can quickly cause anxiety for many Americans. Credit card debt continues to rise, reaching up to $420 billion in 2018. The average household has almost $7,000 in balances carried over to the next month. Credit card debt comes with high-interest rates, which makes it even harder to pay off.

Debt plays a serious role in the a person’s emotional and mental well being. The more debt an individual accumulates, the more likely they’ll deal with stress and anxiety of having to pay it off. Too much debt can take over your life.

If debt becomes too overwhelming, bankruptcy tends to be the last option. There is bankruptcy help in Scottsdale, but that might add a whole new level of stress and anxiety. So, if you’re going through debt right now, consider how it is affecting you emotionally and mentally.

Anxiety and Depression

A study done by Dr. John Gathergood of the University of Nottingham found that those in debt were twice as likely to undergo mental health problems, anxiety and depression included. If this becomes an issue, feelings of worry and hopelessness could arise, making the situation that much more difficult to get a grasp on.

Embarrassment

Admitting that you’re in debt can be embarrassing for some, especially if they’re in so much debt that bankruptcy is a realistic option. In society, money tends to be linked to our success. If you have it, you must be successful in life. If you don’t have it, then you’re not as successful.

With this mentality, many struggling with debt will hide it and act like they are okay financially. The issue is that this could lead to even more debt. They may say yes to expenses that they shouldn’t be in their situation. Plus, they could be avoiding the much-needed help friends and family could offer.

Frustration and Anger

Debt is frustrating. For some, it can be so frustrating that it makes them angry, especially if the debt is out of their control. Anger may arise if the debt was a result of losing a job, an unexpected expense, identity theft, or a serious illness or accident. Frustration tends to come when the debt is from previous years that you wish you wouldn’t have done. Either way though, this mentality won’t help your situation.  You may need to seriously consider your bankruptcy options.

Fear

When you live in debt, fear tends to be a common emotion that many feel. It’s the fear of wondering if you’ll be able to make your payments, pay for your mortgage or rent, put food on the table, ensure there is hot water and electricity in your home, or falling into bankruptcy.

Debt brings up many worries and the deeper in you go, the more the fear becomes apparent. Other fears can arise like the fear of wondering what you’ll do next, how you’ll get out of it, what people will think of you, and if you’ll be able to survive your debt.

If you’re struggling with debt, it’s essential that you watch how it is affecting your emotional and mental well being. The stress of debt can quickly take over your life. However, if you can avoid that from happening, you’ll be able to tackle your debt with a clear mind.  Bankruptcy can often clear the decks of almost all debt and give you a fresh start in life, and with your life’s well being.

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Written by Canterbury Law Group

Your 2019 Financial Resolutions to Get On Top of Your Debts

Making New Year’s resolutions can be challenging. Where do you start and what should it be about? Some popular resolutions revolve around finances – make more money, pay off the credit card, get out of debt, and another similar turn the corner ideas.

If you are struggling financially and worried about filing for bankruptcy, consider making a New Year’s resolution to help you take control of your debt.

Although when in doubt, there is your top bankruptcy attorney in Scottsdale, the lawyers do not always intend to file for bankruptcy for every client. Consider making some of the following financial resolutions to help you get on top of your debt.

Learn More About Finances

Make a New Year’s resolution to improve your financial literacy. The more you understand finances and how money, budgeting, investing, and debt work, the better off you can become.

The internet has tons of blogs that seek to help you take control of your finances. Browse through some that offer information to teach you about finances, rather than provide band-aid solutions to a single problem.

Start a Budget

If you are struggling with debt, you have likely heard the word budget from time to time. That is because a budget is one of the best ways to give you a snapshot of your actual financial situation. A budget shows you how much money you bring in each month and where you are spending it all each month.

To start a budget, write down your total monthly income after taxes. Then, begin to create expense categories. First, write out your fixed expenses (rent or mortgage, insurances, utility bills, and anything else that stays the same or similar each month), then move to your variable expenses (the ones that change month to month like entertainment or dining out). Be specific and honest with your categories.  Keep track of the spending on your phone or on a small notebook in your car.  Every dollar.

Increase Your Monthly Income

Another good resolution to help with debt is to aim at increasing your monthly income. It could be as little as $100 a month or up to $1,000. No matter what the number is though, make sure it’s realistic for you.

There are many side gigs you can do on top of your full-time job. You can get into some freelance work, teach students on the side (for example, guitar or piano lessons), or if you have a hobby in which you create things, you could start selling them.  You can drive for Uber or Lyft a few nights a week, for example.

Set Up a Savings or Emergency Account

Even though if you are in debt and you want to retire it quickly; it’s important that you have an emergency fund. That money is not there for whenever you want it. It’s there for when you absolutely need it.

Ask yourself if you could afford a $500 unexpected expense right now. Would you be okay, or would it push you even farther into debt? Either way, it’s in your best interest to start setting aside small amounts of money each month into an emergency account.

Target a Certain Debt

If you have multiple debts, one of your resolutions could be to target a particular debt. Instead of making the minimum payments on each debt every month, bump up the amount you pay for one debt that has the highest interest rate.

Take the debt with the highest interest rate and make that your primary target first. With the other debt, keep up with the minimum payments. Once you pay off the debt with the largest interest rate, that money can go towards the next debt, and so on. It will turn into a snowball effect until you have everything paid off.  It might take years to get there, but at least you will be on the path to paying everything off and avoiding bankruptcy.

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Written by Canterbury Law Group

4 Steps to Take to Avoid Filing for Bankruptcy Again

Going through bankruptcy is a stressful time. Although the stigma around bankruptcy and how we view it is changing, it is still something that many people are ashamed of. For some, going bankrupt was the result of a job loss or medical crisis they could not afford to pay back. But for others, bankruptcy is the result of overspending. No matter the reason though, bankruptcy tends to be the last option for families or businesses.

Sometimes, even after filing for bankruptcy and going through all the qualifications to continue, there may come the point when a second bankruptcy case is looking like the only option. If this is the case, you likely wouldn’t want to go through the process all over again.

There is a lot of bankruptcy help in Scottsdale if you find yourself in that position. However, there are steps you can take before possibly pursuing a second bankruptcy claim that could help get your debt under control.

Speak With Your Creditors

Just as much as you do not want to file for bankruptcy, neither do your creditors. When you claim bankruptcy, the creditors do not get the same amount of money as they would if you were paying the debt. You may be able to use that to your advantage.

Speak with your creditors and anyone else you owe money to. See if they would be willing to negotiate a payment plan or giving you a few extra grace months until you can gather enough money.

Sell Assets

If you are filing for bankruptcy again, it’s because you don’t have enough money. One way to bring in quick cash is by selling assets. The more you can sell, the more cash you can bring in.

Go through your home and see what items you have that you no longer use or need. It could be clothing, jewelry, artifacts, even a car. Make a list of what you could sell and see if it’s something you can live without.

Take a Second Job

If you are really close to filing for bankruptcy, it may be time to look for another job. The more money you can bring in, the quicker you can pay off your debts to avoid bankruptcy. Although taking on another job is not the most popular step to take, it could bring in enough additional income that you could get straightened out with your creditors.

Ask for Help

If you have exhausted all other avenues and are not sure what else to do, it may be time to ask for some help. Many find this embarrassing the first time, and likely more embarrassing the second time. However, if you can negotiate a loan from a friend or family member, it could be exactly what you need to put the idea of bankruptcy out of your head.

In the end, there is no quick solution to avoid bankruptcy. You will need to find ways to increase your income and reduce your expenses to help get you back on your feet. Work with a budget to keep track of your finances, and to help prevent you from falling into this situation again in the future.

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Written by Canterbury Law Group

Why You Should Not File for Bankruptcy

In some circumstances, filing for bankruptcy is the only solution to deal with your financial crisis. For others though, bankruptcy is actually a bad idea and should be avoided.

Each situation will be different, depending on how much debt you have and what kind of debt it is. It’s essential that you seriously think about the benefits and downfalls of bankruptcy, and see if it is the best solution for your current situation.

Your top bankruptcy attorney in Scottsdale is ready to help you with all of your bankruptcy needs. First, though, see if your reason for bankruptcy is a good one.

Cannot Pay Small, Unsecured Debt

Unsecured debt is commonly known as past due to credit cards. It’s debt that has no outstanding collateral for the credit card company to seize from you. That means the lender lets you spend as much as you want without tendering any security in case you default on the loan. If you do default on your payments, there is nothing for the lender to repossess.  While they certainly can sue you, that again only gets them a judgment.  Eventually, that judgment will likely lead to garnishment of your banking accounts and a paycheck.

This isn’t to say that you can stop paying small loans and you’ll be fine. There are still issues involving your credit and the chance of the lender suing you in court. However, this is not a good reason to claim bankruptcy. In many cases, you or your bankruptcy lawyer can negotiate with the lender to set up a payment plan that works for you, or to pay a lump sum to clear up the debt.

There are also occasions in which the lender may write off your debt as uncollectable, but that isn’t a solution to rely on.

Student Loans, Income Tax, Court Judgment, or Child Support

Bankruptcy doesn’t necessarily erase all of your loans. In some cases, bankruptcy won’t help you with certain loans. Depending on what you owe, each situation is treated individually.

Filing for bankruptcy for debt like student loans, income taxes owed, certain court fines or penalties and child support won’t do you any good. There may be extreme cases when bankruptcy can quash this kind of debt. For the most part, though, bankruptcy can’t do anything about these types of debt.

Stop Collection Agencies from Calling

If you are wary of collection agencies calling you all the time, there’s an easier way to make them stop than filing for bankruptcy. Through the Fair Debt Collection Practices Act (FDCPA), if you request them to stop calling, they must oblige under federal law.

Send a written letter to the collection agency stating you do not want them to contact you anymore. If they continue to call after your request, keep a record of the phone calls, you can sue the collections agency later and potentially collect damages and fees.

Want to Restart

If you’re looking at bankruptcy as an easy way out of your debt, you may want to reconsider that mindset. For starters, there will be certain debts as we mentioned that will never go away after filing for bankruptcy.

Filing for bankruptcy is also hard on your credit. Bankruptcy remains on your credit record for up to ten years. That means if you want to take out a loan for a new vehicle or a mortgage, you may have a hard time being approved for many years to come.

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Written by Canterbury Law Group

Dealing With the Emotions of Bankruptcy

For many, accepting the fact that their finances are beyond their control and that bankruptcy is the only option is challenging. The thing is, though, bankruptcy should not be looked at as the end of the world.

Filing for bankruptcy is a way of admitting that you need help with your finances, and are willing to put in the work to regain control. However, the word bankruptcy still has a negative connotation to it. With that can come the stress on your mental and emotional well-being.

When going through bankruptcy, it is important that you remain as strong as you can. That is why we have the following six tips to help you deal with your emotions while going through bankruptcy.

Realize You Are Not the Only One

Filing for bankruptcy can be a blow to the ego. Your debt got out of hand to the point that there was nothing more you could do to control it. It can negatively affect your mental well being. The last thing you need, though, is for you to be hard on yourself which will only make you suffer even more.

Understand that you are not alone. Many people go through a bankruptcy claim, and many of them come out better after it’s all said and done. Look at a bankruptcy claim as a step you’ve taken to regain control of your finances, and not that you’ve given up. The truth is, you haven’t given up by taking this path because it’s only the first step of many that you’ll be taking to get out of debt.

Speak With Your Attorney

Your bankruptcy attorney is there to answer all of your questions and to guide you through the bankruptcy processes. By going with the top bankruptcy attorney in Scottsdale, they know how difficult a bankruptcy claim can be on someone’s mental well being. A good attorney will be compassionate and understanding, all while not allowing you to give up mentally and emotionally.

Lean on Family and Friends

Even if you want to keep your bankruptcy claim very private, it is still beneficial to have someone you trust to lean on. A close friend or family member will be able to listen to your problems and give you a shoulder to cry on. Take advantage of this as to avoid bottling everything inside.

Educate Yourself on Finances

After filing for bankruptcy, it’s a good idea to start reading up on what you can about finances and recovering from bankruptcy. Financial education will help you through your bankruptcy journey, as well as prevent you from ending up where you were before all of this. 

Seek Counseling

If you find that bankruptcy has taken an extreme toll on your mental health, seeking out counseling services is a good idea. These trained professionals can listen to your problems, and give you advice and coping mechanisms that will help you make it through bankruptcy.

Volunteer

For some, keeping their mind busy will help clear their head and stop thinking about bankruptcy for a moment. Going out and volunteering is an excellent way to do this. Volunteering is a way to lift your spirits by doing something good for someone else.

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Written by Canterbury Law Group

Moving Forward After Filing for Bankruptcy

Filing for bankruptcy is not something families want to do. Unfortunately, though, it is something many American’s have to do.

Filing for bankruptcy is not the end of the world. In reality, it is actually the opposite for many people. It can be looked at as a fresh start with finances, and a way to plan your path to financial freedom. However, it isn’t as easy as it sounds. After filing for bankruptcy, it takes a lot of time and dedication to continue moving forward. Bankruptcy is not a quick fix and is a decision that must be taken seriously.

For some, when the possibility of bankruptcy is an option, the question of how to move forward afterward will come up. With our bankruptcy help in Scottsdale, and along with some of the following tips, we will help you move on with your life after claiming bankruptcy.

Keep Paying Any Reaffirmed Debts

Some debts can survive bankruptcy, which means you will still have to pay them down. There are loans which are entitled to the value of the collateral. This means you will still be required to make the payments agreed upon in the original loan documents.

It would help if you didn’t look at these reaffirmed debts at as something negative. As long as you continue to make your payments on time, the reaffirmed debts can help you rebuild your future credit score.

Use a Secured Credit Card

Continuing with life without a credit card can be challenging. Many companies require a credit card before making a reservation, renting something, or even trying to purchase an item.

Using a credit card is what also helps build and improve your credit rating. A good credit score will allow you to apply for loans and mortgages, whereas a negative credit score is likely to get you denied. However, if you have a poor credit score or went through the bankruptcy process, it could be difficult to obtain one.

A secured credit card is something you should consider using after going through bankruptcy. These credit cards a basically pre-paid cards. You must deposit money into the card account before making any purchases with the card. The money is used as collateral; therefore you can only spend up to what you deposited. You can, though, deposit more to increase your credit, or even be rewarded an increased credit line from the bank.

Avoid Building Debt

One of the best things to do after applying for bankruptcy is avoiding what got you there in the first place. Try not to accumulate any new debt. Keep paying all of your bills on time. Create a budget to help you keep your spending in check, as to not spend more than what you’re earning. The more you can do to keep your cash flow higher than your expenses, the better chance you have of avoiding any more debt.

Don’t let bankruptcy be the end of your finances and your life. Although it will require work on your part, you should think of it as a fresh start to help you get your finances under control. By committing to it, you’ll be able to repair your credit score, pay off all of your loans, and work your way towards financial freedom.

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