What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

Posted on February 13, 2015

If you are looking for a bankruptcy attorney but aren’t sure what type of bankruptcy suits you best, realize that there are two contrasting types: Chapter 7 and Chapter 13 bankruptcy. The Law Offices of Jason R. Moseley concentrates in both types and can answer any questions you may have about which you qualify for. There are some big differences between the two and you need to be aware that each one sends your life down a different path. Each one is a financial tool designed for two very different financial situations. Understand that there are circumstances and criteria you must meet to be eligible for either type. Many times people who are in the gray area between having too much disposable income and too much debt are required to pursue a Chapter 13 filing.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is designed to free you from credit card debt, medical bill debt, and other unsecured loans. However, you will not qualify if your income is too high and you have an excess of disposable income. The idea is to liquidate your property and assets in exchange for discharging the remainder of your debts. Your creditors acquire the value from your nonexempt property, and you become free of your debt burdens at the additional cost of significantly lowering your credit score. However, if you have too much disposable income you may be forced to file for Chapter 13.

What is Chapter 13 Bankruptcy?

Conversely, Chapter 13 bankruptcy is designed to restructure your debts, create an extended repayment plan, and release you from only a portion of your debts. As opposed to Chapter 7, your assets are not liquidated to pay off your debts and if you qualify you have the ability to maintain ownership of personal property such as your home, vehicles, and nonexempt assets. Many times individuals who face foreclosure on their homes can buy time by filing for Chapter 13. Although, you will still be obligated to pay family law expenses such as spousal maintenance and child support. Think of Chapter 13 proceedings as a way to “catch up” on your debts and Chapter 7 proceedings as a way to wipe the slate clean and start over. A typical timeline for a repayment plan under Chapter 13 is three to five years and can save you from losing everything.

Finding a Local Bankruptcy Attorney

Depending on which type of bankruptcy is right for your situation, you need to either seek the help of a practiced Chapter 7 bankruptcy lawyer or Chapter 13 bankruptcy lawyer. To help you plan for your future, consider utilizing the experience of the Law Offices of Jason R. Moseley. We have years of experience aiding clients in South Bend, Indiana restructure their finances with both Chapter 7 and Chapter 13.

Call us at 574-707-8675 to reach our office in South Bend, Indiana or at 219-472-8391 to reach our Merrillville office.

Can I Still Buy a Home After Bankruptcy?

Posted on January 24, 2015

What Does Bankruptcy Mean for My Future?

Bankruptcy is a viable solution to overcome insurmountable debts that can help you and your loved ones move forward. It can, in certain situations, wipe the slate clean or give you a chance to catch up on your debts and provide the opportunity for a brighter future. Most people are unaware, however, that bankruptcy proceedings can partially inhibit your ability to utilize financial tools such as credit cards and certain lending options because of the impact to your credit score. Yet the biggest question people who are considering bankruptcy ask themselves is, “Will I still be able to purchase a home after bankruptcy?”

Can I Still Buy a Home After Bankruptcy?

The short answer to this question is yes, you do in fact have the opportunity to buy a home post-bankruptcy. Please understand that the process is not instantaneous, though, and will require some unquantifiable amount of work and patience to achieve. Firstly your bankruptcy will need to be discharged. Next, your will need to work to build up your credit score. Lastly, you will need to find a mortgage to purchase your home.

Discharging Your Bankruptcy

Finding a Chapter 7 bankruptcy lawyer can help you determine your best options and increase your success of discharging your bankruptcy. If you require the invaluable services of a bankruptcy attorney in South Bend, Indiana, consider the help of the Law Offices of Jason R. Moseley. We concentrate in bankruptcy law and have helped countless individuals in Indiana with their bankruptcy proceedings.

Building Credit

The next step towards a home purchase will be rebuilding your credit. A couple of options you have that effectively build your credit score include installment loans and secured credit cards. Though you may think that cutting up every last credit card and closing your credit accounts can help you avoid future debt, this can hurt you in the long run. A secured credit card is backed by money that you deposit at the bank beforehand, and can help you rebuild your credit. Also, beware of credit repair agencies. While they can be helpful, read the fine print to ensure you don’t get bombarded with expensive fees.

Finding a Mortgage

After two to five years of rebuilding your credit you may qualify for a mortgage again. Your lender will want see that you are financially capable of paying your current debts to see if you have the financial capacity to make mortgage payments. They will review your credit score and other financial assets such as retirement benefits or a 401(k). These will make you look more stable in the eyes of the lender.

If you feel that you need to proceed with liquidating your assets in exchange for freedom from insurmountable debts, find a local bankruptcy lawyer. The Law Offices of Jason R. Moseley concentrate in bankruptcy law and can guide you through the process to help you plan for your future. We have helped countless clients in Indiana wipe the slate clean to create the opportunity for a brighter future.

Call us at 574-707-8675 to reach our office in South Bend, Indiana or 219-472-8391 to reach our Merrillville, Indiana office.

 

WHAT ARE THE LEADING CAUSES OF BANKRUPTCY?

Posted on December 30, 2014

Most Common Causes of Bankruptcy

Personal bankruptcy filings in the United States have risen. A look at the last two years of data will help shed some light on the most common causes of bankruptcy. Many feel confident they already know what the largest root cause is for personal bankruptcy, but the real causes are indicated by several current studies.

In 2012 some 1.4 million Americans were forced to declare bankruptcy and start over. But why did so many need to harm their credit, lose their property, and seek a new beginning? Debt is a quickly growing problem in the United States and an analysis of the current causes of the bankruptcy crisis can help millions of Americans avoid financial ruin. Many are aware of that the leading causes include medical expenses, credit card debt, unemployment, frivolous and irresponsible spending, and unexpected life events. But to what degree do these causes affect current bankruptcy filings?

It seems to be a commonly accepted belief that the healthcare system is to blame for the vast majority of bankruptcy filings. But are medical expenses really the leading ravager of personal finance? Or have the numbers been misinterpreted? There have been numerous studies in the United States that attempt to dissect the leading cause of bankruptcy. However the conclusions drawn from the studies have varying results and the conclusions have been misunderstood. 

Are Medical Expenses Really the Largest Cause of Bankruptcy in the United States?

It is well known throughout the world that the cost of healthcare in the United States is astronomical. Recent healthcare reform through the Affordable Care Act (ACA) sought to correct this problem, but has not yet succeeded.

Surprisingly, the lack of insurance coverage is not the only culprit that causes bankruptcy in these situations. There are many Americans that do have insurance but still get slammed with hopelessly overwhelming out-of-pocket expenses. In some cases their insurance will cover a 6-figure expense, only to incur a 5-figure copay.

Many websites, news sources, and law firms on the internet like to cite that over 62% of bankruptcy filings were mainly caused by medical expenses. However this figure is based on Harvard study from 2007. Though medical expenses certainly cause many bankruptcies, it does not appear that medical expenses are the leading cause today.

The Leading Cause of Bankruptcy

A more recent study conducted in 2013 by the Center for Consumer Recovery observed the causes of 3,082 bankruptcies across the entire nation. They conducted the investigation by studying each credit report and bankruptcy petition, and even held an interview with the participants. The conclusion was that instead of medical expenses, debt collection litigation was the leading cause in 2012 and the statistics are astounding.

2,404 of the bankruptcies (78%) observed in the study were determined to have mainly been caused by debt collection litigation. Instead of their debts forcing them into bankruptcy, the straw that broke the camel’s back was the cost of being sued by debt collection agencies. 74% of the bankruptcy sample admitted to being heckled by debt buyers and collection agencies. Once they were backed into a corner, they felt that the only way to escape was to file bankruptcy. 

Unemployment 

Though not the leading cause, unemployment is a common reason that many are forced to declare bankruptcy. In 2012 the unemployment yearly average in the United States was a staggering 8.07%. The great recession left many without a means to provide for their families and pay their debts.

Ning Zhu from the University of California conducted the Household Consumption and Personal Bankruptcy study and found similar results to the study by the Center for Consumer Recovery. The study did not find medical bills to be the leading cause. Additionally, his study determined that while unemployment does play a significant role in many bankruptcies, it is very far from being even within the top three causes. 

Spending Sprees, Lack of Budgeting, and Fiscal Irresponsibility 

Unfortunately, there is still a large percentage of people that file for bankruptcy because they simply fail to create or follow a budget. Debt is accrued after spending sprees and fueled by the failure to make monthly payments. The media drives many people today to place a higher value on their image than their finances. Because of this, people choose short term gratification at the cost of living beyond their means. The result is usually relentless calls from debt collection agencies and eventually bankruptcy.

The study performed by Ning Zhu found that overspending was the leading ravager of personal finance. With no cash to pay for consumer goods, their credit card debts mounted and proceeded to rack up fat monthly payments because of high interest rates. These results correlate with the study by the Center for Consumer Recovery. Of the participants in this study, nearly three fourths (72%) were shown to attribute their largest debts to credit card spending.

Inadequate Means to Meet the Cost of Living

Conversely there are also people who simply don’t have enough money and turn to credit cards to just meet their basic needs such as food, rent, and transportation. Many fiscally responsible individuals are forced to declare bankruptcy due to reasons outside of their control. We can definitely attribute some bankruptcy filings to these types of situations, though they are certainly not among the leading causes. 

Unexpected Life Events 

Another reason people are forced to declare bankruptcy is a category called unexpected events. This is a wild card or miscellaneous category that encompasses many different life events. A few of these include personal property damage due to floods, fires, tornados, hurricanes, and earthquakes. The untimely passing of a loved one, divorce, or any number of other unforeseeable disasters has forced many to seek a new beginning by filing for bankruptcy.

However, the study by Ning Zhu showed that the root cause of these types of bankruptcies was, again, irresponsible spending. Once a person had stretched their financial means to the limit, all it took was one unexpected event to send them careening out of control into bankruptcy.

The Law Offices of Jason R. Moseley is a South Bend, Indiana based bankruptcy attorney. They concentrate in Chapter 7 bankruptcy, Chapter 13 bankruptcy, and can help you stop harassment from creditors. For more information, please visit https://www.thelawyersforthepeople.com.

Am I Eligible to Declare Bankruptcy?

Posted on December 29, 2014

As the American economy has recently waned, a lot of undue financial stress has been placed on American families. Our national debt is only increasing, and the average amount owed per capita is rising as well. If you are feeling burdened by debt you may be asking yourself, “Do I qualify for bankruptcy?” The answer to this question is largely dependent on what type of bankruptcy you wish to file although additional factors come into play.

Chapter 7 Eligibility and the Means Test

The largest determiner of eligibility for Chapter 7 bankruptcy is called the means test. Essentially, the idea is to compare your household income to the median household income in your state. If it can be proven that your income is less than the state median income, you qualify for Chapter 7 bankruptcy. Some people may have the ability to pay their debts and instead try to find an easy way out by filing for bankruptcy. The means test was designed to weed out those who would try to take advantage of the system.

However, if your income is greater than the state median, a new determinant comes into play: your disposable income. Disposable income is what is left over after you pay your allowed monthly expenses to meet your basic needs. Unfortunately, if your disposable income is too high you will fail the means test and lack eligibility. Seeking a Chapter 7 bankruptcy lawyer will help you determine that you meet all of the requirements.

Chapter 13 Eligibility

There are several caveats and reasons why an individual cannot file for Chapter 13 bankruptcy. It also important to note that businesses are not eligible to file for Chapter 13 bankruptcy. Also understand that if your debts are higher than a certain fixed amount, you will also not be eligible. Currently your debts must not exceed $1,149,525 to qualify for eligibility, but the number changes over time to account for inflation. The debt cap for unsecured debt is adjusted as well, and currently they must not exceed $383,175.

Another critical requirement to be eligible for Chapter 13 bankruptcy is your income tax filings. You must be up to date and produce documentation that proves you have filed your income tax for the previous four years before you are eligible. If you aren’t sure if you meet all of the requirements or not, it is in your best interest to speak to an experienced bankruptcy lawyer.

Finding an Experienced Local Attorney

If you live in South Bend, Indiana and are considering bankruptcy proceedings, call the Law Offices of Jason R. Moseley. We have years of experience serving clients as a bankruptcy attorney in South Bend, Indiana. We specialize in bankruptcy law and have helped countless individuals through the Chapter 7 and Chapter 13 bankruptcy process. Call us at 574-707-8675 to reach our office in South Bend, Indiana or at 219-472-8391 to reach our Merrillville office to learn what bankruptcy options are the best for your unique situation.

What Is Chapter 7 Bankruptcy?

Posted on December 17, 2014

In Chapter 7 bankruptcy, a bankruptcy trustee erases several (or all) of your debts. During this time the trustee may also sell or liquidate some of your property to repay your creditors and debt.

Chapter 7 bankruptcy is the liquidation via sale of the debtor’s nonexempt property (these normally include items of value that are not reasonable and necessary) and the distribution of these proceeds to the creditors.

An experienced bankruptcy attorney can explain who is eligible to file, how the entire process works, and what happens to your debts and property.

Chapter 7 bankruptcy begins with a debtor filing a petition with the bankruptcy court. In addition to the petition, the debtor must also file the following items:

  • Schedule of income and expenditures
  • Statement of financial affairs
  • Include a schedule of executory contracts and current leases
  • Debtors must also include tax returns for the most recent tax year and tax returns from prior years since the case began

Are there alternatives to Chapter 7 Bankruptcy?

Yes – you can learn more by clicking here.

Some Pros and Cons of Chapter 7 Bankruptcy

Pros

A bankruptcy will stay on your record for years, the time to complete the bankruptcy chapter 7 process – from filing to relief from debt, takes only about 3-6 months. The trade-off is a lasting mark on your credit in exchange for freedom from most of your debt.

Cons

Bankruptcy will hurt your credit for some time. A Chapter 7 bankruptcy can remain on your credit report for up to 10 years.

You will lose property that is not exempt from sale by the bankruptcy trustee. You may lose some of your luxury possessions.

You will lose your credit cards. Credit card debt is one of the most common causes of bankruptcy. You may also be able to obtain new credit cards within one to three years of filing bankruptcy. However, typically the interest rates will be at a higher rate.

Bankruptcy will make it difficult to get a mortgage, if you do not currently have one.

Bankruptcy will not erase your student loan debt. Nothing will erase student loan debt.

You can learn more @ https://www.thelawyersforthepeople.com/bankruptcy/bankruptcy-chapter-7/

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual a “fresh start” and another chance. 

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.