Kentucky Bankruptcy Lawyers Blog

Louisville bankruptcy attorneys know that there are a wide range of reasons people file bankruptcy in Kentucky.

Some have mounting medical bills. Others have fallen victim to the economy, finding themselves out of work - and out of other options. Frequently these days, bad real estate debt is involved. For still others, the issues may involve compulsive spending. Shopping addiction plagues about two to five percent of Americans.

Contrary to what some would believe, poor spending habits are not at the root of the majority of bankruptcies. Still, when saving trumps consumerism, your household budget is very likely on the right track.

While spending addiction is sometimes discussed in light-hearted banter, it can rip apart families, deplete your bank accounts and destroy your credit. In some cases, filing for personal bankruptcy can be the first step towards helping you get a fresh start.

But as with any addiction, this one requires that you recognize it before you can do something about it.

Even once you have recognized and addressed it, you must realize that, like other addictions, you may always have to battle some form of temptation. Discipline and moderation will help you spend more responsibly and rebuild your credit in the wake of a Louisville bankruptcy.

Battling a shopping addiction is tough because, unlike alcohol or drugs, which you can avoid forever, at some point, you'll have to enter a store to be self-sufficient.

One of the first things you'll want to do is recruit those closest to you. Confide in them about how much you've been spending and what your financial situation is. Chances are, they'll want to help you avoid future temptation by opting for outings that don't involve malls or stores.

You'll also need to be honest with yourself about the internal dialogue you're having with yourself when you shop. You may want to consider talking to a therapist to address the underlying problems associated with your over-spending.

Next, think critically about what other activities you might enjoy doing that will help you avoid the mall. You may consider playing a sport or joining a club or something of that nature. At first, it may merely be a distraction. However, the goal is to help you transition to a healthier financial situation.

If you find yourself standing in front of a tempting "bargain," walk outside for a few minutes. Maybe even wait a full day and sleep on it before you go ahead with the purchase. This will force you to think it through more carefully before you simply make an impulse buy for something you don't need - and can't afford.

Also, take a very close look at your daily expenditures. Maybe even keep a log. Things like a cab ride or lunches out - they don't seem like much in the course of a day, but they quickly add up.

Finally, recognize what your weakness is. Just about everyone has one. For some people, it's shoes. For others, it might be golf or designer duds. Whatever it is, know that in the long-run, being debt-free will be a greater reward than those new jeans any day.

Continue reading "Can Filing for Bankruptcy Help Address a Shopping Addiction?" »

Our Louisville bankruptcy attorneys have become increasingly familiar with the oxymoron, "Too broke to go bankrupt."

For those contemplating filing for a Chapter 7 bankruptcy in Louisville (the most common form), generally, the upfront cost is about $1,500. That's the nationwide average, according to the National Bureau of Economic Research.

And the truth is, when you're drowning in debt, who has an extra $1,500 lying around?

What that's going to mean is anywhere between 200,000 to 1 million people who would like to file for bankruptcy this year, but can't, according to a study conducted by three midwestern universities. Those social scientists were originally looking at the number of bankruptcy fillings that shot up after people received their tax returns. However in the course of their research, they found that a large number of people just simply couldn't be afforded.

Now, our Louisville bankruptcy attorneys believe it's important to note that there are steps that can be taken to help you achieve your financial goals, and Chapter 7 bankruptcy is an excellent way to help you regain your financial footing. Consulting with an experienced bankruptcy attorney is the first step to determining what all your options are - so don't just assume that because you don't have $1,500 cash in hand you can't do it. Call us, and we'll be happy to see how we can help.

Bankruptcy costs actually weren't always so high. They went up in 2005 (just before the housing bubble burst) with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. The idea was to make it so fewer people would file for bankruptcy by upping the requirements of the filling process. That's meant more paperwork and more fees.

To that end, the measure was somewhat successful, but the framers of the act likely didn't anticipate the large number of people who would need bankruptcy help in the wake of The Great Recession. So while the rate of bankruptcies have fallen just a bit since the law was passed (1.3 percent last year, down from 1.4 percent in 2004), the average income of those filing has gone up - a sign of an ill economy.

Some of the added fees include pre-bankruptcy credit counseling, which is required, as well as a pre-discharge debtor education class. Both of these will run, on average, about $85.

There are a lot of reasons why someone might file for Chapter 7 bankruptcy, including a foreclosure, job loss or medical emergency. Some experts, though, are concerned that the price tag of a bankruptcy is going to mean those who are the most vulnerable will be left with fewer options.

But again, we don't want people feeling intimidated about the process. That's why we really encourage folks to contact us, even if they think they may not be afford bankruptcy and especially if they find the new processes thoroughly confusing. Trying to go it alone is generally a mistake, especially given the new requirements. If you make an error, your chances of being allowed to re-file are significantly reduced.

Bankruptcy is a fresh start, not an added burden.

Continue reading "Louisville Bankruptcy Watch: Too Broke for Bankruptcy?" »

Most people assume - erroneously - that life after a Louisville bankruptcy is going to be bleak. They picture losing their vehicle, their property and being forced from their homes.

In fact, our Louisville bankruptcy attorneys know that there are situations in which filing for a bankruptcy can actually improve your chances of hanging onto your home.

In some cases, you may even be able to strip second or third mortgages, leaving you with your home and manageable payments. The potential loss of a home due to foreclosure is still a possibility that thousands of Kentucky homeowners are grappling with, despite the improved unemployment numbers and incrementally expanding economy.

By no means is Louisville bankruptcy a cure-all, but it can go a very long way in helping you to start fresh after you've been buried by unmanageable debt.

When you first file for bankruptcy, it immediately halts creditors from being allowed to harass you. What it also does is buy you some more time. It can force a mortgage servicer or lender to negotiate with you, and it may allow you to purge a great deal of your unsecured debt.

Speaking with a Louisville bankruptcy attorney to comb through all your options is the critical first step.

SNL Financial reports that the largest banking institutions in the country as of last
September had huge numbers of residential loans in the middle of a foreclosure.

In fact, Bank of America's mortgage loans in foreclosure topped $23 billion - not including the $90.6 billion in loans serviced for others.

Next look at Citigroup, which had mortgage loans in foreclosure that totaled about $7 billion, with another $10 billion in others-serviced loans.

Numbers from Wells Fargo, which held mortgage loans in foreclosure that totaled more than $18 billion, and loans serviced for others stood at roughly $40 billion.

And finally, JPMorgan Chase held residential home mortgage loans that had slipped into foreclosure totaling about $30 billion, plus another $55 billion for those loans they had serviced for others.

What all that basically means is that there is incentive for these financial institutions to want to work with you. That doesn't mean you should assume you can take them on yourself. These institutions have deep pockets and have become widely known for deceptive practices.

The bottom line, though, is that now more than ever, a Louisville bankruptcy can mean you can save your home, rather than be forced from it.

One thing to consider before filing is to look at whether all of your major assets are covered by Kentucky Bankruptcy Exemption Laws. An experienced Louisville bankruptcy attorney can help you sort through the details.

Just know that a Chapter 13 bankruptcy in Louisville can help you keep your home, and generally takes about three to five years to complete, but in the end, you will be considered current on your mortgage balance and free to continue living your life - in your home - without the burden of insurmountable debt.

Continue reading "Louisville Bankruptcy Watch: Keep Your Home" »

One of the main roadblocks people perceive as preventing them from filing for a Louisville bankruptcy is how it will impact their credit score.

Our Louisville bankruptcy attorneys want you to know, however, that bankruptcy is a means to restore your life - not tear it down.

It's a common enough misconception, considering the hype that is often given to prevent people from doing so. That's because it's not necessarily beneficial for the banks and other creditors. And so much is tied to our credit score - such as our ability to secure a home, auto or student loan. Those with high FICO scores (a measurement of your credit) are considered better candidates for lending options.

The truth of the matter, though, is that while your score will go down in the wake of a Louisville bankruptcy, there are ways you can steadily improve it, while nursing your overall financial health and stability. In fact, a discharged bankruptcy is the first step toward a rapidly improving credit score.

First, know that a bankruptcy is going to remain on your credit score for as long as 10 years. That FICO score we mentioned will probably stay fairly low until you start to rebuild your credit. But typically late payments and high credit card balance have already lowered a consumer's score long before they file for bankruptcy.

Here's how you can do that after a bankruptcy:

1. Look over your credit report. This will help you take stock of where you're at and where you'd like to be. Make sure to dig for any inconsistencies.

2. Make sure you are paying your bills on or before they are due. The history of your payments comprises roughly 35 percent of your credit score. That means one of the simplest ways to boost your score is to pay those bills when they're due. If it helps, you may want to consider setting up a monthly calendar reminder that will notify you a few days before the due date. Another option that many creditors and banks offer is the ability to set up your payments electronically so you don't lose track of time and forget.

3. When you apply for new credit, do so with great caution. If all of your major credit cards were discharged after your bankruptcy, it's not a bad idea to get a new one. This may seem counterproductive, especially if credit cards were a huge part of the reason you got into trouble in the first place. However, having a card that you can pay off every month is going to help you incrementally improve your credit score.

4. After more than a year or so, you might want to consider getting a line of credit or a car loan. In either case, you'll want it to be something you can afford. You're probably going to be faced with a higher-than-average interest rate, but just remember that once your credit is restored, you'll be able to get those lower rates.

5. Be wary of services that offer to repair your credit. Often, these agencies charge outlandish fees and in most cases, they aren't necessary. You can do this on your own.

6. Take note of your limits. Yes, it's important to start spending again, but you need to do so with more than a modicum of self-awareness.

7. Don't close all your credit card accounts. Just like after a bad relationship when you swear off the opposite sex, swearing off credit cards isn't realistic and, in truth, it can actually hurt your score. Keep the lines open, but don't spend anymore on them. Cut them up if you have to.

And finally, take it easy on yourself. Be patient. Your Louisville bankruptcy did not occur in a few months, and it's going to take longer than that to get you on a better path.

But don't let that discourage you - because, truly, the grass is greener on the other side.

Continue reading "Louisville Bankruptcy Watch: Repairing Your Credit" »

In the wake of the devastation wrought by powerful tornadoes in Kentucky, those in disaster-affected are sometimes left clamoring for Louisville debt relief.

Our Louisville bankruptcy attorneys understand that even though you have endured a natural disaster, lenders aren't always understanding. This is especially true if you were already struggling with debt prior to the disaster.

For example, in many instances, you'll be expected to continue making mortgage payments, unless you are able to work out other arrangements. Surprisingly, this is the case even if your home has been leveled. You will also still have to make payments on cars, credit cards and school loans - that doesn't all just stop, even though it may seem like your world is standing still.

The good news is that the Federal Housing Administration (FHA) typically implements a moratorium of three months - or 90 days - on foreclosures following a natural disaster. That means that the process must cease during this period, to give you a chance to regain your bearings and get organized.

Another potentially positive development happened last year, following an earlier bout of havoc-wreaking tornadoes that ripped through the Midwest. That's when Freddie Mac sent out a press release that urged lenders to help people in disaster zones by doing the following:

1. Suspend any foreclosure or eviction process for up to a year;
2. Waive any penalties or late fees against those whose home has been destroyed in a disaster;
3. Choose not to report any delinquencies to the national credit bureau if the lateness is due to a disaster.

Still, these are only guideline; there is no law that compels a bank to act on these recommendations.

That is why consulting a Louisville bankruptcy and debt relief attorney may be your best option when it comes to getting your financial affairs back in order. Bankruptcy sometimes has a negative connotation, the belief being that you have somehow failed. The truth, however, is that bankruptcy can mean a fresh start. And debt relief is going to help you keep those creditors at bay. This is especially important when you have bigger things to worry about - like rebuilding your life.

Certainly, it's important to prepare for a disaster before it happens. This means having all relevant documents in a secure and easily accessible location. This means making certain you have the appropriate insurance - such as flood or wind. It also means making sure you have a sufficient amount of savings so that when disaster strikes, you are not left completely destitute.

However, may Americans right simply can't afford all that. The economy continues to strggle, and times for many are hard. In that case, here are some steps you will want to take following a disaster:

1. First locate all of your important paperwork - wills, tax returns, deeds, insurance policies and bank statements.
2. Fill out insurance claims as soon as you are able.
3. Reach out to the bank that holds your mortgage loan. Make detailed notes during the conversation. If they ask for any documents, make sure you follow up with them.
4. Get in touch with the credit reporting agencies and let them know that your home has been affected by he disaster.
5. Call a Louisville debt relief attorney to discuss all of your options. Not only can we help you sort through the wreckage, we can offer peace of mind that you are doing everything possible to help rebuild from the ground up.

Continue reading "Louisville Bankruptcy: Tornado Victims may Need Financial Help" »

Bankruptcy cases are known for the amount of paperwork involved. And it is essential that this paperwork be completed accurately in order for you to be able to declare bankruptcy. At Schwartz Bankruptcy Law Center we have the experienced Kentucky bankruptcy attorneys and staff to help you in your Kentucky bankruptcy.

Morris v. Quigley is a Fourth Circuit court case that arose out of a bankruptcy filing in West Virginia. Although Kentucky is in the Sixth Circuit, bankruptcy law is based on the federal bankruptcy laws and is somewhat uniform across the country.

The main issue addressed in this case is whether in filing for bankruptcy a debtor can declare future monthly payments in calculating their disposable income, where they will not in fact be held responsible for those payments in the future. The amount of income available for spending or saving after taxes is considered disposable income.

Morris ("Debtor") was preparing for her Chapter 13 bankruptcy. This Chapter 13 bankruptcy is only available to individuals who have regular income and have a certain fixed amount of unsecured and secured debts. As the court explains, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") requires debtors who are filing for bankruptcy with above-median income to file under Chapter 13 rather than Chapter 7. The difference between these two types of bankruptcy is that Chapter 13 is a provision that provides for re-organization where Chapter 7 is for liquidation.

However, it is only after a thorough investigation of your financial records by a practicing bankruptcy attorney, that you can decipher which form of relief is more appropriate for you.

While completing the requisite documents, Morris listed all of her personal property on her Schedule B form. Included in her personal property were two all terrain vehicles ("ATV's") as well as another vehicle co-owned with her ex-boyfriend. On her Schedule D form, Morris listed all three vehicles as collateral for secured debts for which she was responsible for making payments on monthly.

Additionally, Debtor created a plan that indicated the future payments Debtor would make to the trustee in order to pay back her creditors. These payments are calculated by a formula that takes into account future earnings and future liabilities.

In Chapter 13 bankruptcy, the court appoints a representative called a trustee to administer to the estate during and after the bankruptcy proceedings. This trustee must distribute the future earnings received from the debtor proportionally to the debtor's creditors. Also, this trustee is responsible for ensuring that the Debtor accurately represents the financial figures involved and is in compliance with the law.

Through a thorough investigation, the Trustee in this case found that there were misrepresentations as to the three vehicles involved. First, the two ATV's Debtor owned were being surrendered because they were the collateral for the liability. In surrendering these two vehicles, debtor was released from the liability of future payments.

Additionally, the vehicle Debtor owner with her ex-boyfriend was actually in the possession of the ex-boyfriend, and he was making monthly payments on it. Therefore, Debtor would not actually be making future payments on this vehicle although she declared this as one of her liabilities.

Because Debtor listed these three vehicles in her Schedule D and deducted monthly payments for these vehicles from her projected future earnings, there was substantially less money available to pay the creditors back with.

The trustee in this case found that the Debtor was misrepresenting her projected disposable income, which led her to file this case. Debtor argued that this was simply a minor mistake in her reporting that would not lead to a "senseless result."

This Fourth Circuit court disagreed with the Debtor, and held that the phrase "projected disposable income" takes into account the past events but allows for future adjustments in Debtor's income or expenses that will affect to the final determination of this future income.

Debtor is required to accurately report all payments declared on the schedule B form. The court in Morris instructs that in the Fourth Circuit a debtor cannot deduct monthly payments from projected disposable income when, regardless how minor the payments may seem, Debtor will not be held responsible for these future payments.

This misrepresentation could very easily have been a mistake; however, the risks are too high in a bankruptcy proceeding to make mistakes on your paperwork.

Most people would do just about anything for a sick relative: Hold a fundraiser, help pay the bills or make some sacrifices to lend a hand. But some families mired in financial problems pretty much have to go it alone. Especially when it comes to paying for medical care,

Many medical procedures are extremely costly these days, and there seems to be no limit on what hospitals and specialists try to bill for. When it costs $25 for one aspirin, you know we're in trouble. But there is help in the form of filing for bankruptcy in Louisville.

Our Louisville bankruptcy lawyers recognize the great power that our nation's bankruptcy laws have because they allow everyday, average citizens to get help if they have financial problems. And one of the biggest causes of financial problems in the United States is healthcare costs.

Even when people have routine out-patient surgeries, many insurance companies end up paying tens of thousands of dollars on behalf of their policyholders. When a person is diagnosed with a form of cancer or has to get treatment for another complex or potentially fatal illness, it's going to require specialists, many hospital visits, exploratory procedures, expensive medications and other help to try to stop the illness.

Even people who get in car accidents -- a daily occurrence -- can be saddled with amazingly large bills. From broken bones to internal injuries, these conditions must be addressed quickly. That, too, can be costly.

So what happens when insurance stops covering? The hospital starts going after the patient. They send letters, make calls, have collection agencies make calls, and conduct other collections practices. Yes, they offered services, but after catastrophic events, people need time to recover.

Take for example one family in Texas. The Austin American-Statesmen recently profiled a family with three kids who are now $25,000 in debt with medical bills because one of their three children has spina bifida and one kidney. She may soon require spinal surgery and their mother has had heart surgery recently, adding to their medical bills.

The community has reached out, providing presents for Christmas, repairing the family's van that was in need of repair and household repairs that were causing problems. The family is determined to pay off the medical bills, but with additional medical care potentially on the horizon, it could be a rocky road.

Having a major illness "affects everybody's life," the mother said. "It's very isolating for the whole family."

Indeed, and this is where Louisville bankruptcy can help. Rather than forcing every family member to suffer, using these consumer-based laws can really help. Filing for bankruptcy in Louisville can get rid of medical bills.

Imagine having that freedom. Instead of waiting for the calls to stop coming in, a family can let bankruptcy clear their debt and get them in the right direction. There are ways out of the debt and while bankruptcy can't stop the medical issue, it can help stop the debt from adding to the stress of the situation.

Continue reading "Major Medical Bills, Even With Insurance, Can Require Louisville Bankruptcy to Cover" »

Times certainly could be better. There has been some good news in recent weeks, as manufacturers are again hiring in the United States, including in Louisville, where GM has recently shifted some operations, The New York Times reports.

But for many others -- more than 9 percent to be exact -- finding a job hasn't gotten any easier. For some families, a potential solution is to consider Louisville bankruptcy.

Our Louisville bankruptcy lawyers know that job loss is a terrible thing. It hits us in our pride and can cause emotional problems. More practically, it brings financial instability.

Some families can't make payments on bills, they may miss a house payment, credit cards become much more of an everyday tool, and they may even opt to take out a loan. In the meantime, lenders are contacting these families by phone, e-mail and other means. They've probably hired collection agencies, attempting to get any kind of payment possible.

The good news according to Business Journal is that unemployment rates dropped in November in 351 of 372 metropolitan areas, including Louisville, according to recently released statistics. In October, the unemployment rate was 9.8 percent and a month later it was 8.8 percent.

Another report states that Kentucky's unemployment rate overall dipped from 9.6 percent to 9.4 percent from October to November. Both of these are encouraging pieces of news.

The New York Times wrote a piece that looks at manufacturing jobs and the fact that while more American businesses are hiring again, they are bringing in people at much lower rates than in years past, even those represented by powerful unions. The guarantee of work these days has become more important than fighting for big raises or large benefits packages.

The article hits on the fact that General Electric's factory in Louisville is now being used to create new water heaters, a process that previously was being done in China.

These are all encouraging bits of news for our state and local economy, but the bottom line is that more than 9 percent of people are still without work. At 9.4 percent unemployment, that means nearly 408,000 Kentucky residents are out of work, according to 2010 census numbers. So, where does that leave most people?

The bottom line is that filing for bankruptcy in Louisville can be an appealing prospect for some people who are out of work. The process is designed to help people get rid of debt that is making life difficult. Rather than continue struggling with minimum payments and constant reminders of the situation you're in, bankruptcy can solve those issues.

After completing the process, those who file for bankruptcy typically get all or most of their debt cleared away. That means credit card debt, medical bills, other types of loans and other debt can be gone and the process of restoring credit scores and savings accounts can begin.

Continue reading "Although Louisville Jobs Increase, Unemployment is High and Bankruptcy Could Help" »

Just about everyone relies on credit cards these days. It's difficult to make large purchases without them.

Yet they can lead to major debt for consumers who get hit by late fees or incur high interest rates that kick in after certain stipulations detailed in the fine print of a contract kick in.

Our Louisville bankruptcy lawyers recognize how useful credit cards can be when used wisely. But we also caution consumers that credit can be dangerous. In fact, credit card misuse is one of the leading causes for debt problems in America.

As such, many people who opt for the protections of a Louisville bankruptcy note that it was credit cards that encouraged them to make the decision to go through with bankruptcy.

Apparently, credit card companies know that many people who sign up for their card will one day miss a payment. They may also be relying on those consumers who pay only the minimum amount due each month. Whether it's a job loss, a medical issue or another circumstance, some consumers fall into these traps.

Creditcards.com reports some staggering statistics about Americans' use of credit cards.

The website states that the average U.S. household has about $15,799 in credit card debt, for a nationwide total of $793.1 billion as of May 2011. It's likely to have increased since then. That debt has been put on more than 600 million credit cards.

By 2008, the average person had 3.5 credit cards, on average, in their name. The average APR on a new card was 14.89 percent and the average APR on a card with a balance was 13.10 percent.

The total amount of consumer debt in May 2011 was $2.43 trillion, including other types of loans, not just credit cards. Through 2010, MasterCard had issued 171 million credit cards, Visa 269 million and American Express 48.9 million.

There's quite a bit of money locked up in credit cards in this country and it won't be going down soon. Many people are tied to their cards and are having difficulty breaking free.

A Washington Post columnist advises consumers to try the "Debt Dash," by putting any extra income, from a second job or reduced expenses perhaps, into credit card debt. The method is designed to get rid of debt as soon as possible. The plan is to pick the debt with the lowest balance and knock that off first while making minimum payments on the others. The plan is to move on to the next biggest debt and up until it's gone. The problem is that making minimum payments adds fees to the debt.

The only surefire way to get out from credit card debt is filing for bankruptcy in Louisville. Filing for bankruptcy allows consumers to rid themselves of all credit card debt. And once the process is over, the consumer can begin the process of trying to repair his or her credit.

Continue reading "Credit Cards Can Be Important, But Misuse Could Lead to Louisville Bankruptcy" »

It's certainly a buyer's market in the real estate world, but what does that mean for those who already have a home and are being hampered by a possible foreclosure?

Proof of the problem can be seen on foreclosure tracking website RealtyTrac, which shows that much of Louisville is in a high foreclosure rate right now. Ten of the 24 ZIP codes are in an area where as few as 1 in every 228 housing units is in foreclosure in Louisville.

Yet, our Louisville bankruptcy lawyers have also noted that at the same time that many residents are dealing with a foreclosure, The Courier-Journal is reporting that the Kentucky Housing Corp. is offering its lowest mortgage rates in 40 years.

The state-chartered housing finance agency is offering borrowers with certain income limits, credit scores and other criteria 30-year, fixed-rate mortgages at 3.375 percent on the low end. The agency provides rates for first-time buyers and those with moderate incomes, but consumers must work with agency-approved lenders.

This all sounds great if you're looking to cash in on the depressed real estate market and get a great deal. But what if you already bought your dream home and ended up with a bad interest rate because it was a seller's market?

Flash forward a few years and now you may have hit a tough stretch financially with someone in your family losing a job, getting hit hard with a major medical bill or having to worry about the rising costs of day-to-day bills? For those with a variable mortgage rate that suddenly has spiked, leading to higher payments, this could be an especially troubling time.

Losing your home to foreclosure is never a good option. In fact, it can be devastating to children who could have their world turned upside down by having to move. If your credit score has taken a hit because of missed payments and other financial troubles, a foreclosure can make matters worse.

So, why not try to keep your house? One clear way is through a Louisville bankruptcy. Filing for bankruptcy immediately stops foreclosure in its tracks. Whether the family is receiving its first missed payment notice or the house is scheduled to be auctioned off at the courthouse, filing for bankruptcy can stop foreclosure.

What filing does is halt any attempts creditors have made to get money or possessions from you, including wage garnishments and foreclosure. This then allows your Louisville bankruptcy lawyer to use the laws on the books to help you get out of your debt.

Bankruptcy laws are supposed to help the consumer get out of debt after other methods haven't worked. These judges are trained and expected to provide help for everyday people who have gotten stung by high interest rates and a house with an underwater mortgage, meaning it is worth less than what the homeowners is paying on it. It's a bad situation that can be made better with bankruptcy laws that were created to help.

Continue reading "Louisville Bankruptcy Can Help Stop the Rise of Foreclosures" »

It's the beginning of 2012 and while it's a new year, for most people, the financial baggage of 2011 didn't stay behind in December. Times are tough, finances are tight and after the holiday season, bills may be looming.

Our Louisville bankruptcy lawyers recognize the frustration and pain that many people are going through right now financially. Government programs haven't done much to help working-class people, jobs are still tough to find, bad mortgages are still hurting families and prices keep climbing for groceries and other everyday needs.

Our lawyers also recognize that filing for Louisville bankruptcy has benefits for those who take advantage of these laws. They are consumer-focused and allow people a fresh start when expenses have gotten out of control and money is tight.

Some believe that bankruptcy is a bad option because it can hurt a person's credit, but the opposite is true. If a person has missed payments and is behind on various bills, his or her credit score has likely taken a tumble.

Filing for bankruptcy will actually begin to repair what has been broken by the past. The purpose of bankruptcy is to provide assistance to consumers who have fallen into bad times, often because of circumstances beyond their control.

The most obvious in recent years has been the housing collapse, which has affected nearly every American. As foreclosures have increased, housing prices have dwindled. Bad loans that people were trapped into signing years before the housing bubble burst are now coming back to haunt them. As the housing market collapsed, so did the rest of the economy, costing millions of people their jobs. And without a job, money has gotten even tighter.

It's a cycle that no one has figured out how to fix and many Louisville residents are stuck in the middle. They are trying to get by, but are having difficulty and aren't sure how long the difficulty will last.

Creating a plan to get out of debt and to try to get out of tough times takes a lot of work. Sometimes, it can be done without the help of bankruptcy, but through other financial and legal avenues, such as a short sale, credit counseling or stopping wage garnishment, there are ways to improve your money situation.

These are a few smaller steps that people can take to try to make some progress in the area of personal finances:

Quit smoking or lose weight -- Common New Year's resolutions, but these could cut down on insurance premiums and save a little money. Obese policyholders and smokers pay between 15 and 22 percent more for insurance than others.

Shop smart -- Clipping coupons, not being tempted by buy-one-get-one-free sales and using generic brands can keep some money in the wallet.

Simplify your finances -- Set up online accounts so you don't have to worry about checks, stamps and the mail. Max out your savings and do it automatically so you don't have to worry about forgetting.

Get smart about money -- Don't be in the dark about money issues, but study up on terms and that will allow you to be more active in financial planning.

Plan for the unexpected -- Start an emergency fund -- most experts suggest having six month's worth of funds set aside.

Pay down your debt -- Paying off your high-interest debt can save you money in the long run. And try to pay more than the minimum.

Create a basic budget -- Don't make it unrealistic, but attempt to keep it simple. Be transparent and allow it to be fluid.

Continue reading "A New Year's Resolution: Strengthening Your Finances Through Louisville Bankruptcy" »

With recent news that Kentucky's divorce rate is much higher than the national average, it's important to note that while a divorce can cause severe emotional issues, there are also obvious financial issues that can arise.

It's certainly possible that considering filing for bankruptcy in Louisville could help couples who are in the processes of filing for divorce or whose divorce has been finalized.

Especially in this current economy, our Louisville bankruptcy lawyers have been able to help many people who have fallen on hard times after having to split assets and begin living with one income instead of two. Alimony payments, child support and other expenses may have made money tight.

The Louisville City Examiner recently reported that Kentucky's divorce rate is 33 percent higher than the national average, according to census figures. The state's rate works out to roughly 13 per 1,000 people. Nationwide, the average is 9.5 per 1,000 who end up getting divorced.

Residents of the South have had higher divorce rates, in general, than other regions of the country in recent years as well. As recent as 2009 data, the rates were 10.2 per 1,000 for men and 11.1 per 1,000 women. At the time, the national numbers were 9.2 for men and 9.7 for women. In the Northeast, divorce rates were lower -- 7.2 for men and 7.5 for women.

Experts believe that divorce rates are higher because marriage rates are higher. People in other parts of the country also wait longer to get married, while Southerners are more apt to get married at a younger age. Education and employment are also factors in the numbers being higher.

So, what does this have to do with money? Any time a couple splits up, their lives change. If they have purchased a house together and now are getting divorced, it's likely that neither wants to keep the house because what once was considered a good investment is now a losing proposition.

Other assets will have to be divided and debt will be split up as well. There are tax implications that can come back to haunt divorcees as well.

It's possible that a couple could decide to file a joint bankruptcy before they get divorced in order to eliminate debt before the split is final. That will allow them to eliminate one more problem they need to deal with after the divorce.

But oftentimes, the breakup is so difficult they are unwilling to consider that. If a divorced person comes out of a split with mounds of debt and less cash than he or she had before, it's possible that bankruptcy could help. Filing for bankruptcy stops debt collections and allows the person to eliminate debt.

If you have just gone through a divorce or you are in the process, take a look at your finances. A divorce provides the chance for a fresh start. So, why hang on to the financial baggage, too? Consider a bankruptcy to get rid of your debt and wipe the slate clean as you start a new life.

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As a result of the housing bubble and the poor economy, home foreclosures in Kentucky and Indiana, as well as elsewhere across the country, have become an epidemic. Suffering a foreclosure can have a devastating impact, not only from the obvious hardship of losing one's home, but from the extremely negative impact it can have on one's credit.

Like most negative information, such as repossessions and judgments, foreclosures stay on one's credit report for 7 years. From a credit standpoint, however, a foreclosure is one of the hardest things from which to recover. For someone trying to finance the purchase of another home, a foreclosure is the worst piece of information that can appear on the credit report. In order for someone to qualify for a conventional home mortgage loan who has had a foreclosure on his record, the foreclosure must be more than 7 years old. What makes matters worse is that the 7 years runs from the date the foreclosure sale is complete, that is the date the new purchaser takes title to the property. Because the foreclosure process can drag out for months if not years before a new owner takes title, it can often take much longer than 7 years from the start of a foreclosure before one can obtain a loan.

Filing a Chapter 7 Bankruptcy, on the other hand, actually speeds up the time frame for obtaining new credit. Although the bankruptcy filing itself will stay on one's credit report for up to 7 years, the rules for obtaining a mortgage loan are much more lenient for someone filing Chapter 7 Bankruptcy than they re for someone with a foreclosure on his record. For example, a conventional mortgage loan can be obtained 4 years after a bankruptcy discharge and an FHA or VA loan can be obtained 2 years after the discharge.

Whether or not you are trying to save your home, Bankruptcy may be a better alternative than letting it go into foreclosure.

Consult with a Louisville or Southern Indiana bankruptcy attorney before it is too late to save your credit.

Redemption is a bankruptcy process that is often overlooked and under utilized by many Louisville and Southern Indiana bankruptcy bankruptcy filers. Redemption is the process of paying a lump sum to a creditor in a Chapter 7 Bankruptcy in exchange for a release of its lien on some personal property, such as a car or household items. The money paid to the creditor must equal the fair market value of the property that serves as collateral for the loan.

Here is how the process works. Suppose you own a car with that is worth $2,000 but the loan balance on the car is $6,000. If you Reaffirm the note on the car, you will be paying $6,000 plus interest for a car that is only worth $2,000. Would you buy a $2,000 car for $6,000? I doubt it. But that is in effect what you are doing if you reaffirm. The redemption option, on the other hand, would allow you to pay only what the car is worth. But the kicker is that you have to come up with the money in a lump sum. There are, however, companies that will loan you money to pay off the redemption amount, in effect giving you a new loan with a smaller balance.

The way it works is that the debtor files a motion to redeem the property for 2,000. The creditor then has an opportunity to object. The only basis for objecting would be if the creditor believes that the property is worth more than what the debtor is offering to pay. Most of the time the creditor will not object because it would rather have the money than take the car back and have to sell it. So if the creditor does not object, the court will enter an order allowing the debtor to redeem for 2,000 and the debtor then has 10 days to pay the money. Upon payment of the money, the debtor gets a free and clear title to the car.

This process is also very useful where the debtor has put up items of personal property as collateral with very little re-sale value, but that have value to the debtor. In many instances, the debtor may be able to redeem those items for very nominal amounts because the creditor does not want to have to repossess them.

In order to understand your rights, it is important to consult with an experienced Louisville or Southern Indiana Bankruptcy Attorney.

The Star-Ledger in New Jersey reports that "Real Housewives" star Joe Giudice has withdrawn a bankruptcy petition after taking the Fifth Amendment in consultation with a criminal lawyer. E! Entertainment reports the petition was withdrawn after the filer became uncomfortable answering questions from a bankruptcy trustee.

The media does not say whether Giudice was filing for Chapter 7 or Chapter 13 bankruptcy but a withdrawn petition is not at all uncommon in Chapter 13 filings. Typically, in a Chapter 7, few creditors bother to show up at the hearing or contest the discharge.

In other words, this is most common when assets are at stake. In most Chapter 7 bankruptcies, the petitioner seeks debt forgiveness with few assets. An upside down mortgage or car loan, are not considered assets, after all. And retirement funds are protected.

Questions more often arise in Chapter 13 filings. In Chapter 13, a debtor discloses assets and sources of income and establishes a repayment plan in an attempt to satisfy most debts presented to the court. The plan lasts 3-5 years. In an increasing number of cases -- particularly those involving bad real estate debt -- a Louisville bankruptcy attorney may suggest filing for Chapter 13 to see who shows up with their hand out.

For instance, say a homeowner who lost several properties in foreclosure is being chased for $50,000 on a second mortgage. By filing Chapter 13, you force the banks and collection agencies to stop hounding you, and you see who shows up in court. If you get tagged for the $50,000 and two other banks show up with $500,000 in deficiency judgments, you dismiss the Chapter 13 to avoid establishing the payment plan.

If no one shows up, or if you are prepared to make payments to those who do, you enter into the plan.

Chapter 13 bankruptcy -- bankruptcy protection -- is a court action brought by the consumer. The consumer is not obligated to go through with the filing. There can be many legitimate reasons to dismiss a bankruptcy case. Perhaps the debtor has obtained employment or his or her financial picture has changed substantially. Perhaps he or she received an inheritance.

At the same time, good legal advice is critical. Lying to trustees or misrepresenting assets can result in serious legal trouble -- even when done unintentionally. As the case of former major league baseball player Lenny Dykstra illustrates, not properly disclosing assets can lead to disaster. Dykstra is facing federal charges after being investigated for grand theft. The bankruptcy trustee in his case accused him of improperly hiding and selling assets. He faces 80 years in prison if convicted of charges related to bankruptcy fraud, embezzlement and obstruction of justice.

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