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Articles Posted in Life After Bankruptcy

Many people believe that filing for personal bankruptcy will make it impossible for them to start a business and become financially independent after their debts have been discharged. Often, bankruptcy debtors will discover that the exact opposite is true. With some discipline and good advice, entrepreneurs can find that starting a business and securing financing is much easier after a bankruptcy than it would have been if they had tried to resolve their debts without filing for personal bankruptcy. Three such entrepreneurial success stories have been outlined in a recently published online editorial post, and they are great examples of the ways for entrepreneurs to start and run a successful business after discharging debts through bankruptcy, while also rebuilding their credit.

credit-card-gold-platinum-1512626The Use of Secured Credit Cards is Often the First Step to Rebuilding Credit after Bankruptcy

After a bankruptcy, it can be difficult for someone to be approved for a credit card, but responsible credit card use is one of the best ways to build credit, so what can be done? A secured credit card can be a helpful way for someone to rebuild their credit after a bankruptcy.

With a secured credit card, it is much easier to gain approval, although it requires a collateral deposit that functions to cover the credit line for the card. Since the card user makes charges and pays the bills on time, they may be able to deposit more in the account to add more credit, and sometimes a bank will increase the credit line without requesting additional deposits. Using a secured credit card can allow someone to gain more and more credit over time, and it can eventually help an entrepreneur to be offered unsecured credit for a business loan to help with business expenses. Users of secured credit cards must be diligent about keeping their balances under the credit limit and paying their bills on time, or else using the card will not help them rebuild their credit.

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It is a well known fact that filing for bankruptcy—while alleviating the month-to-month burden of incoming bills and debts—can have an impact on a filer’s credit score and ability to get loans in the future. However, there is a common misconception out there that once people file for bankruptcy they are never going to get a loan again.

grungy-money-4-1361620-mIn a recent article by the New York Times, the paper discusses how recent bankruptcy filers may actually be eligible to obtain a home mortgage sooner than most people think. Bankruptcy filings peaked in 2010, at the end of the recession. At their apex, there were approximately 1.5 million filings in 2010. However, after that the numbers began to taper off.

Many of those who filed around the end of the recession are now getting back on their financial feet and are prepared to buy a home again. The question is, how long must someone wait to obtain a mortgage after bankruptcy and, secondarily, how long should someone wait to obtain a mortgage?

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If you are currently considering bankruptcy, chances are that your credit score is not very good. Going through the bankruptcy process—while freeing you of the crippling debt that burdens your daily life—will likely have a further impact on your credit score.

money-641083-mHowever, there are some things that recent bankruptcy filers can do to help rebuild their credit scores. In some cases, people who follow these guidelines are able to attain a higher credit score than they had before they filed bankruptcy.

The first thing to consider before filing for bankruptcy is to consult with an experienced bankruptcy attorney to help you along the way. The experience that comes along with hiring an attorney is an invaluable resource to those who want to quickly get their life back on track after their bankruptcy.

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There are many things that can contribute to someone’s decision to declare bankruptcy. However, few debts are more daunting than past-due federal income taxes. Because of the federal government’s inherent authority over its citizens, unpaid past-due taxes can lead to all kinds of legal and financial problems down the road. Perhaps that is why a common question we receive is whether filing for bankruptcy can help get someone out from under past-due income taxes.

tax-169849-mWhile it is impossible to give an answer that can apply to everyone’s circumstances, the general answer to this question is yes. Filing for bankruptcy may result in unpaid past-due taxes being forgiven. However, several criteria must be met before establishing eligibility for such forgiveness.

Before You File For Bankruptcy

Before filing for bankruptcy to avoid a past-due tax debt, you may consider contacting the IRS and asking if you can be put on a payment plan, or if they have any other possible solution to help you get current on your tax debt. In some cases, the IRS will look at a person’s assets, expenses, ability to pay, and asset equity and determine that they are a good candidate for alternative means of repayment.

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The decision to declare bankruptcy is no doubt an important one. While there are some short- to medium-term consequences of doing so, it offers valuable financial freedom to many. And, as a recent Forbes article points out, bouncing back after bankruptcy is very possible.

coins-1222894-mA recent article in Forbes Online takes a look at five of the richest families in the United States who have, at one point or another, declared bankruptcy, either personally or under the auspices of a floundering business they managed. Looking at their wealth before, during, and after they declared bankruptcy, the article points out that bankruptcy was certainly not a nail in their financial coffins.

The individuals mentioned in the article all fell on difficult financial times despite being hard-working and motivated to succeed. However, when the business climate changed, it meant that their businesses were not as profitable as they once had been. Combine this with an ill-timed investment or two, and their ability to service their debt became compromised. This left them little choice but to declare bankruptcy.

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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. garden.jpg

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.

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

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.

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

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.

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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.

Senior citizens are the fastest growing demographic asking for charitable food handouts, according to an article in The Republic. For 5 million older adults, nutritional meals are either inaccessible or unaffordable.

“It comes as a surprise to most people that seniors are going hungry,” said Dr. James Ziliak, director of the University of Kentucky’s Center for Poverty Research. “People think we conquered hunger with the War on Poverty back in the 1960s.” 833820_hands.jpg

When you look at the retirement savings of the Baby Boomers (or lack thereof), it becomes clear that growing numbers of senior citizens are having trouble making ends meet. According to the Survey of Consumer Finances, the average household has just $148,000 saved for retirement. Or about three years of modest living expenses.

Louisville bankruptcy attorneys continue to see those in retirement struggle with credit card debt, bad real estate debt and medical bills. Once living on a fixed income, they often have nowhere to hide and nowhere to turn when hit with unexpected expenses.

Tragically, too many turn to more credit card debt, reverse mortgages or outright scams.

In many cases, filing for Chapter 7 bankruptcy in Kentucky can free retirees from the confines of insurmountable debt. With this type of filing, most debts are forgiven. Retirement accounts are protected and filers can often keep their home and vehicle if they choose to do so.

Most retirees have worked hard all their life. They’ve raised families. And now it’s their time. We are committed to helping seniors find the best solutions to their financial situations. Whether it’s dealing with foreclosure or the high cost of medical care. We believe no one deserves to live out their Golden Years under the threat of collection agencies and the stress that comes with unmanageable debt.

Because of these financial strains, the number of bankruptcy filings involving those over the age of 65 has doubled in the last 20 years, according to the National Consumer Bankruptcy Project.

Often, the highest barrier for older residents is the negative stigma they associate with bankruptcy. But the truth of the matter is that bankruptcy is one of the strongest consumer protection laws on the books. As living expenses continue to grow, too many seniors are left getting by on the same fixed income year after year. Banks and Wall Street have been taken care of — it’s our senior citizens who are left to struggle.

As a result, AARP now estimates the percentage of older Americans dealing with food insecurity has climbed from 4.7 percent in 2006 to more than 10 percent in 2008.

Only about 4 percent of the U.S. population was over the age of 65 in 1900. Today, about 12 percent of the population — or 35 million adults — are senior citizens. As Baby Boomers begin to retire over the next decade, that number will grow to 17 percent by 2020.

This is the generation that always did for everyone else. Who kept themselves to themselves. And who kept problems close to the vest. But if financial problems are ruining your retirement, we encourage you to seek professional advice.

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