Kentucky Bankruptcy Lawyers Blog

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" »

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 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.

Continue reading "Filing for Bankruptcy in Louisville Can Benefit Divorcees" »

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 Chicago Sun-Times and other major media outlets are reporting this week that household income has dropped faster since the end of the recession.

Louisville bankruptcy attorneys continue to help consumers deal with the fallout of the middle-class squeeze. Really, it's no wonder protestors have taken to Wall Street. The AFL-CIO recently reported the average annual CEO pay at a S&P 500 company is $11.4 million. The pay of these few hundred executives totaled $3.4 billion and would have paid the median salaries of more than 100,000 workers.

During the recession, the median household income fell by 3.2 percent to $53,518. From June 2009 to June 2010, it fell by 6.7 percent to $49,909. Self employed households suffered an 8.4 percent decline. African-American household income fell nearly 10 percent to $31,784. The youngest (25 to 34) and the oldest (62 to 64) fell by the largest percentage, 9.8 percent and 10.7 percent, respectively.

Too often, consumers don't know where to turn when medical bills, bad mortgage debt and credit card debt have them backed into a financial corner. Chapter 7 or Chapter 13 bankruptcy in Kentucky can offer a fresh start. Bankruptcy remains the most powerful consumer protection law on the books; families that have been squeezed to the breaking point should seek the advice of an experienced bankruptcy law firm.

Bankruptcy will stop foreclosure and collection efforts, including garnishment of wages. It will immediately stop creditors from harassing you. Together with your attorney you can review your financial situation and decide upon the best course of action. For about three-quarters of those who file, Chapter 7 is the best option. This filing will eliminate most unsecured debt. Consumers may even be able to keep their home or car if it makes financial sense. Retirement accounts are protected.

For those who need a financial breather and time to regroup, Chapter 13 will establish a payment plan over 3-5 years. It will keep creditors off your back and permit you to prioritize your debt. It may also be used by consumers who do not qualify for Chapter 7. Those filing for Chapter 13 can keep large assets while making arrangements to satisfy debts.

In either case, filing for bankruptcy has become a primary weapon in the middle-class fight to stay afloat. We encourage you to be proactive. If bad debts are preventing you from saving for college or retirement, of if bill collectors are impacting your quality of life, please pick up the phone and get the legal help you need to secure a brighter financial future.

Continue reading "Median Household Income Plummets; Bankruptcy a Powerful Weapon for Kentucky Families" »

On television, credit cards seem so convenient and consequence-free -- just use your card and get "points, "rewards" or "perks."

But what these commercials don't tell the consumer is that along with the perks, rewards or points system are hidden fees and high interest rates that can escalate on a sliding scale through no fault of the consumer. Built-in rate hikes can add as much as 25 percent to the purchase price without the cardholder knowing it.

It's lending practices like these that make credit card companies so much money. It's why they can afford lavish marketing budgets and high-profile actors and celebrities trying to sell consumers on their cards. But it's also why people throughout the state and nation are struggling with credit card debt. These practices have driven many to seek shelter in Louisville bankruptcy laws.

Louisville bankruptcy lawyers have helped countless consumers who are unemployed, downtrodden and looking for answers and help. Bankruptcy laws were created with the consumer in mind. They allow people to discharge mounds of debt that are hounding them and give them a brighter future without creditors calling constantly.

A recent column looks at the nine myths of credit card usage and how to bust them:

Good credit requires a credit card
A credit score isn't built on how much a credit card is used alone. Credit histories take into consideration a lot of spending behaviors, including whether loans are repaid on time.

Credit card debt should be carried
Some people believe this and borrow well beyond their means, which can cause major problems. When fees and interest builds after falling behind on payments, people may not be able to pay it, driving down their credit score.

Paying the minimum will pay off debt
Sure, after you've ended up paying many times more for your purchases than the sticker price. At the rate that the interest is multiplied and carried out against consumers, it can take years and sometimes decades for everything to be paid off. Thousands of dollars in debt can turn into tens of thousands or hundreds of thousands of dollars after interest and fees are applied.

Creditors can't repossess items bought with an unsecured card
A default on a credit card can be devastating to your credit score, whether you keep the defaulted possessions or not

Credit card accounts that are inactive should be closed
Not necessarily. If you believe you can't resist the urge to use an active line of credit, then maybe. But if you can keep a line of credit open with a zero balance, it shows you don't rush to use the credit you have.

It's OK to go over the credit limit as long as it's paid before the due date
This can hurt your credit score, cost you fees and increase that card's interest rate.

Even if I overuse my credit card, it will die with me
Not true. Credit card companies can go after survivors and the assets you leave behind to get their money back. Your spouse, if he or she survives you and shares a credit card, will be saddled with the debt.

I wouldn't get so many credit card offers if I couldn't afford it
Credit card companies send out offers to just about anyone -- even dead people and children. Don't feel so special. Their plan is to get as many people signed up for their cards as possible and likely only do a cursory look at your credit score before sending you mail.

Bankruptcy is the only option if my credit card debt is massive
There are many solutions to high credit card debt, though Louisville bankruptcy may be your best option. Just beware of credit counselors and other programs that may not end up helping you in the long run.

Continue reading "Credit Card Myths Send Louisville Residents Into Debt, but Bankruptcy Helps" »

A recent CNNMoney story reports that an increasing number of college graduates are filing for bankruptcy, as everyone has been affected by the nation's poor economy.

College graduates are the lifeblood of our country's future. Without bright young people who have spent years developing the skills necessary to be successful, America is going to have problems. Yet, these young adults are coming out of school with mounds of debt from student loans, book loans, housing, living expenses, car payments and credit card debt.

And with the nation's unemployment rate around 9 percent, many of these young people have had difficulty finding work.

But there is help. Filing for bankruptcy in Louisville can discharge many debts and through Chapter 13 bankruptcy can defer payments on student loans if the process is handled by an experienced Kentucky Bankruptcy Lawyer.

According to a survey of 50,000 respondents from 2006 to 2010, the rate of college graduates who have filed for bankruptcy has risen 20 percent. Non-college graduates make up the majority of debtors -- 70 percent.

But the study found that while bankruptcy filings have increased in that time frame, which is no surprise, the number of people making more than $60,000 a year who are filing for bankruptcy has also increased. In 2006, only 5.5 percent of debtors made that much, but in 2010, more than 9 percent of bankruptcy filers made more than $60,000 a year.

Most of those who filed for bankruptcy were married couples, while based on race, Asian-American filings doubled and Hispanic filers increased slightly. African-American filers dropped from 15.4 percent in 2006 to 11.3 percent in 2010.

There has been legislation proposed in Washington D.C. that would allow for student loans to be discharged as part of bankruptcy proceedings. As the law is currently written, student loans can't be discharged unless the student is physically unable to work and the loans are an "undue hardship."

That can sometimes be difficult to prove, so the new legislation, if it passes, would be a tremendous help to those who have tens of thousands or hundreds of thousands of dollars in student loan debt and no job to show for it. Too many of these students are falling prey to predatory loan companies writing for-profit commercial loans.

These are tough times financially and citizens are being forced to look at all means avaialable in order to help get them out of debt.

What those in this position in Louisville should consider is bankruptcy. Filing for bankruptcy can enable consumers to get rid of debt that has been mounting for years and get them back on track financially. If college graduates, who are more likely to find work, are filing for bankruptcy in record numbers, those without an education could possibly be in a more difficult position. Starting your career buried in debt is no way to live life.

Everyone is affected by the poor economy and bankruptcy can work for just about everyone. But it is a complex area of law that should be navigated by an experienced Louisville Bankruptcy Lawyer.

Continue reading "Bankruptcy Among Kentucky College Grads is Growing" »

Now that the country's debt ceiling crisis has been averted, for now, it's time to take a look at individual American's debt ceilings with tips provided by Forbes.com.

Consumer debt in Louisville can be difficult to tackle. Mounting credit card bills, unexpected medical bills and widespread job loss as a result of the weakened U.S. economy are all reasons people consider bankruptcy. But consulting with an experienced Louisville Bankruptcy Lawyer to go over all possible options should be the first step to financial freedom.

Unlike the federal government, average Joes and Janes can't simply raise their own debt ceiling. So, how does one tackle living beyond their own means? Forbes.com provides some solutions:

See if you can refinance debt with a lower interest rate: Interest rates are near record lows and while the government can borrow money fairly cheaply, personal credit cards aren't necessarily the same way. Sometimes a person can transfer high rate balances to credit cards with low or zero interest rates for at least a period of time. Balance transfer fees and other hidden costs could apply, so beware.

Borrowing from your home equity and retirement plan are also options, but they each have positives and negatives. Home equity loans tend to be tax-deductible, but they require good credit and some equity. Retirement plan loans don't require a credit check and the interest goes back into your account, but money won't be growing for your retirement and you may owe taxes, according to Forbes.com.

Find out where the money is going and try to cut back: The news has been full of politicians saying the country needs to cut back on wasteful spending. While little actually usually gets cut, it makes for good news clips.

But for the average citizen, cuts may be necessary. Forbes suggests looking at three months of bank and credit card statements. If there's not enough fat to cut, a person may have to prioritize spending. Eating out less and going to the movies less may be options to consider.

Start paying down debt: If you're able to free up savings each month, putting it toward debt with the highest interest rates and making the minimum payments on the rest may be a good strategy. But if someone is struggling to make even minimum payments, a payment plan with creditors may be an option. Bankruptcy is also an option.

Stick to a "balanced budget amendment:" Consider not borrowing except for things that can appreciate, like a home, or things that can provide more income, like education or a car for work. Avoid credit card debt, continue tracking spending and don't go over budget.

While these are sound financial tips, they won't work for everyone. Many people are so overwhelmed with debt that they can't come up with a budget or come up with a system to balance their bills. For those people, considering bankruptcy in Louisville may be an option to explore. Filing for bankruptcy immediately stops creditors from calling and can provide a fresh start financially that many people covet.

Continue reading "Tips to Deal With a Kentucky Resident's Debt Ceiling" »

Our Louisville bankruptcy lawyers continue to assist a record number of clients who want to free themselves from insurmountable debt caused by predatory lending, job loss, unexpected medical bills and bad real estate debt.

Those considering bankruptcy in Kentucky may also be struggling to pay student loans. As we reported recently on our Kentucky Bankruptcy Lawyers Blog, it's easy enough for high school seniors and young college students to get in over their head -- predatory lenders make it so by doing all they can to rope them into taking on debt via student loans, credit cards and car payments with high interest payments.

Sometimes the very colleges they attend get in on the act. Because student loans are one of the few debts that can be difficult or impossible to jettison via bankruptcy protections, students continue to struggle with loans long after graduation. For-profit colleges have a poor track record of piling debt on students that will take years or decades to repay. The Lexington Herald-Leader recently reported concern over the student default rate in Kentucky.

The report opened with the case of a middle-aged couple who had nearly $70,000 in loans for a pair of uncompleted associate degrees. As many as one-third of students at a Daymar College campus defaulted on loans due in the last three years. In all, 35 of 81 Kentucky schools eligible to participate in federal student loan programs had default rates higher than the national average of 13.8 percent. Daymar is being sued in U.S. Court by 140 current and former students.

In general, student loans are one of the few debts that cannot be discharged through bankruptcy (in most cases). But that's not to say bankruptcy won't assist someone struggling with student loans. By ridding yourself of credit card debt, bad mortgage debt, and other unsecured debt, a consumer can more readily pay down student loan debt and rid themselves of that burden altogether.

Chapter 7 Bankruptcy will permit those who pass a debt-to-income ratio test to eliminate most debts entirely. Others, including those who have large assets they want to keep, can file a repayment plan through Chapter 13 bankruptcy. Certain assets, including most retirement funds, remain protected from seizure throughout the process.

In other cases, when a consumer's rights were violated, there may be additional legal remedies. Kentucky Attorney General Jack Conway is among the attorneys general in 17 states who are investigating whether for-profit schools have violated consumer protections. Aside from the high default rates, other clues that something is amiss include student complaints, inadequate educational accreditation and deceptive marketing practices.

The average Kentucky college student graduates with $19,112 in student loans.

Continue reading "Kentucky Bankruptcy and Student Loans " »

How long one must wait in between bankruptcy filings depends upon the type of bankruptcy and the outcome of the previous bankruptcy.

1. Chapter 7: In order to be eligible to file Chapter 7 Bankruptcy in Kentucky and receive a discharge, the bankruptcy filing must occur more than 8 years after the filing of a previous Chapter 7 or Chapter 11 case in which the debtor received a discharge. Prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was adopted on October 17, 2005, the time period was 6 years. Keep in mind that the 8 years runs from the date of the filing of the previous Chapter 7 bankruptcy case, not the date of discharge. Furthermore, the rule does not apply if the prior case was dismissed rather than discharged.

In the case where the debtor files a Chapter 7 case and had a previous Chapter 13 case in which a discharge was received, the rule is slightly different. In that case, in order to receive a discharge, the prior Chapter 13 case must have been commenced more than 6 years before the filing of the current Chapter 7 case, unless payments under the plan in the prior Chapter 13 case totaled at lease: (A) 100 percent of the allowed unsecured claims in such case; or (B) 70% of such claims; and the plan was proposed by the debtor in good faith and was the debtor's best effort. This last requirement seems somewhat redundant because in order for the Chapter 13 plan to have been approved in the first place, the court would have had to find it to be filed in good and and the debtor's best effort. For this is a requirement for confirming any Chapter 13 plan.

2. Chapter 13: In order to be eligible to file Chapter 13 Bankruptcy and receive a discharge, the bankruptcy filing must be commenced more than 4 years following the filing of a prior Chapter 7 Bankruptcy case in which the debtor received a discharge. It is important to note, however, that this rule does not prevent the filing itself, but merely the obtaining of a discharge, and unlike Chapter 7, where the lack of a discharge makes the filing pointless, there may be reasons to file Chapter 13 where one is not eligible for a discharge. For example, if one is filing Chapter 13 Bankruptcy to cure his mortgage default and save his Kentucky home, then a discharge may not be that important. For in that case one doesn't need a discharge to achieve his goals since he is merely reinstating and paying, rather than discharging, his mortgage loan. The same may be true where the Chapter 13 bankruptcy is being used to reorganize tax debt or student loan debt that is not dischargeable anyway. Since the debtor still gets the benefit of the automatic stay, the Chapter 13 filing will still provide the benefit that the debtor needs.

These discharge rules can be rather tricky. If you have questions, consult with a competent Kentucky or Indiana Bankruptcy Attorney.

One of the questions that people frequently have who file bankruptcy in Kentucky or Indiana is whether they will have to return items that were purchased on credit. Will they have to return the refrigerator to Sears, or the camera to Best Buy?

In order to answer that question, it must first be determined whether the creditor from whom the credit was obtained is a secured creditor or an unsecured creditor. An unsecured creditor is a creditor that is owed money but does not have a lien on any of the debtor's property. Examples of unsecured debts are medical bills and credit cards. With respect to those types of debts, the creditor may have a legally binding claim, but there is no specific property of the debtor that has been pledged to secure the debt and therefore, nothing that the creditor can repossess. For example, when someone charges a purchase on his or her Visa or Mastercard, there is generally no security interest created in the merchandise purchased. Rather, there is simply a contractual obligation on the part of the debtor to pay the bill, but no claim by the creditor against the merchandise itself.

In order for a creditor to become a secured creditor, there must be a written security agreement that specifically provides that the creditor has a security interest in some property of the debtor. In the absence of such a document signed by the debtor, there is no right to repossess anything by the creditor.

There are two different types of security interests that can be created. The first is what is called a "purchase money security interest". This is where the creditor obtains a security interest in the property that is being purchased with the funds being loaned. A typical example of this type of security interest is the purchase of an automobile. An individual borrows money for the specific purpose of financing the purchase of an automobile. The second type of security interest is what is called a "non-purchase money security interest". This is where one borrows money and pledges as collateral some property that he already owns. For example, suppose the debtor needs to borrow money to pay for a new transmission in a car that he owns. Because the creditor doesn't feel secure enough about repayment based on the debtor's signature alone, the creditor asks that the debtor's car be used as collateral. Since the debtor is not using the loan to purchase the car, this type of security interest is called a non-purchase money security interest. This is an important distinction, because what type of security interest the creditor has may effect that creditor's rights in the event of bankruptcy.

Once it has been established that a creditor has a secured claim, as opposed to an unsecured claim, it becomes more complicated to deal with that creditor in bankruptcy. If the debtor does not address the creditor's security interest in some manner in the bankruptcy case, then that creditor will have the right to repossess the collateral after the bankruptcy is over. For the discharge that the debtor receives does not discharge the lien but only the underlying debt. So even though the secured creditor cannot take legal action against the debtor to collect the debt after discharge, its rights in the property pledged survive the bankruptcy discharge, and the creditor is entitled to take action to recover the property to satisfy its debt.

So how does one deal with his secured creditors when filing Chapter 7 Bankruptcy in Kentucky or Indiana?

The Bankruptcy Code offers several methods for dealing with secured creditors.

The first and simplest way to deal with a secured creditor in bankruptcy is to surrender the property, i.e. just hand over the keys to the car. If one elects to do so, he is completely off the hook. The creditor's sole remedy to get paid back is to sell the collateral and apply the proceeds to the loan.

The second option is to reaffirm the debt. This means that one signs a legally binding document during the course of the bankruptcy that waives the debtor's right to a discharge of that debt. So in other words, it becomes the same as if the debtor never filed bankruptcy with respect to that debt, because the creditor retains all of its rights against the debtor that it would have had in the absence of bankruptcy.

The third option is to redeem the property. This is accomplished by paying the secured creditor the value of the property in a lump sum. Suppose for example that the debtor owes the creditor $5,000.00 and the car that serves as collateral for the loan is worth only $500.00. The debtor can force the creditor to release its security interest in the car upon payment of the $500.00 rather than the full balance. To exercise this option, the debtor must file a motion with the Kentucky or Indiana Bankruptcy Court and obtain an Order. If the creditor disputes the value, it can object to the motion and the judge will then have to hold a hearing to determine the value. This option is only available for consumer debts that are secured by personal property.

The fourth option is to avoid the lien. This option may be available available where the security interest is a non-purchase money security interest that is secured by exempt household goods. This is also accomplished by the filing of a motion with the Bankruptcy Court. However, not all household goods are subject to this type of lien avoidance. The Bankruptcy Code provides a list of which household goods are subject to lien avoidance. So make sure you consult with your Kentucky or Indiana Bankruptcy lawyer.

The final option is to simply continue to pay the secured creditor without signing anything new. This is sometimes referred to as "ride through". When Congress amended the Bankruptcy Code in 2005, it eliminated this option for debts secured by personal property, unless the creditor consents. However, the option is still available for debts secured by real estate.

Dealing with secured creditors in Bankruptcy is a complex undertaking so make sure that you employ a competent Kentucky or Indiana Bankruptcy attorney to assist you.

It is commonly believed that filing bankruptcy will not eliminate one's tax debts. This is not necessarily the case. Income tax liabilities can in fact be discharged in bankruptcy if certain conditions are met.

There are five basic rules that must be satisfied in order for income taxes to be wiped out in bankruptcy:

1. The taxes in question must be more than three years old. The three years is measured from the date that the tax return for the year is question was due, including extensions. For example, if one owes income taxes for tax year 2007 and files bankruptcy in May of 2011, this rule will be satisfied provided the taxpayer did not receive an extension. If the taxpayer received an extension, then the taxpayer would have to wait until 3 years after the extension date, regardless of whether the person actually used the entire extension.

2. The tax return for the taxes in question must have either been filed on time or if not filed on time, been filed for at least two years prior to the filing of the bankruptcy. So let's say that one owes taxes from 20 years ago, but just now got around to filing the returns. Those tax obligations would not be able to be discharged in bankruptcy. That person would have to wait at least two years before filing the bankruptcy in order to be able to discharge those taxes.

3. The taxes must have been assessed at least 240 days prior to the bankruptcy. Ordinarily, when one files a tax return and owes taxes, the IRS assesses the tax on that date. So in most cases, the filing of the tax return and the assessment date are the same. However, sometimes the IRS will assess additional taxes after the return is filed. This can be caused by either the IRS receiving a W-2 that was not included with the tax return, or as the result of an audit.

4. The taxpayer's return was not fraudulent.

5. The taxpayer did not attempt to evade or defeat the tax.

if all five of these rules have been satisfied, the the taxes are probably going to be able to be eliminated in bankruptcy.

If you owe income taxes that appear to meet these requirement, speak with a Kentucky or Indiana bankruptcy attorney in order to determine your rights.