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?" »

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" »

When one files Chapter 7 bankruptcy in Kentucky or Indiana, a discharge is received by the debtor at the conclusion of the case. This discharge releases the debtor from all dischargeable debts that were incurred prior to the filing of the bankruptcy case. Certain debts survive bankruptcy, such as child support and alimony, most student loans and certain taxes.

A reaffirmation agreement is a legally binding document that the debtor enters into with a creditor, pursuant to which the debtor agrees that an otherwise dischargeable debt will not be discharged and therefore, will survive the bankruptcy filing. This means that this particular creditor with whom the debtor entered into such an agreement can take legal action to collect the debt after bankruptcy if the debtor defaults, even though the debtor may have received a discharge of all of his other debts.

Why would someone want to reaffirm a debt? The most common situation is where the creditor has a lien or mortgage on something that the debtor owns and wishes to retain, such as an automobile. In that case, if the debtor wishes to retain the automobile, he must sign a reaffirmation agreement if the creditor requires it. If he refuses to sign it, then the creditor has the right to repossess the automobile even if the debtor is current with his payments. In deciding whether to reaffirm a debt, the debtor should always take into account the value of the property that he is retaining by signing the reaffirmation agreement versus the amount owed on the loan. If the amount owed on the loan far exceeds the value of the property being retained, then it does not make any economic sense to reaffirm because it would be the equivalent of re-buying the property at an inflated price.

What about a debt that is completely unsecured? Generally, if the creditor does not have a lien on anything that could be repossessed, then there is no need to reaffirm the debt. All you are doing is obligating yourself to pay something that the law makes clear you don't have to pay. Since the primary purpose of filing bankruptcy is to obtain a fresh start by coming out of the bankruptcy as debt free as possible, then reaffirming debts when there is no benefit to be obtained undermines that goal.

When it comes to real estate, the law is a little different than it is with regard to personal property such as automobiles. While reaffirming on an automobile loan is mandatory under the bankruptcy code, unless the creditor doesn't require it, it is optional when it comes to real estate. With regard to real estate mortgages, the debtor can simply maintain payments and keep the property without signing a reaffirmation agreement. However, if one chooses to go that route, he will not obtain the benefit to his credit from making future payments on his mortgage because those future payments will not be reported to the credit reporting agencies. The reason for that is that there is no "debt" to report since the underlying obligation has been discharged. The mortgage holder may also terminate certain services such as automatic bill paying and paying online. The mortgage holder may also be unwilling to modify the loan in the future if there is no reaffirmation agreement signed. Finally, when it comes time to refinance or buy another house, there will not be a trade line of payments on the credit report that helps build up a credit score.

The decision on whether to reaffirm a home mortgage or not when filing bankruptcy in Kentucky or Indiana is really a judgment call. On the one hand, reaffirming the debt provides certain advantage in terms of credit standing, but also exposes the debtor to substantial risk in the event of default. For if the mortgage debt is not reaffirmed, then the creditor's only recourse in the event of default is to sell the property, whereas if the debt is reaffirmed, then the creditor can also pursue the debtor for a deficiency balance (the difference between the amount the property sold for at foreclosure and the balance owed on the debt).

Before deciding whether to reaffirm a debt, consider all of the factors and seek the advice of your Kentucky or Indiana bankruptcy lawyer.