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17 hours 1 min ago

Deceptive Marketing – Lexington Law, John C. Heath and CreditRepair.com
Lexington Law and CreditRepair.com
5/2/19 – The Consumer Financial Protection Bureau (Bureau) filed a complaint for deceptive and abusive telemarketing acts or practices against PGX Holdings Inc. and subsidiaries Progrexion Marketing Inc., Progrexion Teleservices Inc., eFolks LLC, and CreditRepair.com Inc.; and against John C. Heath, Attorney at Law PLLC, which does business as Lexington Law.
Deceptive marketing for credit repair services
credit repairThe lawsuit, filed in U.S. district court in Utah, alleges the defendants violated the Telemarketing Sales Rule (TSR) by requesting and receiving payment of prohibited upfront fees for their credit repair services. Under the rule, companies can only charge fees for telemarketed credit repair services after providing consumers with documentation reflecting that the promised results have been achieved. That documentation cannot be provided to consumers until more than six months after the results were achieved. The Bureau also alleges that Progrexion and its subsidiaries violated the TSR and the Consumer Financial Protection Act by making deceptive representations in its marketing, or by substantially assisting others in doing so.
Lexington Law and CreditRepair.com – falsely advertised that it “guarantee[d] ANYONE a 0-3.5% Down Home Loan no matter how bad their Credit is when we start”
credit repairTo generate credit repair sales, Lexington and other defendants rely on a network of marketing affiliates who advertise a variety of products and services, often related to consumer credit products. As alleged below, Progrexion’s marketing affiliates have used deceptive, bait advertising to generate referrals to Lexington Law’s credit repair service. For example, one of Progrexion’s most productive marketing affiliates falsely advertised that it “guarantee[d] ANYONE a 0-3.5% Down Home Loan no matter how bad their Credit is when we start!” In reality, the affiliate did not provide any loans at all. Interested consumers were told that, to participate in the (non-existent) loan program, they had to sign up with Lexington Law. The Progrexion Defendants paid this marketing affiliate for each credit repair sale that resulted from its efforts, despite knowing that it engaged in deceptive practices.
Heath and Progrexion are headquartered in Salt Lake City, Utah and do business throughout the United States.

A copy of the complaint filed in federal district court in the District of Utah is available at: https://files.consumerfinance.gov/f/documents/cfpb_pgx-holdings_complaint_2019-05.pdf

MUSINGS FROM DIANE:
Desperate people will use their last dollar to hire quacks who are in the business to pad their own pockets.   Why?  Because they are searching for any way to give their families a better life.  At what point do these scum decide to treat others they way they want to be treated?  Probably never.  But, they are first to whine when they are prosecuted for their illegal acts.  It does not matter if that scum is the largest and oldest bank in the United States, or a bully on the play ground.  None of them care about the harm they are causing others.  Please remember – if it sounds too good to be true – IT IS!!!!

How Can I Help You?
The post Deceptive Marketing – Lexington Law appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


17 hours 1 min ago

PERSONAL BANKRUPTCY IN 2019”
 OUTLINE FOR PRESENTATION AT WORLD WIDE LAND TRANSFER
122 EAST 42ND STREET, SUITE 620
NEW YORK, NY 10168
PHONE: (212) 541-6224
FAX: (646) 218-4600
E-MAIL: JSHENWICK@GMAIL.COM

The goal of this presentation is to discuss issues and the law regarding filing for personal
bankruptcy in NYS in 2019.

1. The process begins with the client preparing three pieces of information:
1. A list of assets or property that they own,
2. A list of liabilities or who they owe money to and
3. An after-tax monthly budget.

-With this information and a 45 minute to one-hour consultation with the client, a determination can be made if the client should file for bankruptcy or not, what remedies are available to the client outside of bankruptcy under NYS law and what type of bankruptcy would most help the client.

-What is the goal of personal bankruptcy? To allow the client to keep as much property as possible and to discharge (legally wipe out) as much debt as possible or obtain “the fresh start” for the client.

2. Types of Personal Bankruptcy.  There are three (3) types of personal bankruptcy:
chapter 11, chapter 13 and chapter 7
-Chapter 11 is most commonly used to reorganize businesses but is sometimes used by high net worth individuals who have too much debt to qualify for chapter 13.  It is a very expensive process.
-Chapter 7 is known as a liquidation and “fresh start.” If you only have credit card debt and exempt assets, you would file a chapter 7 bankruptcy.  You can only file for chapter 7 bankruptcy once every eight years.
--Approximately 90 to 95% of our clients file chapter 7 bankruptcy.
-Chapter 13 is known as a “wage earner reorganization”–it is a blend of chapter 7 and chapter 11. If you had a house or a car that you wanted to keep, then you would file a chapter 13 bankruptcy.  If your debts were discharged in a prior Chapter 13 case, you cannot receive a discharge in a subsequent Chapter 13 unless it is filed at least two years after the date the first case was filed.
3. Median Income and Means Test.  Effective May 1, 2019, if a single person in New York State has income in excess of $55,333, then they fail the Median Income Test and they must take the “Means Test” to determine whether they qualify to file for chapter 7 bankruptcy (liquidation of debts). For a family of two, the income threshold for the Median Income Test is $71,343, for a family of three it is $83,887 and for a family of four it is $102,384. Add $9,000 for each individual in excess of four. 
-To perform the Median Income Test, you need to determine your gross monthly income for the last six months, subtract Social Security and Victims of Terror payments, divide this figure by six and multiply the result by 12. This figure is your annualized current monthly income (CMI). Compare your annualized CMI to the applicable Median Family Income as provided above. If you fail the Median Income Test provided above, then you must take the “Means Test.”
-The “Means Test” is an extremely complex test consisting of six pages of calculations! In its simplest form, you take your gross monthly income and subtract certain expenses based on the IRS National Standards, Local Standards and other actual expenses to calculate your monthly disposable income.
-This is one of the most complex calculations under the law; it is very difficult to do without a computer program and it is a six to eight-page calculation!
-If the majority of a Debtor’s debts are “business debts,” then they do not need to take the Means test, even if their income exceeds the Median Income for their state and family size.
4. Chapter 13.  There are several requirements to file a chapter 13 bankruptcy-(a) $419,275 or less of unsecured debt; and (ii) $1,257,850 or less of secured debt; (iii) you most devote all of your disposable income (income after taxes and other living expenses) to the plan; (iv) the plan may range from three (3) to five (5) years; (v) your creditors must get $1 more that they would get in a chapter 7 filing (liquidation analysis and best interest of creditors test); and (vi) as a general rule, if you have a lot of equity in your property and not a lot of disposable income. then it is not possible to confirm a chapter 13 plan.
-The Debtor’s attorney must do a liquidation analysis and determine how much the Debtor must pay each month to fund the plan
-The Chapter 13 Bankruptcy Trustee receives a 10% commission on each plan payment.
5. Exemptions-Debtor may choose NYS or Federal Exemptions. Exemptions are calculated at the time a Debtor files a Bankruptcy Petition with the Bankruptcy Court.
-NYS law determines what property is exempt from creditors and what property is not exempt.  Non–exempt property can be reached by your creditors and exempt property can be kept after the discharge. 
-Common exemptions include up to $1,150 for jewelry, a watch and art;
-$1,150 in personal property, bank account or cash (if no homestead exemption is taken); $3,400 for tools of trade, necessary working tools and implements necessary for profession or calling; and
-$170,825 of equity for a homestead (or $341,650 in equity for joint debtors).
However, debtors can also choose to use a federal exemption scheme instead of the NYS exemption scheme.  We sometimes advise debtors to use the federal exemption scheme when they do not own real estate and have other assets that they need to protect, since the federal “wildcard” exemption can exempt up to $1,325 plus up to $12,575 of any unused federal homestead exemption, for a total of $13,900. 
6. Automatic Stay.  When a bankruptcy petition is filed, the automatic stay pursuant to § 362 of the Bankruptcy Code comes into effect-and no creditors can sue you, garnish your wages or restrain your checking or savings account.

7. Bankruptcy Trustee.  When a bankruptcy petition is filed, a trustee is appointed to administer the estate, and his or her job is to liquidate the non–exempt assets; most chapter 7 cases are no asset cases.  There are chapter 7 and chapter 13 Trustees. In a chapter 13 case, the trustee will review the plan and related documents and make a recommendation as to whether the plan should be confirmed. If the plan is confirmed, he or she collects the debtor’s payments into the plan and distributes them to creditors.
8. Benefits of Bankruptcy. (A) Discharge-the goal of a chapter 7 filing is to get a discharge, which means that all the dischargeable debts listed in the bankruptcy petition are wiped out-it is important to list all creditors on the petition with the correct addresses; and (B) It may improve a person’s creditworthiness. Certain debts such as recent taxes, student loans, fraud and drunk driving awards are non-dischargeable. See section 727 and 523 of the Bankruptcy Code.
9. Property of the Estate-(1) tax refunds, (2) causes of action where Debtor is the plaintiff (such as a personal injury lawsuit); and (3) inheritances within 180 days of the filing are subject to the reach of your creditors. 
-Under the NYS exemption scheme, a personal injury payment up to $8,550 for bodily injury, not including pain and suffering or compensation for actual pecuniary loss, is exempt from the Debtor’s bankruptcy estate.
10. Taxes-as a general rule “old” “income taxes” can be discharged. Trust fund taxes such as sales taxes and the employee’s portion of employment taxes (FICA/FUTA) are non-dischargeable.
The following conditions all need to be met for taxes to be dischargeable in bankruptcy:
(a) The tax year in question is more than three years prior to filing the bankruptcy (counted from last date the return is due for that year, including extensions);
(b) The tax in question has been assessed more than 240 days prior to the filing the bankruptcy;
(c) The tax return for the year in question was filed at least more than two years prior to the bankruptcy filing (substitute returns don’t count);
(d) The tax return was non-fraudulent and there is no showing of willful evasion of payment of a lawful tax; and
 (e) The claim is unsecured: if secured, the tax is discharged as to the debtor personally (in personam liability) but the lien is still valid as to any property it has attached to (in rem liability).
-To discharge taxes client will need to obtain a tax transcript from IRS, which lists the nature of taxes owed and year for which taxes are due
11. Student Loans-In the 2nd Circuit and many other circuit courts of appeal, courts follow the Brunner “undue hardship” test (based on Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2nd Cir. 1987)), which requires a three part finding for a student loan to be dischargeable in bankruptcy: (1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.
-Recently many judges, law professors and bankruptcy practitioners have started advocating for a more liberal test to discharge student loans other than the Brunner test.
12. Exception to discharge under § 523(a)(2)(C)–purchase of more than $725 in luxury goods or services in 90 days prior to filing or cash advances aggregating more than $1,000 in the 70 days prior to filing.
13. Other exceptions to discharge under § 523-intentional torts, fraud, defalcation and alimony, maintenance and support for a spouse or child in connection with a separation agreement or divorce decree.
14. Negatives of a chapter 7 Bankruptcy Filing-chapter 7 can only be filed once every eight years and a filing will stay on a credit report for 10 years.
15. Reaffirmation Agreement-if you want to retain an asset and money is owed to a creditor with respect to that property, you can file a form with the Bankruptcy Court and reaffirm the debt-which means that you agree to repay the debt as if you had not filed for bankruptcy. The Bankruptcy Judge will review the Reaffirmation Agreement to determine if the Debtor needs to retain or keep that asset (is there a business reason for the reaffirmation?). Example reaffirming a car lease or a car loan for a car that the Debtor needs for business reasons.
-You can keep a credit card with a zero balance.
16. Credit Rehabilitation-Earn as much as you can, save as much as you can, get a securitized credit card, charge on it, pay it down and then get the credit limit increased.
17. Adversary Proceeding-an action in your bankruptcy case by your creditors objecting to your discharge with respect to a debt-potential grounds include fraud, false financial statements or constructive fraud-when was last time the debtor took a cash advance or purchased luxury goods or services?
18. Fraudulent Conveyances and Preferences. 
-A fraudulent conveyance is where you transfer property to a third party without fair consideration, and the statute of limitations under NYS law is six years. 
-A preference is where one creditor is preferred over another similar creditor, and the key time periods are 90 days (for general creditors) and one year (for creditors that are “insiders” of the debtor-individuals or entities with close relationships to the debtor).
19. Fees and Getting Started-The filing fee for a chapter 7 bankruptcy is $335 and the filing fee for a chapter 13 bankruptcy is $310.
20. The Process:
-When a potential client contacts us, we schedule an hour-long meeting and ask for the following documents to be brought to the meeting: (1) a list of assets; (2) a list of liabilities; and (3) an after–tax monthly budget. 
-At the meeting, we review the documents and discuss their finances, debtor and creditor law and pre–bankruptcy planning.  Our goal in a chapter 7 filing is to discharge as much debt as possible (giving the client a “fresh start”) and exempting as many assets as possible from the bankruptcy estate that’s created when their petition is filed.
-When the client retains us, we send him or her a link to enter the financial data we need to prepare the bankruptcy petition and information about the mandatory credit counseling course. 
-We draft the petition, review and review it with the client, and finally electronically file the petition and pay the filing fee.
-Shortly after the petition is filed, we receive notice of the § 341 meeting of creditors
-We attend the meeting with the client (who must bring an original Social Security card and a current photo ID) to the 341 meeting. 
-Before the meeting, we prepare the client on how to dress and questions that he or she can expect from the chapter 7 bankruptcy trustee. 
-Creditors may also attend the meeting and have 60 days from the date of the meeting to object to a discharge of their claim in bankruptcy or the debtor’s discharge.  Our goal is to have the chapter 7 trustee close the case at the end of the meeting, which happens in about 90% of our cases.  Within 60 days after the meeting, the debtor needs to take a post–bankruptcy debtor education course.
The process usually takes about two to six months from start to finish.

Other Bankruptcy Filing Requirements:

1. Have you filed for bankruptcy in the past?  As stated above, a chapter 7 debtor can only file another chapter 7 case eight years after a prior chapter 7 case was filed and if your debts were discharged in a prior Chapter 13 case, you cannot receive a discharge in a subsequent Chapter 13 unless it is filed at least two years after the date the first case was filed.  However, the issue of multiple filings is complex depending on chapters filed and sequencing, so each situation needs to be reviewed individually.
2. Have you resided in the district for the last 730 days? 

Documents Needed:
i. Valid NYS Driver’s License or Photo ID with current address
ii. Original Social Security Card
iii. Tax Return (last year federal, but bankruptcy trustee may request additional returns)
iv. Real Estate-if you own real estate, you need a recent appraisal for the real estate and mortgage statement showing the mortgage balance.
v. Last 60 days of pay stubs or payment advices

JHS


2 days 14 hours ago

Assets of Grand Teton Professionals frozen by federal court for fake credit repair schemeAlleges scammers charged upfront fees and falsely promised to improve credit scores

June 21, 2019 – At the Federal Trade Commission’s request, a federal court has temporarily halted and frozen the assets of Grand Teton Professionals, an alleged credit repair scheme that charged illegal upfront fees and falsely claimed to repair consumers’ credit. The company and other defendants are charged with violating the FTC Act and several provisions of the Credit Repair Organizations Act, the Telemarketing Sales Rule, the Consumer Review Fairness Act, the Truth in Lending Act, and the Electronic Funds Transfer Act.
According to the FTC’s complaint, since at least 2014, two of the defendants, Douglas Filter and Marcio G. Andrade, have operated an unlawful credit repair scam that bilked consumers out of at least $6.2 million.
FTC Finds that Douglas Filter and Marcio G. Andrade Lied to Consumers Who Wanted to Clean Up Their Credit
“A good credit score can help you buy a home, get a business loan, or finance an education,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “These companies preyed on consumers who wanted to clean up their credit by making false promises and taking illegal upfront fees.”
fake credit repairThe FTC charges that the defendants, using such trade names as Deletion Experts, Inquiry Busters, and Top Tradelines, used deceptive websites, unsolicited emails, and text messages to target consumers with false promises of substantially improving consumers’ credit scores by claiming to remove all negative items and hard inquiries from consumers’ credit reports. The defendants also falsely claimed to substantially improve consumers’ credit scores by promising to add consumers as “authorized users” to other individuals’ credit accounts, a practice known as adding “tradelines” or “piggybacking” credit. In most instances, however, the defendants were not able to substantially improve consumers’ credit scores.
Illegal Upfront Fees
Fake Credit Repair: The complaint also alleges that the defendants charged illegal upfront fees and failed to provide consumers with required disclosures about their credit repair services. The defendants also advised consumers to mislead credit bureaus by filing false identity theft affidavits and to mislead lenders by claiming to be authorized users on other individuals’ credit accounts, according to the FTC.
fake credit repair

MUSINGS FROM DIANE:
fake credit repairEveryday I see or hear about wonderful, naive people who believe the lies of scheming scum, who take their last dollar with the the promise of making their lives better.  It would not irk me so much if these were wealthy people being ripped off.  Instead, these low lives are taking money that is needed to buy food or find a better place to live.  If you are one of these scum – my prayer is that you are forced to endure the pain and suffering you put these trusting people through.  Get a real job and earn your own money!!
How Can I Help You?
The post Fake Credit Repair Scheme – FTC Cracking Down appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


2 days 17 hours ago

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3 days 20 hours ago

According to a recent Business Insider article many  bankruptcies are being driven by student loan debt.  See the link below. Jim Shenwick

https://www.businessinsider.com/people-filing-for-personal-bankruptcy-carry-student-loan-debt-2019-6


3 days 20 hours ago

To view an interesting article about proposed City council actions to overhaul the taxi medallion industry please see NY Post article below. Jim Shenwick

New York Post Article on City Council Proposed Overhaul of Taxi Medallion Industry


3 days 20 hours ago

An excellent article on student loans and bankruptcy. Please review below. Jim Shenwick

Student Loans in Bankruptcy: What’s on the Horizon?


3 days 20 hours ago

Taxi Drivers to get 10 Million Dollar Break and Lone Safeguards, reported by New York Times on June 12, 2019-IS THIS RELIEF TOO LITTLE TOO LATE!
------------------
The New York Times reported on June 12th 2019, that's facing ruin, taxi drivers to get 10 million dollar break and lone safeguards.
While 10 million dollars sounds like a lot of money, in this author's opinion, that 10 million dollar break & loan safeguard will have little impact or benefit to the average Taxi Medallion owner, who owns an “under water” taxi medallion.

The article further stated that Mayor Bill de Blasio announced a separate set of initiatives: The city is eliminating as much as $10 million in fees to taxi medallion owners, and drivers will be able to obtain financial counseling from a new “driver assistance center.”
The mayor said that he would extend the city moratorium on
approving additional vehicles from ride-hailing services such as Uber and Lyft for another year.

The fee waiver would aid all owners of the city’s 13,500 taxi
medallions, including large fleets, which operate about half of cabs. It would exempt them from paying $1,100 renewal fees due this year or next.

While any waiver of fees would be appreciated by the beleaguered taxi medallion owners, it is this authors opinion that the waiver of $1,100 renewal fees for this year and next year is a drop in the bucket compared to the financial problems facing under water taxi medallion owners.

It is this author's experience, that the average taxi medallion owner
owes approximately $500,00 to $600,000 in loans, on a medallion
that is now worth approximately $165,000, based on the latest TLC
data, so the savings of $1,100 in renewal fees will have little to no
financial impact on the troubled taxi medallion owner.
Additionally, the ability to obtain financial counseling from a new
driver Assistance Center, while admirable is too little and too late for
most taxi medallion owners, who owned under water taxi medallions.
Moreover, extending the city moratorium on proving additional
vehicles for ride-hailing services has not helped increase the value of existing taxi medallions. Taxi medallions are either continuing to fall or have stabilized at an extremely low price, so the city moratorium has had and will have little impact in increasing taxi medallion values and will provide little relief to taxi medallion owners.

These benefits, while providing good PR for the Mayor and good
sound bites will have little impact on under water taxi medallion
owners-too little, too late! Jim Shenwick


1 week 14 hours ago

Seniors were sold a risk-free retirement with reverse mortgages. Now thousands face foreclosure.
Urban African American neighborhoods are hardest hit as nearly 100,000 loans have failed.
6/2019 By Nick Penzenstadler and Jeff Kelly Lowenstein, read extensive report – article from USA TODAY
Reverse mortgages – thousands of seniors, who worked their entire life to own a home, are finding their homes foreclosed for several reasons.  The problem is that a few years ago there was little to no federal regulation on reverse mortgages.  A high percentage of these homeowners relied on the lies of those who made a profit from selling reverse mortgages.  They were told they could live in their home for the rest of their lives, for “free”.
Who sells these mortgages – mostly brokers/realtors who lost their normal income during the real estate crash, but now there is an entire lending market focused on these mortgages.  They targeted poor neighborhoods who are least likely to seek competent advice about the issues with reverse mortgages.  They looked for homes that needed repairs, leaving door hangers advertised a “tax-free” benefit for seniors.
reverse mortgageTV ads featuring Henry Winkler, Fred Thompson and Robert Wagner made it appear that these mortgages were “free”.  They offered to “eliminate monthly payments permanently” with “a risk-free way of being able to access home equity” – neither of which is true, according to the Consumer Financial Protection Bureau. “Always retain ownership,” “remain in your home as long as you wish” and “you can’t be forced to leave” were other frequent hooks, according to investigations by federal regulators.
Five years ago HUD developed some changes to protect seniors.  But, those who signed reverse mortgages before the new rules went into effect are left to fend for themselves and, in many cases, lose their home.
So, what is the problem today?
Thousands of seniors signed reverse mortgages and did not understand they had certain obligations or their home would go into foreclosure.  These obligations included paying real property taxes or keeping the property insured and in good condition.  In ZIP codes where most residents make less than $40,000, the analysis found reverse mortgage foreclosure rates were six times higher in black neighborhoods than in white ones.
Poor neighborhoods were targeted with “bad apple” reverse mortgages
reverse mortgageIn ZIP codes where most residents make less than $40,000, the analysis found reverse mortgage foreclosure rates were six times higher in black neighborhoods than in white ones.  See the USA Today article for a map of the United States identifying foreclosures of senior homeowners – Chicago, Baltimore, Miami, Detroit, Philadelphia and Jacksonville, Florida, are among the hardest hit.
How reverse mortgages work:
Lenders appraise the value of a house and allow homeowners to borrow back money against that market value.
Borrowers can stop making monthly mortgage payments, and they can stay put for life, so long as they maintain the home, pay property taxes and insurance and don’t sell, move out or die. Reverse mortgages require no credit check and government-mandated financial counseling can be as easy as a 20-minute phone call.
Lenders and their investors make their money through origination fees that can top $15,000 with fees and mortgage insurance, and by charging interest on the loan balance.
The neighborhood is damaged by foreclosures
reverse mortgageEach foreclosure depresses home values within about 600 feet by 1%, according to a study in 2006 in the journal Housing Studies. As foreclosures mount, the study says, that figure compounds. Five foreclosures in a few city blocks means a 5% loss for every neighbor.
It’s all about money
Even when both husband and wife are old enough to qualify, reverse mortgage lenders often advise them to remove the younger spouse from loans and titles. Federal rules allow people to take out more money if they are older based on actuarial tables showing they have fewer years left to live.  The problem is the spouse who is not on the mortgage finds it very difficult to save the home after the spouse on the loan passes away.  There are deadlines for filing certain paperwork, all happening at a time the surviving spouse is dealing with the death of the spouse.
A higher loan balance means higher closing costs and a bigger commission for brokers.
reverse mortgage

10 Questions to Ask About Reverse Mortgages
Sun Cities area has some of the highest reverse-mortgage foreclosures.
Reverse Mortgage Meltdown – and Gov’t Complicity?
USA TODAY wants to hear about your stories

The post Reverse Mortgages – Why Seniors Lose Their Home appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.


1 week 3 days ago

Do I Need to File For Bankruptcy in Tacoma Washington?
You do not always get a “yes” or “no” answer when you ask someone if you should file bankruptcy in Tacoma, Washington. More often, people will respond, “File for bankruptcy only as a last resort!”  This usually means, bankruptcies are the last straw if and only if you have already exhausted all available debt relief options and despite everything, you are still on the road to financial distress.Bankruptcy in Tacoma Washington
The reason people turn their backs on bankruptcy is because of the drawbacks it brings.  More often than not, Americans perceive people who go bankrupt as failures. The scar bankruptcy leaves on one’s life is often brought about by the stigma associated with it all these years.
However, bankruptcy is more of a scab rather than a scar.  With proper care and attention, a scab clears up and fades away, leaving little to no traces of a wound that it once was. Like a scab, when the bankruptcy process was treated with proper care and attention, there is a great chance for a debtor to get a fresh start. It is for this reason that bankruptcy laws are in place.  It is meant to give people a second lease on life, at least on the financial aspect of their lives.
In Tacoma, Bankruptcy is one of the major decisions anybody makes in their lives. That being said, before you dive in,  you must find out the reasons why you are even considering it.  You also need to study the advantages and disadvantages of a bankruptcy filing.
Why Am I Filing Bankruptcy?
Medical debt is considered as the number one reason why Americans file for bankruptcy in Tacoma. An estimated 66.5% of all bankruptcies are tied to medical issues, followed by unaffordable mortgages (45%) and spending or living beyond one’s means (44.4%). Even if one has insurance, it is not enough to cover health-related bills.  Worse, your health problem may even make it challenging to do your job resulting in you quitting or being let go by your employer. This imbalance on your income and expenses is an unfavorable consequence of mounting medical bills coupled with losing your job.  Other situations can make bankruptcy a seemingly suitable option for the following reasons:

  • You are undergoing divorce proceedings
  • You are being sued by creditors in order to make you settle your debts.
  • You are about to lose your home.
  • You only have your credit card to pay for your purchases
  • You have been maxing out your credit cards one by one because you just transfer balances from one to the other.
  • You are being tempted to dip into your retirement account to cover the bills

Are there options other than a bankruptcy filing?
When you really think about it or when you keep your eyes open, you might find that there are other alternatives available to address your financial troubles.
There are other viable options you can consider before diving in bankruptcy. Credit counseling is one. Credit counselors will look at the state of your finances and enlighten you on the pros and cons of debt management programs such as debt consolidation or debt settlement.
You may also be considering living within your means. Tighten your belt by drawing the line on unnecessary purchases. You can also try taking a second job or selling off one of your assets to supplement your income or to pay the bills.
You can also look into negotiating your debt to more manageable terms and amounts. Maybe you may also evaluate if this is just a temporary slump and your situation may improve soon.
Another important thing to consider is if you have an incoming substantial amount of payables looming in the horizon.  If so, you might want to hold off on paying that until you decide whether or not to file bankruptcy since those bills could be dismissed through bankruptcy.
Am I Eligible to File for Bankruptcy?
Chapter 7 and Chapter 13 are the two types of bankruptcies for individuals. Both have certain criteria to qualify:
Chapter 7 bankruptcy is more of liquidation and allows the debtor to clean out debts and get a completely fresh start. A bankruptcy court appoints a trustee who collects all of a debtor’s non-exempt assets and sells them to pay back the creditors.  A debtor is allowed to keep what is known as exempt property. Considered exempt includes most retirement accounts, Social Security payments, and a certain amount of home equity. Chapter 7 bankruptcy works for low-income debtors with little or no assets with which to pay off their debts.
Chapter 13 bankruptcy is called reorganization because it allows Chapter 13 filers to pay off all or part of their debts in a span of three to five years. Your bankruptcy attorney will help you draft a proposed repayment plan, which must be approved by the bankruptcy court before your bankruptcy petition can proceed further. The purpose of the reorganization plan is to show how you will fully pay all priority claims, such as child support, unpaid wages, and taxes, within three to five years. Unsecured debts like credit card debts and medical bills may be partially paid over time. Chapter 13 bankruptcy works for individuals who make too much money to qualify for Chapter 7 bankruptcy, or for those who would stand to lose property that they would rather keep.
Can Bankruptcy Wipe Out All Debts?
One of the common misconceptions about bankruptcy in Tacoma is that it wipes out all debts. Unfortunately, some debts are not included in a bankruptcy discharge. These are student loans, child support, alimony, income taxes, debts to government agencies, debts for personal injury caused by driving while intoxicated and any court fines or penalties. On a positive note, Chapter 7 bankruptcy discharges credit card debt, medical bills, personal loans, lawsuit judgments and obligations from leases or contracts. Chapter 13 bankruptcy wipes out those debts, plus debts from a divorce (except support payments), debts for loans from a retirement plan.
If you are already retired and have no significant property, bankruptcy may no longer be necessary. If you have no considerable assets such as valuable property or money in the bank, you are already considered judgment proof.  This means, your collectors can no longer collect anything from you no matter how much they pester you. Under the law, no one can go after your assets from social security, pension plans, 401(k) retirement savings, disability benefits, veterans benefits, alimony or support payments.
Do I Need to Work With a Tacoma Bankruptcy Attorney
Yes! You do not want to be stuck in a financial quagmire. When life throws you a curve-ball that turns your life upside down, it is best to look beyond the short-term effects of bankruptcy on your credit score and appreciate the long-term benefits it may have to regain your financial freedom.
Consulting an experienced bankruptcy attorney is one of the crucial first steps when considering filing for bankruptcy. You may be better guided and assisted throughout the whole process if you have a trusted bankruptcy attorney by your side. Call our bankruptcy attorneys at Northwest Debt Relief Law Firm (NWDRLF) for a free initial assessment of your case.

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