Blogs
Jesse Barrientes: What happens if – because it’s going to be lean living during this time. What happens if I need to get credit? If I’m going to be able – if I’m locked into this plan for three years or five years, and I need – I probably shouldn’t, not the greatest idea but+ Read More
The post Chapter 13: 12 appeared first on David M. Siegel.
David Siegel: Does someone get to keep all of their property when they are in a Chapter 13 or do they have to give up some property in exchange for this reorganization? Jesse Barrientes: Typically they get to keep all of their property. I suppose there have been some instances and I think I was+ Read More
The post Chapter 13: 11 appeared first on David M. Siegel.
David Siegel: Let me ask you this, Jesse. Do creditors object to your plan for your organization or do they just accept it? Jesse Barrientes: It depends on the creditor. Sometimes they object. Essentially, and we talked about this which is similar in a Chapter 7. It’s a 341 Meeting. It’s essentially the same, Meeting+ Read More
The post Chapter 13: 10 appeared first on David M. Siegel.
Your office, Dave, you also do the first plan payment as well. Do you not? David Siegel: What I like to do in many cases is get first plan payment that’s going to go to the trustee upfront. The reason for this is its good faith, it shows the trustee when you go to meet+ Read More
The post Chapter 13: 9 appeared first on David M. Siegel.
Jesse Barrientes: So how do I pay the trustee? Do I send them a check? A money order? How does that work? David Siegel: Well, if you are gainfully employed and you are working for an employer, then I’m going to mandate payroll control and that’s where the money comes directly out of your payroll+ Read More
The post Chapter 13: 8 appeared first on David M. Siegel.
Jesse Barrientes: Well, you mentioned the plan payment. How do I go about paying the trustee? So assume now we have gone through the numbers and we know what my disposable income is. And by the way, that’s pretty lean, right? There’s nothing else built in that budget. There’s nothing for entertainment or anything else.+ Read More
The post Chapter 13: 7 appeared first on David M. Siegel.
Grandma passes away and you inherit her retirement funds. If forced to file bankruptcy, will you be able to save the inheritance from the creditors?
The bankruptcy court allows personal debtors in a Chapter 7 case to claim as exempt certain personal property. Common exemptions are household items and equity in homes and cars. Included as exempt from creditors are personal retirement accounts.
Recently the U.S. Supreme court was asked whether a debtor can claim as exempt from creditors an inherited retirement account. The answer was "no" in most cases. Spouses who inherit a retirement account from their spouse are allowed to "rollover" the account into the living spouse's name. Under this circumstance, the surviving spouse may claim the monies exempt. Not exempt are inheritances outside the course of marriage, for example, parent to child.
Here are some more details from the case:
In 2001, daughter inherited $450,000 from an an IRA from her mother’s estate. In 2010 the daughter and her husband filed chapter 7 bankruptcy. They claimed the inheritance as exempt retirement funds. The Chapter 7 trustee and unsecured creditors objected to the claimed exemption on the ground that the funds in the inherited IRA were not “retirement funds” within the meaning of the statute. The Supreme Court held that the funds in an inherited IRA are not set aside for the debtor's retirement and thus are not "retirement funds" under the retirement exemption. The Court found that the daughter was prohibited from investing additional money in the account. Also, she was not required to take minimum annual distributions every year, but could withdraw the entire balance of the account at any time and for any reason without penalty. As such, the Supreme Court held the account did not have the characteristics of a typical retirement account.
Photo Credit:Quinn Dombrowski at Flickr
Because there is additional proof needed to show undue burden, the majority of those individuals who file bankruptcy do not file the additional adversary proceeding necessary to receive a discharge. This accounts for very low number of student loan discharges given to debtors by bankruptcy courts each year. The post Student Loan Debt and Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Because there is additional proof needed to show undue burden, the majority of those individuals who file bankruptcy do not file the additional adversary proceeding necessary to receive a discharge. This accounts for very low number of student loan discharges given to debtors by bankruptcy courts each year. The post Student Loan Debt and Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Probably the most frequent question I get from prospective clients is: "Will bankruptcy hurt my credit score?"
It's a fair question, but I usually find it a little amusing. It's a bit like the man who's drowning worrying about how he's dressed.
For most people, by the time they see a bankruptcy attorney the financial problem is extreme -- the garnishment has begun, the foreclosure is imminent, the summons has arrived setting a court date, or the collector calls are now coming every hour. And, of course, at this stage, the person's credit score is in the tank. It cannot get worse.
By clearing away debt, I explain, they will improve themselves to get a loan.
A recent survey of credit-risk managers at lenders by credit-score giant FICO, reported in the Washington Post, confirms what I have been saying all along: When it comes to qualifying for a loan, it's the amount of debt you are carrying, not your credit score that matters most.
"Researchers asked a representative sample of them what single factor makes them most hesitant to fund a loan request -- in other words, what's most likely to prompt them to say no.
Tops on the list? Surprise, it's not your credit scores. And it's not how much you've got for a down payment or what you have in the bank. It's your DTI -- your debt-to-income ratio. Nearly 60 percent of risk managers in the FICO study rated excessive DTIs as their No. 1 concern factor. . . "
Again, I repeat, for 60% of bankers it's the amount of debt the credit applicant is carrying that is the disqualifier, not the credit score!
"Debt-to-income ratios for home loans are the most direct indication about whether you are going to be able to afford to repay the money you want to borrow," says the article.
Basically, bankers look at two ratios to determine whether they will qualify an applicant for a home loan.
The first ratio looks at the ratio of the monthly payment for the loan you seek to your gross monthly income. Generally, lenders do not like to see a ratio for this of greater than 28%. Basically, they don't want you to buy a bigger house than you can afford.
The second ratio, the so-called "back end" ratio, is a ratio of your monthly recurring debt payments against your monthly gross income. The recurring debt payment total includes the proposed housing payment as well as your credit cards, car, student loans and payments on other debts. For most lenders, this ratio cannot exceed 43%. This is why amount of debt you are carrying can be such a deal-killer when applying for a loan.
For a lender, who cares about a bankruptcy in the past, it's the applicants current debt load, as well as income that matters.
If you have financial problems and are looking for guidance, contact us for a consultation. We'll ready to help.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.