Filing Credit Card Bankruptcy

Credit card offers seem to arrive each day in the mail. And they offer such sweet deals. Go to a retailer and they will give you a 10% discount if you will sign up for a credit card and use it for your purchase. It is no wonder that a lot of people have large amounts of credit card debt. For some people the amount gets to be so large and difficult to pay that they begin to think of filing credit card bankruptcy. It sounds so simple, but is it?

First, there is no such thing as credit card bankruptcy. There are two types of personal bankruptcy – Chapter 7 bankruptcy and Chapter 13 bankruptcy. Whenever you file for either of these types of bankruptcy, you must list all of your debts – credit cards, mortgage, medical bills, car loans, etc. You cannot simply select which debts you want to list. By federal law, you must list all of your debts.

Next, there are generally two types of credit cards that consumers use. There are the standard, multi-purpose, multi-location type of cards. These are primarily the master card(tm) and visa(tm) type of credit cards. The second type are the store credit cards which are designed to be used only in a specific company’s stores. A good example of this is a Sears credit card.

There are also two types of debt – unsecured and secured. Most of the time when the multi-purpose, multi-location type of credit cards and store credit cards are used, they create unsecured debt. This means that you did not put anything up as collateral for the credit card loan with which you make the purchase. However, with some store credit cards, when you purchase durable goods, such as appliances, jewelry, etc., the store will retain a security interest in the items that you purchased. This means that if you do not pay the credit card debt for the item, the store can seek repossession of the items that you purchased.

If your credit card debt is primarily from the multi-purpose, multi-location type of credit cards and is unsecured debt, then filing bankruptcy under Chapter 7 may be your best bet because it will discharge unsecured debt. Of course, you must consider all factors because you could lose property in a Chapter 7.

If your credit card debt is primarily from the store type of credit card where the store retains a security interest in the items purchased, you can try filing bankruptcy under Chapter 13. Depending on a number of factors, you may be able to pay for the value of the items instead of the original price of the items.

It is important to remember that when you file bankruptcy, you file against all of your creditors, not just against credit cards. It is also important to remember that personal bankruptcy has disadvantages such as possibly losing property and long term negative affects on your credit. Filing bankruptcy should not be taken lightly. Consider all factors and not just your credit card debt.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

This article may be republished, but the wording must not be changed and the author links must remain active.

Claiming maximum benefits under Chapter 7 & 13, for low cost, is easier than you now think. Find out how the pros use their options wisely and beat creditors at their own game.

Bankruptcy Strategies

Stop! Did you know that bankruptcy was created to give people a fresh start? Find out more at bankruptcy information. And click here for more insights on credit card bankruptcy.

How to Pay Down Your Debts Quickly

With debt concerns more prominent than ever in society, many people are finding themselves faced with having to snowball- with more debt then they may have thought possible. When debts are mounting, the absolute worse thing you can do is ignore the situation. By avoiding your financial responsibilities, you are only adding to your own problems. The only solution to your debt problems is to tackle them full on and start paying them down (and off!) as soon as possible. Paying off debt for good takes a serious commitment to allocating your monies towards debts. It will not always be an easy road but it will certainly be one worth traveling, as the end result is financial freedom.

So, how can you pay off those debts? Here is a list of ways to start paying down your debts fast:

Stop Spending!

Once you have made a commitment to paying down your debts, you will have to stop spending. Do not continue to buy anything you can not pay cash to get. Adding additional charges to an already high credit card balance will not help you pay off your debts. Create a reasonable budget that incorporates the funds you need to put as much money as possible towards debts and then stick to that budget at all times. Savings may even have to be put on hold while you work towards paying down your debts.

[Read more...]

Health, Health Care Insurance and Bankruptcy

Imagine for a moment that your health has taken a turn for the worse. You need extensive medical attention and expensive treatments. Would you be prepared to account for these medical costs? Or would you or a family member ultimately have to deal with this financial burden?

Surely, you would not want to suffer the consequences of paying big medical bills on your own. This is why health insurance is so important. A Harvard study conducted in 2001 found that medical bills caused half of all bankruptcies. Therefore, you should make sure that you have some form of medical insurance. You should also make sure that your money is well-spent on insurance that meets your needs.

Insurance Provided by Employer

You should feel lucky if you are in the minority of people who receive health insurance through your employer. According to bankrate.com, company health insurance is actually part of a group insurance plan. Your employer pays for most of your insurance and also pays for your insurance with portions of your paychecks. Everyone in your group plan pays the same rate. The premiums paid by healthy members go towards paying the bills of sick members. Bankrate.com recommends that you study up on your employee benefits package to make sure that the insurance plan you choose provides you with the services and options you will need. If you are young and/or relatively healthy, you may want to consider choosing to pay for your company’s cheapest health plan.

Bankrate.com also recommends that you review your insurance plan periodically. You may be paying more money for services you no longer need. For example, if you have children that have graduated from college or are no longer on your insurance plan, you should change your insurance plan accordingly. Additionally, if you have lost weight or quit smoking, you could qualify for a cheaper insurance plan.

[Read more...]

Your 2006 New Year’s Resolution – Save More Money!

Are you planning on establishing a “New Year’s Resolution” to start
saving more money in 2006? Like any resolution, unless some ACTION
is taken on your part, nothing will ever change.

For example, if your New Year’s resolution is to lose weight, you WILL
have to change a few eating habits and/or exercise regularly. If your
goal is to quit smoking, then you WILL need to make an honest effort
to stop smoking.

Key To Your Success
~~~~~~~~~~~~~~~~

The key to making your resolution become a reality is to set a goal. In
other words, what do you want the ‘extra’ money for? Are you saving
for a new car stereo system? What about a family trip to Las Vegas?

Point is, when you have something to strive for, saving money becomes
ten times easier. This goal is something you really want, so you will
do what is necessary to be successful.

Once you have a tangible goal to work toward, establish an amount
you will need to reach. Or, how much is your ‘goal’ going to cost?

For example . . .
[Read more...]

The Chapter 13 Meeting of Creditors – What to Expect

Have you recently filed Chapter 13 Bankruptcy? Do you have an upcoming Meeting of Creditors hearing? Many Chapter 13 debtors get a little nervous about the meeting since they are not exactly sure what to expect. So, I decided to take some notes on exactly what happens during the meeting for the benefit of those who have an upcoming meeting. Of course, I knew what was going to happen since I’ve done these hearings before for my clients, but I wanted to note the exact words this hearing officer (trustee) was using and the exact questions she was asking. Sometimes, clients have visions that creditors are going to sit there and hammer them all day with questions or something. This is just not the case, in my experience. Let’s start with some basics.

What is the Meeting of Creditors?

The Meeting of Creditors is a hearing that is held 20 to 40 days after the bankruptcy petition is filed. The debtor must attend this meeting, at which creditors may appear and ask questions regarding the debtor’s financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors meeting. The trustee also will attend this meeting. It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests.

The trustee is required to examine the debtor orally at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy, including the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt.

In some courts, trustees may provide written information on these topics at or in advance of the meeting, to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. This paragraph was adapted from Bankruptcy Basics, a FREE publication, click here to get a copy.

What can I expect?

Well, that’s what this article is all about. Let’s talk about that:
[Read more...]

Getting Caught Up in the Payday Loan Cycle

I’ve come across a number of people in my practice that get caught up with payday loans and end up with thousands of dollars in debt.

What is a Payday loan?

A payday loan is small, short-term loan that a company will make without a credit check to bridge a borrower’s cash flow gap between paydays. For example, a customer goes into a check cashing store and writes a post-dated personal check for $130 to the store in order to borrow $100 for 2 weeks. The store holds the check until the borrower’s next payday two weeks later. At the end of the two week period, the store deposits the check and makes $30 profit for the 2 week loan of $100. In this case, that would be equivalent to a 720% annual interest rate.

Even more costly is the opportunity to “refinance” given by the check cashing company at time the loan is due. The borrower can either pay the entire amount ($130 in the example above) or the borrower can pay a fee to extend the loan another 2 weeks. So, in this case, the borrower would pay $60 to borrow $100 over a total of 4 weeks.

Some people become very dependent on such loans and they end up taking one loan after another. Many times, they get to the point where what started out as a $100 loan, very quickly turns into a debt of $1,000 or more. Eventually, they can’t pay the money back and their financial world comes crashing down.

The following article I came across illustrates this cycle:

Dishwasher Tangled in a Cycle of Payday Lending

Leon Rountree III
Consumer Bankruptcy Attorney

Stacks of Credit Card Offers After Filing Bankruptcy

Under the new bankruptcy law, one can only file Chapter 7 bankruptcy once every 8 years. Before the new law, that number was 6 years. So, those who will obtain a bankruptcy discharge under the new law are now subject to MORE solicitation by the credit card companies.

Why? Well, now that you have recently gotten a discharge, the credit card companies know that you can’t file another Chapter 7 bankruptcy for 8 years. They have 2 more years of profits they can make off of you! It’s tragic.

This New York Times article published today tells the story well: Credit Card Offers Stacking up at Homes of the Newly Bankrupt

“As one of more than two million Americans who rushed to a courthouse this year to file for bankruptcy before a tough new law took effect, Laura Fogle is glad for her chance at a fresh start. A nurse and single mother of two, she blames her use of credit cards after cancer surgery for falling into deep debt.

Ms. Fogle is broke, and may not seem to be the kind of person to whom banks would want to offer credit cards. But she said she had no sooner filed for bankruptcy, and sworn off plastic, than she was hit with a flurry of solicitations from major banks.

“Every day, I get at least two or three new credit card offers – Citibank, MasterCard, you name it – they want to give me a credit card, at pretty high interest rates,” said Ms. Fogle, who is 41 and lives here. “I’ve got a stack of these things on my table. It’s tempting, but I’ve sworn them off.”"

The moral of the story is: It is important to learn to develop good credit habits after bankruptcy. It’s difficult to do that when you have all those credit card offers staring you in the face. Many of the cards will be at higher interest rates and you might end up in trouble again.

It might be wise to take a break from incurring new debt until you’re sure that can manage it.

Leon Rountree III
Consumer Bankruptcy Attorney

Technorati Tags:

Your Secret Weapon: A Budget

For many, the word ‘budget’ immediately sends shivers down the spine. Why in the world would anyone need or want to budget their money?

First off, budgeting your money does NOT mean you are poor, or are in need of financial assistance. You’d be surprised to know how many considered to be “middle class”, regularly budget their money in order to make the most of what they have.

Secondly, designing and implementing a budget does NOT take a Harvard doctorate degree requiring hours upon hours of tedious work.

What is a budget?
~~~~~~~~~~~~~~

Simply put, a budget helps you to track your income and keep your
spending habits in check over a certain period of time, allowing you to
reach specific goals.

Why Start A Budget
~~~~~~~~~~~~~~~

There are many reasons why a family may want to implement a budget. These “reasons” can be labeled BUDGET GOALS. The reason(s) you are budgeting your money.
[Read more...]

How to Deal with Bill Collectors

So you’ve screwed up. You’re drowning in debt. Maybe the credit card was burning a hole in your pocket and you just had to get the HDTV. Or maybe you or a family member had a medical emergency while you we laid off. It doesn’t matter to your creditors; they lent you the money and now they want it back.

The lender will try to work with you for a while and its best to try to negotiate with them at this stage. If you can’t work something out or just don’t pay, they will send your file to either an in-house bill collector or, more commonly to an outside agency.

Bill collectors are a tough bunch. They have heard all the sob stories and aren’t interested in yours. They mostly get paid on commission, so they just want to get money out of you and move on. [Read more...]

Getting Past the Idea of Budgeting and Saving Money

I’m sure you’ll agree that budgeting, saving money, and eliminating
debt are very appealing ideas. If effectively tackled, these goals
can secure your financial status for the future, and allow you to live
a comfortable, debt-free life.

However for some unfortunate reason, these important financial
goals hardly ever get accomplished, and most will continue to go
through life consistently worried about their financial security,
unprepared for what the future may hold.

[Read more...]