Monday, December 31, 2012
Sunday, December 30, 2012
Wednesday, December 26, 2012
1. The bankruptcy laws of 2005 made it nearly impossible to get a personal bankruptcy discharge. This is just not true. Yes, the laws changed in 2005 to help prevent bankruptcy fraud, but the vast majority of folks will still be able to get a fresh start, whether it's through a chapter 7 or a chapter 13 bankruptcy.
2. Bankruptcy will ruin your credit. Okay, this one isn't so much a myth as it is a ridiculous notion for many people. Of course, bankruptcy can ruin healthy credit. But, if you are considering bankruptcy, the chances are great that your credit is already is already bad....maybe really bad. Bankruptcy may actually improve your credit score.
3. You can't afford a bankruptcy lawyer. Yes, you can. Many lawyers will let you pay them off over time. Again, refer to my bankruptcy lawyer tips for more information.
4. If you pay off certain credit cards prior to filing, you can keep those cards open. Nope. It's highly unlikely that any creditor will keep your credit open once they catch wind of your bankruptcy, even if you don't owe them anything. What's more, if you make what is called a preferential payment to any one creditor in an effort to not include them in your creditor matrix, the trustee can actually go after that money if it's over a certain amount. What that means is that it can be retrieved and put back into your estate to be distributed differently than you had intended.
5. You can run up the balances on your credit cards shortly before filing. DON'T EVEN THINK ABOUT IT! That is fraud, and you will get caught. There are guidelines between your last charges and when you should file. This is another reason you need to talk to an experienced attorney.
6. Your stuff is worth a lot. Well, it could be, I suppose. But most people value their belongings unrealistically. Your two year old couch is not worth what you paid for it. It is worth considerably less. Why is this important? Because your belongings will determine what your assets as a whole are worth, and that could make the difference between whether you can file a chapter 7, and in what you get to keep. It's possible for many people to keep everything they own (I did), and a lawyer can give you guidance on how to self-appraise your loot.
Those are some of the most common personal bankruptcy myths. There are more, and perhaps we'll get to them later. The point of this post is to not believe everything you read on the web about bankruptcy. Find out how to get a free consultation with an attorney, and find out the straight dope for yourself.
Wishing a fresh start to all in need,
Monday, December 24, 2012
Nearly four years out of bankruptcy now, my life is in good shape, and I no longer have the stress of trying to figure out how to pay bills that couldn't possibly be paid. My bankruptcy discharge was truly a fresh start, and I couldn't be more grateful that I've had this wonderful opportunity to start over.
I wish everyone a fresh start for the new year if that's what is needed. And, if you're feeling blue because it's looking sparse underneath the Christmas tree, remember that it's not material things that matter this holiday season. It's loving and being with the ones you love that is most appreciated.
Good luck with your bankruptcy attorney search. I have tips that can help you with your hunt here: Bankruptcy Attorney Tips
May everyone experience a peaceful and joyous year end and new year.
Sunday, September 23, 2012
After bankruptcy, my life is different than it used to be in more ways than one. Gone are the days of using credit cards to fulfill whims...well, at least the whims that could be satisfied within credit limits. In the more than four years since filing bankruptcy, I've learned a lot of lessons - stuff I wish I'd learned much earlier in life. One of the most significant lessons I learned was how to live on cash only.
Of course, I had to cease using all credit cards before I even filed my Chapter 7 bankruptcy. That's just part of how it works. Not using credit cards also meant that I had to start using cash for everything, and that takes some getting used to. However, I've discovered, living on cash is a much better way to live than living in debt.
For one thing, I can't spend more than I earn, which is something many people do. If I want something I can't afford, I have to save up for it. Funny how we are taught to do that as children and then ignore that teaching once credit rears its ugly head into our lives. This is a great lesson to make sure your children learn now.
Before I go on, I need to expand on the definition of "cash only". It doesn't mean you have to carry large amounts of cash. That would be inconvenient and also dangerous. By cash only, I'm really talking about any payment methods that don't drive you into debt. They don't have any interest, and they don't have any fees. For the purposes of this premise, living on "cash only" includes the use of paper checks and debit cards. Living on cash only has more to do about living without credit than it does to do with how to live on cash.
You are probably afraid of living without credit, and that's perfectly normal. One of the biggest fears I hear from people is that they won't be able to do things like get a rental car or reserve a hotel room. That's simply not true. All you need is a debit card that doubles as a MasterCard or Visa. Most banks offer these with no credit check and no fees. If you can't get one from your bank, there are plenty of banks online to choose from.
You should build up an emergency savings fund. This may take a while to get going, and if you have an emergency before the funds are saved, there are other options. Many medical offices will allow you to split up payments if you can't afford to pay the amount upfront and in full if you agree to your payments that are set to be charged to your debit card on predetermined dates. There may even be discounts for people whose income is lower than a certain threshold. Don't be afraid to ask what your options are.
It's worth mentioning that it's unrealistic that you'll never need some sort of credit. For those of us who can't afford to buy a home or car outright, saving up for one won't be an option either. It may actually be necessary to acquire a credit card or two (no personal cash loans) to establish or re-establish credit so that you can eventually get a home loan or a car loan. Those are acceptable forms of debt as long as you can afford them and you budget for them.
If you find you do need a credit card to rebuild your credit history, the following tips are imperative:
1. Pay the balance in full each month and put the payment in your budget. This way, you will never acquire interest.
2. Don't open a credit card that has an annual fee. These types of cards usually give you a credit limit that is just over the fee, so they are virtually useless and actually harmful.
3. Pay all credit cards in full and on time. No late fees. If you must set up recurring payments to do this, then do it.
4. Don't use credit cards to pay for luxury items. Buy necessities that you would otherwise budget for. Again, pay them in full each month.
5. Open a cashback credit card or rewards card. This way, you can even earn cash back on your purchases. Why not make money on your necessary expenses?
6. Remember tips 1 - 5. You opened the credit card in order to establish credit and nothing more. As long as you follow these rules, having ONE credit card (maybe two) still counts as living on cash.
That's how to live on cash not only after bankruptcy, but also in lieu of it. When used correctly, a credit card can be a useful tool for financial health, but only when paid for with cash. The problem is that too few of us use credit correctly. The peace of mind that comes from living on cash is priceless, and I love it. I want you to experience it too.
Wishing a fresh start to all who need one,
Thursday, June 28, 2012
What is PACER?
If you've never heard of PACER, you haven't necessarily been living under a rock. Most people will never need to know about PACER. However, if you have filed bankruptcy, or are going to file bankruptcy, you do need to know about PACER and how you can use it to monitor your case.
PACER is the acronym for Public Access to Court Electronic Records. It is typically used by lawyers, but it is accessible to all.
Why use PACER?
So, do you really need to use PACER? No, you don’t. However, many people find it comforting to be able to view any documentation that is filed with the court over the course of their bankruptcy. In my case, I had an issue with a creditor who added themselves to my creditor matrix after the bankruptcy petition had been filed.
I owed that creditor nothing when I filed. It was a mistake, and my lawyer, though a good one, did not tell me about it. It ended up being corrected eventually, but it delayed my discharge by several months. Had I not discovered the documentation on PACER, I definitely would have been worrying about why my simple Chapter 7 case was not yet discharged. Bankruptcy is a stressful enough when nothing goes wrong.
You'll want to use PACER if you find it hard to talk to your attorney. If you'd rather view your court records online, that's perfectly understandable. Bankruptcy is a hard thing to talk about, even with a competent lawyer.
If you're going to file without an attorney (or PRO SE)) you especially need to use PACER. As I’ve said before, I don’t think it’s a good idea to file bankruptcy without a lawyer, but if you’re going to go that route, you’re going to need PACER.
Lastly, if you want to check for milestones as they occur in your bankruptcy, PACER is the place to do that. Those milestones include things like your Declaration of No Assets and, of course, your bankruptcy discharge.
How Much Does PACER Cost?
It costs .08 per page. That is .08 per page viewed (not just printed). However, you are not charged anything unless you rack up at least ten bucks in charges per quarter. That is why you don’t want to check your bankruptcy status too frequently, or go nosing around and looking at other cases. There have been many people who have become obsessed with PACER, and it has cost them a small fortune. When I was going through bankruptcy, I made it a point not to check it constantly, and I never paid a penny for the service.
One final word of caution: do not view your bankruptcy court records through third party sites. Entering information on third party sites that promise to deliver your PACER records can make your information accessible to the search engines. The search engines do not have the ability to access your records on the PACER site. Only use www.PACER.gov.
Let me know if there are any other questions about PACER and bankruptcy by me dropping a comment.
May your fresh start come very soon,
Friday, June 22, 2012
I’m back after a long hiatus, and bankruptcy questions have been piling up. This one is about bankruptcy and car insurance. Understandably would-be filers are asking “does bankruptcy affect car insurance”?
In most states it can. This is because most states allow car insurance companies to factor in credit scores when determining rates. So, a bankruptcy could very well raise your insurance premiums. Or, you may even be denied coverage.
However, I think it’s necessary to point out that the vast majority of folks who file bankruptcy have a lousy credit score to begin with. It is rare for a filer to have an acceptable credit score, much less a stellar one. In fact, filing bankruptcy might even raise credit scores for people who haven’t been paying their bills.
Also, some states, such as California and Massachusetts, forbid the use of credit scoring to determine your rates. Many other states have tried to fight it also, but, in the vast majority of states, using your credit score for insurance purposes is still legal.
Some companies (again, except in states where this is illegal), can drop your auto policy if you are in default on a debt you have with them. For example, I had USAA insurance and I also had a USAA credit card that I included in my bankruptcy petition. Because I live in California, USAA could not drop my car insurance, but they would have if I lived in a state that allowed it.
It's just wrong that if you file bankruptcy, car insurance companies are able to use your credit score to charge you higher rates or deny you coverage, even if you’ve never lapsed. Fortunately, there are still plenty of carriers that do not use credit scores to determine eligibility or rates, regardless of where you live. For the best rates, you just need to shop around. You can even get a car insurance quote online.
As always, this and other issues regarding your bankruptcy should be discussed with a competent bankruptcy attorney. I am not a lawyer.
Good luck to all who need a fresh start,ep