Would you operate on yourself?

With the current recession continuing with no end in sight, self-surgery is a growing, albeit a misguided trend. In 2009 a California woman thought it might be a good idea to try self-plastic surgery on her face.

“Insane, I can’t believe I did what I did,” the 54-year-old said. “I thought I was going to be happy with the results, then the next day, my face became very inflamed, very red, swollen.”

The resulting problem required several operations by a professional plastic surgeon to successfully correct the problem.

It does not make much sense to do a procedure yourself to save a few bucks and then have to pay to have multiple procedures done by someone who knows how it is done to fix your problem.

However, as a Bankruptcy Attorney I see that same thing happening over and over again by misguided people who think that bankruptcy is simply just filling in some forms and then ending up with no debt.

I have seen many self-filers’ cases dismissed for simply not filing the necessary forms, or for not meeting the necessary pre filing requirements. To get the discharge these self-filers desire, they must then file a second case. But, the bankruptcy code imposes more restrictive requirements on multiple filers.

A dismissal of the case and then filing a second or third case may be a minor problem if the paperwork in your first case is not completed correctly. I have seen self-filers, and even some debtors who went to an attorney not familiar with the bankruptcy laws, lose their cars, their homes and even their life savings, all to save a few bucks.

I am sure that many of the self-filers felt that they just had a “simple case”

But bankruptcy is much more than filling out forms. This is what bankruptcy petition preparers do, but they are not trained in substantive bankruptcy law and legally can not give you any advice on how the form is to be completed. A trained bankruptcy attorney can analyze your situation and determine the correct course to take. Is bankruptcy even an option and if so, what chapter should you file under, and then when should you file? These questions along with many others are all part of the service that a trained bankruptcy attorney will provide to you.

If you are thinking about bankruptcy, you need to treat this as a very serious situation (which it is) and not go around town shopping for the cheapest lawyer in town or just go online to order some bankruptcy forms. You are trying to get out of debt, not buy a toaster. I offer a free, no obligation consultation. I will analyze your situation and let you know what I can do to help. This consultation will cost you nothing but an hour of your time to meet with me. You will get your questions answered, including what it will cost to file. You would not want to operate on your self, so treat your financial situation the same way. Please make sure you really think about going at it alone, as it may cost you much more than you save.

Help! I can not pay my bills. What can I do?
　
The recession has caused many people to get caught in a bad cycle of robbing Peter to pay Paul. As this cycle continues, it will inevitability reach a point of no return, the point when Peter does not have any more money to rob and you now owe both Peter and Paul.

Before we can find a solution, we must first recognize why we are in the cycle in the first place. Not all of the reasons for the cycle may be your fault and you may not even be able to control the reasons. You may have lost your job or had your work hours or hourly rate cut due to the down turn in the economy. You may have had unexpected medical bills or unexpected home or auto repairs. There may be other reasons for the cycle but whatever the reason, there are lots of creditors waiting in line with their hands out demanding a payment. And with little or no money to go around, what do you do?

Don’t ignore the problem. Sticking your head in the sand is not a solution and will just make things worst by increasing late fees, interest charges and further ruining your credit rating. You must take positive action.

First, STOP SPENDING MONEY. Don’t borrow from a payday loan, don’t pawn your car, don’t borrow from your 401k. You can not borrow yourself out of debt. You need to take stock of where you are so for the next few days, make due with what you have. Sort through your expenses, bills and income to get a clear picture of your position.

Next you need to put pen to paper and write down everything. Every debt you owe, all credit cards, medical bills, utility bills, mortgage or rent, car payment, food bill, everything. Review these bills and expenses to see if any can be reduced or discontinued. (For example, you may be able to cut out internet or cable)

The third thing to do is to decide which bill has the highest priority. Your life necessities should be at the top. Housing, Food, Utilities, and transportation. You may notice that credit cards and medical bills are not on that list. (Some financial gurus will even leave utilities out of the top of the list.) If there is not enough money to cover the bills on the bottom of the list then you may have to accept that your credit score may just take a hit.
If your cash flow problem is temporary in nature and you do not have any cash reserves to meet your needs, then this may get you through your situation and you can recover once your income returns.

However if your problem is long term or permanent then you may need to consider other options. Do you need to file for Bankruptcy? It depends, filing for bankruptcy is not always the solution. If your bills are not that monumental or your financial prospects are likely to improve, a bankruptcy filing may be a major overreaction. The Supreme Court of the United States has stated that "the principal purpose of the Bankruptcy Code is to grant a fresh start to the honest but unfortunate debtor". If you feel you need the fresh start that the bankruptcy code provides, feel free to call us to review your options. Also check back for future blog entries on other topics of interest.

Is your home worth keeping
Many potential clients come into my office with high payments on a home that was recently purchased but one which they really can not afford to keep. The almost universal response to the home ownership question is "I cannot give up my home!!". But, even under the best of cases, the potential client can not make a plan work with their income.
I have seen several clients work two full time jobs in an effort to keep a home that is just too much. Not only is this practice bad for your health, the client never sees their family or when they are home, they are too tired to do anything but sleep. Working oneself to death and depriving your children and spouse of your "family time" is not beneficial in the long run.
However, with the possibility that Congress may soon pass an amendment to the Bankruptcy Laws which will give the Bankruptcy Judges the ability to modify home mortgages by reducing the principal, reducing interest rates, and/or changing from an ARM to a Fixed rate mortgage, many of these potential clients may feel that to opt for a Bankruptcy and mortgage modification may be a way to actually keep their home.
But the question is, "is your home actually worth keeping?" If you think about it in purely financial terms, the smart decision may be to just let the bank foreclose.
Consider the following:
After the modification,
1. Will your payments still be too high?
2. Will you still be "underwater" for years?
3. Will you be better off just renting?
If you decide to try to keep your home in today’s market you should ask yourself these question;
Can you keep your home without invading your retirement funds?
Can you make your mortgage payments while meeting your other obligations?
Is there a rescue in sight?
After looking at the options, you might decide to just walk away from the mortgage. The bankruptcy courts may not only help you to keep your home but can help if you decide to just walk away.
Whatever you decide, you need to consider what is best for you and your family.

Can Bankruptcy improve your Credit Score?


The Decision of whether to file for bankruptcy protection may not be an easy one. Typically one of the main worries is that your credit rating will be so damaged that obtaining a loan in the future will be near impossible.

However, it may be surprising but that in may cases, the damage done to your credit score may not be as bad as you might think.

One reason is that you might not have that good of a credit score to begin with. You might have late payments, high balances, charged-off or collections accounts, and maybe even some judgments or garnishments.

In light of this, you might even see a boost in your credit score after filing bankruptcy.

Contact my office for an appointment to learn more about Bankruptcy and your Credit Score.

Information taked in part from "Declaring Bankruptcy Can Improve Your Credit Score" by Aleksandra Todorova, and published in "SmartMoney" January 22, 2007.

6 questions for those considering bankruptcy
Candice Choi, Associated Press
Sunday, November 23, 2008
(11-23) 04:00 PST New York --
If mounting credit card bills are threatening to pull you under, you may be considering bankruptcy as a way to hit the restart button.
The American Bankruptcy Institute expects worsening economic conditions to drive up the number of consumer filings this year to their highest level since stricter bankruptcy terms went into effect in 2005.
The more than 880,000 filings through October have already eclipsed the 823,000 filings for all of 2007. It's no wonder, with government figures showing Americans are lumbering under some $900 billion in credit card debt.
Bankruptcy comes with serious consequences for your credit profile, however. So if you're considering bankruptcy as a way out, here are six questions to ask yourself.
What type of bankruptcies are there? There are two bankruptcy options for individuals.
Most people file for Chapter 7 bankruptcy, which wipes clean unsecured debt such as credit card or medical bills. What won't disappear are fixed debts including mortgages, student loans, taxes and child support.
Under the second option, Chapter 13 bankruptcy, filers agree to repay creditors over three to five years. Chapter 13 is typically for people who think they will be able to repay lenders and hold onto their home and other belongings.
There is no debt limit to file for Chapter 7. For Chapter 13, however, people can only have about $1 million in secured debt and some $350,000 in unsecured debt. This is to prevent businesses or wealthy individuals with business debts from applying.
Who can apply? Eligibility for Chapter 7 is determined by a formula known as the means test, which weighs your income against your ability to pay creditors. Your attorney calculates the test and it is vetted by a trustee.
A family earning $100,000 or less generally won't have problems filing for Chapter 7 because the means test factors in living expenses. People who received a Chapter 7 discharge in the past eight years are not eligible for another discharge.
A similar means test is used to determine a payment plan for Chapter 13. People who filed for a Chapter 7 bankruptcy resulting in discharge in the past four years or a Chapter 13 case resulting in a discharge in the past two years are not eligible for another discharge.
How do I get started and what are the costs? Depending on the complexity of a Chapter 7 case, you'll need to pay a lawyer an up-front fee of about $1,000 to $2,000, said Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys. Chapter 13 cases usually cost $2,000 to $3,000 since they require developing a payment plan over several years.
In both cases, there is a court filing fee of about $300. You'll also need to pay roughly $100 for a mandatory credit counseling session and budgeting class.
Both sessions typically last about 45 minutes and may be in person, via phone or online.
If these costs seem out of reach, there are nonprofit groups that provide pro bono legal services. Court fees may also be waived for those who can't afford them.
What can I keep? Pensions and 401(k) retirement accounts are usually safe under bankruptcy proceedings.
Depending on where you live, you may also be allowed to keep a limited amount of property under Chapter 7.
In Massachusetts, for instance, people can keep up to $500,000 in home equity as long as there are no liens on the house, said Jack Williams, resident scholar of the American Bankruptcy Institute and a professor of bankruptcy law at Georgia State University.
By comparison, Maryland doesn't let people hold onto any home equity, while Texas puts no cap on how much home equity people can keep. Some states also have capped exemptions for motor vehicles.
"Wild card" exemptions in several states let people keep as much as $20,000 in cash or other assets. The court typically won't go after property worth less than $1,000 because it might take more to administer the liquidation than it's worth.
You may also claim exemptions under Chapter 13, but filers often hold onto their belongings by repaying creditors.
How does the process work? Once you file for bankruptcy, an automatic stay immediately requires creditors to stop collection efforts. That means no more phone calls, letters or lawsuits.
Under Chapter 7, you still need to pay mortgages and other secured debt.
Within 20 to 40 days after you file for bankruptcy, a trustee will schedule a meeting with you to go over your financial records. Creditors then have up to 60 days to object before debts are discharged.
Only the debts you list when you file for bankruptcy are erased. Any debt you incur or money you earn after filing for Chapter 7 is not subject to proceedings. The process should take about four months from filing to approval.
For Chapter 13 bankruptcy, repayments start within 30 days after the case is filed, Sommer said.
Interest rates on mortgages, credit cards and other debts will likely drop substantially and the principal may also be reduced. During the repayment process, applications for new loans need to be approved by the trustee.
What are the repercussions? Filing for bankruptcy comes with serious consequences.
To start, a Chapter 7 bankruptcy stays on your credit report for 10 years, while a completed Chapter 13 sticks around for seven years.
Those with decent to good credit can also expect to see their scores drop by at least 100 points, said Barry Paperno, a spokesman for Fair Isaac Corp. Someone who doesn't have many credit card bills but suddenly incurs major medical expenses may fall into this category.
The exact impact on your score depends on how much debt was discharged and how many different accounts were involved.
Online resources
American Bankruptcy Institute: www.abiworld.org
National Association of Consumer Bankruptcy Attorneys: www.nacba.org
Fair Isaac Corp.: www.fairisaac.com
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/23/BUI31439A5.DTL
This article appeared on page D - 4 of the San Francisco Chronicle

welcome to the Toomey Law Bankruptcy Blog

welcome to the Toomey Law Bankruptcy Blog.