Christmas Credit Card

Does the following scenario sound familiar to you? The Smith family has had a difficult year financially. John Smith lost his lucrative career as a result of cutbacks to middle management at a previously thriving construction company and has been working two jobs in retail for several months. Jane Smith recently re-entered the workforce after twelve years of staying home to raise children in order to help make ends meet. As the year comes to a close, Mr. and Mrs. Smith realize that bankruptcy is inevitable and decide to have one more wonderful Christmas before confronting the legal steps that will need to be taken. The credit cards come out of the wallets to make this holiday the best one yet. Tickets are purchased for the entire family to attend the Houston Texans' final game of the season. The girls get new iPods and cell phones. The Smith's only son, true to his Texas roots, receives new gear to help him prepare for upcoming tryouts for his high school's football team and a used truck to drive to the games.

The Smiths have no reason to worry because all of the mounting credit card bills will just be included in the bankruptcy settlement, right? In reality, this family may learn a hard lesson about the consequences of their spending practices.

If you are feeling overwhelmed by the debt that you are carrying and you believe that bankruptcy is your best solution, please know that some of the credit card debt you have accumulated may not be dischargeable. Section 523(a)(2) of the federal Bankruptcy Code addresses the problem of credit card binging. This clause exempts from discharge "debt that was obtained if an individual made material and false representations about his financial condition." This may mean that a person submitted fraudulent information on the credit card application or knowingly made purchases for which he knew he would not be able to pay. The latter issue is the more common situation, and the exemption that describes the scenario involving the Smith family.

A credit card company is going to use Section 523(a)(2) to challenge the discharge of your debt if one or more of the following circumstances exist:

1. An increase in credit card usage shortly before filing for bankruptcy
2. The use of the card for recent vacations or travel
3. Using the card while unemployed or otherwise without reasonable ability to repay
4. A large balance at the time of filing

One specific point in the Bankruptcy Code, Section 523(a)(2)(C), deserves special attention from all of those shoppers who are determined to find the perfect gift regardless of cost. Consumer debts owed to a single creditor that total more than $500 for luxury goods or services within ninety days of filing for bankruptcy will be considered non-dischargeable. And, by luxury items the law is not referring to fur coats and yachts. Instead, luxury goods are defined as "goods or services reasonably not necessary for the support or maintenance of the debtor or a dependent of the debtor."

What does this mean for people who overindulge with their spending during the Christmas season? If you spend thousands of dollars in December knowing all along that you plan to file for bankruptcy once the New Year rolls around, your plans for debt relief may be delayed. If you know that you will not be able to pay for the bills you created during Christmas, you will have to wait at least four to six months into 2010 to file for bankruptcy. In the meantime, you will be expected to make regular payments to your creditors. The bottom line is that you should not view an intended declaration of bankruptcy as an excuse to make everyone happy with the expensive gifts under the Christmas tree.

When it comes to issues of bankruptcy, Texans are in a better position than many others in our country. In 2008, our state ranked forty-sixth in the country for number of bankruptcies filed. While residents of the Lone Star State are proud of being the biggest and best in so many areas, this is one ranking for which we should take pride in being nowhere near the top. However, this relatively good standing does not mean that there are not thousands of Texans who are struggling to pay their bills every month. With the pressure to be a good consumer from the moment that the doors open on Black Friday until the exchanges are made and the clearance items are tagged the day after Christmas, the end of the year only makes already difficult situations even worse.

If you believe that you may be a candidate to file for Chapter 7 bankruptcy, which essentially offers a fresh financial start to those who qualify, make sure that you do not at this point begin to create debt that cannot be discharged. The time to consult with an experienced bankruptcy attorney is now. You need to receive solid legal advice concerning your financial options and any spending pitfalls to avoid while the paperwork is being drafted. Once you know where you stand, try to relax and enjoy the rest of the holiday season at home with family and friends and not at the local mall. Your credit rating and your legal counsel will thank you for it.

Bankruptcy

Chapter 7 bankruptcy is a proceeding to find all of the debtor's assets. If any are found, they are sold by a designated trustee and proceeds are distributed to any creditors that the debtor is indebted to repay.

To be eligible to file Chapter 7 bankruptcy it needs to be determined by conducting a means test which was regulated together with the 2005 amendments of the bankruptcy code.

In most cases, all assets are considered exempt, so there's no asset to liquidate and there's no money paid to creditors. The Chapter 7 bankruptcy is generally the quickest form of bankruptcy and is available to individuals, couples, corporations and partnerships.

The case is first started by visiting the court clerk and obtaining the petition, schedules and statements for all of your finances. The forms will give you detailed instructions and what to list. Make sure you list everything on your credit report including your assets and debts, along with your financial history. This can be very time consuming but necessary when filing for bankruptcy. Don't forget you must also pay the filing fee which can be over two hundred dollars to the court clerk.

Make sure that you have every creditor listed in the schedules with an accurate creditor name, telephone number and mailing address. You must list all of your debts, even if the debt is non dischargeable such as a foreclosure or if you intend to repay the debt. The schedules must list all of your real property, any time shares obtained for buying property, and the real value of any property.

After you list all of your debts and creditors you must then decide what you want to have exempted. These items include everything that will give good quality of life including washer and dryers, refrigerators and dishwashers. Once you decided on these items you can then sign the documents.

Once the documents are signed they are then filed with the bankruptcy court clerk and are notified of any hearings or proceedings that are scheduled before a judge if there is a response from any creditors.

For most cases, the debtor and the creditors rights are valid only on the day of filing. All other additions or inclusions that creditors have are excluded in bankruptcy proceedings.

What is Involved?

Bankruptcy is debtor protection provided by the federal government to help businesses and individuals repay their debts or eliminate them by means of liquidations or reorganizations. The Bankruptcy code is divided by chapters and that is how bankruptcies are referenced. A Chapter 13 bankruptcy is a bankruptcy where debt repayment plans are reorganized in a manner that allows the debtor the ability to repay those debts; however, that type of bankruptcy isn't ideal for everyone and they made need to file a Chapter 7 bankruptcy. A Chapter 7 Bankruptcy is a liquidation bankruptcy where the debtor is only allowed to keep a certain amount of property, as described below, and all the other assets belonging to the debtor is sold off in an attempt to repay the creditors, the companies and people the debtor owes. A person is only allowed to file a Chapter 7 Bankruptcy every 8 years.

When a person files a bankruptcy petition, a Bankruptcy Estate is created. The Bankruptcy estate contains everything that the debtor owns and all of their equitable interests. This is then under the control of the Bankruptcy Trustee. The chapter 7 trustee is an individual appointed by the courts to administer the estate and is entrusted to try to find and liquidate all the assets of the debtor's and repays the creditors as much as they can from the sale of the assets.

Before the decision to file a Chapter 7 petition is done, a Disposable Income Test and a Means Test should be done to determine if the debtor meets the requirements necessary to file. The Disposable Income Test is used to determine whether the debtor has enough income left over after paying necessary monthly expenses, to pay off at least a portion of their unsecured debts. If the disposable income adds up to more than the statutory amount set for the debtor's location, they will fail the means test and cannot file for Chapter 7 bankruptcy. The Means Test is the method used to determine if the debtor makes more than the median income level for their geographic location. If their income is less than the median amount, they are allowed to file; however, if they do make more than the median amount, then the Disposable Income Test must be used.

At the same time the Bankruptcy Estate is created, an automatic stay is put into place to protect the debtor from any other collection efforts by their creditors. This protects the debtor from creditors proceeding with lawsuits, garnishments, and even initiating foreclosure proceedings against the debtor. Creditors cannot send the debtor collection letters or assess other charges and fees to their accounts. This is good for both the creditors and the debtors. The debtor no longer has the stress of collections while the creditors can be reasonably assured that an effort will be made to pay each and every creditor an equitable distribution of the assets rather than one creditor having the ability to take all the assets. This Automatic Stay remains in effect until the bankruptcy is dismissed or discharged.

An individual debtor under Chapter 7 is allowed to keep some of their assets through exemptions allowed under the Bankruptcy code. Exemptions are statutorily defined properties that an individual debtor may protect from administration in the bankruptcy estate. Some states offer their own exemptions though and the debtor is allowed to choose to use their states exemption laws or to use the federal exemption laws. In Indiana, the homestead exemption is currently at $7,500 for an individual filing and $15,000 if filing as a married couple. A debtor is also allowed to keep up to $8,000 in personal property or $16,000 is filing married. Indiana has scattered the statutes pertaining to all of a debtor's possible exemptions all over the place. Some are under title 34, some under title 27, and yet you should always look for any other possible exemptions under § 522 of the Federal Code. There are exemptions of varying amounts for whole life insurance policies, automobiles, business partnership property exemptions, exemptions for crime victims' benefits, unpaid wages still due to the debtor, earned income tax credits, health aids, jewelry, household goods, tools of the trade like uniforms, personal injury claims, retirement accounts, and government benefits like Social Security. There are many exemptions available depending on your state and your circumstances. It is the duty of the debtor's bankruptcy attorney to find all those exemptions applicable.

One of the primary concerns for the debtor is, "How long will this take?"

There is a deadline of 15 days after filing the petition to file certain financial "schedules" with the court-documents declaring your assets, liabilities, expenses, income, and a statement of your affairs. These schedules are typically filed with your initial petition. About 15 days after a petition is filed, the courts will mail the Notice of Commencement of Case to the debtor and to all of the creditors listed in the petition. This notice will inform the debtor of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you. Within 30 days after filing a petition, or before the meeting of creditors (also called a 341 meeting), you are required to file a Statement of Intention whereby the court is informed if the debtor intends to keep their secured property that serves as collateral for their secured debts, or if the debtor plans to surrender the property. A debtor can reaffirm the debts and continue to make payments on those debts if they wish to keep the property or it can be sold for fair market value. Within 45 days after the Statement of Intention is filed, the debtor must surrender or keep the property as indicated in the Statement.

Sixty to ninety days after filing the bankruptcy petition, there will be a Meeting of the Creditors or 341 Meeting as it is typically called. The trustee will ask the debtor to testify under oath as to the accuracy of the statements in their petition. It is vital that the client, debtor, attends the 341 hearing. If the debtor is not there, the petition will be dismissed. Within 45 days after filing, evidence of any payments received from any employer within 60 days of filing, an itemized statement of monthly income, and an estimate of any increase income or expenditures expected over the next 12 months must be submitted.

Within 60 days of the 341 hearing, the trustee and any creditors must file any objections they have to any of the exemptions in the petition. Creditors can object to the discharge of a debt if the debt was obtained through fraud or theft, personal injury claims from a DUI or DWI, or assigned debt through a divorce. Another debt that cannot be discharged is a federally backed student loan without typically being permanently unable to repay it typically due to indigency or handicap. Orders for child support or alimony cannot be discharged as well. Creditors can also object to the discharge if it is found that there was any bankruptcy fraud, spoliation of necessary records, failure to explain losses, or failure to respond to interrogatories. Proofs of claim must be filed within 90 days after the first date set for the 341 hearing if they wish to share in the payments from your case if any assets are available for liquidation even though there typically are not any assets to divide in a Chapter 7 bankruptcy.

It is important to address certain times for the debtor, such as the 341 meeting again. The trustee will be asking some questions of the debtor like, "Have you paid off any debts to family members recently?" or "How did you get your unsecured debt?" It is important that the debtor is prepared to answer questions pertaining to their finances going back at least 180 days and that they bring any financial documents that may help to explain their situation and a copy of their most recent tax return. They should also bring their identification and social security card. The trustee is trying to make sure there has not been any preferential transfers (paying off one creditor to benefit them more than another creditor) or fraudulent transfers (transfer of assets to another without consideration to hinder, delay, or defraud creditors). If it is found that there has been a preferential transfer, the trustee is entitled to take that money back from the preferred creditor to more equitably divide among the other creditors. If it is found that there has been any fraudulent transfers, the petition may be dismissed and the debtor may not be allowed to file for bankruptcy and even be sent to prison. Make sure your debtors are honest in the preparation of their bankruptcy. It is also important to include certification of debtor counseling in the petition by the due date so the case isn't dismissed. Debtor counseling is a new requirement since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect. This certification is often overlooked by debtors especially if they had filed previously before the BAPCPA. After all, the purpose of bankruptcy is to give the debtor a fresh start, so that counseling may be the first time they were ever given any tips to stay out of debt.

Debt Relief

The recession has sent most Americans looking for debt relief. Most of the people have just heard grandpa stories regarding the great depression. But now they are getting an actual taste of what it is like to be in an economic downturn.

Along with the folks looking for debt relief there is a surge in the solution providers too with all sorts of false promises. The gullible victims of the credit card tirade need to know what are the genuine means for them to get out of trouble. Watch out for scams. Most small time advisors may lead you into scams. In such a confusing scenario, what is most important is how much of correct and authentic information you have before taking a decision.

Bankruptcy and Debt settlements have emerged as the top most choices for debt relief. Before you take a call, you need to get your facts right. Here are a few basic questions about bankruptcy that you need to ask yourself before making any kind of decision on debt relief.

1. What is meant by bankruptcy? It is a procedure that is mandated by federal law to provide protection to US citizens looking for debt relief.

2. What is the protection given to me by bankruptcy? Bankruptcy provides two types of protection, the first for your current assets, and the second, for your future earnings.

3. I am so deep in debt that I will loose my home. Will bankruptcy save my home? Many state laws provide homestead protection, that can be either unlimited or up to a given limit. You will loose your home only if your state provides no homestead protection at all.

4. Do I go in for Chapter 7 or Chapter 13? Chapter 7 is a straight bankruptcy. You will be permitted this if your current assets are so bad that you can not pay off the debt in any manner. Chapter 13 revised will block portion of your future earnings, if you have any, to overcome debt in 3 to 5 years.

5. What will happen to my credit? You will take 8 to 10 years to revive your credit score.

When You Most Need it

Most credit card users in US are in dire straits. The recession has blown the wind out of their sails. You had planned out everything so well. You bought your dream house and dream car. After that your credit card helped you out to get all the things that you required. You were to get the much awaited rise in your salary and well deserved promotion. What went wrong thereafter?

Your company ran into rough weather due to the recession. The company had to go on a job cutting spree. You could not even save your job. The promotion and the rise in salary remains a fantasy. The struggle to get debt relief seems to be endless. You have tried all the tricks in the trade. However nothing seems to help you. You tried out the debt counselors. The advice seems to be very sound but it is very difficult to practice. The debt counselor's advice was not very practical. It is due to the sheer size of debt that has accumulated in your account.

Your friends advised you to file bankruptcy. You are really not sure what it means. It is a legal procedure and sounds quite complicated to you. Here are some words of wisdom to help you out. First of all bankruptcy is the ideal option for anyone in your state. A large number of people think that they will loose everything they have. There could not be a bigger myth about bankruptcy than this. To put your mind to rest, bankruptcy is a procedure by the government to help out people who are in financial trouble. It also allows you protection to some of your current assets. Each state has laid down a limit for protection of home equity in case of bankruptcy.

There has really never been a more advantageous time for consumers to try and eliminate unsecured debt. Creditors are very concerned about collecting and most have government money to make eliminating some of your debt financially feasible.