Times are tough. Our entire economy is in severe crisis, and with the rest of the world experiencing similar hardship it is unlikely that we will encounter a quick, easy solution. Home values are plummeting, causing people stuck with less than ideal mortgages major financial distress. Companies are folding and laying people off, making jobs even scarcer than they already are. Costs are skyrocketing for nearly all goods and services in our daily lives, and every indication is that things are probably going to get worse before they get better. If you are having a tough time right now, you are not alone. The good news is that there are solutions that you can use to improve your situation and relieve the burden of debt that is currently crushing you.

 

One very good option for some people is to declare bankruptcy. Bankruptcy rates are rapidly increasing from San Francisco, California, to Long Island, New York and everywhere in between. The people making the decision to declare bankruptcy are from all walks of life, and all income levels. There is no archetypal bankruptcy case. The one thing that they have in common is that they all made a business decision to help ease their burden and start over with a clean slate.

 

Some people with loads of personal debt do not consider bankruptcy as an option because they think that it is something to be ashamed of. This could not be farther from the truth. Declaring bankruptcy is not weaseling out of your financial obligations- it is making a serious and well thought-out business decision to utilize an established financial tool to help improve your quality of life.

 

Bankruptcy as an institution exists because people get caught in unexpected situations that turn their world upside-down. It is not designed to protect lazy people that are trying to game the system, but instead to protect people like you- hard working individuals that due to falling home values, rising medical expenses, or some other previously unforeseen trouble now find themselves on the verge of drowning. If the owners of a big corporation find themselves with mounting debt and little to no chance of recovery, they sell off their assets and declare bankruptcy, effectively canceling their debt. They do this without apology to laid-off workers or upset shareholders. They do not feel bad about the decision because they exercised their right to use an existing solution to minimize future hardship. This tool is available to you as well, and you should not discount it as an option because of a non-existent moral obligation to a creditor.

 

Declaring bankruptcy is an entirely valid way to address crippling debt before it is too late, and it can be the best decision for many people. As with any other business decision that you make, it is important to understand all of the facts. If you are experiencing financial trouble, talk to an experienced bankruptcy attorney who will be able to inform you about your myriad options and whether or not bankruptcy is a viable solution for you.

 

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Drive anywhere in Suffolk or Nassau County, and you will see the signs of a depressed economy: countless for-sale signs, vacant businesses, foreclosed homes, and quiet streets.  These signs tell of consumers hunkering down- a widespread withdrawal from a grievously injured economic system.  It can be during times such as these, when things might seem hopeless, that we can actually be thankful for a thing like bankruptcy.  While bankruptcy is a sensitive and personal issue for most people, it can also be an interesting phenomenon.  For instance, have you ever wondered how bankruptcy came about?  Who invented this consumer protection concept, and why? 

 

When the Montauk and Rockaway Indians were still hunting and trading on Long Island, bankruptcy had already been an established practice for thousands of years.  In fact, in Ancient Greece, there was even a type of Chapter 13 “reorganization.”  Modern Chapter 13 allows a debtor to reorganize his debts with a lower interest rate and total amount.  In Ancient Greece, only men were permitted to work.  If a man fell behind in his bills, a creditor could petition the local court to have the Man indentured as a debt-slave.  He would be required to work for the creditor until the debt was repaid.  However, being that a man’s family was considered his property, wives and children were indentured as well; often for many years.  This property rule was a frightening idea for slaves owned by the debtor, as they would forever belong to the creditor as part of the “bankruptcy.” 

 

In Roman times, individuals who provided financial services such as currency transfers or loans would operate at a bench in a public place.  In the event they went bankrupt, (or simply ran off with their client’s money) the bench would be broken to indicate the vendor was no longer in service.  This is where the term bankruptcy came from: the Latin words for broken bench.  Many individuals who went bankrupt naturally or were “caught” going bankrupt would often be penalized with harsh prison sentences. 

 

In the time of the Inquisition, Phillip II of Spain inherited a country in trouble.  Already operating with a deficit, Phillip engaged the country in a long series of wars that depleted Spain’s resources even further.  In addition, Spain’s population at the time was small, and spread in thin pockets across the country, which made the collection of taxes quite difficult.  As a result of all this financial duress under Phillip II’s rule, Spain became the first country to declare national bankruptcy.  In fact, during the height of the Inquisition, Phillip II declared bankruptcy several more times.

 

In colonial America, a bankruptcy usually meant serving time in jail.  Even this was uncertain however, as the original colonies soon abandoned practices originally stolen from Great Britain.  Because communication and coordination was so difficult in the early history of the United States, this led to a wide array in the rules and consequences of a bankruptcy from region to region.  In some places, you might be forgiven your debt, with certain restrictions.  In other regions, you could do hard time in a primitive jail. 

 

Throughout the eighteenth century, bankruptcy rules and practices changed frequently, and sometimes did not exist at all.  Finally, the 1898 Bankruptcy Act was passed, and bankruptcy rules across the country gained uniformity.  The rules under this act shifted the balance of benefits to the consumer. 

 

Since the Bankruptcy Reform Act of 1978, bankruptcy has largely remained as it is now.  There have been other key changes to the Act- in 1984 and 2005, for instance, but bankruptcy continues to be a way to start over for people who have no options left.  Everybody deserves a second chance, and by studying the history of bankruptcy, we can clearly see that ancient and modern societies alike have agreed that there should be financial relief and redemption in some way.     

 

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Somehow, Nassau and Suffolk County residents have been better able to avoid bankruptcies than citizens in many other parts of the country.  However, that certainly doesn’t mean that it is not happening.  While New Yorkers in general may be more aware of exactly what a bankruptcy is, due to the heavy amount of advertising and marketing done in this field, some things remain unclear or even unknown to many individuals who are considering their bankruptcy options.  So before you Google “Nassau Bankruptcy attorneys” or “Suffolk Bankruptcy lawyers”, you may want to review the most basic terms, so that you can be as knowledgeable as possible when you speak to someone about bankruptcy.

 

Bankruptcy Court

All bankruptcies in the United States are handled in Federal Bankruptcy Court.  While most of the laws governing bankruptcy are written at a Federal level, individual states have more specific rules that accompany the federal rules.   These additions or differences between the laws may make proceedings vastly different from state to state.  In any case, bankruptcy courts are highly regulated, and with laws changing all the time, it is vital to seek the assistance of qualified bankruptcy lawyers before you start taking any active steps. 

 

Bankruptcy Fraud

Bankruptcy fraud is a crime punishable by fines and/or imprisonment, or both.  Some consumers, through their own ignorance, unintentionally commit bankruptcy fraud.  This is classified by such acts as withholding information from the bankruptcy court, hiding or disguising sources of income or assets, selling property that is technically in possession of the court, and making false statements or claims about any aspect of your bankruptcy.  Even a slight infraction of this law can have devastating effects: another reason why you need to pick up the phone and simply call a bankruptcy attorney near you.  In most cases, they will initially advise you for free.

 

Chapter 7

When referring to “Chapters” in relation to bankruptcy, we are actually talking about types of bankruptcy.  For most individuals, Chapter 7 is the correct course of action.  In fact, nearly 65% of all bankruptcies are of this type.  In a Chapter 7 bankruptcy, a debtor’s possessions and assets are sold by the court to satisfy as much of the debts as possible.  Some items are exempt from this process, such as a home (in many cases), an older car, and clothing.  Whatever debts are not paid by the sale of the debtor’s assets are discharged forever through the bankruptcy proceedings.  It should be noted, however, that certain kinds of debt, such as student loans or child support, cannot be included in a bankruptcy, and must be repaid. 

 

Chapter 13

For individuals who have a regular income, a Chapter 13 bankruptcy allows them to restructure their debts.  They are allowed to keep all of their assets, provided that they make a concerted effort with their creditors to pay at least some of their debts owed.  This is typically done over a five year period, after which time any remaining debts can also be purged. 

 

Trustee

Bankruptcy courts have individuals who do nothing but manage bankruptcy proceedings.  These are officials who collect and examine information, verify, seize, and protect assets, correct, return, or file documents with the court, and otherwise manage aspects of the proceedings, up until an appearance before a judge.  A bankruptcy trustee ensures that all required steps are taken, and all required information is gathered.  If you are declaring bankruptcy, the court trustee can be a valuable aide, so make certain that you treat them with the utmost respect. 

 

Whether you have a grasp on the basics of bankruptcy or not, it is always a wise idea to consult with an experienced bankruptcy attorney.  Lawyers specialize in the field of bankruptcy because the scope of the field is so enormous that only specialized, highly trained individuals can fully understand and stay abreast of all the changes and requirements that are included as part of the process.  Want to learn more?  Stay tuned to this blog, as bankruptcy issues are a common theme.        

 

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You are considering bankruptcy.  You are intelligent, and responsible, but your financial situation may need the fresh start that bankruptcy protection provides.  Perhaps you have even consulted with a qualified bankruptcy attorney.  In Nassau and Suffolk counties, much as in the rest of the country, bankruptcies are on the rise, and along with that the general view of bankruptcy is softening.  If this is your situation, you may take some comfort in knowing that this is happening to very competent and careful people all over the country.  You are not alone.  In fact, very wealthy and powerful people have traveled down the path you may be treading, and sometimes it can help to know that you’re not the only one who has gone through this.  There’s no need for shame.  In fact, this might be a cause for a chuckle or two- or at the very least some inspiration.   

 

            Perhaps the most famous New Yorker to ever file bankruptcy was Donald Trump.  One of the world’s most well known and wealthy men has actually filed bankruptcy twice, squashing debts that totaled more than one billion dollars.  Despite two high profile bankruptcies, Trump is now back on top, and earning top profits. 

 

            Another very public series of bankruptcy proceedings were those against Willie Nelson.  Unlike most bankruptcies, Nelson was actually sued by his lenders in an attempt to force him into bankruptcy.  Because of badly mismanaged money issues, Nelson was not aware of his financial problems until the IRS raided his home and took literally everything he owned.  In a compassionate twist, Nelson’s friends and family purchased most of his auctioned items, and returned them to him.  Sympathy is easily gained for Nelson, considering one of his biggest problems was that he gave money away to virtually anyone who asked. 

 

            Remember MC Hammer?  You can’t touch this?  Well, apparently you can touch this, being that Hammer filed for bankruptcy in 1996.  A young rising star unaccustomed to success, Hammer indulged heavily in gambling, and had an enormous entourage that was dangerously financially draining.  In addition, Hammer faced a number of legal issues, and the resulting litigations, coupled with his exorbitant lifestyle, forced his eventual slide into bankruptcy.

 

            Mark Twain- one of our most renowned and cherished American figures, suffered horrible financial troubles in the latter part of the nineteenth century that led him into bankruptcy.  Twain had a very ambitious and creative mind, but made terrible investment decisions.  He poured millions of dollars into inventions that did not work, or had never even been tested.  His financial woes became so pronounced that he fled with his family to Europe to escape his creditors.  Even still, he became totally insolvent by 1894.  Eventually, he returned to the United States, and wrote a series of papers, books, and memoirs, and successfully repaid all of his creditors. 

 

            The Jackson family has a pattern of bankruptcies among its members.  Michael Jackson’s parents filed for bankruptcy, relieving themselves of $45 million in debts.  Four of their children followed suit.  Today, Michael is being sued by creditors to force his bankruptcy.  He currently owes about $200 million, but has successfully staved off bankruptcy proceedings by lowering his standard of living…very, very slightly. 

 

            Even American President’s can suffer serious financial setbacks.  Thomas Jefferson was declared bankrupt upon his death.  His estate management staff soon discovered that his penchant for wine (he died with an unpaid $10,000 wine bill) and his luxurious mansion and lifestyle had amounted unimaginable debts.  With his death, every item that Jefferson had owned was sold to pay his creditors- including the sale of 130 people.  (Slaves) 

 

            As you can see, a bankruptcy can happen to anyone, from any walk of life.  It doesn’t matter whether you are rich or poor, well-known or obscure- sometimes, these things happen.  However, as has been evidenced repeatedly throughout our history, many people recover from bankruptcy.  In fact, sometimes a bankruptcy can be the most beneficial thing you can do for yourself.  Not sure if that’s true in your case?  Then contact a professional bankruptcy attorney today, and bookmark this blog for more bankruptcy-related issues.      

 

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Like millions of Americans, you might find yourself facing a bankruptcy or foreclosure.  Currently, the number of bankrupt individuals and foreclosed homes is epidemic, and like a flu, the problem is communicable.  One foreclosure helps to perpetuate another, and one bankruptcy forces someone else down the same road.  In many cases, filing for Chapter 13 or handing the keys back to the bank can be a blessing.  Nevertheless, certain steps should be taken to mitigate these financial risks. The first step to guarding against a foreclosure or a bankruptcy is to have a thorough understanding of your financial situation.  While many people believe that they are fully aware of where their money is going, most find that they actually only know a fraction of what they should.  Even for those who have traditionally maintained strict control over their money, it is time to re-evaluate.  A great deal of change has occurred over a very brief period, so we need to view things with fresh eyes.  We need to get back to financial basics, and we can start with a pencil and a piece of paper. Create a list of all your expenses.  This needs to be a comprehensive list that accounts for literally every dollar that you earn.  Calculating your rent or mortgage, car payment, credit cards, utilities, and insurance is not enough.  Consideration needs to be made for things like haircuts, clothing/shoes, morning coffee/newspaper, entertainment, pet food/veterinary bills, property taxes, oil changes and basic maintenance, memberships, cosmetics/toiletries, laundry; this list could go on nearly indefinitely.  It is imperative that you account for everything.  For instance, when you calculate your gasoline expenses, include any gas expenses for boats, recreational vehicles, farm equipment, barbecue grills, lawn equipment, and so on.  When you calculate your food expenses, include groceries, eating out, vending machines, dinner or holiday parties, and take-out or delivery charges.  Be creative and honest in your assessment, and you will soon discover that your money is disappearing to things you don’t even think about.   The last part of your expense sheet should detail amounts being paid toward savings, retirement plans, or investments.  You will know that you are finished with your expense sheet when the total dollars spent equals your total amount of income. When you have a grasp of precisely where your money is going, it’s time for the next step: debt and expense reduction.  Many people find that, once they have completed an exhaustive budgetary analysis,  they see their money being disposed of in rather wasteful ways.  Using your expense sheet, brainstorm ideas for ways to reduce each category of expense.  For example, you can reduce your entertainment expenses by not going out, or reducing or eliminating cable and satellite packages.  You can reduce your mortgage by refinancing, or reduce your rent by moving to a cheaper place or taking on a roommate.  Grocery costs can be drastically slashed by buying pasta, rice, and flour instead of prepared foods, and by buying in bulk.  For almost every expense you have, there is potentially a way to reduce it. In addition to establishing a budget and reducing expenses, there are certain government and private programs available to help homeowners prevent foreclosure or bankruptcy.  For example, Suffolk County, New York, has a program that “ . . . will provide one-time cash grants of as much as $500 on a first-come, first-served basis to the first 1,000 families who apply.”, reports Tom Incantalupo, who reports for Newsday.com.  Other programs include mortgage payment forbearances, interest rate reductions, and mortgage or loan restructuring. Establishing a budget and reducing or eliminating your expenses will provide you with more capital to invest in savings, or to chip away at large loans like mortgages or automobile loans.  Your biggest consideration should be interest.  Meaning, always pay down balances that are at the highest interest rates first.  While it may be tempting to take your surplus money and invest it at 10%, or work on paying off your 7% mortgage, you will actually lose more money in the long run than if you used the same money to pay off a credit card balance that was at 18%.  It’s simple math, folks, but many people often do not see things in simple terms when it comes to their money.   Following these steps will allow you to take more control over your financial situation, and avoid a foreclosure or bankruptcy.  However, if your budgetary analysis shows that you have a negative debt to income ratio even after reducing expenses, then you may need to seek the advice of an experienced bankruptcy or foreclosure attorney.  And, you should bookmark this blog, as we will discuss what will happen if that is the case. –

 

We are going to have a very frank discussion about bankruptcy.  There won’t be any fluff, and no B.S.-  just facts given with “no holds barred,” nothing held back, and no niceties.  The current financial crisis has affected all classes of people in the United States, so that even the most carefully laid plans can lead to eventual bankruptcy.  If you’re reading this blog, then you have probably already given it a lot of thought.  Now you need to take action.    Bankruptcy laws are complex and written in such a way as to be full of interpretive inconsistencies.  Regulated by the federal government, bankruptcy laws also change frequently, and specific laws can vary from state to state.   For these reasons, an expert must be consulted when you are faced with the possibility of a bankruptcy.  Seeking the advice of a qualified and experienced bankruptcy attorney is imperative in order to ensure that the whole process is handled legally and effectively.  At no time should you ever attempt to file your own bankruptcy: you could end up in serious financial and legal trouble if you do.     This means that research must be conducted in order to correctly choose the attorney whose skills best match your needs.  Seeking a bankruptcy attorney who is local to you will aid in ensuring that your counsel is available and understands local laws- if you live on Long Island, for instance, seek a qualified bankruptcy attorney in Long Island.  Check Better Business Bureau reports and other consumer reports to verify that your chosen lawyer is legitimate and committed to providing superior services.     When you have selected a suitable local bankruptcy attorney, the first step is to make their job easier by gathering information that they will need.  This means that you will need to collect all of your financial related documents: tax returns for the last several years, all your bills, bank statements, past due or foreclosure notices, government program rejection letters, collection letters, an asset inventory, a budgetary analysis, and anything else that will be helpful.  When gathering these documents, keep in mind that it will be used to establish that your financial situation is such that you have no other recourse but bankruptcy. Be prepared to show anything that will substantiate this.    Consult with your chosen attorney.  They will analyze the data you provide and determine if you have a solid case.  They may ask for additional pieces of information, and you should procure this as soon as possible.  If the bankruptcy attorney takes your case, you should immediately begin contacting your creditors.  To each of them, issue a cease and desist request.  This means that they will no longer be able to contact you to collect on debts you may have with them.  You will need to provide your bankruptcy attorney’s name and contact information.     If bankruptcy is what you have to do to protect your family, yourself, and your assets, then you should not feel ashamed to do so.  Remember, bankruptcy is a form of financial protection, designed to assist consumers who are overburdened with debt.  It is a way to start over again, and in some cases, may be the best thing that you can do for yourself.  Bookmark this blog, because soon we will discuss the realities of a bankruptcy’s effect on your very valuable credit.          –

 

 

Recently, record numbers of individuals have filed for bankruptcy, or had homes that entered into foreclosure.  This problem is worsening exponentially, and has become a pandemic that has spread to virtually all parts of the country.  As an example, Long Island, New York experienced 2,154 bankruptcies in the first quarter of 2008 alone, according to the May 23, 2008 issue of Long Island Business News.    Foreclosures in Long Island were up 11% during the same quarter.  Being that these same trends are being seen all over the country, it stands to reason that there are now thousands of people out there with the damaged credit of a recent bankruptcy or foreclosure status.  While this can be disheartening to anyone, most credit situations are not nearly as terrible as they seem.  Credit is easy to repair if you take decisive steps and have patience.    The first step in repairing your credit after a bankruptcy or foreclosure is to get a copy of your credit report.  The report needs to be obtained from all three major credit bureaus.  www.freecreditreport.com is a website that was set up with the assistance of the federal government as a means for citizens to view and manage their credit files.  Legislation passed at the time allows for one free copy from each reporting agency, once a year.  When you have these reports in front of you, check them for errors of any type.  If you find mistakes, you will need to formally dispute the information with the credit agency reporting it, and have it removed from your file.  If you dispute a reporting that is deemed to be valid, you can still legally have a consumer addendum added to your report, which will allow you to leave a permanent statement in your file that can explain or clarify delinquencies or inaccuracies.      After your credit report has been checked for errors, you can begin the true repair process.  The most effective means of quickly improving your credit score is to “piggy-back.”  This is where you are added as an authorized user to the account of someone who already has well-established credit.  While you will have no real financial obligation for the account, you will gain the good payment history of the person whose account you are piggy-backing.  This can improve credit scores dramatically, and in a very short period of time.     Even with poor credit, there are many high-risk lenders out there that will approve you for a credit card at an 18% interest rate or higher.  Take it, and use it to your advantage. Use the credit card to pay for everything:  rent, groceries, utility bills, pet food, gas, and so on.  However, being that you would normally pay cash or write a check for those items, you can simply mail one large check to the credit card account, before it cycles into the next month.  If you do this, you will avoid paying any interest fees, have a large amount of purchasing power, and will be quickly building your credit as a desirable “pay-in-full” customer.  Furthermore, if you can get a credit card with purchasing benefits, like airline miles, you can get free perks just for spending money that you were going to spend anyway.   Many banks and credit unions will make secured or collateralized loans.  Take advantage of these, even if it means you have to “buy” one.  In many cases, you can hand your bank cash, and ask them to make you a loan based on using the cash as collateral.  Or you can put an automobile up as collateral.  In any case, these loans will report favorably to the credit bureaus, helping to improve your score.  Doing this at multiple banks will help immensely.     Once you have established some credit, even if it is of the secured kind, ensure that you pay for the credit according to terms.  Never miss a payment or pay late, and always pay more than the minimum amount due.  Bankruptcy or foreclosure is not the end of your credit situation.  In fact, in many cases, it is only the beginning.         –