2011 Tax Return Refund

I recently filed my 2010 tax return, and thought that a lot of people that are considering filing for bankruptcy may have questions about a potential refund on their own 2010 taxes.  For many, this refund is a huge part of the beginning of the year.  For some, it can be the difference between being able to survive the year (even after bankruptcy) and having to make even more drastic changes. 

Let’s look at one scenario.  It is late January and an individual is considering bankruptcy.  In the past three years the individual’s tax refunds has averaged approximately $4,000 (for both state and federal).  The individual’s income level and family situation has remained consistent throughout the past three years (and the tax year in question).  The individual estimates that a tax refund will equal the $4,000 level of the past three years.  What happens if the individual files for Chapter 7 bankruptcy before filing a 2010 tax refund?  Will that refund be confiscated by the trustee and distributed to creditors?  Does the individual have to claim anything on the bankruptcy petition?

The first question we have to look at is whether a tax refund can be considered “property of the estate.”  Only property of the estate is subject to turnover (delivery) to a bankruptcy trustee, and distribution to creditors.

Property of the estate is defined in the Bankruptcy Code as “all legal and equitable interests of the debtor in property as of the commencement of the case.”   The courts have held that this definition is broad and consists of virtually all of a debtor’s property.  The courts have also determined that a refund should be prorated to the percentage of the taxable year.  For example, if a debtor filed a bankruptcy petition on October 1, then only nine months (3/4) of a refund would qualify as “property of the estate.” 

The second question is what can be done to protect the refund should an individual file for bankruptcy.  Once the debtor’s interests or assets become property of the estate, the debtor may claim certain exemptions protecting that property.  One specific exemption that may apply in California is the “wild card” should a bankruptcy debtor choose the California (bankruptcy only) exemption statute.  In this case, a debtor can exempt any property in the amount of $1,100 plus any portion or a residence or burial plot (around $20,000). 

Thus, while in our situation (person filing for taxes in January 2011), the entire tax return for 2010 becomes property of the estate and subject to turnover to the trustee, it is possible, and potentially likely, that the property will remain with the individual through the use of statutory bankruptcy exemptions.  Bankruptcy planning comes into play again and the use of exemptions determines what someone can keep and what they cannot.

There is one more piece of tax information that should be briefly touched on.  Should an individual owe taxes from a previous period, it is possible that an individual may not be able to exempt a refund owed.  This would be a topic of another discussion…

OK, one more thing.  Always file a return, even if you owe money.  It starts the statute of limitations, and in many cases, your bankruptcy case will be dismissed if you have failed to file for the previous year.

For more questions, contact the Henshaw Law Office.

Common Scenario - Delinquent Home Mortgage Payments

Lately it seems as though individuals and couples filing for bankruptcy (especially Chapter 13) are doing so for one reason, to save their house from foreclosure.  Some people believe, based on what they have read, heard, or seen, that bankruptcy will prevent foreclosure.  To some extent, they are right.  Bankruptcy can permanently prevent foreclosure.  But, for most people, the protection is only temporary. 

All Too Common Scenario

Let’s take a look at a common situation.  In 2006, a couple buys a new house for $800,000 in a new development in South San Jose.  They are not required (and do not) to provide any down payment.  Their initial loan is a five year interest only loan at 4.5%.  Their monthly payment during the first five years is $3,000 (this does not include private mortgage insurance, taxes, homeowner’s insurance, etc.).  When the couple purchased the house nobody thought the market could decline, especially in the Bay Area.  The couple both had what they thought were stable jobs and an income that could sustain the loan and the existing payments.  However, as the months rolled on and all the house costs came in, the budget became tight, but still manageable.

Now, we fast forward to 2011.  In quick order, the loan payment alone has jumped over $1,200 per month, the house is worth $200,000 less than what the loan value is, the couple still has both jobs, but salary has slightly decreased, and their stability of employment has greatly declined.  Anything that can be paid with a credit card is.  The entirety of the debt becomes too much, and now the couple is late on their mortgage.  Default notices appear, and the bank has sent a note of a foreclosure sale.

The couple calls up a bankruptcy attorney, preferably one located in Los Gatos with Henshaw as part of his or her name, looking to save the house they have been in and created lasting memories in for the past five years.  They love the schools for their children, their neighbors, and all that the neighborhood provides. 

What Bankruptcy Can Do

Now we have to look at the realities of what bankruptcy can do for this couple.  First, the filing of a bankruptcy petition will immediately stop any foreclosure sale or other proceeding against the couple through the imposition of an automatic stay.  In general, this stay will last throughout the bankruptcy case.

The most important question an individual or couple in this situation must ask is whether the house is worth saving.  The second question is whether saving the house is feasible.  We have to look at a couple factors in determining this second question, including the bankruptcy chapter and the value of any first or second loans as compared to the value of the property.

In Chapter 7 (liquidation of non-exempt assets), the home lender will likely seek relief from the bankruptcy case’s automatic stay (which prohibits the foreclosure).  The grounds they mostly use in such situations is that their collateral (the house) is not adequately protected because the debtor (person that files for bankruptcy) has no equity in the property.  In the vast majority of cases, this is all that is necessary for a lender to show when the debtor is in default and has no equity in a property.

Chapter 13 bankruptcy provides a more realistic option for our couple.  Chapter 13 cases required the debtor to provide a plan of reorganization of debt.  While in most cases Chapter 7 debtors are not required to either sell property or pay creditors after the close of a bankruptcy case, the Chapter 13 debtor has a required payment plan of three to five year years.  One large benefit of Chapter 13 is that through the plan, the debtor can make up for delinquent mortgage payments.  This can be done in a number of situations because other debts are reduced or even wiped out completely. 

Another benefit of Chapter 13 is the ability to strip a second mortgage off.  This lienstripping ability is only available in situations as described above, where the first loan is at a higher value than the market value of the property, with the second completely outside of the value.  In our situation, because the value of the home is now $600,000, and the first loan is for $650,000, the second loan amount of $150,000 can be stripped off, leaving the debtor with only a loan for $650,000 to pay off for the property.  This can be of a huge benefit, but only if the debtor is able to make payments on that first loan.  Chapter 13 bankruptcy cannot reduce interest rates or values of a loan that is based on a debtor’s principal residence.

What this means is that if the couple can afford to do both (a) pay off the delinquent payments owed on the first loan, and (b) pay the regular payments of the loan, they can keep the house.  What they would need to do to show the bankruptcy court this is to either start or continue to pay the lender while the bankruptcy case is ongoing.  If the lender is receiving no payment during the time the case is pending, it is likely they will seek and receive relief from the automatic stay.

Keeping a house in bankruptcy in this economy is possible for some.  Bankruptcy can be of a substantial benefit in keeping that property.  However, knowing what is required is necessary before the process is initiated.

Call the Henshaw Law Office today if you are in a similar circumstance.

Auto Repossession Before Bankruptcy

The other day I received a call where an individual asked me whether filing bankruptcy would allow for a car that has been repossessed to be returned.  Although my response probably failed to satisfy the caller (the usual attorney response of it depends), here is what is required in California (at least how the courts have viewed the law).

Background

In most vehicle contracts the lender retains a right to repossess a vehicle if the borrower fails to make the scheduled payments.  With many contracts, this repossession can be done outside of any court proceedings.

However, once an individual files for bankruptcy many of the rules change.  For one, an automatic stay is implemented.  This stay prevents most actions against the debtor (individual that files for bankruptcy).  Specifically, the automatic stay strictly prohibits any lawsuit or repossession against a debtor that is delinquent on car loan payments.  Any repossession after a bankruptcy petition is filed constitutes a violation of the automatic stay, with the repossession void and of no effect.  In that case, the lender would be immediately required to return the vehicle to the debtor.

Effect of Bankruptcy on Prepetition Repossession


Section 542 of the Bankruptcy Code requires that entities in possession of "property of the bankruptcy estate" are generally required to turn the property over to either the trustee (in Chapter 7) or the debtor (in Chapter 13).  This big sticking point then for this turnover requirement is determining what is "property of the estate."

Section 541 of the Bankruptcy Code defines property of the estate.  This definition includes "all legal or equitable interests of the debtor in possession as of the commencement of the case."  Basically this definition states that whatever rights the debtor has at the commencement of the case continue in bankruptcy.  As for the vehicle that has been repossessed, the court has to discover what rights a debtor had when the bankruptcy case was filed.

These rights are determine by state law (California State law).  Under the California Civil Code (section 2983.2), a debtor has the right to redeem a repossessed vehicle up until the date the car is sold by the repossessing lender.

Two recent cases have come to different conclusions as to whether turnover of the vehicle is required upon the filing of the bankruptcy petition.  First, in a case from the Southern District of California (In re: Fitch, 1998), the bankruptcy court held that while a repossessed car is property of the estate, the right to possess the car was transferred to the lender prior to the filing of the bankruptcy petition.  The court interpreted the statutes to mean that the automatic stay freezes the positions of the debtor and creditors.  Thus, the lender had the right to maintain possession.  The court did state that a vehicle could be returned to a debtor upon the debtor's giving of adequate protection.  In most cases adequate protection means the establishing of proof of insurance and proof that the debtor will be able to make the regular payments on the car.

In the Northern District of California (In re: Cortez, 2010), the Bankruptcy Court interpreted the Bankruptcy Code, and specifically the section on the automatic stay, to mean that a "knowing retention of estate property violates . . . the automatic stay."  Because a debtor has the right to redeem until the date of a sale by the lender, the vehicle remains part of the estate, and subject to turnover.  In this case, the debtor provided adequate protection to the secured creditor.  However, the court seemed to say that it was not necessary for turnover.


What to do?

If your car has been repossessed, and you want to make sure you retain possession, bankruptcy may be a solution if you are not able to pay the balance before a lender's sale.  However, while the Northern District seemed to state that adequate assurance is not necessary for turnover, it will ultimately be necessary to avoid a lender's motion for relief from the automatic stay.  Be prepared to show (a) insurance, (b) regular and sufficient income, and (c) an ability to pay for the vehicle.

If you have any questions on the matter contact the Henshaw Law Office.

United States Supreme Court Case - Vehicle Exemption

The Supreme Court of the United States recently decided a case where a debtor attempted to shield a portion of his income for vehicle ownership costs from a Chapter 13 Bankruptcy plan.  In Justice Elena Kagan’s first published opinion, the Court reviewed a case of a debtor that incurred approximately $80,000 in unsecured debt.  The Court ultimately held that the debtor’s attempt to take advantage of $471 monthly allowance for vehicle ownership costs were not allowed because the debtor did not have a loan or lease payment.

In Chapter 13 Bankruptcy cases a debtor is required to pay a portion of his monthly income according to a court-approved plan.  Under the Bankruptcy Code, the amount that the debtor is required to pay is determined by a “means test.”  In this means test debtors are able to deduct certain standard living expenses.  These allowable expenses permit a debtor to shield his income from creditors according to the stated amount.  These amounts are stated in either national or local standards. 

Vehicle expenses are provided for in two sections, “Ownership Costs” and “Operating Costs.”  The current National “Ownership Costs” allow for a $496 monthly deduction for a single car and another $496 for a second vehicle. 

Justice Kagan and the Court held that “a person cannot claim an allowance for vehicle-ownership costs unless he has some expense falling within that category.”  Thus, a person can take advantage of the Ownership Costs exemption only if the debtor has either a vehicle loan or lease.

In this case, the debtor owned his car free and clear of any loan or other encumbrance.  Thus, he did not qualify for the exemption from the means test.

This case is extremely important not only for Chapter 13 debtors, but also for those debtors whose income falls above the median income for Chapter 7 debtors.  If you own a vehicle outright, you cannot use the national ownership cost to obtain a better chance to qualify for Chapter 7. 

If you have any further questions on the means test contact the Henshaw Law Office today.

Foreclosures Still on Rise

When will this torrent of foreclosures stop?  A recent Associated Press article predicts that 2011 will outpace 2010 for foreclosures.  Maybe it is the 5 year adjustable rates finally coming due.  Maybe it is the continued unemployment rates.  Maybe it is the fact that home prices just are not where they were a few years ago.  If your home value is 1/2 of what it was when you purchased the property just a short time ago, does it make sense to continue to try and fight?

Bankruptcy does provide one option.  In Chapter 13, homeowners may have the ability to eliminate a second mortgage.  However, this option, called "lienstripping," is only available where the value falls inside the amount of the first mortgage.  For example, lienstripping may be available where a home valued at $500,000 has a first mortgage for $550,000 and a second for $200,000.  Lienstripping would not be available in that same home with a first mortgage for $450,000 and a second for $250,000.

Luckily for us here in the San Jose area, prices appear to have stabilized.  (See Graph)

Call the Henshaw Law Office today at (408) 599-1305 if you are facing foreclosure and want to discuss your options.

Ride Through Option Eliminated

Definition - Ride Through Option - Bankruptcy debtor continues to make vehicle loan payments to lender without having to give the vehicle back or sign another agreement with the lender.

Before 2005, a bankruptcy debtor with a vehicle loan had four (4) options as to the vehicle:

(1) surrender the vehicle to the lender;
(2) redeem the vehicle (pay the lender the fair market value of the vehicle);
(3) reaffirm the debt (debtor and lender create new terms by which the debtor would be bound after the close of the bankruptcy case); and
(4) the "ride through" or "pay and drive" option where the debtor continues to make payments to the lender as if bankruptcy never occurred. 

The most obvious benefit of the ride through option is that, if allowed, should a debtor stop making payments on the vehicle loan, the lender could reclaim the car, but could not obtain a "deficiency judgment."  A deficiency judgment would generally be allowed where the vehicle sells for less than the debtor owes.

The main problem with cars is that they are so essential to so many people, especially here in the Bay Area.  Also, when people file for bankruptcy, the fear is that they will not be able to afford a vehicle.  Alternatively, if they are given credit to purchase a car, the terms are usually outrageous. 

The Ninth Circuit (California bankruptcy courts are part of this federal appellate court system), prior to 2005, allowed this ride through option, even though other circuits stated that such an option violated the Bankruptcy Code.  Recently, a Delaware Bankruptcy Court ruled that congressional changes to the Bankruptcy Code in 2005 specifically eliminated the ride through option for bankruptcy debtors.  The court held that "creditors holding security interests to file a statement of intention to surrender the collateral, redeem it, reaffirm the debt or, in the case of leased property, assume an unexpired lease."  In their opinion, a debtor cannot simply assert that payments will continue on the loan or lease.  Further, debtors must make an affirmative declaration of their intentions with the vehicle.  If not, the court can grant relief from the automatic stay that prevents repossession of the vehicle.  

This decision does not have the force of law in California bankruptcy courts.  However, the Ninth Circuit in In re Dumont (a 2009 decision) has held that Congress, through the 2005 legislation, intended to eliminate - or at least restrict - the ride through option.  Under this statement there may be situations where the ride through maybe allowed.  


The bottom line is that if you want to keep your car after bankruptcy, you have a few options.  Speak with the Henshaw Law Office today to see which option is best for your situation.


www.Bankruptcy-SanJose.com

Codebtors and Bankruptcy

In many instances individuals with less than stellar credit ask parents, other family, or friends to be a codebtor on a loan.  This is commonly the case of car and student loan cosigners.  The point of that cosigner is to provide additional protection to the lender in case the borrower fails to fulfill the contract.

If that borrower files for bankruptcy, no matter which Chapter, a stay preventing any collection efforts is created on behalf of the borrower (debtor).  However, depending on the Chapter of Bankruptcy, that stay may not include protection for the cosigner. 

In Chapter 7 cases, the codebtor is provided no protection against the borrower’s creditors.  However, in Chapter 13, creditors “may not act, or commence or continue any civil action, to collect all or any part of a consumer debt of the debtor from any individual that is liable on such debt with the debtor, or that secured such debt.”  11 U.S.C. § 1301(a).

 Even in Chapter 13 cases, the Bankruptcy Code provides exceptions to this protection.  For example, the debts must be consumer, not business, debts.  This means that a particular debt must have been incurred by an individual primarily for a personal, family, or household purpose.  Because other exceptions apply, contact the Henshaw Law Office at (408) 599-1305 to see the best path forward.

Ted Williams and the Fresh Start

Today, during one of the college football broadcasts, Ted Williams became the voice for Kraft Macaroni and Cheese.  This Ted Williams is not the Splendid Splinter of Boston Red Sox fame.  No, this is the man that has gained recent notoriety through YouTube for his “golden voice.”  Mr. Williams’ meteoric rise to fame is something that many dream of.  He has gone from penniless and living on the streets to multiple high spotlight job offers and likely a substantially significant pay increase.

The term that came to me when seeing his story was “fresh start.”  It is a term that is thrown around a great deal on bankruptcy websites and federal cases.  Mr. Williams’ story is clearly the definition of a fresh start.  In no manner do I suggest that when a person files for bankruptcy they will become the spokesperson for a national food brand.  But a change of circumstances is possible. 

It can be easy to feel the stigma that many attach to bankruptcy.  It is that stigma that prevents filing of a bankruptcy petition until there is no other option.  Many people give up everything trying to make due.  Then, when they file bankruptcy, they have literally nothing left.  When they realize their true options, a light turns on, and many wish they could have made the decision earlier. 

That leads me to the options that are available for people.  Bankruptcy can be that fresh start, if you are willing to work hard and put yourself in a new frame of mind.  Those that do this, and have a clear goal for their future, generally come out of bankruptcy able to make those hard choices to be financial solvent.  The law gives us this opportunity when we are at the end of our rope.  The key is to take advantage of this benefit and recognize the changes that need to be made.

If you are in a situation where debt is coming in faster than you are able to pay; if you are up late each night worrying about that next credit card, mortgage, or car loan payment; or if you are going through your retirement funds trying to make that minimum payment, call the Henshaw Law Office at (408) 599-1305 to review your finances and see what your true options are. 

Baby Boomers, Retirement, Debt, and Protection in Bankruptcy

Recently, a close relative sold her house in South San Jose, packed up her belongings, and moved clear out of California.  Fortunately for her, she had equity in her home (as she bought the home in 1997).  But, with this move I began to think about retirement for many in the Bay Area.  How much does a proper retirement cost? 

Of course, all calculations depend on your particular situation.  Some have a house that they own outright.  Some have no children.  Some are able to live frugally with other family members.  But let’s take a look at some basic numbers.  The figures come from the U.S. Census bureau.

First, let’s explore a house.  The average (median) residence in Santa Clara County is estimated at $702,000.  Proposition 13 (California law that states that property taxes are based on the value of the date the home purchased, plus a small increase each year), if allowed to remain intact, would have significant benefits to those that have lived in their homes for a number of years.  However, even considering Prop 13, taxes alone can be quite significant.  In one area of San Jose (Almaden/Leigh High School) the property taxes are as follows (see Santa Clara County Assessor):

Tax	Tax Rate
1% Maximum Tax Levy	1.00000%
Co. Retirement Levy	0.03880%
Co. Bond 2008 Hosp. Fac.	0.00950%
Union Elementary 1999	0.07860%
San Jose City G O Bonds	0.03500%
Campbell Union High 1999	0.01960%
Campbell Union High 2006	0.01310%
West Valley Coll 2004	0.01390%
SCVWD-State Water Proj	0.00700%
SCVWD-Zone W-1 Bond	0.00020%
Total	1.21570%

Thus, at the median house in Santa Clara County of $702,000, the yearly tax rate would be $8,534.21 annually (or $711.18 per month).  Other necessary residential costs to consider include utilities, homeowner’s insurance, and maintenance (including furniture, kitchen supplies, and electronics replacement). 

Next, start to add up vehicle costs, insurance, gas, food, travel, entertainment, cell phone bills, clothing, ever-increasing medical bills, charitable contributions, gifts to family, and, of course, other taxes. 

One category I did not state already, DEBT.  For many individuals and families, debt is the overpowering category that dictates how much work is done, and for how many more years.  For those considering retirement, this debt is forcing behavioral changes that have not been seen before.  Especially here in the beautiful, but expensive Silicon Valley, we are seeing increasingly high number of seniors living off credit cards.

An article in the Chicago Sun Times details the effects of this debt.  We are seeing an increasing number of seniors filing for bankruptcy.  Also, baby boomers are simply not prepared, or even preparing for retirement. 

To close, here is one thing to consider when looking at debt payments.  Avoid taking money from your retirement accounts to pay off debts.  This is especially important when that debt starts to become unmanageable.  The reason for this is that in California, in general, retirement plans are completely exempt in bankruptcy.  This means that the money that you have worked so hard for so many years and placed in those accounts will remain yours even after bankruptcy.

Other bankruptcy exemptions will apply to each and every individual.  Therefore, if you have been losing sleep trying to figure out how you will be able to climb out of debt in order to have a retirement, come see us at the Henshaw Law Office for a free consultation.

Vallejo, California Bankruptcy Lessons

Recently, the city council of Vallejo approved a plan to exit bankruptcy (http://www.reuters.com/article/idUSN3028542420101201). It is the largest city to ever seek such protection. The case presents a story very common in many cities, counties, and states in the country. Governments received increased funds from the housing boom and the business that followed it. When the crash came a couple years ago, the loss of revenue hit the pockets of the treasuries. Specifically, Vallejo had to cut expenses, but was not able to make large enough cuts.

One of the reported problems in this case surrounds creditors allegedly unwilling to make concessions and deals with the city. Without such cooperation, the city turned to a measure that could end up losing those creditors significant payments on their debts.

How does this translate to consumers?

First, many in the Bay Area have seen ups and down in their own personal economic situations. Whether it was that initial purchase of Chipshot.com, Pets.com, or Webvan.com (although I still think it is a great idea), many here were caught up in the ride of the dot coms. After lost jobs, and the thought that Silicon Valley businesses could be hurt forever, we survived and new businesses emerged and took a stronger hold, such as Google, Facebook, and a rebounded Apple.

In recent years many thought that home values could continue to increase, even though prices seemed incredibly out of control to many. Home equity conversations were regular occurrences at dinner parties. Home equity mortgages were even more common. We are now in the middle of how our economy is reacting to this new adversity.

Second, the threat of bankruptcy can provide reason enough for creditors to work with you. Try talking with them directly to see what plans are available. If you fail to receive a response, or if their offer is completely one-sided in the creditor's favor, contact a debtor's attorney, such as the Henshaw Law Office, to see what your options are. Banks, home lenders, credit card companies, an even landlords should be willing to discuss alternative methods of payment with you or even debt reduction.

Once these negotiations fail, bankruptcy may be the best option. While bankruptcy is not a cure-all, it is a powerful option that can restore confidence and stability. Additionally, the bankruptcy process provides time for individuals and families to decide their financial direction without the constant onslaught of collection calls and repossession and foreclosure notices.

California Bankruptcy Exemptions – What are They and Can I use them?

The Bankruptcy Code institutes a number of ways for individuals to have a realistic “fresh start” that bankruptcy is intended to provide.  One of these is the allowance of “exemptions” from the bankruptcy estate.  When a debtor files bankruptcy, an estate is created of the assets of the debtor.  However, you can exclude or exempt certain property from the estate.  These exemptions mean that you can retain property that would otherwise be part of the estate, subject to liquidation and distribution to creditors.

The law of exemptions can be quite daunting and complex.  For example, to qualify for the California exemptions, a debtor must have “domiciled” in California for at least 730 days (2 years) before filing for bankruptcy.  Also, California’s exemption statute allows the debtor to choose between a set of state law exemptions and California’s nonbankruptcy exemptions.  The ability to choose between the two is further complicated when a married couple file for bankruptcy.  

Specific California (nonbankruptcy) exemptions include (although there are several other exemptions) $2,550 for a single motor vehicle, ordinary and reasonably necessary household furnishing, clothing, and personal effects, jewelry, heirlooms, and works of art the aggregate value of which do not exceed $6,750, tools of the trade (include potentially a work vehicle) not to exceed $6,750, certain social security benefits, certain life insurance policies, and certain retirement plans.

Further, California nonbankruptcy exemption law provides a homestead exemption valued at varying levels, with a minimum of $50,000.  This homestead exemption is limited to the principal dwelling where the you or your spouse resided on the date the bankruptcy case commenced.  The Bankruptcy Code caps the California homestead exemption to $136,875 for property acquired within 1,215 days before the debtor filed for bankruptcy.  Other caps may also apply by law.

Lastly, California’s alternative Bankruptcy Code-Like Exemptions allow for alternate choices for the debtor and bankruptcy attorney.  One key addition is the inclusion of a “wildcard” provision.  This wildcard allows the debtor to exempt up to $1,100 on any property.  The wildcard ultimately can potentially be used up to an aggregate amount of $20,725.

The bottom line on exemptions is that the debtor has choices.  While the choices are not always clear, a good bankruptcy attorney should be able to look at the debtor’s assets and create a plan that incorporates the exemptions to the full extent the law provides.  Call the Henshaw Law Office today at (408) 599-1305 to discuss whether bankruptcy planning is appropriate for you.

Bankruptcy - Life Goes On

The Philadelphia Inquirer

By Gail Marks-Jarvis

Personal Finance: Bankruptcy is No Longer a Doomsday

http://www.philly.com/inquirer/business/20101226_Personal_Finance__Bankruptcy_is_no_longer_a_doomsday.html

A lot of people in this country, and in this region, are in financial despair.  Bankruptcy can be a method to alleviate some of the pressures that people are facing.  As Ms. Marks-Jarvis put it, “bankruptcy does not ruin your life.”  When considering bankruptcy, timing is ever important.  Try avoid waiting to file until your car is ready for repossession, your wages or social security payments are garnished, or your house is on the steps of foreclosure. 

Lastly, Ms. Marks-Jarvis points out that life exists after bankruptcy even after bankruptcy.  Many individuals are able to obtain “a home loan two to three years after coming out of bankruptcy.”  Also, credit cards are another possibility.  With a strict focus and careful habits after your case is closed, these luxuries that were previously considered part of daily existence can again become available.