Plan Your Finances Using Bankruptcy

bankruptcy attorney Hawaii

bankruptcy lawyer HonoluluThe Difference Between Chapter 7 and 13

Just because you are filing for bankruptcy doesn’t mean that you are giving up your financial future.  It is important to know the main differences in the way that Chapter 7 and Chapter 13 bankruptcy will affect your debt.  The prior will eliminate all your debts and give you a completely clean start, while the latter will result in the creation of a repayment plan for your debts that suit your budget.  Both these plans will allow you to keep your assets and allow you to plan your financial future properly.

What To Do Before and After

In order to take control of your financial future after bankruptcy, there are a few important things you will need to do.

  • 1)      Budget before. Before you file for bankruptcy, you will need to create a comprehensive list of your debts and analyze your monthly income to determine how you are spending the money.  Create a budget that will help to prioritize your expenses.
  • 2)      Attend the credit-counseling course. One of the mandatory aspects of filing for bankruptcy is that you attend a credit-counseling course before filing.  The course is designed to help you learn how to better manage your assets and monthly expenses.  If you do not attend and complete the course, your bankruptcy case will be dismissed.
  • 3)      Plan. A comprehensive plan of how you can brighten your financial future and stabilize your household can be implemented before, during and after the proceedings.  Your plan should include a budget as mentioned earlier, an analysis of your spending habits, and a plan to eliminate unnecessary expenses.

It is important to look at bankruptcy as an opportunity to improve your financial situation, rather than as the end of the world.  You can use the bankruptcy system to gain much needed financial relief.  Consulting a qualified attorney will help you to maximize the benefits of bankruptcy and expedite the process.

 

Credit Counseling Courses

hawaii bankruptcy

hawaii bankruptcyA credit counseling course can be an important essential before and after you file for bankruptcy. When you file for bankruptcy, the courts will mandate that you attend credit counseling sessions.  You may think that it is stupid and a waste of time, but it is a requirement if you want to qualify for any kind of bankruptcy.  If you decide not to attend these counseling sessions, your petition for bankruptcy may be dismissed by the court.

When to do it?

If you decide to file for bankruptcy, you will need to attend a credit counseling course and successfully complete it at least 24 hours or more before you file the initial petition for bankruptcy.  If you do not complete it, then you may not be able to file.  You will need to provide your attorney with the proper “Certificate of Completion” before you can submit your petition.

The Courses

Many people wonder about the cost of the credit counseling course, how it all works, and what happens if you end up failing the course.  To address cost, you should consult with your lawyer, because they will have affordable recommendations for you.

The course itself can be completed from your own home over the phone, on the internet or in person.  The most important thing to remember is that you should only do the course with an agency that has been approved by the government.  Be prepared to answer questions that are related specifically to your personal bankruptcy situation including spending habits, income, expenses, etc.

One last thing to remember is that once your case has gone to court and you have been approved for debt discharge and your case is over, you will need to complete a second court mandated course.  This second course is about “financial management,” and is focused on giving you useful information about things such as budgeting, time management, work strategies, and more that will help you to rebuild your life after bankruptcy.  This can be done with any government approved agency by phone, internet or in person.

Credit counseling can help you to get back on track and to get a new start before and after bankruptcy.

The Dangers of Consolidating Debt for Debt Relief

consolidation

Debt ConsolidationWith so many people in Hawaii facing debt challenges, you may be searching for a solution that will lead to being debt free. Among the many solutions people have been looking into is debt consolidation. There are several forms of debt consolidation, but none of which are that appealing when you take into consideration the ways in which it will affect you overall. Make sure you are considering your options completely in order to get the kind of help that will actually lead to getting out of debt.

Debt Consolidation Using a Second Mortgage

Homeowners are often lured into the idea of getting a home equity line of credit in order to pay off debts. While this may give you all the money you need to pay off your creditors, it may create other problems you do not need. The first problem is that you will need to pay the closing costs on this kind of a loan. Second is that with all of your credit now in one loan, you may start giving yourself permission to use your credit cards again. This in essence means that you are simply creating more debt rather than eliminating your old debt.

Zero-Interest Credit Cards

Many credit card companies offer a zero percent APR for anyone signing up to get a new card. This gives you the ability to use the credit card to pay off your existing high interest cards. However, it also means that you now have a single card where all your debt is. What happens when the zero percent promotion is over? What does the APR go to at that point? This is a very important consideration to make sure you are getting the best deal.

Debt Consolidation Loan

The most common way for people to consolidate their debt is through a debt consolidation loan. This is a loan that is supposed to bring all of your debts together into one loan that has a lower interest rate than even your lowest rates. This is not always the case. When considering these kinds of loans, make sure to do your homework as to what interest you are actually paying on the total debt. You may discover that you are actually losing money this way. Another consideration here is that a debt consolidation loan can be worse for your credit than going through bankruptcy.

Take all of this into consideration before trying to consolidate your debt. You may find that going through bankruptcy is actually a better solution in the end, because it allows you to reduce debt rather than build new debt.

Credit Counseling Is Helping Debtors to Manage Finances

Credit counseling

Credit counselingOne of the main things that people have to do when they file for bankruptcy is to attain credit counseling. This is a service that the individual will have to pay for and attend in order to finalize their bankruptcy. When going through this kind of counseling, people learn to make better decisions about the kind of new debt they are creating as well as how to create and stick to a budget. This kind of counseling allows the individual to avoid getting into another circumstance in which they will have to go through bankruptcy again.

When asked what was the biggest benefit received by attending credit counseling, people have reported that they learned how to accurately make a decision about new debt. Before attending the counseling, there was a mindset of figuring out how to make the payments after acquiring the debt. After going through counseling, individuals have learned it is possible to take a closer look at the kind of debt they are acquiring, what the monthly payments will be, and how this will work with their budget.

It has yet to be seen whether the long term financial goals set by these individuals has been met, but given the tools to set and meet short term financial goals has helped many to enjoy great success. These courses are not teaching individuals how to manage their wealth, or how to invest their money. They simply provide the basic outline of how to create a budget, prioritize spending and manage the income that they have to work with. These factors alone seem to be helping individuals to take better control of their financial decisions and prevent falling behind on their financial obligations. By sticking with this program, more people will be able to keep making better choices and recidivism in bankruptcy courts will be greatly diminished.

Average Credit Card Debt Rises for Hawaiians in May

According to data compiled by Creditkarma.com, Hawaiian consumers’ credit card debt rose in May to an average of $7,250.  (Article here) This is an increase on April’s total and is the second highest total in the nation.   Additionally, Hawaii’s upward trend in credit card debt is running against the national downward trend.  Average credit scores in Hawaii also declined from April.

During these tough economic times, many residents of our beautiful islands continue to struggle to make ends meet.  If you are stressed out about rising debt, then please contact us.   We offer a free consultation and will be happy to sit down in a comfortable, pressure-free environment to discuss your options and come up with a plan to get you back on your feet.

The Student Loan Debt Bomb

We probably don’t have to tell you that it’s expensive to put yourself or a loved one through college.  Student loan debt has increased steadily to where we’re now seeing undergraduates averaging more than $23,300 in debt at graduation.  This is in addition to the average of roughly $3,000 in credit card debt for each college student.  If you consider the above, then take into account the fact that average income has declined or held steady over the past several years, it doesn’t take a math major to figure out that there is a problem at hand.

The Baltimore Sun recently published an article pointing out that student loan debt now exceeds credit card and auto loan totals. Millions of Americans are struggling to make ends meet as a result of high student loan payments.  “Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could very well prevent millions of Americans from fully participating in the economy or ever achieving financial security,” testified Illinois Attorney General Lisa Madigan on March 20 before a U.S. Senate judiciary subcommittee.

Although student loan debt is not dischargeable in bankruptcy except in very extreme circumstances, Abelmann Law also specializes in debt counseling and finding creative solutions to your financial worries.  Please call or email to schedule a free consultation.

All Walks of Life

April 6 brought news that former NFL star defensive lineman Warren Sapp has filed for Chapter 7 bankruptcy protection.  This serves as a good reminder that, contrary to what many of us may have thought, the individuals and families that file for bankruptcy protection come from all walks of life and file for all varieties of reasons, including, illness, death in the family, and accidents.   The protection and the fresh start afforded by bankruptcy allows many people the chance to catch their breath, get back on their feet,  then return to pursuing their financial goals.  You may have heard of the following people who filed for bankruptcy protection:

  • Abraham Lincoln
  • Henry Ford
  • Walt Disney

If you’re stressed out and losing sleep over whether bankruptcy is the right decision for you, then please give us a call at Abelmann Law to schedule a free consultation.  We will sit down with you to discuss your current situation and help you to decide whether Debt Settlement, Chapter 7 bankruptcy or Chapter 13 bankruptcy is a good option.

Collection Agencies Win Free Trips by Harassing Borrowers into Unreasonable Terms

On March 25, Bloomberg.com published a troubling report detailing the incentives offered to collection agencies attempting to collect on delinquent debts.  While it should come as no surprise that collections agencies are pushing the legal limits with their methods, at Abelmann Law we find it particularly concerning that the agencies are failing to advise individuals of the various repayment options available to them.  In many cases the result is increased financial hardship for families that are already struggling under a heavy debt burden.  Meanwhile, “successful” debt collection agents are rewarded with cash bonuses, foreign trips and gift certificates.
While the above-mentioned report focuses on debt collection practices in the student loan industry, we think you will agree that the problem does not end there.  If you are being hounded by creditors, we would like to talk to you about your options.   Bankruptcy may not be your best option, but we will be more than happy to tell you this and provide counsel with respect to your other options.  If bankruptcy is the answer, then we are here to discuss Chapter 7 and Chapter 13 bankruptcy with you and assist in making this very important decision to get back on your feet with a fresh start.

Average credit card debt in Hawaii drops 11 percent since 2011

A year-on-year comparison of the month of January shows that average credit card debt in Hawaii dropped 11% to $7,524, according to a report from creditkarma.com.  An article in the Pacific Business News reviews further statistics on Hawaii residents’ mortgage debt, credit scores, auto loan debt, and student loan debt.

These statistics are telling – in our everyday interaction with individuals and families here in Hawaii, we find that people are suffering from increased debt loads and a decreased ability to service that same debt.  One way to determine whether you are in need of a Chapter 7 bankruptcy or Chapter 13 bankruptcy is to organize a budget.  Set out all of your income – salary, business, social security, pension, family contributions, etc.  Then list out your fixed costs – mortgage/rent, car payments, insurance, etc.  Then add in your variable costs – utilities, gasoline, food, clothing, entertainment, etc.  If your outflow/costs exceed your inflow/income by a significant amount, and you don’t expect much to change in the near future, it may be worthwhile to consider whether bankruptcy is an appropriate solution to help you get a fresh start in your finances.

There are quite a few resources available virtually, such as online credit counseling services provided by Abacus, or in person in Honolulu, with services like Consumer Credit Counseling Services of Hawaii, that can help you to create a budget and analyze whether you need assistance with your debt.  You can also call us now at 589.1010 to set up a free consultation with our Hawaii attorneys.