Tag Archives: Bankruptcy

The Elements of a Successful Consumer Bankruptcy Filing: A Complete Guide

Filing for bankruptcy can be a complex process, but with careful preparation and the right guidance, it can provide the financial relief you need. If you’re considering filing for Chapter 7 or Chapter 13 bankruptcy, understanding the elements of a successful bankruptcy case can help you navigate the process with confidence. In this guide, we’ll explain what information you need to provide, what your bankruptcy attorney and trustee will require, and how all this information is formulated into your bankruptcy filing with the court.

1. Initial Consultation with a Bankruptcy Attorney

Before filing for bankruptcy, the first step is to consult with a qualified bankruptcy attorney. During this initial meeting, your attorney will assess your financial situation to determine whether bankruptcy is the best option for you and, if so, whether Chapter 7 or Chapter 13 is the most suitable type of filing.

Information Your Bankruptcy Attorney Needs

To give you the best advice and start preparing your case, your attorney will need detailed information, including:

Personal Identification: Your Social Security number, driver’s license, and proof of residency.
Financial Documents: Recent pay stubs, tax returns (usually for the last two years), bank statements, and profit and loss statements if you’re self-employed.
List of Debts: A comprehensive list of all your debts, including credit cards, medical bills, student loans, mortgages, auto loans, personal loans, and any other outstanding liabilities.
Assets and Property Information: Details about your property, including real estate, vehicles, savings accounts, retirement accounts, valuable personal belongings (like jewelry or collectibles), and any other significant assets.
Monthly Budget: A breakdown of your income and expenses, including rent or mortgage payments, utilities, groceries, healthcare costs, and any other regular expenses.
Legal Documents: Copies of lawsuits, judgments, garnishments, foreclosure notices, or repossession letters if applicable.

This information helps your attorney determine whether you qualify for Chapter 7 or Chapter 13 bankruptcy and whether any of your assets can be protected through exemptions.

2. Completing the Means Test (for Chapter 7 Filers)

If you’re filing for Chapter 7 bankruptcy, you must pass the means test to prove that your income is low enough to qualify. The means test compares your income to the median income for your household size in your state. If your income is below the state median, you may qualify for Chapter 7; if it’s above, you may need to explore Chapter 13 or another debt relief option.

The means test involves:

Calculating Average Monthly Income: Reviewing your income over the past six months to determine if it falls below the threshold.
Accounting for Allowable Expenses: Deducting certain allowable expenses from your income, such as rent, utilities, healthcare, and transportation, to determine your disposable income.

Your bankruptcy attorney will guide you through this process and help you gather the necessary documentation.

3. Preparing the Bankruptcy Petition

Once your attorney has collected all the necessary information, they will prepare your bankruptcy petition. This document is the core of your bankruptcy case and includes the following schedules:

Schedule A/B (Assets): A detailed list of all your assets.
Schedule C (Exemptions): Identifying the property you’re allowed to keep under state or federal exemption laws.
Schedule D (Secured Debts): Listing any debts secured by collateral, such as mortgages and car loans.
Schedule E/F (Unsecured Debts): Detailing unsecured debts, like credit cards, medical bills, and personal loans.
Schedule I (Income) and Schedule J (Expenses): Outlining your monthly income and living expenses.

Once completed, your attorney will file the petition with the Bankruptcy Court. This officially initiates your bankruptcy case and triggers the automatic stay, which halts collection actions, wage garnishments, and creditor harassment.

4. The Role of the Bankruptcy Trustee

After your case is filed, the court will assign a bankruptcy trustee to oversee your case. The trustee’s job is to review your bankruptcy petition, ensure it’s accurate, and determine if there are any assets available to distribute to creditors.

What Information Does the Trustee Need?

The trustee will request the following documents:

Proof of Income: Recent pay stubs, tax returns, and bank statements to verify your financial situation.
Proof of Assets: Documentation for any significant assets, like property deeds, car titles, or retirement account statements.

The trustee will review these documents before your 341 Meeting of Creditors, which is a mandatory part of the bankruptcy process.

5. The 341 Meeting of Creditors

About 30 to 45 days after you file for bankruptcy, you’ll attend a 341 Meeting of Creditors. This is a relatively informal meeting where the trustee and any creditors who choose to attend can ask you questions about your finances and bankruptcy filing.

What to Expect During the Meeting

The trustee will ask you questions under oath to confirm the accuracy of your petition.
Creditors may ask questions, though they rarely attend in consumer bankruptcy cases.
The meeting usually lasts about 10 to 15 minutes.

It’s crucial to bring all requested documents and answer questions honestly. Your attorney will attend this meeting with you to provide support and ensure everything goes smoothly.

6. Debtor Education Course

After the 341 meeting, you must complete a debtor education course before receiving a discharge of your debts. This course is designed to teach you about budgeting, credit management, and financial planning to help you avoid future financial difficulties. Once completed, you’ll receive a certificate that must be filed with the court.

7. Receiving Your Bankruptcy Discharge

If everything goes smoothly, and the trustee finds no issues with your case, you’ll receive a discharge order from the court. This typically happens:

Chapter 7: Within 3 to 4 months after filing.
Chapter 13: After successfully completing your repayment plan, which lasts 3 to 5 years.

The discharge order officially wipes out your eligible debts, giving you a fresh financial start.

Key Takeaways for a Successful Bankruptcy Filing

Provide Complete and Accurate Information: The success of your bankruptcy case relies on transparency. Be honest and thorough when providing information to your attorney and trustee.
Respond Promptly to Requests: Whether it’s your attorney or the trustee asking for documents, responding promptly helps keep your case on track.
Complete Required Courses: Fulfilling the credit counseling and debtor education requirements is essential to avoid delays or dismissal of your case.
Stay Organized: Keeping all your financial documents organized will make the process smoother and less stressful.

Conclusion

Filing for bankruptcy is a significant financial decision, but with careful preparation, it can offer the relief you need to rebuild your financial future. By understanding what’s involved in the process, from gathering information for your attorney to cooperating with the trustee and fulfilling court requirements, you can set yourself up for a successful bankruptcy filing.

If you’re considering bankruptcy, consult with a qualified attorney who can guide you through every step, ensuring that your case proceeds smoothly and results in the debt relief you’re seeking.

Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Understanding Bankruptcy Options: Why Chapter 7 May Not Be Available for High-Income Earners in New Jersey and the Viable Alternative of Chapter 13

Leave a reply

Filing for bankruptcy is a significant decision that many individuals facing financial difficulties consider. In New Jersey, like in other states, the type of bankruptcy one can file depends on several factors, including income level. If you are a consumer with a gross income above the median income for your state and household size, you might be ineligible to file for Chapter 7 bankruptcy. Instead, Chapter 13 bankruptcy could be a more suitable option. This post will explore why higher-income earners might not qualify for Chapter 7 and how Chapter 13 serves as an alternative.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals to discharge most of their unsecured debts. This means debts like credit card balances, medical bills, and personal loans can be wiped out. However, to qualify for Chapter 7, you must pass the “means test,” which evaluates your income, expenses, and overall financial situation.

The Means Test: A Gatekeeper for Chapter 7 Eligibility

The means test is designed to limit the availability of Chapter 7 bankruptcy to those who genuinely cannot repay their debts. Here’s how it works:

Median Income Comparison: First, your gross income is compared to the median income for your state and household size. If your gross income exceeds this median, you move to the next step of the means test.
Disposable Income Calculation: The next step involves calculating your disposable income by subtracting allowable living expenses and secured debt payments from your gross income. If your disposable income is above a certain threshold, you fail the means test and cannot file for Chapter 7 bankruptcy.

Why High-Income Earners Might Fail the Means Test

If your gross income is higher than the median income in New Jersey for your household size, it’s likely that you will not qualify for Chapter 7 bankruptcy. This is because the means test assumes that individuals with higher incomes have the financial capacity to repay at least a portion of their debts. Therefore, high-income earners are often steered towards Chapter 13 bankruptcy instead.

Chapter 13 Bankruptcy: A Structured Repayment Plan

For those who cannot qualify for Chapter 7, Chapter 13 bankruptcy offers a structured way to manage and repay debts. Here’s how Chapter 13 differs and why it might be a better option:

Repayment Plan: Unlike Chapter 7, Chapter 13 does not discharge all debts immediately. Instead, it involves creating a repayment plan that spans three to five years (5 years if your income is over median), allowing you to pay off your debts over time based on your disposable income.
Protection of Assets: Chapter 13 allows you to keep your property, as long as you adhere to the repayment plan. This can be particularly beneficial if you have significant assets or secured debts, such as a home mortgage or car loan, that you wish to retain.
Debt Consolidation: Under Chapter 13, your debts are consolidated into one monthly payment made to a bankruptcy trustee, who then distributes the funds to your creditors. This can simplify the repayment process and make it easier to manage your finances.

Advantages of Chapter 13 for High-Income Earners

For individuals with incomes above the state median, Chapter 13 offers several advantages:

Debt Management: Chapter 13 provides a manageable way to pay off debts without the pressure of immediate liquidation; it can protect you from the lawsuits of your creditors, unlike debt settlement.
Credit Impact: While bankruptcy will impact your credit, Chapter 13 may be seen as less severe than Chapter 7 since it involves repaying your creditors over time.
Legal Protection: Filing for Chapter 13 triggers an automatic stay, which halts all collection actions, including foreclosure, repossession, and wage garnishment, giving you time to reorganize your finances.

Conclusion

If you are a higher-income earner in New Jersey struggling with debt, understanding your bankruptcy options is crucial. While Chapter 7 might seem appealing due to its debt discharge feature, failing the means test because your income is above the median could disqualify you. However, Chapter 13 bankruptcy offers a viable alternative, providing a structured repayment plan that allows you to manage your debts effectively while protecting your assets. Consulting with a bankruptcy attorney can help you navigate the complexities of the bankruptcy process and choose the best option for your financial situation.

By exploring Chapter 13 as an alternative to Chapter 7, high-income earners can find relief from debt while maintaining a path toward financial stability. Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Getting Rid of Debt: How Bankruptcy Transformed Sarah’s Life

Leave a reply

Introduction

Meet Sarah, a hardworking individual who found herself drowning in a sea of credit card debt. Like many others, Sarah initially turned to credit cards to cover unexpected expenses and make ends meet. However, as interest rates climbed and payments became unmanageable, Sarah realized she was trapped in a cycle of debt with no clear way out. That’s when she turned to our consumer bankruptcy service for help.

Please note that while “Sarah” is not a real client, this story is broadly representative of many that this practice has assisted with in real life. That said, every individual’s financial situation is unique and deserves to be separately evaluated to determine whether bankruptcy might be beneficial, and if it is, which chapter of bankruptcy would be the best choice. There are situations in which bankruptcy may not be a good idea.

Sarah’s Struggle

Sarah’s journey began with a single credit card, but soon spiraled into multiple accounts with mounting balances and relentless collection calls. Despite her best efforts to keep up with payments, Sarah found herself falling further behind, her credit score plummeting with each missed payment. Feeling overwhelmed and hopeless, Sarah knew she needed a lifeline to break free from the burden of bad credit card debt.

Finding a Solution

Enter our consumer bankruptcy service, where Sarah found the support and guidance she needed to navigate the complex world of bankruptcy. With our expert assistance, Sarah explored her options and ultimately decided to file for Chapter 7 bankruptcy, which allowed her to discharge her unsecured debts, including credit card balances, and start fresh with a clean slate.

The Transformation

The moment Sarah’s bankruptcy was finalized, she felt a weight lift off her shoulders. No longer burdened by the constant stress of overdue bills and harassing collection calls, Sarah could finally breathe a sigh of relief. With our help, Sarah not only achieved her goal of freedom from bad credit card debt but also gained a newfound sense of financial empowerment and control over her future.

Moving Forward

Today, Sarah is on a path to rebuilding her credit and securing a brighter financial future. Armed with the knowledge and tools provided by our consumer bankruptcy service, Sarah is making smart financial decisions, budgeting wisely, and prioritizing her long-term goals. While her journey was not without challenges, Sarah’s story serves as a reminder that there is hope and a way forward, even in the face of overwhelming debt.

Conclusion

At our consumer bankruptcy service, we understand the impact that bad credit card debt can have on individuals and families. That’s why we’re dedicated to providing compassionate and effective solutions to help our clients achieve financial freedom. If you’re struggling with credit card debt and seeking a way out, don’t hesitate to reach out to us. Together, we can help you write the next chapter of your financial story—one of empowerment, freedom, and hope.

Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Demystifying Chapter 13 Bankruptcy: Understanding the Repayment Plan

Leave a reply

Introduction

Facing financial difficulties can be overwhelming, but for many individuals, Chapter 13 bankruptcy offers a lifeline towards regaining control of their finances. Central to the Chapter 13 process is the formulation of a repayment plan, meticulously crafted by a consumer bankruptcy attorney. In this blog post, we’ll delve into the intricacies of how a Chapter 13 repayment plan is constructed, providing insight into this essential aspect of the bankruptcy journey.

Understanding Chapter 13 Bankruptcy

Chapter 13 bankruptcy, often referred to as “reorganization bankruptcy,” differs from Chapter 7 in that it involves creating a structured repayment plan to settle debts over a period of three to five years. This option is suitable for individuals with a regular income who wish to retain their assets and repay debts in a manageable manner.

Initial Assessment

The process of constructing a Chapter 13 repayment plan begins with an initial assessment of the individual’s financial situation. A consumer bankruptcy attorney will gather information about the individual’s income, expenses, assets, and debts to gain a comprehensive understanding of their financial landscape.

Creating a Feasible Plan

Once the attorney has gathered all necessary financial information, they work closely with the individual to craft a repayment plan tailored to their specific circumstances. The goal is to create a plan that allows the individual to repay creditors while still meeting essential living expenses.

Prioritizing Debts

In constructing the repayment plan, certain debts may be prioritized over others. For example, secured debts such as mortgage or car payments may take precedence, ensuring that the individual retains ownership of these assets. Delinquent payments on secured debts and priority debts, such as taxes or child support, are also addressed within the plan.

Calculating Disposable Income

A crucial aspect of constructing a Chapter 13 repayment plan is determining the individual’s disposable income – the amount of money available after deducting essential living expenses. This disposable income is then allocated towards repaying creditors as outlined in the plan.

The Role of the Trustee

Once the repayment plan is drafted and filed, the consumer bankruptcy attorney may discuss it with the trustee to obtain their approval. This may involve discussions regarding the terms of repayment, including the total amount to be repaid and the timeline for repayment.

Submitting the Plan to the Court

Once the terms of the repayment plan are worked out, the consumer bankruptcy attorney submits the plan to the bankruptcy court for approval. The court reviews the plan to ensure it complies with bankruptcy laws and is feasible given the individual’s financial situation.

Implementing the Plan

Upon approval by the court, the Chapter 13 repayment plan goes into effect. The individual makes regular payments to a trustee, who then distributes the funds to creditors according to the terms of the plan. Throughout the repayment period, the consumer bankruptcy attorney provides guidance and support to ensure the plan is adhered to.

Conclusion

Constructing a Chapter 13 repayment plan is a collaborative effort between the individual and their consumer bankruptcy attorney, aimed at achieving financial stability and debt relief. By understanding the process and working closely with a knowledgeable attorney, individuals can navigate the complexities of Chapter 13 bankruptcy with confidence, paving the way towards a brighter financial future.

Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Why Bankruptcy is a Better Option Than Debt Settlement

Leave a reply

When it comes to managing overwhelming debt, many individuals may consider debt settlement as a way to negotiate a lower payoff amount with creditors. However, bankruptcy may actually be a better option in many cases. In this post, I will explain why bankruptcy is a better option than debt settlement.

Legal Protection. Bankruptcy is a legal process that provides individuals with protection from creditors and debt collectors. When a person files for bankruptcy, an automatic stay goes into effect, which stops creditors from contacting the individual and pursuing further collection actions. On the other hand, debt settlement does not provide the same level of legal protection and creditors may still be able to pursue collection actions.
Faster Resolution. Debt settlement can take months or even years to negotiate a lower payoff amount with creditors. In contrast, bankruptcy can often provide a faster resolution to debt problems, with most Chapter 7 bankruptcies being complete within a few months.
Wider Debt Relief. Debt settlement typically only addresses unsecured debts, such as credit card bills and medical bills. Bankruptcy, on the other hand, can provide relief for a wider range of debts, including secured debts such as mortgages and car loans, and priority debts such as back taxes and child support.
Better Outcome for Creditors. While debt settlement may seem like a better option for the individual, it may actually have a negative impact on creditors. In many cases, debt settlement companies only negotiate a portion of the debt owed, and creditors may receive less money than they would have in a bankruptcy scenario.
Fresh Start. Bankruptcy provides individuals with a fresh start by discharging most unsecured debts and allowing them to begin rebuilding their financial future. On the other hand, debt settlement may leave a negative mark on a person’s credit report and make it difficult for them to obtain new credit in the future.

In conclusion, bankruptcy is a better option than debt settlement for individuals who are struggling with debt. It provides legal protection, a faster resolution, wider debt relief, a better outcome for creditors, and a fresh start. If you are struggling with debt, consider speaking with a New Jersey bankruptcy attorney to see if bankruptcy is right for you. Book a free telephone consultation here: https://jenniferweil07030.setmore.com/

There’s a Judgment Against Me – What Are My Options?

Leave a reply

Many people face civil judgments for debt collection. Here’s a guide to your options for addressing this problem.

What is a Debt-Collection Judgment?

A debt-collection judgment is basically a court order signed by a judge stating that you owe the plaintiff, who may be the original creditor or a debt collector, a specific sum of money. The judgment may or may not say that you owe continuing interest and/or attorney fees to the plaintiff.

How Do I Know if There’s a Judgment Against Me?

Typically, you would have been served with legal papers – a lawsuit – at some point. You may or may not have chosen to handle the lawsuit somehow, either by contacting the other side’s attorneys yourself or by getting your own attorney. Or maybe you ignored it. If a judgment was entered, you should have received a copy of the judgment itself or some notification that a judgment was entered against you, along with some indication of how much money the judgment was for.

If you were not served with any legal papers, it’s possible that you might have missed them in the mail somehow – some courts allow for service by mail, under certain circumstances – or maybe you’ve moved over the last few years. Try looking on the court’s website to see if you can locate a lawsuit against you. If you find one, make a note of the county in which it was filed, the plaintiff’s name, and the court’s docket number. These pieces of information will come in handy if you need to call an attorney or the court clerk.

If you knew about the lawsuit early on and you settled it with the plaintiff’s law firm, you might be required to make payments on the debt over time. In that case, there should not be a judgment against you, at least not if the debt-collection lawsuit took place in New Jersey. A debt-collection settlement is not the same as a debt-collection judgment in the New Jersey civil court system.

There’s a Judgment Against Me – What Are the Risks?

If there is a debt-collection judgment against you in New Jersey, you face some potential problems. The most likely issues are the following:

Wage garnishment: Only a certain percentage of your wages can be garnished, but it might be more than you can afford;
Bank levy: This is the most dangerous, in my opinion, because the plaintiff can get up to the full amount of the judgment at one time – meaning that your bank account could be cleared out; and/or
Lien on real estate: If you own property in New Jersey, the plaintiff could have a lien placed on it, which means that, when you sell the property, the plaintiff will have to be paid from the sale proceeds.

I Can’t Afford to Pay the Judgment (Or the Settlement) – What Now?

If there is a debt-collection judgment against you and you can’t afford to pay it, you have a few options:

Do nothing: Let it get paid through one of the judgment collection methods listed above;
Settle it: You can settle a judgment, although it’s not likely to be on great terms – try settling it yourself, or if it’s for a high dollar amount, you might want to pay an attorney to settle it for you;
File for bankruptcy: Get a free bankruptcy consultation and tell the attorney as many details about the judgment as possible. Most debt-collection judgments are dischargeable in bankruptcy. Provide information about all of your debts, income, and assets with the bankruptcy attorney and see if you qualify.

If you’d like to discuss your debt situation, book a phone consultation now by scheduling it on my calendar.

How To Solve Your Debt Problems: Making the Decision

Leave a reply

Many people will tell you that one type of solution for debt problems is better than others for several reasons: They’ll say that one solution is the best for your credit report; that one solution is cheaper than others; and even that morality favors one solution over others.

Considering Your Options

But when you are considering what to do about our overwhelming debt, it’s best to consider all of your options. That’s the only way to know what works best for you. You’ll want to avoid the disappointment that happens after you decide on an option and implement it, only to discover that it wasn’t the right way to go, especially after finding out about another solution that would’ve been a lot better.

When you’re solving debt problems, you need to consider all the relevant information up front in order to decide what’s right for you. Once you’ve chosen a path to solve those debt problems, it’s difficult, if not impossible, to go back and opt for a different solution.

How to Find The Right Solution For You

Finding the right solution means examining your entire financial situation, looking at everything you own and everything you owe. Then look at how all the available solutions would apply to your situation. Don’t leave out any potential solutions, no matter how crazy they sound: Compare the likely results of debt settlement, Chapter 7 bankruptcy, Chapter 13 bankruptcy, and of doing nothing at all. What are the effects of each solution on your overall financial health? On your credit? How much could each one cost, both over the long term and over the short term?

How To Gather Information

Make sure that you’re examining and comparing the facts of how each solution actually applies to your situation, not your hopes and fears around each of them. Get advice from people who know what happens when each solution is applied to your type of financial situation. Talk to someone who actually settles debts, not just someone who used a debt-settlement company or who works to sell a company’s debt-settlement services. Find out if that debt-settlement company you’re considering is operating legally in the State of New Jersey.

Talk to one or more bankruptcy attorneys. Find out if you qualify for bankruptcy. Find out what would happen to your financial situation under each of the different chapters of bankruptcy. Ask them what might happen if you sat back and did nothing. It might sound crazy, but doing nothing is a viable solution for some people.

When To Lay Out Your Hopes And Fears

Only after you objectively consider the facts, can you decide whether your hopes and fears are grounded in fact. Do your research. Talk to professionals who have seen situations like yours and who have seen the outcomes of the various solutions. Then decide.

If you need to speak with a professional who has helped others file bankruptcy, settle debts, and guided others in doing “nothing” about their debts, call and schedule a phone consultation with attorney Jennifer Weil at (201) 676-0722 or schedule your own phone call at my Setmore page.

Struggling to Make Minimum Credit Card Payments? Explore Your Options

Leave a reply

Struggling to make minimum payments on your credit card debt and unable to save any money? You may want to consider bankruptcy as an option for debt relief. If your credit card debt has become overwhelming, debt settlement and bankruptcy are the two main options for financial relief.

While debt settlement may seem like an attractive option, it can often be more expensive than bankruptcy. You will have to pay back at least a portion of your debt, and there’s no protection from debt collection lawsuits.

On the other hand, filing for bankruptcy offers protection from debt collection activities such as lawsuits. With Chapter 7 bankruptcy, you may be able to have your entire credit card debt discharged for the cost of attorney fees and filing fees. If you file for Chapter 13, you’ll pay back a portion of your debt under the protection of bankruptcy from debt collection activity.

It’s important to weigh your options and consider the financial and legal implications before making a decision on debt relief. Contact a bankruptcy attorney to discuss your options and determine if bankruptcy is the right choice for you.

Do you have questions about whether you should file for bankruptcy? Schedule a phone consultation with attorney Jennifer Weil on the Setmore page.

How bankruptcy can help save your small business

Leave a reply

Bankruptcy isn’t just for winding up after the end of a business. It can help keep your business around for longer.

Bankruptcy saves a lot of companies. Companies can get out of a lot of debt, restructure their operations, and save a lot of jobs. If you own and run a small business, bankruptcy may be able to save your job, too.

Let’s assume you have a small, simple business. One so simple that you did not form a corporation or any other kind of legal entity when you set it up. And let’s assume that you don’t have any partners – that is, you have a sole proprietorship.

In a sole proprietorship, you and your small business are treated as a single unit—unlike a corporation, which is legally separate from you and which owns its own assets and has its own debts. In the right circumstances, a sole proprietorship can be easier to handle in a bankruptcy.

A Chapter 7 liquidation is seldom a good option if you own a business that you want to keep operating during and after the bankruptcy. You can discharge your debts in return for liquidation—the surrender of your assets to the trustee to sell and distribute to your creditors. Except that in most Chapter 7 cases everything you own is protected–“exempt”—so that you lose nothing or very little. But if you own an ongoing business, you are likely to have some non-exempt assets. So the Chapter 7 trustee could take some important parts of your business to sell off or otherwise shut down.

Instead, a Chapter 13 case— sometimes called a “wage-earner plan”—is much better designed to enable you keep your personal and business assets. You get immediate relief from your creditors under the automatic stay, and for a much longer period of time, usually with a significant reduction in the amount of debt to be repaid. So Chapter 13 can help both your immediate cash flow and your long-term prospects. It is also a good way to address tax debt, which is often an issue for struggling businesses. Overall, it can be a relatively inexpensive tool that combines the discipline of a court-approved payment plan with the flexibility of continuing the operation of your business.

Please understand that when you own ANY kind of business, solving your financial problems will be more complicated. This is because you are not dealing merely with the size and timing of a paycheck, but instead with all the financial and practical aspects of running a business. In addition, timing issues are often more important in business bankruptcy cases and they require more pre-bankruptcy planning to plot out the best path for you. So, no matter how small your business, be sure to get thorough legal advice as soon as possible.

Photo by Ruben Schade.

How to stop using your credit card for holiday gift-giving

Leave a reply

If you are thinking about filing for bankruptcy, do not accumulate any credit card debt for holiday gifts. Otherwise you may run into trouble over what debts are dischargeable in your case. Instead, come up with thoughtful ways to express your love and appreciation for your loved ones that do not involve spending a lot of money on gifts this holiday season.

When money is tight, financial anxiety can cloud the holidays, making the temptation to use credit cards nearly irresistible. We live in a rather materialistic culture, so when we express our love and affection through gifts we tend to let price carry too much meaning, often by allowing the gifts we give to define our worth. That is particularly true with our close loved ones, whom we are reluctant to disappoint.

The feelings about expressing love through pricey gifts may be especially intense if there is tension in the marriage, or within the household, which is often the case when there are financial pressures. But we all know that the price of a gift is not a true measure of our love and that gifts do not buy love. To help you follow your wiser impulses, here are three suggestions.

1. Give gifts appropriate to your financial circumstances, no matter how modest they may be. That is the only responsible way, and in fact shows your love—especially to family members—more than if you gave gifts you could not afford.

2. Direct your energy toward coming up with a gift idea that reflects the connection between you and the intended recipient. Make it a gift that the person will enjoy but also one that shows you really put thought into it.

3. Communicate honestly with your loved ones about your financial circumstances. Do this in a way that is appropriate for the relationship, which will be different for extended family, your significant other, and/or your children. This communication need not be negative. Instead, it can be a constructive conversation about priorities, honesty, and your love for the other person.

Following these tips can be difficult, but sometimes it needs to be done.

Photo by Billy Halsey.