A recent debtor online posed a question on a bankruptcy forum about releasing personal business information about their profit and loss statement to a collection agency. If you are asking a question about sharing a business profit and loss statement with a collection agency, then an assumption must be made your business is currently in default of a loan or you would not be talking to a collection agency to begin with. How much personal information, like your business profit and loss statement, should you share with a collection agency after defaulting on a debt and before bankruptcy?
Some people put off filing bankruptcy thinking a debt settlement might solve their current financial problems. Sometimes it does, but most often, a debt settlement only postpones the inevitable, especially if the underlying cause of the symptom has not been resolved in the first place.
The collection agency you are trying to resolve a loan issue with should determine whether or not you should share a business profit and loss statement and/or income tax information. Under no circumstance should you have to share personal identifying information to a collection agency other than your name and address.
Understanding the process of debt settlement is paramount in you making the right decision in settling a debt, whether or not you should settle in the beginning, and in determining how much information you give the collection agency for those debt settlement purposes.
When default of a debt is fresh, the original creditor often holds the debt for a certain period of time to see if you are going to catch up on your payments. They may send out notices threatening penalties, fees, and interest to entice you to pay your debt in full. During this time, you as a debtor have little or no chance at debt settlement.
After a while creditors will normally turn the debt over to their in house collection agency in order for them to collect the debt. If the creditor does not have an in house collection agency, they often will hire an outside collection agency to collect for a percent of what is owed. After these second handlers of the debt are brought into the picture, they are given certain criteria the make debt settlement a priority. By this time, the original creditor thinks getting a part of what is owed is better than nothing. You can expect to be threatened by lawsuits from the collection agency if you do not comply with the collection agency demands. You can also expect the original loan to be inflated by interest, penalties, and fees that have been added to bolster their settlement.
The last line of collection activity for a creditor is to write off the loan and sell the debt to junk debt buyers who buy the debt at pennies on the dollar. It is this latter group’s collection agencies who normally push the limits of harassment, and who will think nothing of using any kind of information obtained by a profit and loss statement to gain an advantage for attaching liens from a judgment on personal assets you still own. This group is the easiest to get a debt settlement from, but you will not need a profit and loss statement to get it, especially before bankruptcy.
At this time, filing for bankruptcy protection may be your only defense left against collection agencies, and common sense says you might need a bankruptcy lawyer to help you enough bank.
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Many debtors want to know how soon they can file for either Chapter 7 or Chapter 13 Bankruptcy and what needs to be done. The bankruptcy code was updated in 2005 to make it more difficult for debtors to discharge their debts.
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) debtors will not be immediately able to file bankruptcy without completing some basic legal requirements.
• Means Testing
The BAPCPA outlined some financial requirements which debtors must meet to be able to file Chapter 7 Bankruptcy. Debtors who do not meet these requirements will have to file Chapter 13 Bankruptcy, and instead of immediately discharging debts, debtors will complete a 3 to 5 year debt repayment plan to repay a portion of their unsecured debts.
How do you determine if you can file for Chapter 7 Bankruptcy? The testing examines your income for the last six months, and if it is below the median for your state, you will qualify for Chapter 7 Bankruptcy. If it is not below the median income a series of calculations are completed to determine if you can repay your debts.
Basically the calculations will examine your income, subtract certain allowable expenses and determine if you have at least $100 per month to pay your creditors. The court will also evaluate if you would be able to pay at least $10,000 or 25% of your unsecured debts over a five-year period.
• Complete a Credit Counseling
Mandatory credit counseling was also added under the new bankruptcy laws. Prior to filing for either Chapter 7 or Chapter 13 Bankruptcy you must complete an approved credit counseling course.
• Complete a Financial Management Course
Mandatory financial management training must also be done prior to the discharge of your bankruptcy. This course does not have to be completed prior to filing for Chapter 7 Bankruptcy so it will not delaying filing, but completion of this course is required prior to the discharge of your debts. There are a variety of approved courses throughout the United States.
• Talking to a Bankruptcy Lawyer
One of the most important things to do before filing for bankruptcy is to talk to a bankruptcy lawyer. Bankruptcy lawyers can review your financial situation and determine whether filing bankruptcy is right for you. Bankruptcy is a serious financial decision which should not be done before determining if it is the best financial solution.
How soon after I file bankruptcy will my debts be discharged?
Chapter 7 Bankruptcy is the easiest and fastest way to discharge debts. Unless the Chapter 7 Bankruptcy case is dismissed, converted to Chapter 13 Bankruptcy, or a party of interest in the case files an extension or objection most discharges will occur within 60 to 90 days.
Chapter 13 Bankruptcy does not automatically discharge debts and the debtor will not receive a discharge of qualifying debts until they have completed their 3 to 5 year debt repayment plan.
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If you are thinking about filing for bankruptcy, you have probably heard about the 341 Meeting. This meeting usually causes much trepidation and anxiety in people who are going through the bankruptcy process.
What is a 341 Meeting?
A 341 Meeting or First Meeting of Creditors is a gathering of you (the petitioner), your lawyer, and a bankruptcy trustee who will meet to examine the facts of the bankruptcy case.
The meeting usually occurs 30 – 40 days after the bankruptcy is filed. Anyone who files either a Chapter 7 or Chapter 13 bankruptcy will be required to attend one of these meetings. The main object of this gathering is to give your creditors the opportunity to challenge any aspect of your bankruptcy. It sounds daunting, but the truth is, creditors rarely appear to challenge a bankruptcy.
What happens at a 341 Meeting?
To start, you will be sworn in and then asked some basic questions about your identity. They will then move on to more specific questions about your bankruptcy petition. They want to get you on the record that you are being honest and that you understand what you are doing. Here are some questions you may be asked:
* Did you read the paperwork before signing?
* Are you a resident of the state?
* Did you inventory all of your assets and debts?
* Do you carry insurance on your vehicles?
The 341 Bankruptcy meeting is usually short. It generally takes about five minutes, although you may have to wait in a line if the court has scheduled several 341 Meetings in a row.
Tips for Survival
The 341 Meeting is not an exam that you can fail. Nobody is trying to catch you in a lie or trick you into giving wrong information. This is simply a meeting to collect information. It is important to stay calm and honestly answer their questions.
After the 341 Meeting is concluded, your creditors have 60 days to challenge the discharge of debts. If there are no issues, you will receive the discharge soon after.
Reasons to Look Forward to the 341
*It is short and painless. The questions are routine.
* This is the only occasion you are required to meet with the trustee.
* Creditors rarely show. In the unusual circumstance that they appear, at least you have your bankruptcy attorney there to speak on your behalf.
* You are not alone. If you have any concerns or questions, your bankruptcy attorney is by your side to help. Bankruptcy lawyers have been through many of these meetings and know what to expect.
* It is the last step! After your 341 Meeting, all you have to do is wait to receive your discharge. Now you have made it through your bankruptcy and you can begin to rebuild your credit so you never have to be in this situation again.
Hiring a Bankruptcy Lawyer
If you are considering filing for bankruptcy, or would simply like to learn more about what is involved, you should contact a qualified bankruptcy attorney in your area. He can answer any questions you may have and offer advice specific to your situation.
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What will happen if the United States Congress fails to raise the debt ceiling by the August 2 deadline? According to President Obama, there are no guarantees that government checks or Social Security payments will be made to seniors.
Is this political pandering or is there some validity to his claim? CNNMoney reports that according to a Bipartisan Policy Center it is likely that the Treasury Department would not be able to pay up to 40% and 45% of the 80 million of their payments.
How can this be possible? The United States simply does not have enough revenue or income each month to pay its bills. It is estimated that the U.S. lacks an average of $125 billion each month and has to borrow that money to make their standard debt payments. It is ridiculous that our government functions this way. Imagine if individuals and families managed their own finances so irresponsibly.
The bigger question is who would not be paid. Obama has been known to use scare tactics to force legislatures to take action, but the bottom line is roughly $125 billion of bills on average may have to be put off and tough decisions would have to be made. For instance, the revenue the Federal Government receives in August could be spent simply by paying a few of our debt obligations including: defense contractors, Medicaid and Social Security Expenses, and debt on our interest. If our money is spent on these bills, who does not get paid? According to CNNMoney the list could include: active-duty soldiers, veterans, taxpayers due refunds and federal workers.
Even more devastating than no-payments could be the aftershocks on the stock market. Everyone assumes the debt ceiling will be raised, but if it is not it is hard to predict how the markets would react. Others predict volatility in the Treasury market which could cause the cost of U.S. debt to climb. This will impact everything from car loans to home mortgages.
Most importantly is the reputation of the United States which has, up until recently, been very good. The United States may continue to pay bond holders, but according to news reports, when the credit rating agencies know that the U.S. has not met its domestic debt obligations they may consider lowering the United States credit rating. Fitch Ratings Agency said it would put the country on “Ratings Watch Negative” if this occurred.
“Extensive payment arrears to suppliers of goods and services to the government … would damage perceptions of U.S. sovereign creditworthiness and signal growing financial distress,” said Fitch Rating Agency.
Filing for Bankruptcy Protection
Although it feels like the United States needs to press a financial reset button this is not an option. It is time for the government to cut spending and reduce the deficit.
What if you are an individual facing a major financial crisis? What if you have had an unexpected divorce, death, or job loss? Fortunately, federal and state bankruptcy lawyers may allow you to file for bankruptcy and discharge or restructure your unsecure debt payments.
Filing for Chapter 7 Bankruptcy will allow you to discharge most types of unsecured debt by liquidating your assets and using the money from the liquidation to pay your creditors.
If you do not qualify for Chapter 7 Bankruptcy, you may be able to file Chapter 13 Bankruptcy. Chapter 13 Bankruptcy will stop home foreclosures, wage garnishments and bank account levies and will allow you to restructure your debt payments to repay your creditors over a 3 to 5 year period.
Debts are paid in priority order, according to bankruptcy law, and a trustee is assigned to your bankruptcy case to distribute payments to your creditors. Creditors are also barred from contacting you or continuing their harassing debt collection tactics while you are under bankruptcy protection.
No one wants to file for bankruptcy. It is a serious financial decision which should not be made without serious financial consideration, but if you have evaluated all of your other financial options and feel like filing bankruptcy is right for you, contact a bankruptcy lawyer who can answer your bankruptcy questions.
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What should you do after bankruptcy? If you have completed the bankruptcy process or if you have almost completed the required payments in your Chapter 13 debt repayment plan, you may think you are finished.
You may feel like the dieter who has reached their ideal weight and mistakenly thinks their work is done, only to return to their old habits and old weight. Understanding your past decisions and financial actions which caused or contributed to your financial crisis can ensure that you are not in the same place seven or ten years from now filing for another bankruptcy.
So what steps should you take immediately following bankruptcy?
1. Create an Emergency Fund – Most people do not file for bankruptcy because they have maxed out their credit cards on unnecessary purchases. Divorce, job loss, high medical bills, or an unexpected death are the leading causes of bankruptcy. Unfortunately, if you do not have an emergency fund you are one crisis away from a financial disaster.
How much should you save? It depends on your expenses. Many experts suggest 6 months of savings but if you have a secure job, you do not own a home and you have limited expenses, three months of savings may be enough.
2. Create a Budget – Successful people generally have a plan. It does not have to be written, but your expenses and income should not be a mystery each month. If you are married create a budget together. Identify the amount of money each of you can freely spend without consulting with each other.
3. Get a copy of your credit report – If you have completed your bankruptcy, the last thing you want is inaccuracies on your credit report to interfere with your efforts to improve your credit score. A free copy of your credit report can be requested each year at several different websites.
4. Do not co-sign a loan – Everyone wants to help their friends and family members, especially in these difficult economic times, but co-signing a loan will make you liable for the principle payment and interest of the loan if the other person defaults.
5. Save for your Retirement – It is never too early to think about saving for retirement. Many workers aim to save 10-15% of their gross income each month. If you have the amount automatically deducted from your paycheck it is unlikely (after awhile) that you will notice it is gone.
6. Get a credit card – You may not be ready for this step yet, but at some point it is important to begin to re-establish your credit and prove that you are able to meet your financial obligations. Experts suggest starting with a secured credit card which has a low interest rate and no annual fee. Only charge a limited amount each month and be sure to pay the full balance.
7. Get a secure loan- After you have established your budget and have met your financial obligations for approximately a year, you may want to get a secured loan and continue to rebuild your credit. Secured loans may offer a lower interest rate than a credit card because the lender can repossess the property and get a percentage of their money back. Lenders may also be more willing to loan you money if it is secured.
8. Find a higher paying job or take a second job – If you have completed the bankruptcy process but you are unable to meet your financial obligations, it is time to take drastic steps. Taking a second job may be your only option. If you have changed your spending habits and reduced your unsecured debt obligations, there is a good chance that you will not have to work a second job for too long.
9. Tell others about your bankruptcy – Telling your friends and family and honestly confronting your financial situation has several benefits. It will keep you accountable and help you to make the needed changes. Millions of people file for bankruptcy each year. There is no shame in bankruptcy.
10. Do not worry about the future and have patience – Like a new exercise program, eating regimen or new job, change is difficult, and it does not happen overnight. Stay focused and disciplined and you can be on the track to a better life.
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I was visiting with a friend yesterday and the subject of Osama Bin Laden’s death came up. He made the comment Bin Laden was responsible for the financial condition of the United States due to the cost of the 911 and the subsequent costs of apprehending the most wanted terrorist in the history of the United States. It might be a stretch but has the cost of finding Osama Bin Laden affected the financial condition of the United States and have bankruptcies increased as a result?
If our financial condition has been impacted by the Iraq and Afghanistan Wars, then it is not much stretch to say the housing and banking crisis might not have had such an impact if our nation was not already financially strained.
Osama Bin Laden and Al Queda claimed they attacked the Twin Towers to hit America where it hurts the most, in our pocket books. According to news reports, Al Queda perceived America as the “Great Satan”, characterized by greed and our desire to control the wealth of the world. From their point of view, Al Queda and the Arab world were “financial slaves” serving the Great Satan and its lust for wealth and power.
In 1980, America, for all practical purposes, deregulated the banking industry under the auspices of “all big government is bad.” The federal government passed a special law which allowed national banks to ignore state usury limits and peg the rate of interest at a certain number of points above the federal reserve discount rate.
In addition, specially chartered organizations like small loan companies and installment plan sellers have their own rules. Some opponents of the changes claim that the current laws in most states do not have enough “teeth” to regulate credit card debt. In many cases, individual debtors can only relieve exorbitant debt from various banking institutions by filing bankruptcy.
If the banks, like America, are driven primarily by greed, as Bin Laden and Al Queda claim, then they don’t really mind financially enslaving the average American citizen with their high interest rates.
Deregulation of the banking industry has almost collapsed one of the most robust economies in the world, that of Iceland. Before deregulation, Iceland had three major commercial banks. In 2008, all three collapsed after the Iceland government followed other economies of the world by deregulating their banking industry.
Prior to 2001, Iceland had no national debt. Today, their national debt is 9.553 trillion Icelandic kronur (50 billion in Euros), owed mostly to other banks. Their unemployment has more than tripled since 2001, bankruptcies have risen, pension funds are expected to shrink by as much as 25%, and independent Iceland is now considering joining the European Union in order to stay afloat.
Add deregulation to a national crisis, mix in the cost of supporting a 10 year war, add a national housing crisis to the mix, and sprinkle in greedy banks who can take money placed in their banks and gamble with it in the unregulated over the counter securities market, and you have some of the highest bankruptcy statistics since 2005 (when the bankruptcy laws were updated).
Bin Laden was a terrorist and murderer, and I think he got what he deserved, but what about the people who are responsible for our current financial crisis? There has been greed on both sides, and our financial wealth has been squandered. Who can we, as Americans, hold responsible?
If you are facing a financial crisis, you may need help. Bankruptcy protection seems to be one of the last bastions of individual rights to protect yourself. Filing for bankruptcy protection gives you the opportunity for a new beginning. Bankruptcy laws are complicated, and you might need a bankruptcy lawyer to evaluate your current financial situation.
If you need relief from the stress of debt and you live in or around the metropolitan area of Washington DC, Maryland and Virginia, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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