Discharging Credit Card Debt in Bankruptcy

January 18, 2016

Discharging Credit Card Debt in Bankruptcy

Are you having trouble making the minimum payments on your credit card debt?  Are you receiving calls from your creditors at home and at work?  Have you been served with a debt collection lawsuit?  Are you using one credit card to pay the payment on another credit card?  Have you started using your credit cards to pay your living expenses? If so, this may be the time to consider filing bankruptcy.

Treating the Problem Instead of the Symptoms  

It is easy to get in over your head with credit card debt.  You may have lost your job, suffered a prolong illness, lost a spouse, or simply mismanaged your credit card use.  Regardless of the reason why you cannot pay your credit card debt, filing a bankruptcy case will help you treat the problem instead of simply dealing with the symptoms of debt problems. When you do not have any income left at the end of the month to pay credit card debt after paying your living expenses, borrowing additional money, refinancing debt, or turning to a debt consolidation company will only treat the symptom of your debt problem.  The real problem is that you do not have sufficient income to pay your credit card debt. Filing bankruptcy can help.

Bankruptcy Eliminates Credit Card Debt

When you file bankruptcy, your creditors are prohibited from continuing any collection actions including filing a debt collection lawsuit.  This protection begins immediately when you file your bankruptcy case and continues throughout your bankruptcy case.

Credit card debt is unsecured debt — the creditor does not hold a lien on any of your assets. If the creditor held collateral for the debt, you would be required to pay the debt in order to keep the asset or surrender the asset in satisfaction of the debt.  Because credit card debt is unsecured debt, you can eliminate this debt through bankruptcy without paying any of the money back to the credit card company or only paying pennies on the dollar.

In a Chapter 7 bankruptcy case, credit card debt is discharged or eliminated at the end of your case. You are not required to repay any portion of your credit card debt in a typical Chapter 7 bankruptcy case. In a Chapter 13 bankruptcy case, you may be required to pay a portion of the credit card debt back.  The amount you will be required to pay toward your credit card debt will depend on many factors including your income, expenses, assets, and debts.  In many cases, you only pay a small percentage of the credit card debt spread out over a 5-year bankruptcy plan.  When you complete your bankruptcy plan, the remaining credit card debt is discharged.  You no longer owe any of the remaining credit card debt.

Your bankruptcy discharge prevents your creditors from attempting to collect any portion of the discharged debt.  If a creditor violates the discharge order, it may be subject to sanctions by the bankruptcy court.

Contact an Experienced Elkin, North Carolina Bankruptcy Attorney

I have been helping consumers in Wilkes, Surry, Yadkin, and Alleghany Counties file for bankruptcy for nearly 15 years.  Helping relieve the financial burden debt brings is my life’s work.  If you are ready to help yourself and your family build a better life, give me a call.

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Will I Recover From Bankruptcy?

December 2, 2015

This is a question I hear often in my Bankruptcy practice.  The answer is YES!  I have helped over a thousand people file bankruptcy over the past 15 years.  People are always better off having resolved their debt issues. Bankruptcy is designed to give people a “Fresh Start”.   I ran across this article about famous people who had filed bankruptcy. It really surprised me.  http://mentalfloss.com/article/20169/7-wildly-successful-people-who-survived-bankruptcy The fact is that we Americans are and have always been optimistic risk takers.  This is true in our business affairs and personal lives. We always think things are going to get better. As long as we keep thinking this way, things usually do get better. As soon as we as parents and business people lose this optimism, then we will cease to see the multitude of opportunities that present themselves to us. We then will always be looking for a place of safety. Always hiding, always conserving, is no way to live. We must take risks so that our families and businesses will have a chance to thrive. The bankruptcy process s a way for us to hit the reset buttons in our finances. We know we can take risks, when we have the opportunity to erase mistakes. Take a few minutes to read the article. What would the world be like if Abraham Lincoln didn’t overcome his early financial failures, if Walt Disney wasn’t allowed to create the stories that have inspired generations of children, and if Henry Ford was stopped from bringing the automobile to us all. The opportunity to start over should not be limited to future business tycoons. The opportunity is there for any of us that make mistakes.

I have been helping consumers in Wilkes, Surry, Yadkin, and Alleghany Counties file for bankruptcy for nearly 15 years.  Helping relieve the financial burden debt brings is my life’s work.  If you are ready to help yourself and your family build a better life, give me a call.

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5 Reasons Bankruptcy Can Help You!

June 24, 2015

Why would anyone ever file Bankruptcy?  You never hear anything good about Bankruptcy, but every month I have 5 or 6 clients tell me it is the best thing they have ever done.  Here is what the banking industry doesn’t want you to know:

1.  Bankruptcy doesn’t hurt your credit.  It doesn’t matter how I explain this, my clients never believe me.  Congress crafted Bankruptcy to be a way for consumers to get a “Fresh Start”.  The words “Fresh Start” are actually mentioned in code and case law.  If you have bad credit, then Bankruptcy could be the way for you to quickly improve your credit score!

2.  You can borrow money in some cases almost immediately at lower interest rates.  Most of my clients come in with the assumption that they cannot borrow money for  3 to 10 years!  This is not the case.  I have clients get credit card offers right after completing their case.  I do not recommend they take those offers, but the opportunity is there.  I often tell the story of Susie (fake name used to protect confidentiality).  I went to high school with Susie and in 2002 she was going through a divorce.  She had about $25,000 in credit card debt, a repossessed car and she wanted to let her home go back to the lender.  I filed a Chapter 7 Bankruptcy for Susie.  Everything went smoothly.  In 2004 I was feverishly gathering documents to purchase my home, so I could lock in a 6.25% interest rate.  I was certain I would never see a rate this low again in my lifetime (I now have a 3.75% mortgage rate).  Susie called me up and said, “Tom I need my bankruptcy paperwork, I am applying for a home loan.”  I said, “Susie you’re getting a home loan just two years after bankruptcy? What’s your interest rate?”  I had only been practicing Bankruptcy Law for about 3 years at this time. Susie said, “6.25%.”   I could not believe it.  Since this first encounter, I have seen it happen time and again.

3.  You can let your home go without getting taxed.  From 2008 to 2014 there was a special tax provision allowing homeowners who could no longer pay for their home to let their home go back without the monies borrowed being considered income.  This provision has now expired.  This is a big deal for someone who is already in dire financial straits.  For example: If you owe $200,000 on your home, and the bank sales it for $150,000, then the bank will file a 1099 against you with the IRS for $50,000.  The IRS will tax you at whatever your tax bracket is.  If your bracket is 20% then you will now owe the government $10,000.  The good news is that filing for Bankruptcy Relief streamlines the process of declaring this 1099 not income due to insolvency.

4.  Medical Debts can be discharged in Bankruptcy.  In almost every case I file there are medical debts.  Medical debts are treated no differently than credit cards.  They will be wiped clean from your credit report upon the completion of your Bankruptcy.

5.  Debts with personal property pledged are discharged in Bankruptcy.  More and more often I see debts owed to Springleaf Financial, Basic Finance, Mariner Finance etc.  These companies use items of personal property as collateral.  The Bankruptcy Code provides for the avoidance of the liens on your personal property.  This means you can wipe out the debt owed to these companies (and their 30% interest rate) and keep your property.  If  you have a loan with any of the above mentioned companies, you need to file bankruptcy.  Call me.

I have been helping consumers in Wilkes, Surry, Yadkin, and Alleghany Counties file for bankruptcy for nearly 15 years.  Helping relieve the financial burden debt brings is my life’s work.  If you are ready to help yourself and your family build a better life, give me a call.

 

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How Refinancing Your Home Can Lead to Bankruptcy!

June 22, 2015

Refinancing seems like a great idea.  You have a 6% loan and your banker calls you and says they can get you a 4.5% loan, a couple of thousand dollars and lower your payment by $25 per month.  WOW! Free money!  I’ll take it!  Well that money isn’t as free as it sounds.  There is all sorts of bad advice on the internet about when to refinance.  The most common advice is to refinance if you can save 1% interest.  I am here to tell you- refinancing is usually a bad idea.  I and many of my bankruptcy clients have fallen for this bad advice.

Here’s why.  The interest you are paying on loans is front loaded.  For instance- if you have a $200,000 30 year mortgage at 5% interest your payment will be $1,073.64 per month.  In 10 years you will pay $128,836.80 toward this $200,000 obligation.  Guess how much your balance will be?  Really take a couple of minutes don’t read further- Guess.  A: $80,000 B: $100,000 or C: $163,000.  If you guessed $163,000- you would be right.  Isn’t this ridiculous!  The system is rigged against you from the start.  You see you pay the bank their profit first.  If you look at your amortization, you will see it takes 10 years to start paying the loan down at all!

Ok-so now we owe $163,000.  We get letters in the mail.  Interests rates are at a historic low!  You call your local lender.  Sure enough- he can lower your rate by 1% and give you $5,000 with no closing costs (that would never happen).  So you think- Great! Free money!  You finance $168,000 for 30 more years at 4% interest.  Your payment is now $802.06 per month.  Man that is great.  You are saving $200 per month right!  Well after 10 more years and $96,247.20 guess what your payoff is.  It is $132,000.  If you had just stayed with the old loan at the same point- your payoff would be $100,574.  The bigger problem is you still have 20 more years to pay on the 2nd loan.  If you had stayed with the first loan- you would be completely finished in just 10 more years. Are you starting to see how this strategy can lead to bankruptcy?

If you had stayed with the first 5% loan, your total costs are $386,513.  By refinancing after 10 years (and lowering your interest rate), your total costs increase to an amazing $417,576.80.  I don’t know about you but $31,063 is a lot of money to me.  This doesn’t take into account the pain of increasing the term of the loan by another 10 years.

What do you think?  Will this analysis change your mind about refinancing in the future?  Full Disclosure.  I have made this mistake a couple of times.  I could kick myself for refinancing my old home twice.  I promise I will never do it again.  Many of my bankruptcy clients in Wilkes, Surry, Yadkin and Alleghany Counties have made this mistake over and over again.  Everything you read on the internet tells you to do it.  Your banker tells you to do it.  Now you know how the system is rigged against you. If you have questions about your bills, don’t hesitate to give me a call.  I offer free confidential consultations.

 

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Foreclosure- How will it affect your future?

By Thomas Flippin on November 19, 2014 (2 Comments)

Foreclosure is a heart wrenching process. Thousands of people in northwest North Carolina resigned themselves to this reality after losing their jobs or finding their home values had dropped by 40% in just a year. They thought letting their home go would be the end of their problems.  This is unfortunately not true. After foreclosure, your mortgage creditor can continue to make your life miserable.  First your credit will be decimated for years to come.  Second, your creditor will file a 1099 for the difference between what you owed and they received from the sale.    Third, your lender can sue you for the difference between what you owed and they received from the sale.  Fourth, if your loan was backed by the federal government  (almost all are) the government can garnish your wages, tax refunds and even your social security.

Let’s talk about your credit first.  Foreclosure is considered to be the worst type of delinquency on your credit report by most lenders. The lender thinks anyone who would release a home would not be a good risk for less necessary obligations like credit cards, cell phone purchases, or auto loans.  So if you let a home go and never do anything about it, you are not likely to get a low rate on a loan anytime soon.  If you file for bankruptcy, the foreclosure will no longer hold down your credit score.  The foreclosure will show on your report, but any new credit you incur will push your score higher and not be held back by the previous foreclosure.

1099s being filed against folks were not a big issue until the last few years.  Now the IRS requires any debt not collected to be filed as a 1099 and considered forgiven and taxable.  You can rebut the idea that this debt forgiveness is taxable by filing a Form 982 with your tax return.  The Form 982 has a fairly long formula to determine how much of the 1099 income you can exclude from your taxable income.  Luckily for my bankruptcy clients, the first box on the form asks if your debt was discharged as a result of a Title 11 case.  Title 11 is another way of saying bankruptcy.  If you filed bankruptcy on the debt, there is no need to fill out the rest of the complicated form.  You will not have to pay tax on the deficiency.

Before the real estate crash, you rarely heard of lenders suing people after foreclosure.  Now with the property values still below that of those in 2008, lenders suing foreclosure clients are still pretty common.  A lawsuit for the difference between what was owed by the homeowner and what the lender actually sold the property for would mean any new income or property purchased would then be encumbered or taken as collateral by the old lender.  This means the painful act of losing your home may continue to be painful.  Especially if you were to buy another home or inherit property.  The new property would be encumbered by the judgment your foreclosing lender obtained after suing you.  If you file for bankruptcy after the foreclosure, your lender cannot take any further action against you.  You would not need to worry about a lawsuit popping up in the distant future.

You may not realize this, but most mortgages in the US are backed by the federal government.  This means that the government will buy the mortgage if you default on your home loan.  Luckily the government is not allowed to treat this loan like taxes.  The government is treated like any other lender except the government has the ability to garnish wages, tax refunds and  social security.  I recently filed for a couple who had very little debt except for a $25,000 deficiency on an old mortgage.  The government took their tax return for 3 years totaling more than $10,000 taken from the family.  We filed bankruptcy and the couple kept their tax return last year and is on their way to discharging the debt completely.

I help people in Wilkes, Surry, Yadkin and Alleghany Counties with debt.  If you would like to sit down and discuss your bills with me, just give me a call.  My number is 336.526.2280.

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Are Student Loans Discharged in Bankruptcy?

November 5, 2014

When filing for bankruptcy, it is important to understand that there are some types of debts that are difficult to be discharged. One type of debt that you might not be able to get rid of are student loans, although there are certain situations which might result in the cancelation of your student loans. The only way to determine if you can get rid of your student loans through bankruptcy is by talking with a qualified bankruptcy attorney who will assess your individual situation.

Proving That Debts are an Undue Hardship

When you go through the bankruptcy process, students loans might be discharged if you can prove that those loans “will impose an undue hardship on you and your dependents.” The problem is that it is very difficult to prove this undue hardship, and the courts use several tests to determine the hardship that the loans will be on you and your family.

Tests to Prove Undue Hardship

A common test used by the courts is known as the Brunner test, which looks for proof that you can’t maintain a “minimal” standard of living while paying student loans living expenses at the same time. This test is based on your current expenses and income, to see how a student loan payment would impact your situation.

The second portion of this test looks at the likelihood of a continuance of your current state of affairs during the repayment period. Additionally, the test considers whether or not you have made good faith efforts to repay the loans.

Keep in mind that it is very difficult to prove undue hardship right out of school, because you don’t have any payment history to show that you made a good-faith effort to pay the loans back.

How to Use Bankruptcy to Discharge Student Loans

If you talk with your attorney and determine that you can prove undue hardship, then it must be proved during the bankruptcy process. Some people assume that student loans can be automatically discharged by filing for bankruptcy, but the truth is that you will need to file a petition in order to get a determination for your individual situation.

In the situation where you have previously filed for bankruptcy and did not file the petition for an undue hardship determination, then it might be possible to address the bankruptcy again in order to file the proceeding.

If Bankruptcy is not the right option for your student loans, then I can go over several other options with you.  The options for dealing with your student loans are complex and change frequently.

Here at Flippin Law, provide bankruptcy services to Yadkin, Surry, Wilkes and Alleghany Counties in North Carolina. Contact our office today to schedule a bankruptcy consultation: (336) 526-2280

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The Fastest Road to Bankruptcy and How to Avoid it.

November 3, 2014

Let’s face it times are tough for most folks in Surry, Wilkes, Yadkin and Alleghany Counties. Most folks who can find a job are making $12, an hour have terrible benefits and no room to save for retirement. These facts make it all the more important to know where your money is going.  As I talk to my bankruptcy clients, I see that they struggle to support their families and it is overwhelming for them to face the cold hard facts they must face. There was a recent poll finding only 21% of Americans balance their checkbook. I have been guilty of this myself. I have however seen the err of my ways. If you do not balance your checkbook, you cannot operate on a budget. Ask yourself, do I really know where I spend my money? If you do not balance your checkbook, then the answer to this question is no. When you don’t know the balance of your checking account, you invariably either go into overdraft incurring a $35 fee and racking up 20% interest, or you charge your purchases on a credit card. You think things will be better next month and you will take care of the credit card or overdraft at that time. After 4 or 5 months of letting items roll over on our credit card and you have a real problem. The good news is it has never been easier to balance your check book. There are several good smartphone apps that will allow you to enter in your purchases and get immediate account balances without even having to do any math. The apps will also allow you and your spouse to instantly see the joint checking account balance. If you are determined not to own a smartphone (sometimes I wish I were one of you), then you have to dig out the old blue and white check register and diligently log your information. Both of these options take a little work. Besides the obvious benefit of knowing how much money you have or do not have there are other less obvious benefits. Psychologists and economists have proven that the time and effort of entering the information each and every time will assist you in curbing your spending. Retailers have known this for a long time. Why do you think every store you visit this Christmas season will offer you 10 to 20% off if you apply for their store credit card? If instead of hoping you have money to buy you latest desire, you know you do not have the money, this is a big deterrence in making rash spending decision. If you are serious about getting your finances balancing your checkbook every time you make a purchase is your fist and most important step. If you need help with your finances, give me a call at 336-526-2280. I am always happy to help.

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3 Steps to Stop Debt Collection Calls

October 22, 2014

Has your phone been ringing off the hook with debt collection calls? It can be frustrating to cringe every time the phone rings, since you know that a debt collector is going to be on the other line. There is no reason that you should continue dealing with these calls though, because you can follow a few steps to stop the calls and once again find peace in your life. Here are a few steps to consider:

Step 1: Talk With a Bankruptcy Attorney

The first step is to get help with your financial situation, and one of the easiest ways to access the help that you need is by talking with an attorney who is familiar with the financial laws in your area. Your attorney will help you to understand the laws, so that you know what the bill collectors are allowed to do.

In many cases, debt collectors use illegal techniques to contact you and scare you into making a payment. Some of these scare tactics are illegal, which is why you should discuss the situation with an attorney.

Step 2: Ask the Collectors to Stop Calling You

Once you have started working with a bankruptcy attorney to file a bankruptcy, the debt collectors are legally required to stop calling you. Even though you have been trying to avoid their phone calls, it can be beneficial to have a conversation with the debt collection agency and ask them to Cease & Desist. You will have a bankruptcy file number available to provide to them if needed. Informing them about the bankruptcy filing should be sufficient to stop the calls.

Step 3: Let Your Bankruptcy Attorney Handle the Details for You

 Once your attorney has filed the bankruptcy, there is no need for you to continue trying to work out a payment plan with your creditors. Instead, your attorney will deal with the creditor’s for you, and inform the creditors that they should no longer be calling you.

It can relieve so much stress to have the professionals handle everything for you. There is no need to battle the debt collectors on your own!

Finding the Help That You Need

If you have found yourself in the situation where you are unable to pay the bills, then talking with a bankruptcy attorney might be the right solution for you. Here at Flippin Law, we offer bankruptcy and debt relief services. One of the advantages to working with our office is the fact that we will put together a personalized plan, in order to find the best solution for your individual situation.

There is no reason that you should be fielding debt collection calls every day, and we would love to help you stop those calls. We have worked for 14 years, helping many people find the financial relief that they are searching for.

Our office offers bankruptcy services in the Yadkin, Surry, Wilkes and Alleghany Counties in North Carolina. We understand the local laws, and we are available to help you stop the debt collection calls and move forward with your life. Call us today to schedule your complimentary consultation: (336) 526-2280

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How to Avoid Financial Problems After Filing for Bankruptcy

October 21, 2014

As a bankruptcy attorney, it is my job to help you find relief from the financial stress that you have been experiencing. I enjoy the process of helping people overcome their debt, and my goal is to help you find the financial freedom that you desire, so that you can avoid filing for bankruptcy again in the future.

Here are a few steps that you can follow which will help you to avoid the need to file another bankruptcy:

Put Together a Budget… and Follow It

Write down your monthly budget, and make sure that you are sticking to that budget. Writing down your budget, tracking your expenses, and reviewing the information on a regular basis is one of the most effective methods to pay attention to your spending habits.

It can be surprising to see how much money you are spending on a monthly basis, and tracking your expenses will give you the information that you need to make a change with your spending habits.

Don’t Spend More Than You Earn

One sign that you are heading in the wrong direction is that you are unable to pay off your entire credit card balance each month. Make it a goal to pay the balance in full at the end of the month, and if you find that you can’t pay that balance then it means that it is time to stop spending! Spending more than you are earning is a fast-track back to bankruptcy once again.

Utilize the Tools from Your Bank or Credit Union

In our digital world, it has become easier to manage your financial accounts online. Make sure that you have online access for all of your accounts, so that you can log in to view balances and payments that are due. Many of these online accounts allow you setup payment reminders, so that you never forget to make a payment again.

Also, use the features to setup automatic transactions that will cover the minimum payments that are due each month. Most minimum payments are as small as $25 or $35, and these small transactions can be scheduled to automatically pull from your checking account. The advantage of the automatic payment is that you will never have to pay a late fee again. You can always make additional payments if you have extra money to pay.

Have An Emergency Fund

Setup a savings account that is dedicated as emergency money, which will help you to avoid putting emergency costs on a credit card. Emergencies are unavoidable, and everyone will encounter unexpected costs at some point: medical bills, car repairs, broken appliances, job layoffs, or home repairs.

The emergency will be less stressful if you know that you have money in the bank to pay for the emergency costs. Start out with a small amount in your emergency fund, and work to increase that amount over time. Don’t touch that money unless it is an emergency! Your goal should be to save 3 – 4 months of income, which would help to cover costs if you lost your job or faced another big emergency.

Here at Flippin Law, we offer debt relief and bankruptcy services in Wilkes, Surry, Yadkin, and Alleghany Counties in North Carolina. Are you ready to experience relief from your financial stresses? Contact us today to schedule your complimentary consultation: (336) 526-2280.

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Now is the Time to Apply for a New Job- Here Are a Few Employers Hiring!

September 2, 2014

The last 14 years have a been a terrible time to find a job in the Foothills of North Carolina.  If you had a job you have likely seen your pay decrease while everything else increases.  Well the times are finally changing.  The national employment numbers have been on the positive side of 200,000 for over 6 months in a row.  Those types of numbers haven’t been seen since the late 90s.  If you need a job or think your employer is taking you for granted, here are a few places I have heard are hiring:

Pittsburgh Glass Works  Elkin, Surry County

Phillips Van Heusen  Jonesville, Yadkin County

Lydall  Hamptonville, Yadkin County

Pruitt Health  Elkin, Surry County

Hugh Chatham Memorial Hosptial  Elkin, Surry County

Unifi  Yadkinville, Yadkin County

Renfro  Mount Airy, Surry County

Northern Hospital of Surry  Mount Airy, Surry County

United Parcel Service (UPS)  Wilkesboro, Wilkes County

Tyson Foods  Wilkesboro, Wilkes County

 

I am sure there are many more.  Please let me know and I will post.

 

 

 

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