Bankruptcy Reader

–By Priya Jestin, Staff Writer

Is your debt situation ready to tip you over to bankruptcy? If yes, then it is important that you know how you go about the whole procedure. One of the most important things you need to do is get yourself a credit counselor. You must consult one approved by the U.S. Trustee Program. And remember, even if an agency is approved in your state, you need to check if it can be used in your area. Check to see what agencies have been approved in your judicial district.

However, there are some who may not be able to get a counselor near their homes. In such a case, you can complete the pre-bankruptcy session by phone or online. And since credit counseling is a must when you file for bankruptcy, make sure you get a certificate as proof of your counseling session.

Generally, the charge for a pre-bankruptcy counseling service is $50. If you can’t afford it, you can request a fee waiver. But you must make that request before the session begins.

I don’t know how many of you watch Oprah (Winfrey), but I am a regular. I cannot do without my daily dose of Oprah and when I’m forced to miss her program, I ensure I have it taped. I’m sure there are quite a few of you who think you’ve clicked into an Oprah fan’s blog. Well, don’t worry, this is the credit card blog and yes we are still discussing credit cards and not Oprah’s hairstyle or clothes or where she’s off to next. So, let be get back to where I was: I was watching some of my taped programs and I found one of Oprah interviewing Maria Shriver (Arnold Schwarznegger’s wife). She was talking about how she managed her two daughters and how she refused to give in to all their demands.

One of the demands was that the girls wanted their own phone lines and that they wanted television sets in their own rooms. Well, not too much to ask for a teen, right? Well, so the fact that Maria refused was interesting. It seems she didn’t want the children to all be in their own rooms watching their own programs and not talking to each other. And the phone line, well she wanted to keep a watchful eye on her teens.

Whatever her reason, it got me thinking — there are so many of us who take these things for granted. I mean, things like a second phone line was something I took for granted. What we don’t realize is that it’s these small things that add up to create a huge debt. That extra TV, those lovely pairs and pairs of shoes to match every dress, every mood, those clothes… the list is endless. If a person like Maria, who could have everything money could buy, refuses to toe the line, we too can. A little self-control, a little restraint and we would be happier people. As Oprah said later in the show, the things you own don’t make you happy, it’s the relationships you maintain.

– By Priya Jestin, Staff Writer

Martha knew her financial situation wasn’t too good, and she had prepared herself for the inevitability of bankruptcy. What she wasn’t prepared for was the lingo! Agreed, our attorneys are well conversant in legal language. But what about simple folks like us. How much do we understand of a term called discharge?

A bankruptcy discharge is supposed to release the debtor from personal liability for certain specified types of debts. This means that you (the debtor) are no longer legally required to pay any debts that are discharged. In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee. Creditors receive a notice shortly after the case is filed that sets forth much important information, including the deadline for objecting to the discharge.

Did you know that a small event like not returning a book to a public library could affect your credit score? Of late records of outstanding money for small things like parking tickets and fines, are finding their way to individuals’ credit records. Authorities do not have much choice in this matter. They are faced with the tough choice of either trying to clear past-due accounts or raise taxes and cut spending. Since the second alternative is not very popular, the government is left with no alternative whatsoever.

However, the only problem with such an approach is that it can taint a person’s credit record credit record to such a point that s/he finds it difficult to make big purchases like a house or a car. So while this may be a legitimate way to get back money that is rightfully owed to it, is the state doing more harm than good in the long run?

– By Priya Jestin

I was taking stock of my finances the other day — yes I do it sometimes. Well and what do I see? I was spending around 10 percent more than my salary on a monthly basis. Now, 10 percent didn’t seem too much so I brushed it aside. Big mistake screamed my friends. They warned me that I was taking the shortest route to bankruptcy!

I thought they were being a bit too dramatic until I decided to prove to them that I could curtail my expenses if I wanted to. And that’s when I discovered something: cutting down on my expenses was proving to be next to impossible. Something like my weight loss program. I’ve tried for years to lose weight, but all I do is lose some, and gain some more back on. I learnt that credit is just like weight — gaining it is a cakewalk and losing it is a sweaty business!

But I am not chicken and I wanted to prove that I could, if I wanted, do something. So I took the drastic step of grounding my credit card. I locked it away and gave my mom the keys to the drawer. Yes, it was very difficult. But so is weight loss. And once you are on track, it surely feels great…you can wear all those great dresses you’d locked away. So also with your finances — when you are in control, you can splurge every now and then. Believe this: Every dollar makes a difference!

It’s been a year since federal bankruptcy law was made tougher, and the effects are showing. Filings in Greater Cincinnati and Northern Kentucky are down more than two-thirds. The drop mirrors the national trend. Enquirer.com reports:

Last year, a record 2.1 million bankruptcies were filed nationwide. The tidal wave of filings happened mostly before implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act took effect on Oct. 17, 2005 designed to prevent marginal filers from using the court system to walk away from their debts.

Read more:Bankruptcy filings way down

Ever daydreamt about letting loose and going on the spending spree of a lifetime? And wouldn’t it be fun if you could spend all you wanted. And then, when it’s time to pay those gargantuan bills you’ve worked up, all you need to do is magically pull a rabbit out of your hat and make everything better. In other words, you declare bankruptcy and get all that debt wiped out. Fool.com reports:

It’s likely too soon to be certain about the effects of bankruptcy reform. What is clear, however, is that many honest people are suffering for the bad actions of a few abusive debtors. The best way to deal with the new law is to do everything you can to avoid getting into financial straits in the first place, but unfortunately, circumstances sometimes make that impossible.

Read more: Did Bankruptcy Reform Work?

Did you know that a Chapter 13 bankruptcy is also called a wage earner’s plan? That’s because it allows individuals with regular income to develop a plan to repay all or part of their debts. Uscourts.gov reports:

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time.

Read more: Bankruptcy Basics

When you are indebted to someone, it is good to know the kind of creditors you have. Generally speaking there are two broad categories of creditors: Secured and unsecured. A ’secured creditor’ has a lien, or interest on your property, which s/he can use to satisfy the debt. Now within this category, you will find voluntary liens like mortgage or security interest in a car. Then there are involuntary liens on property that result from unpaid taxes or a judgment.

An unsecured creditor on the other hand, has no interest in any particular property of the debtor. So, apart from a bankruptcy, the only way unsecured creditors can get their money back is if you, the debtor pays up voluntarily. If you decide not to pay up, your creditors will have to sue you, get a judgment against you, and ask the sheriff to seize some of your property and sell it to satisfy their claims.

Personal finance is something not all of us are comfortable with. Most Americans are a pampered lot and are very used to the easy and unlimited access to credit. So asking an American to control his/ her expenditure is like asking a toddler to give away his only Popsicle. That’s just not possible you see. I know that wasn’t too funny or fair. But let’s be honest — how many of us have seriously budgeted our income and expenditure and provided for some savings? Why the silence?

So you see, I wasn’t too far from the truth after all. Anyways, since personal finance is such a tedious chore, things tend to snowball out of control. When you are in college, you think you’ll take that student loan, and then once you have a job, you’ll get your finances on track. Then you get married and then come the children… all along, your finances are waiting for you to straighten out the mess. And by the time we get down to checking and budgeting, we realize we are too far-gone and probably our only option is to declare bankruptcy. This way, we can at least save the roof over our heads. But it need not be that way.

According to finance writer Jane Bryant Quinn, the best way to keep your finances under control is — Keep it simple and automate if possible. This includes using services such as online banking and putting in place an automatic savings plan for your retirement. Ensure that you buy financial products directly from companies whenever possible and try to avoid brokers or planners.