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How is Chapter 7 different from Chapter 13 Bankruptcy?

When consumer confidence is high and the financial markets are doing well it may be time to drop some of your financial dead weight to clear space for new jobs, more money and less debt. Many people have added it all up and said, “If I only had this amount of extra money, I could clear everything up and actually start getting ahead.” What do you do about those bad decisions or unfortunate situations that were not your fault, but still have a hefty price tag? When you are saddled with debt you cannot pay, you may start thinking about bankruptcy options. Do not be dissuaded by the anti-bankruptcy ads on television, paid for by debt repayment and restructuring companies. Most of them do not get people the fresh start they need to really be successful. If you want to get out of debt and do it right, there are two consumer bankruptcy options for you, Chapter 7 discharge and Chapter 13 restructuring.

What are the differences between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 is a liquidation bankruptcy. When you qualify for a Chapter 7 liquidation (or think of complete discharge) you can literally wipe the slate clean. Note that only certain debts may be discharged, such as court judgments against you, credit card debts and loans you cannot pay. You cannot however get rid of child support obligations, student loans or certain tax or municipal fines.

Chapter 13 is a reorganization bankruptcy. If you do not qualify for a Chapter 7 discharge, you may be able to file a Chapter 13 petition for bankruptcy. You will be able to repay a portion of your debts, every month, over time. In a Chapter 13 you get to keep all your property, including non-exempt assets. When you have the income to pay debts, but need some time to spread it out and get caught up, a Chapter 13 can be your best path to financial freedom.

Note that when you file a Chapter 7 or Chapter 13 Bankruptcy, the Automatic Stay provision kicks in which prevents bill collectors from doing anything to collect a debt while you are in bankruptcy. In a Chapter 13, you pay the Bankruptcy Trustee every month and they make the negotiated payments on your debts. For people who want to keep their house and other valuable assets and still get bankruptcy relief, Chapter 13 is a great thing.

How do I know whether I qualify for Chapter 7 or Chapter 13 Bankruptcy?

To qualify for a Chapter 7 Bankruptcy, and get a full discharge of qualified debts, you must show financial need and hardship through a means test calculation. Your bankruptcy attorney can do the math and let you know whether you qualify. In the event, you do not qualify for a Chapter 7, you can always file a Chapter 13 bankruptcy instead. Let’s say you make just a little bit too much money or have a little more equity in your home you want to preserve, the Chapter 13 will still help you and you will repay only a portion of your debts over time.

How long will a Chapter 7 or a Chapter 13 Bankruptcy take to be completed?

A Chapter 7 Bankruptcy can be filed and discharged within several months. Your bankruptcy attorney collects all the necessary information, files the petition, appears with you at the Notice to Creditors Meeting, after which time you wait to see if any of your creditors file any objections to your bankruptcy. In a few months, you have a full discharge. In Chapter 13 Bankruptcy, you can get caught up on missed payments and non-dischargeable debts over a three to five-year period.

What steps can I take to make sure I have good credit after my bankruptcy case?

When preparing for credit worthiness after bankruptcy, remember that the only thing that matters is what you do with your finances after the bankruptcy. Your credit score determines how risky it may be to lend you money or credit. To reduce that risk, many companies offer secured credit cards. Anyone can get a secured credit card by paying a deposit of $200. If you never pay the bill, you forfeit your deposit. Without a bunch of missed monthly payments, there is nothing to negatively affect your credit score. Keep up with the secured card and you will start receiving regular credit card offers in no time. Buy a new car or a new home in a handful of years after a bankruptcy. There are many people who tell success stories about the new opportunities they seized after getting out from behind the eight ball.

If you have a question about any of the bankruptcy details mentioned in this article, it costs you nothing to call Joseph Wrobel, Ltd. and find out what bankruptcy law may mean to your financial future.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Beware of IRS scams in several forms, report the “bad guys!”

Most people born and raised in this country know how the IRS works, and that an IRS agent calling themselves “officer” does not call you on the phone one day and extort a payment under threat of an arrest warrant. Sounds too amazing to be real? Guess again. Just one of the scams the “bad guys” are using involves demand of full or partial payment of an overdue balance to the IRS, with the promise (or threat) that law enforcement may be speeding to your door at any minute to arrest you and toss you in IRS jail until you cough up the money they’re demanding. The story sounds like something out of a bad movie about tourists being scammed abroad in countries where the police cannot help.

In the real world, police actually are here to help you, when it comes to your reporting IRS scammers.

Tax time is a perfect time for scammers who know you may have recently filed your IRS tax return and either expect a refund or to make your tax payment(s). Many of these “bad guys” conducting the scams are calling non-native Americans and commonly targeted minority groups, hoping they find someone who does not know how the IRS really works, or worse, is fearful of being deported in the event they are not in the country legally.

One day, however, the “bad guys” called a realtor, very aware of these types of scams, and the realtor fired back at them, calling the local ABC television station to help them warn viewers about IRS refund scams. The realtor said the man who called him had a noticeably foreign accent and very quickly determined the person he was talking to did not work for the IRS.

The IRS issued responses and advisory statements to the public in light of these and other scams.

In a recent announcement the IRS stated that, “Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.[i]

The IRS will never call and ask you to verify personal information over the phone. Everything that happens with the IRS is done with paperwork and they will send field agents to your home before calling you. If you ever receive a call from someone who says they are an IRS agent, call the IRS directly or your local police department if you suspect a scammer. The realtor who received a phony phone call from one of the “bad guys” notified his local police department, who told him they were receiving several calls from people telling similar stories about scammer phone calls.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law. The firm will also publish notices and warnings about consumer fraud scams to keep you aware of the “bad guys.”  

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

[i] IRS, Consumer Alert: Scammers Change Tactics, Once Again

Tips we should know about personal loans

Easily we can identify several reasons to borrow money. Most of us are comfortable taking out loans for homes, cars and education because these are expectations for us and they help us further build our credit while we finance our basic needs. Personal loans are different type of loan, and unlike home and car loans, a personal loan is not guaranteed by a collateral asset such as the home or car. A personal loan can be obtained through a bank, credit union or an online lender, which is a newer option gaining in popularity. How and when to look for a personal loan can be a matter of necessity or smart financing when we have general personal debt. Shopping around and knowing what to look for in a personal loan is important to achieving financial success.

Sources of personal loans

Banks and credit unions offer their customers and members personal loans based on their financial relationship with the borrower. If the lender and borrower agree, a personal loan may be secured by collateral, such as a vehicle or land title. In most cases, a personal loan is based on the lending bank or credit union’s lending decision based on our income and credit rating. Some credit unions offer quick cash loans for up to several hundred dollars or more, which are repaid from direct monthly withdrawals from the borrower’s account over a short term, often within one year.

The new trend in personal borrowing involves online and app-based moneylenders. An online lender with money to lend may offer a good rate on a personal loan where the online lender does not have the overhead of a brick and mortar bank or credit union. Online applications and processing make it easy for us to apply for personal loans from our home or office. With so much commerce happening on device applications, personal loan apps are another option. Some apps we use to receive credit and debit card payments, will offer personal or business loans to their customers, based on a known income average. These app-based loans can easily be repaid monthly in a fixed amount or as a percentage of incoming funds until the loan is repaid. Square Capital is an example of a income app-based lender.

Determining whether a personal loan makes good financial since

The fees and interest payments on credit cards can be significant if we carry a balance and do not make more than the minimum monthly payment. The balances never seem to come down. A personal loan at a lower interest rate can save us significant amounts of money if we use the proceeds of the personal loan to pay off the credit cards. Of course, if we run those credit cards back up we are headed right back to a monthly cash flow problem. If credit cards are only used for actual emergencies or small monthly fixed bills, such utilities, they are good for our finances.

An unexpected major expense such as an uninsured medical expense or major car repair is a good reason to look for a personal loan. Using the car repair example, a $1500 personal loan to repair a transmission, will cost us significantly less than trading off the devalued vehicle on a newer one, especially if we owe more than the value of the car. Too often people get into terrible deals on cars because they do not have the access to cash or credit to pay for major car repairs.

Shopping for the best personal loan to meet our needs

We should always perform our own investigative online research about any lender we from whom we might borrow money. There are many scams and consumer fraud perpetrators in commerce, especially online where their identities might be hidden. Before you give out personal information on the Internet, in a loan application, make sure you are not working with a fraud or identity thief.  Of course, be aware of scammers offering amazing deals. If it sounds too good to be true, everyone would be borrowing money from these folks.

Another good idea is to find out how and when the lender reports positive payment histories to the credit agencies. Any lender who makes interest and repayment decisions based on our credit, should update the agencies when we make timely personal loan payments, to boost our credit scores. We should make sure we understand the amount and duration of our payments. If we can make fewer and somewhat larger payments, we can save money on interest, with the example of the 12-month quick cash loan versus a 36-month personal loan, where we are likely to pay more money in total interest.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional suggestions about personal loan options as the need may arise.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Image source: Aero Federal Credit Union, personal loan http://bit.ly/1MmFo02

Understanding and improving your credit score before or after bankruptcy

Understanding how your credit score works requires knowledge about how the credit system works and how lenders use your credit score. There are three companies, Experian, Equifax and Trans Union, and they collect your credit use and payment history and calculate your credit scores. Based on several elements of your credit patterns, your scores from each agency will range from an extreme low of 200 to an extreme high of 850. The average credit score among most people is 711. When your score is 740 and higher, you will likely receive the best interest rates on credit cards and consumer loans. If however, your score is 620 and lower, approval is less likely, and when approved for a credit card or consumer loan, your interest rate will likely be much higher. The interest on a credit card or loan can vary from five to 20 percent based solely on your credit score.

Your frequency of credit use and amount of credit allowed versus used is important to your score.

There are several activities and factors that affect your credit score. The amount of open credit card and loan accounts is a factor in your score. If you have several open credit accounts you are not using, or you have not opened a new credit account in many years, your credit score can suffer. The loan balance to loan amount is another factor in your credit rating. The more you pay down a loan, the better you can affect your score. A ratio of credit offered and credit used is important, especially with credit cards. If you have a credit limit of $1,000 you should keep your monthly spending around 30 percent ($300), which is a general rule, not using your credit limit and using up all your available credit are both harmful.

Get the free copy of your credit report and challenge the errors, or use a credit repair company.

Order a free copy of your credit report and decide how to take action or hire a credit repair company to do it for you. There is a free credit-reporting website (www.AnnualCreditReport.com) you can use to generate your full credit report. Most people have some inaccuracies or wrong information on their credit report. Reviewing all the information and challenging anything that looks like an error is a quick way to increase your credit score. Additionally, there are credit repair agencies you can hire to fix your credit for you, using all their tools and knowledge.

Obtaining secured credit cards is easy, use several and pay the fixed monthly bills.

Using credit cards and loans is a great way to improve your credit score when you follow a few basic rules. Paying your credit card on time every month is imperative to demonstrating credit responsibility. The more credit cards you have in current responsible, the better your score should be. It is a good practice to pay your fixed monthly bills with a few credit cards and pay them off every month. If you recently filed for bankruptcy or do not have a credit card, the secured credit card can help you start repairing your credit immediately. When you go to a local major bank, bring $300-600, deposited into a savings account connected to a normally functioning secured credit card. You receive and pay your bill on time every month and your credit improves. The bank may refund some or all of your deposit money once you demonstrate a positive payment history. If you never pay the bill, the bank will use your deposit to pay the bill.

Joseph Wrobel Ltd., can get your debts partially or fully wiped out and help you with credit rebuilding.

If you take advantage of the bankruptcy laws and discharge some or all of your debt, your credit card companies adjust the status of those debts and should reflect the new amount owed, if anything, but the credit reporting agencies do not always reflect the discharge. Joseph Wrobel, Ltd. has relationships with credit repair experts who can help challenge credit errors, assist in the clean up, and credit rate increase process. It is important to remember that good credit has less to do with what happened before the bankruptcy and everything to do with how you use and build credit afterwards.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can “Like” the firm’s Facebook page and “Follow” Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

Supreme Court gives bankruptcy judges more power, could help speed up cases

Bankruptcy judges traditionally had less power to decide certain matters since 1978. A new U.S. Supreme Court decision in, Wellness International Network, Ltd. v. Sharif, now expands the power of bankruptcy court judges. Before this recent decision (May 25, 2015), bankruptcy court judges had to send certain elements of bankruptcy cases to higher level federal district court judges, who might no longer be needed when the litigants in a bankruptcy lawsuit agree and consent in certain decisions.

The U.S. Constitution controls the power of the judiciary; here is a brush-up civics lesson:

Within the U.S., Article III, Section 1 of the Constitution provides that “The judicial power of the United States, shall be vested in one Supreme Court, and such inferior courts as the Congress may from time to time ordain and establish.[i]” Congress used its power in establishing 94 federal district courts and 13 courts of appeal. The judges and justices in these established courts are appointed by the President of the U.S., and with the approval of the U.S. Senate. These judges (federal district courts) and justices (federal courts of appeal) are appointed for life and their pay is guaranteed and cannot be reduced.

The appointed federal court judges and appellate court justices would have been involved in bankruptcy cases, prior to this new U.S. Supreme Court decision, which now empowers bankruptcy judges to make final decisions on disputes that arise, in cases where all the parties consent[ii].

There had not been significant discussion about the power of bankruptcy judges since 1978 when Congress adopted a new bankruptcy statute. Bankruptcy judges were employed as lower status judges than other federal judges. The Constitution required that only senior judges could make final decisions that would end up in federal courts.

This case involves a bankruptcy litigant and money held in a family trust:

In this case, Wellness International Network, Ltd., v. Sharif, 575 U.S. ([No. 13-935]) (2015), opinion published May 26, 2016, Mr. Sharif was alleged to owe Wellness $500,000, and while Sharif was seeking a bankruptcy discharge of his duty to pay any debt to Wellness, its attorneys sought to take money and assets from a family trust, to collect on their claim.

The Supreme Court decided in Wellness v. Sharif, to reverse the 7th Circuit Court of Appeals’ decision that the bankruptcy court cannot hold the constitutional authority to decide whether certain property belonged to the bankruptcy estate. A main issue before the Supreme Court is was whether all disputes in bankruptcy lawsuits necessarily had to be decided by a higher-level federal court judge, particularly if consenting parties are involved.

Litigant consent is a historically prominent aspect of the federal court system.

Justice Sonia Sotomayor, writing the majority Supreme Court opinion, stated, “Adjudication based on litigant consent has been a consistent feature of the federal court system since its inception…Reaffirming that unremarkable fact, we are confident, poses no great threat to anyone’s birthrights, constitutional or otherwise.[iii]

Now, with broader authority on a variety of matters, bankruptcy judges are empowered to make decisions in bankruptcy lawsuits instead of sending those issues up to higher federal court judges. This means consumer bankruptcy cases can be handled more quickly and efficiently, by the bankruptcy court most familiar with the individual cases.

Joseph Wrobel, Ltd., works to educate clients and bring everyone bankruptcy and financial news they can use to better understand the laws and processes involved in consumer bankruptcy.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can “Like” the firm’s Facebook page and “Follow” Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

 

[i] Cornel University Law School, U.S. Constitution, Article III, Section 1.

[ii] Valuewalk.com, U.S. Bankruptcy Court Boosted By Supreme Court Decision, By Clayton Browne, May 27, 2015.

[iii] See HNii above.

Khan Academy: Can it help you make more money?

Bank of America TV ads draw attention to their partnership with the Khan Academy, the non-profit educational organization on a mission to provide “a free, world-class education for anyone, anywhere.[i]” The Khan Academy was founded by former hedge fund analyst, Sal Khan, born and raised in Louisiana and with an impressive resume and educational background. Khan, with funding from the Bill & Melinda Gates Foundation and Google, is now being recognized as a household name since so many large companies are getting involved to fund this non-profit website offering education to anyone, anywhere, at no charge.

Khan Academy is a different kind of education website and as more people learn about it, they are sharing why they spend time on the site.

Critics of online education frequently suggest there is no substitute for traditional classroom settings with interactions among students and teachers. This site is not part of that grudge match, because Khan Academy does not pitch itself as a substitute for degreed education programs and universities, rather it is a free resource for people who want to learn specific information on their own time and pace and from wherever they access Khan Academy, such as from any computer or mobile device.

What you can learn on Khan Academy is seemingly unlimited. Right now, the site offers education resources in the form of video tutorials, lectures, problem solving exercises, social comment, and interaction chats where you can ask any question and others may offer their input. The subjects available to Khan Academy students include just about everything taught in traditional pre-college level education and beyond.

You can use some of the lessons in Khan Academy improve at work, study for a promotion or start your own business on the side.

Being well into a career does not mean there is no need to continue pursuing education. In fact, the most successful careers involve frequent continuing education in specific areas. Not having gone to college should and not having time do enroll in night school should not be a deterrent to people who want to learn more and get ahead at work or get a better job.

The entrepreneurship focus on the Khan Academy website is significant. Many well-known CEOs are contributors to the library of lessons and content available free on Khan Academy. See Interviews with entrepreneurs for personal lessons.

Community questions offer a forum, we hope everyone takes seriously, to ask and get answers.

A recent question posted on the Community Questions page for entrepreneurs reads, “At what point in the business is it big enough to get a professional accounting service.” One response to the question suggested the person consider setting up an internal accounting department. The first person might next do some research about hiring a part-time employee with accounting experience. If that part-time employee only works a few hours a week it could be more affordable than outsourcing those tasks.

Remember, knowledge is power. The more you know, the more you can see new options to make more money and get a better job and career. Sometimes people need to change gears in life and pursue a career in a new direction. Sites like the Khan Academy can be useful springboards to new opportunities.

Joseph Wrobel and the attorneys and staff at Joseph Wrobel, Ltd., work hard to help people turn their lives in the right financial direction, writing and sharing content that helps clients learn, grow and prosper.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

[i] Khan Academy website, about page.