With the new bankruptcy laws in effect, debtors will have to first pass a two-part means test before filing for Chapter 7 bankruptcy. First, a quick definition of Means Test: Means = Money, property, or other wealth (source: Dictionary.com)
Your Income Vs. Your State's Median Income
In the first part of the means test, your monthly income multiplied by 12 is compared to your state's median annual income. Your state's median income would be below your state's highest incomes and above your state's lowest incomes.
If your income falls at or below your state's monthly median income, then your Chapter 7 bankruptcy filing will likely be successful. On the other hand, if your monthly income does not fall below your state's median income, then your income will then be factored into a formula. Your formula results will determine your ability to file for Chapter 7 bankruptcy.
Means Test Formula
Under the Means Test, any creditor, trustee or judge will look at your monthly income, minus certain living expenses like food and rent. Your Chapter 7 bankruptcy will likely be successful if you are unable to pay at least $6,000 over the next five years ($100 per month). However, if you can pay at least $10,000 over five years ($166.67 per month or more) your Chapter 7 bankruptcy will likely be denied.
If you could afford more than $6,000 but less than $10,000 over five years, then a mathematical calculation determines whether your Chapter 7 filing will likely be successful or not. If you could afford to pay 25% or more of your unsecured debt, then a Chapter 7 will likely be denied. If you can't afford to pay 25% of your unsecured debt, your Chapter 7 filing will likely be successful. Examples of unsecured debts would include medical and credit card bills. Note that you can still opt for Chapter 13 in either of these cases.
Conclusion
You should be aware that the new bankruptcy law lets the government decide what is best for you. The updates take away discretion from the Judges to judge cases based on individual circumstances. It is doubtful that the courts can make exceptions for results.
ABOUT THE AUTHOR
Jeffery J. Aleman is a managing partner with Legal Helpers specializing in consumer bankruptcy law.
Legal Helpers is a debt relief agency helping people to file for bankruptcy relief under the bankruptcy code. With over 25 offices throughout the country and attorneys answering the telephones six days a week, their firm is always striving to provide the highest level of client service available. Legal Helpers aggressive representation and extensive experience have earned Attorneys Macey and Aleman a national reputation for excellence in the representation of Debtors in financial distress.
Legal Helpers can be contacted by phone at (888)743-5787 or email them at info@legalhelpers.com or visit their web site at www.legalhelpers.com
Thursday, May 17, 2007
How To Rebuild Credit After Bankruptcy
Your ability to reestablish credit after filing bankruptcy is better than it has ever been. After you receive your bankruptcy discharge, you will receive solicitations from lenders offering to finance homes, vehicles and credit cards. Here are some tips on responsibly and successfully reestablishing your credit after bankruptcy:
1. Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle your cash flow.
2. Pay your utility bills and rent on time for at least a year.
3. Apply for store and gas credit cards that you would normally pay cash.
4. Apply for a secured card where you deposit cash and charge against it. Be sure to pay advances back over two months so that they will be reflected as positive marks on your credit report.
5. Look for car dealers and mortgage brokers that attest to be "bankruptcy friendly lenders".
6. Stay away from payday loans that are at high interest rates and are a "bad credit" trap.
7. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
8. Pay your reaffirmed, pre-bankruptcy debts on time.
9. Write a letter to each credit reporting agency explaining the circumstances that lead to your bankruptcy filing.
10. Find a friend or relative to cosign for you on a loan and pay it on time.
ABOUT THE AUTHOR
Legal Helpers is a debt relief agency helping people to file for bankruptcy relief under the bankruptcy code. With over 25 offices throughout the country and attorneys answering the telephones six days a week, their firm is always striving to provide the highest level of client service available. Legal Helpers aggressive representation and extensive experience have earned Attorneys Macey and Aleman a national reputation for excellence in the representation of Debtors in financial distress.
Legal Helpers can be contacted by phone at (888)743-5787 or email them at info@legalhelpers.com or visit their web site at www.legalhelpers.com
1. Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle your cash flow.
2. Pay your utility bills and rent on time for at least a year.
3. Apply for store and gas credit cards that you would normally pay cash.
4. Apply for a secured card where you deposit cash and charge against it. Be sure to pay advances back over two months so that they will be reflected as positive marks on your credit report.
5. Look for car dealers and mortgage brokers that attest to be "bankruptcy friendly lenders".
6. Stay away from payday loans that are at high interest rates and are a "bad credit" trap.
7. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
8. Pay your reaffirmed, pre-bankruptcy debts on time.
9. Write a letter to each credit reporting agency explaining the circumstances that lead to your bankruptcy filing.
10. Find a friend or relative to cosign for you on a loan and pay it on time.
ABOUT THE AUTHOR
Legal Helpers is a debt relief agency helping people to file for bankruptcy relief under the bankruptcy code. With over 25 offices throughout the country and attorneys answering the telephones six days a week, their firm is always striving to provide the highest level of client service available. Legal Helpers aggressive representation and extensive experience have earned Attorneys Macey and Aleman a national reputation for excellence in the representation of Debtors in financial distress.
Legal Helpers can be contacted by phone at (888)743-5787 or email them at info@legalhelpers.com or visit their web site at www.legalhelpers.com
Health, Health Care Insurance and Bankruptcy
Imagine for a moment that your health has taken a turn for the worse. You need extensive medical attention and expensive treatments. Would you be prepared to account for these medical costs? Or would you or a family member ultimately have to deal with this financial burden? Surely, you would not want to suffer the consequences of paying big medical bills on your own. This is why health insurance is so important. A Harvard study conducted in 2001 found that medical bills caused half of all bankruptcies. Therefore, you should make sure that you have some form of medical insurance. You should also make sure that your money is well-spent on insurance that meets your needs.
Insurance Provided by Employer
You should feel lucky if you are in the minority of people who receive health insurance through your employer. According to bankrate.com, company health insurance is actually part of a group insurance plan. Your employer pays for most of your insurance and also pays for your insurance with portions of your paychecks. Everyone in your group plan pays the same rate. The premiums paid by healthy members go towards paying the bills of sick members. Bankrate.com recommends that you study up on your employee benefits package to make sure that the insurance plan you choose provides you with the services and options you will need. If you are young and/or relatively healthy, you may want to consider choosing to pay for your company's cheapest health plan.
Bankrate.com also recommends that you review your insurance plan periodically. You may be paying more money for services you no longer need. For example, if you have children that have graduated from college or are no longer on your insurance plan, you should change your insurance plan accordingly. Additionally, if you have lost weight or quit smoking, you could qualify for a cheaper insurance plan.
Have You Been Laid Off?
If you have recently lost your job, you may want to consider the Consolidated Omnibus Budget Reconciliation Act (or COBRA) plan. With a COBRA plan, you pay for the medical benefits your former employer paid for on your own. The plan lasts up to 18 months. Keep in mind that the COBRA plan is a bit expensive. In addition to paying the premiums your company used to pay, you would also have to pay a 2% service fee.
Are You Uninsured?
Unfortunately, according to bankrate.com you may face discrimination from insurance companies if you try to insure yourself on your own. You may have difficulty buying insurance if you have any medical problems whatsoever. Remember, with a company group insurance plan, your insurance provider only has to pay the medical bills of the sick members in the group.
Look for health plans that have higher premiums. You may pay more upfront for medical coverage, but you will ultimately spend less on deductibles. At the very least, financial analyst Suz Orman recommends paying for worst-case-scenario insurance for medical bills that top $5,000. This way you can at least be sure that you will not have to foot the entire bill for high costs.
Conclusion
No one wants to live their life fearing the worst. By insuring yourself, you can at least rest assured knowing that you are prepared if your health takes a turn for the worse. As a result you or your family would not have to suffer the additional hardship of having to pay for your medical costs yourself. The good news is that if you can not afford insurance coverage, filing bankruptcy could eliminate your medical bills if necessary.
http://www.debtriddance.com/articles/health_care.html
Insurance Provided by Employer
You should feel lucky if you are in the minority of people who receive health insurance through your employer. According to bankrate.com, company health insurance is actually part of a group insurance plan. Your employer pays for most of your insurance and also pays for your insurance with portions of your paychecks. Everyone in your group plan pays the same rate. The premiums paid by healthy members go towards paying the bills of sick members. Bankrate.com recommends that you study up on your employee benefits package to make sure that the insurance plan you choose provides you with the services and options you will need. If you are young and/or relatively healthy, you may want to consider choosing to pay for your company's cheapest health plan.
Bankrate.com also recommends that you review your insurance plan periodically. You may be paying more money for services you no longer need. For example, if you have children that have graduated from college or are no longer on your insurance plan, you should change your insurance plan accordingly. Additionally, if you have lost weight or quit smoking, you could qualify for a cheaper insurance plan.
Have You Been Laid Off?
If you have recently lost your job, you may want to consider the Consolidated Omnibus Budget Reconciliation Act (or COBRA) plan. With a COBRA plan, you pay for the medical benefits your former employer paid for on your own. The plan lasts up to 18 months. Keep in mind that the COBRA plan is a bit expensive. In addition to paying the premiums your company used to pay, you would also have to pay a 2% service fee.
Are You Uninsured?
Unfortunately, according to bankrate.com you may face discrimination from insurance companies if you try to insure yourself on your own. You may have difficulty buying insurance if you have any medical problems whatsoever. Remember, with a company group insurance plan, your insurance provider only has to pay the medical bills of the sick members in the group.
Look for health plans that have higher premiums. You may pay more upfront for medical coverage, but you will ultimately spend less on deductibles. At the very least, financial analyst Suz Orman recommends paying for worst-case-scenario insurance for medical bills that top $5,000. This way you can at least be sure that you will not have to foot the entire bill for high costs.
Conclusion
No one wants to live their life fearing the worst. By insuring yourself, you can at least rest assured knowing that you are prepared if your health takes a turn for the worse. As a result you or your family would not have to suffer the additional hardship of having to pay for your medical costs yourself. The good news is that if you can not afford insurance coverage, filing bankruptcy could eliminate your medical bills if necessary.
http://www.debtriddance.com/articles/health_care.html
Subscribe to:
Posts (Atom)