If you plan to apply for a loan, you need to do some homework beforehand in order to increase your chances of getting approved. A bankruptcy on your credit report is really a drawback, however, some lenders are willing to approve loans even if you have gone through a bankruptcy as long as it has been discharged and you can prove that you are to be trusted. To prove such a thing you need to make sure that your credit behavior shows no stains for a significant period of time.
Recreate Credit by Paying on Time
To start recreating your credit, you need at least six months of uninterrupted bill payments. During this period you need to avoid missing payments, paying late, opening new bank accounts, closing existing ones, requesting credit cards or loans, having too many credit inquiries on your credit report, etc.
Just pay your bills on time and reduce your debt exposure as much as possible without closing accounts or taking new debt. Slowly, your credit score will begin to rise and recover. Your credit history will start to show an uninterrupted pattern of timely payments that will aid you in this new task.
Credit Cards Can Aid Your Credit Repair
Once you can obtain a credit card, do so. A credit card will aid you in recovering your credit because all the payments are immediately recorded into your credit report as credit card issuers report to credit bureaus on a regular basis. Just make sure your payment behavior is impeccable.
This implies paying always on time, never (absolutely never) missing a payment and paying your balance in full. Try as hard as possible to avoid paying only the minimum payment on your credit card as this creates a bad antecedent and risks your ability to repay if any unexpected situation reduces your available income.
Personal Loans Can Also Boost Your Credit Score
At this stage you might be able to successfully apply for a personal loan. Start with small loans as there are a lot more chances of getting approved this way. Also, request short repayment programs, this will not affect your credit score and you’ll improve your credit history as soon as the loan is repaid in full. After repayment you’ll be able to request loans for larger amounts and so on.
The loan payments will also be recorded into your credit report, raising your credit score and improving your credit history. Though it may take a while, this procedure will eventually lead you again to having a good credit score and to recover your ability to get finance at more reasonable terms: You’ll get higher loan amounts, longer repayment programs and lower interest rates. A good credit score is just a few steps away!
http://www.content.onlypunjab.com/Article/Steps-For-Getting-Approved-After-Bankruptcy-/4200320092003243546
Friday, October 5, 2007
Mandatory Credit Counseling Before Bankruptcy - The Unanticipated Results
In a study released in October, 2006 by the National Foundation for Credit Counseling (NFCC) on the eve of the one year anniversary of the 2005 Bankruptcy Reform legislation, there were a number of unanticipated results of the now mandatory pre-bankruptcy credit counseling.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires all debtors to get mandatory credit counseling before they are permitted to file a chapter 7 or chapter 13 bankruptcy.
One of the most surprising results of the study are that consumers filing for bankruptcy have a huge amount of debt, with average unsecured debt being almost $12,000 greater than their average annual income, and this ratio is getting progressively worse. In addition, consumers filing for bankruptcy protection are more likely to have mortgage delinquency problems, than those debtors who received non-bankruptcy related credit counseling.
Although phone and internet based counseling are the most common type of service delivery, as opposed to in person counseling, the time required to complete pre-discharge education sessions is taking more than 25% more time than aniticipated. These higher than anticipated costs mean that the cost of providing services exceeded the fee income collected by NFCC agencies. The study states that "Based on current estimates of 600,000 bankruptcy filings in 2006 and assuming the same delivery mix, an annual funding shortfall of $7.52 million appears likely for pre- filing counseling services delivered by NFCC agencies."
NFCC agencies waived the fee for services provided for all consumers unable to pay for them, meaning that 16 percent of pre-filing sessions and 13 percent of consumers attending pre- discharge education classes were provided free of charge. The big worry here is that if the costs of providing mandatory credit counseling becomes excessive, the entire credit counseling system may become difficult to continue, so stay tuned for further information.
http://www.content.onlypunjab.com/Article/Mandatory-Credit-Counseling-Before-Bankruptcy---The-Unanticipated-Results/4200320092003243544
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires all debtors to get mandatory credit counseling before they are permitted to file a chapter 7 or chapter 13 bankruptcy.
One of the most surprising results of the study are that consumers filing for bankruptcy have a huge amount of debt, with average unsecured debt being almost $12,000 greater than their average annual income, and this ratio is getting progressively worse. In addition, consumers filing for bankruptcy protection are more likely to have mortgage delinquency problems, than those debtors who received non-bankruptcy related credit counseling.
Although phone and internet based counseling are the most common type of service delivery, as opposed to in person counseling, the time required to complete pre-discharge education sessions is taking more than 25% more time than aniticipated. These higher than anticipated costs mean that the cost of providing services exceeded the fee income collected by NFCC agencies. The study states that "Based on current estimates of 600,000 bankruptcy filings in 2006 and assuming the same delivery mix, an annual funding shortfall of $7.52 million appears likely for pre- filing counseling services delivered by NFCC agencies."
NFCC agencies waived the fee for services provided for all consumers unable to pay for them, meaning that 16 percent of pre-filing sessions and 13 percent of consumers attending pre- discharge education classes were provided free of charge. The big worry here is that if the costs of providing mandatory credit counseling becomes excessive, the entire credit counseling system may become difficult to continue, so stay tuned for further information.
http://www.content.onlypunjab.com/Article/Mandatory-Credit-Counseling-Before-Bankruptcy---The-Unanticipated-Results/4200320092003243544
How to Stop Creditors Cold
Wipe Out Your Debts!
If you're afraid to answer the phone because your creditors have been calling every night; and you're worried that one of them is going to call your boss and tell him you're a deadbeat; and just trying to pay off your bills leaves you almost nothing for food it’s time you thought about bankruptcy!
With a small amount of money, a lawyer (and even he's not necessary a lot of the time), and a careful evaluation of your assets (what you own) and your liabilities (what you owe), you too can make a new start with the help of the Federal and State bankruptcy laws. But don't rush into this without carefully determining which is the right way for you, for there are several different ways to stop your creditors cold, and choosing the wrong way can result in your losing much more than you might otherwise have to.
Straight Bankruptcy Usually Costs Less, and It's Quick!
If you have very few assets, and lots of debt, and not enough income to pay the debts off, even on an extended plan (more about that later), then you will probably have to file straight bankruptcy. You must file the proper forms (or "schedules") which you can purchase from any really good office supply stationery store in your nearest city, especially one in a district where there are lawyers' offices.
Bankruptcy is not a very complicated court action, so don't be too afraid of it. You will need to know which district you live in for Federal Court purposes; look in the telephone (white pages) under U.S. Government - Courts, and locate the U.S. District Court in your nearest city. Probably that court has jurisdiction; but check this out by phoning the Clerk of the Court and asking him, giving him your home address. You will have to fill out several "schedules" or lists of your creditors: creditors having priority, creditors having security, and creditors having unsecured claims without priority. You must list every creditor, for any one that is not listed can still sue you and collect, even after the bankruptcy! If you don't know if a debt is secured (backed up by a related asset, like refrigerator bought on an installment loan) or unsecured (made only on your personal reputation, with no related asset), ask the creditor. Include as a creditor the name of anyone for whom you co-signed a loan or note, and anyone who co-signed for you.
What Will You Have Left?
Will you be put out in the cold without food, clothing and a house to live in after your creditors get paid? Not at all - because most State bankruptcy laws allow some of your assets to be "exempt" from being used to pay your creditors! You must check the specific laws of your state, but usually, the house you live in, the tools of your trade, your personal clothes (within reasonable limits) and certain specific basic home furnishings are all not taken away from you. In fact, in this totally absurd world we live in, many states now permit you to also keep your TV set, because, apparently, they regard it as a necessity for life!
Where to File
Once you have all the forms filled out and notarized, bring them to the Clerk of the U.S. District Court in your district, along with $50. You don't have to notify your creditors - the Clerk does that, while also reminding them that now that you have filed bankruptcy papers, they may not press you for any more money, but may come to your hearing.
Usually your creditors don't show up, since by that time you have filed bankruptcy, you have very few nonexempt assets left that they are interested in. Whatever assets you do have that are not exempt (if any) must be sold under the Court's supervision. Any money thus realized is added to whatever cash you may have had at the time you filed (if any) and the total amount (which might be, and often is, as low as $50 or $750 is divided up by the trustee appointed at your hearing and your creditors get paid on a pro rata (proportional) basis to the amount you owe them. If your assets add up to an amount that, for example, only allows each creditor 3 1/2 cents for every dollar of debt you owed them, then that 3 1/2 cents is all he gets!
About three months after you have filed, you are judged "bankrupt". and you can start over again to incur, pay bills and establish a new credit record. Be careful, however, about talking to your old creditors at this time. They may offer to help you out by extending new credit, and manoeuvre you into signing "reaffirmation" of your old debt! Read anything you sign very closely, and don't agree to repay any debt that you have already discharged through your bankruptcy!
Lawyers for Complications
There are some people who should definitely hire a lawyer to help them through their bankruptcies, especially people who have assets like real estate that they want, somehow, to keep. Aside from real estate, if you have been accused by any creditor of fraud, you should also have a lawyer handle your case. If you decide you don't need a lawyer to handle your bankruptcy, you are still responsible for filling out all of the forms accurately and completely, and every bit as carefully as if a lawyer had done them. Leaving out a creditor's address from a schedule, or forgetting a loan you co-signed can bring lawsuits against you even after your bankruptcy. So be careful, and if you find the bankruptcy process is too complicated, do see a lawyer!
Keeping Your Assets Instead
If you've fallen behind in paying your bills, but you don't want to declare straight bankruptcy, you may want to clean up your financial mess instead through Chapter XIII of the Federal Bankruptcy Laws. Also known as the Wage Earner Plan, Chapter XIII differs from straight bankruptcy in two most important ways: you must pay off the entire amount of your debts (no 10 cents on a dollar here), and within a 3 year period. but the good part is you are not declared "bankrupt", so no one ever knows that you needed relief under any part of the Federal Bankruptcy Acts.
The major advantage of the Wage Earner Plan, besides not being recorded permanently on your credit record, is that you get to keep all your assets, exempt and non-exempt alike (assuming you still have any left!). This is quite important, if, for example, you have a good paid-up car, or expensive household furnishings or a boat or other valuable assets that you want to keep. Under Chapter XIII, you can get your current debts "stretched out" to three years, which may well result in lower total monthly payments than you are currently paying, and as long as you pay off your debts in accordance with the agreement files with the Court, month by month, no creditor will be able to sue you to try to seize any other of your assets, and force their public sale at disadvantageous prices.
Even if they have begin to sue you, once you file for relief under the Bankruptcy Act, either under Chapter XIII or under Chapter XI, straight voluntary bankruptcy, they can't touch you! They are immediately restricted to getting from you only what the referee or trustee will give them and that only after the court proceedings have been completed. Often, if the creditor threatens to sue you, the most effective thing you can do to stop him (besides paying the debt!) is to tell him frankly that, if he sues you, you have no other recourse than to declare bankruptcy. This will often make your creditor willing to negotiate the debt, and you may be able to satisfy him by paying the debt back, but over a longer period of time (with smaller monthly payments) than you originally contracted for. Creditors know well that if you file bankruptcy, the chance of their getting payment in full on their overdue account is very low, so it is in their interest to try to ease your credit burden at least for a while.
Make Yourself "Judgment-Proof"
If a creditor goes ahead and sues you, and gets a judgment against you, he can then get a court order directing the sheriff to seize your personal property, sell it and pay the creditor the amount of your debt. However, if you have no valuable assets, there is nothing for the sheriff to seize, and you are what is generally called "judgment proof", or in other words, can't be made to pay the debt. Because they know this is likely to happen, street-smart debtors often hide their possessions, or move them out-of-state, before the sheriff (or marshal) arrives. This is, of course, illegal. The creditor's next move is to try to "garnishee your wages, which he does by getting a court order directing your employer to set aside part of your wages or salary every pay period and turn the amount over to him. However, he can only do this if he knows, or can find out, where you work. But even if your wages are garnisheed, there are limits on what a creditor can take! Laws vary from State to State. In some states wages cannot be garnisheed at all while in others only small amounts are exempt from garnishment.
If you have no job, and no visible assets, or you live in a State where your wages cannot be garnisheed, your creditors actually have very few ways of ever collecting on that judgment!
Harassment and Other Creditor Tools
Before your situation gets bad enough to need bankruptcy relief, and before your creditors actually sue you, they will try to make you pay up using informal techniques, rather than formal court orders, as this is far less expensive and time-consuming. First among these informal attempts may be turning their bills over to a collection agency which may then begin harassment, by calling you often and at odd hours by telephone, by trying to talk to your employer about your debts, and/or by threatening you with legal actions, etc. Many of these techniques that they use are illegal! Yes, a creditor or agency can write you letters, call once a day seeking payment, try to bring legal action against you, but he is forbidden by law to harass you or invade your privacy, or use deceptive means to get you to pay your bills. He may not use foul and abusive language over the telephone, tell anyone beside you the reason for his phone call, insist on payment for a product or service that you claim to have a legitimate grievance about, nor issue false threats (such as saying that he is going to drag you into court to collect $35, when in fact his agency's policy is not to file suit on accounts of less than $100, because of the high legal costs involved). He may not inconvenience you (by calling you at work when you are not easily able to receive calls), or invade your privacy (telling your employer or your neighbor that he is trying to collect a debt from you).
There are books that provide detailed additional information on personal bankruptcy, and include sample letters with which you can try to arrange "stretch-outs" on your own with your creditors before bankruptcy is necessary. Some include sample bankruptcy forms filled out that you can use as a model. Since the accurate filing of all your debts and assets is so important, it's a good idea to follow their detailed instructions closely, with or without a lawyer, so that once you get your creditors off you back, they stay off.
http://www.content.onlypunjab.com/Article/How-to-Stop-Creditors-Cold/4200320092003242896
If you're afraid to answer the phone because your creditors have been calling every night; and you're worried that one of them is going to call your boss and tell him you're a deadbeat; and just trying to pay off your bills leaves you almost nothing for food it’s time you thought about bankruptcy!
With a small amount of money, a lawyer (and even he's not necessary a lot of the time), and a careful evaluation of your assets (what you own) and your liabilities (what you owe), you too can make a new start with the help of the Federal and State bankruptcy laws. But don't rush into this without carefully determining which is the right way for you, for there are several different ways to stop your creditors cold, and choosing the wrong way can result in your losing much more than you might otherwise have to.
Straight Bankruptcy Usually Costs Less, and It's Quick!
If you have very few assets, and lots of debt, and not enough income to pay the debts off, even on an extended plan (more about that later), then you will probably have to file straight bankruptcy. You must file the proper forms (or "schedules") which you can purchase from any really good office supply stationery store in your nearest city, especially one in a district where there are lawyers' offices.
Bankruptcy is not a very complicated court action, so don't be too afraid of it. You will need to know which district you live in for Federal Court purposes; look in the telephone (white pages) under U.S. Government - Courts, and locate the U.S. District Court in your nearest city. Probably that court has jurisdiction; but check this out by phoning the Clerk of the Court and asking him, giving him your home address. You will have to fill out several "schedules" or lists of your creditors: creditors having priority, creditors having security, and creditors having unsecured claims without priority. You must list every creditor, for any one that is not listed can still sue you and collect, even after the bankruptcy! If you don't know if a debt is secured (backed up by a related asset, like refrigerator bought on an installment loan) or unsecured (made only on your personal reputation, with no related asset), ask the creditor. Include as a creditor the name of anyone for whom you co-signed a loan or note, and anyone who co-signed for you.
What Will You Have Left?
Will you be put out in the cold without food, clothing and a house to live in after your creditors get paid? Not at all - because most State bankruptcy laws allow some of your assets to be "exempt" from being used to pay your creditors! You must check the specific laws of your state, but usually, the house you live in, the tools of your trade, your personal clothes (within reasonable limits) and certain specific basic home furnishings are all not taken away from you. In fact, in this totally absurd world we live in, many states now permit you to also keep your TV set, because, apparently, they regard it as a necessity for life!
Where to File
Once you have all the forms filled out and notarized, bring them to the Clerk of the U.S. District Court in your district, along with $50. You don't have to notify your creditors - the Clerk does that, while also reminding them that now that you have filed bankruptcy papers, they may not press you for any more money, but may come to your hearing.
Usually your creditors don't show up, since by that time you have filed bankruptcy, you have very few nonexempt assets left that they are interested in. Whatever assets you do have that are not exempt (if any) must be sold under the Court's supervision. Any money thus realized is added to whatever cash you may have had at the time you filed (if any) and the total amount (which might be, and often is, as low as $50 or $750 is divided up by the trustee appointed at your hearing and your creditors get paid on a pro rata (proportional) basis to the amount you owe them. If your assets add up to an amount that, for example, only allows each creditor 3 1/2 cents for every dollar of debt you owed them, then that 3 1/2 cents is all he gets!
About three months after you have filed, you are judged "bankrupt". and you can start over again to incur, pay bills and establish a new credit record. Be careful, however, about talking to your old creditors at this time. They may offer to help you out by extending new credit, and manoeuvre you into signing "reaffirmation" of your old debt! Read anything you sign very closely, and don't agree to repay any debt that you have already discharged through your bankruptcy!
Lawyers for Complications
There are some people who should definitely hire a lawyer to help them through their bankruptcies, especially people who have assets like real estate that they want, somehow, to keep. Aside from real estate, if you have been accused by any creditor of fraud, you should also have a lawyer handle your case. If you decide you don't need a lawyer to handle your bankruptcy, you are still responsible for filling out all of the forms accurately and completely, and every bit as carefully as if a lawyer had done them. Leaving out a creditor's address from a schedule, or forgetting a loan you co-signed can bring lawsuits against you even after your bankruptcy. So be careful, and if you find the bankruptcy process is too complicated, do see a lawyer!
Keeping Your Assets Instead
If you've fallen behind in paying your bills, but you don't want to declare straight bankruptcy, you may want to clean up your financial mess instead through Chapter XIII of the Federal Bankruptcy Laws. Also known as the Wage Earner Plan, Chapter XIII differs from straight bankruptcy in two most important ways: you must pay off the entire amount of your debts (no 10 cents on a dollar here), and within a 3 year period. but the good part is you are not declared "bankrupt", so no one ever knows that you needed relief under any part of the Federal Bankruptcy Acts.
The major advantage of the Wage Earner Plan, besides not being recorded permanently on your credit record, is that you get to keep all your assets, exempt and non-exempt alike (assuming you still have any left!). This is quite important, if, for example, you have a good paid-up car, or expensive household furnishings or a boat or other valuable assets that you want to keep. Under Chapter XIII, you can get your current debts "stretched out" to three years, which may well result in lower total monthly payments than you are currently paying, and as long as you pay off your debts in accordance with the agreement files with the Court, month by month, no creditor will be able to sue you to try to seize any other of your assets, and force their public sale at disadvantageous prices.
Even if they have begin to sue you, once you file for relief under the Bankruptcy Act, either under Chapter XIII or under Chapter XI, straight voluntary bankruptcy, they can't touch you! They are immediately restricted to getting from you only what the referee or trustee will give them and that only after the court proceedings have been completed. Often, if the creditor threatens to sue you, the most effective thing you can do to stop him (besides paying the debt!) is to tell him frankly that, if he sues you, you have no other recourse than to declare bankruptcy. This will often make your creditor willing to negotiate the debt, and you may be able to satisfy him by paying the debt back, but over a longer period of time (with smaller monthly payments) than you originally contracted for. Creditors know well that if you file bankruptcy, the chance of their getting payment in full on their overdue account is very low, so it is in their interest to try to ease your credit burden at least for a while.
Make Yourself "Judgment-Proof"
If a creditor goes ahead and sues you, and gets a judgment against you, he can then get a court order directing the sheriff to seize your personal property, sell it and pay the creditor the amount of your debt. However, if you have no valuable assets, there is nothing for the sheriff to seize, and you are what is generally called "judgment proof", or in other words, can't be made to pay the debt. Because they know this is likely to happen, street-smart debtors often hide their possessions, or move them out-of-state, before the sheriff (or marshal) arrives. This is, of course, illegal. The creditor's next move is to try to "garnishee your wages, which he does by getting a court order directing your employer to set aside part of your wages or salary every pay period and turn the amount over to him. However, he can only do this if he knows, or can find out, where you work. But even if your wages are garnisheed, there are limits on what a creditor can take! Laws vary from State to State. In some states wages cannot be garnisheed at all while in others only small amounts are exempt from garnishment.
If you have no job, and no visible assets, or you live in a State where your wages cannot be garnisheed, your creditors actually have very few ways of ever collecting on that judgment!
Harassment and Other Creditor Tools
Before your situation gets bad enough to need bankruptcy relief, and before your creditors actually sue you, they will try to make you pay up using informal techniques, rather than formal court orders, as this is far less expensive and time-consuming. First among these informal attempts may be turning their bills over to a collection agency which may then begin harassment, by calling you often and at odd hours by telephone, by trying to talk to your employer about your debts, and/or by threatening you with legal actions, etc. Many of these techniques that they use are illegal! Yes, a creditor or agency can write you letters, call once a day seeking payment, try to bring legal action against you, but he is forbidden by law to harass you or invade your privacy, or use deceptive means to get you to pay your bills. He may not use foul and abusive language over the telephone, tell anyone beside you the reason for his phone call, insist on payment for a product or service that you claim to have a legitimate grievance about, nor issue false threats (such as saying that he is going to drag you into court to collect $35, when in fact his agency's policy is not to file suit on accounts of less than $100, because of the high legal costs involved). He may not inconvenience you (by calling you at work when you are not easily able to receive calls), or invade your privacy (telling your employer or your neighbor that he is trying to collect a debt from you).
There are books that provide detailed additional information on personal bankruptcy, and include sample letters with which you can try to arrange "stretch-outs" on your own with your creditors before bankruptcy is necessary. Some include sample bankruptcy forms filled out that you can use as a model. Since the accurate filing of all your debts and assets is so important, it's a good idea to follow their detailed instructions closely, with or without a lawyer, so that once you get your creditors off you back, they stay off.
http://www.content.onlypunjab.com/Article/How-to-Stop-Creditors-Cold/4200320092003242896
Bankruptcy - The Director's Liability
Are You a Director of a Corporation? Do You Know Your Liability?
If you sit on a Board of Directors of a corporation then exposure to liability exists under various statutes. For example, unpaid wages and vacation pay, workplace liabilities, liabilities under corporate statutes as well as environmental liabilities are a major concern of the corporate director.
Amounts owing to the Crown with respect to taxes are the most common of the liability claims. Unremitted source deductions which consists of income taxes, employment insurance and Canada Pension Plan premiums from employee wages is the liability that the Crown has been very aggressive in collecting in recent years. The Crown is also being more aggressive in the collection of other taxes such as unpaid sale taxes and the ever controversial Goods and Service Tax (GST).
A common scenario in creating director’s liability is that a business that is struggling financially is using the unremitted source deductions as capital to keep the corporation in business rather than close the doors. However, when the corporation realizes that the unremitted source deductions is not enough capital to keep the operations going, the company goes out of business. Canada Revenue Agency (CRA) has a statutory right to go after the directors for unremitted source deductions plus interest and penalties.
For CRA to successfully claim against a director it must meet certain requirements under the Income Tax Act. CRA must file a certificate in respect of the corporations tax liability and CRA must attempt to have execution against the corporation and the execution must be returned unsatisfied. In the case of a liquidation in bankruptcy, CRA must prove its claim within 6 months of the date of bankruptcy. If these actions have not been met by CRA then the director has no liability.
CRA also has only 2 years to attempt to collect the liability from the director. If the 2-year period passes then the director escapes any liability for the unremitted deductions. In order to attempt to collect from the director, it must be established that the funds could not be collected from the corporation or from the Receiver or Trustee in bankruptcy.
CRA has first priority on all assets of a bankrupt company. If a company files a bankruptcy CRA has priority over all other secured creditors even those who had security on the assets of a company prior to CRA having a debt owed, such as a General Security Agreement by a banking institution. This priority is given to CRA through the Income Tax Act. If the company continues to go forward in a receivership CRA must be paid for any arrears in crown taxes.
There are only a few defenses available to a director in order to avoid payment of the liability. In order to be liable you must be a ‘director in law” at the time the source deductions were not remitted. For example, the individual may not have been properly appointed as a director or may have resigned prior to the failure to remit.
If the above exemptions do not apply then the only defense is the “due diligence” defense as set out in the Income Tax Act. This defense provides that the director is not liable for the corporation’s failure to remit source deductions where he/she exercises the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would exercise in a similar situation.
In determining if a director has acted with due diligence the court will look at a variety of factors such as, the capability of the person, their business knowledge, education and the actions taken by the director to prevent the failures. The courts have stated that there is a positive duty to take action to prevent the failures.
To prevent failure the director should familiarize himself with the withholding and remittance requirements. Ensure that an appropriate system is in place to withhold and remit all taxes and require on a timely basis written reports to ensure that the remitting procedures are being done correctly.
It is human nature especially for most entrepreneurs to do anything to find away to keep the doors of their company open. This determination sometimes leads to the careless use of unremitted source deductions and other government taxes to fund the operations. The courts have said where a corporation reaches the point where it cannot issue a remittance cheque for fear that it won’t be honored it is time to close down the business. Thus, the mere decision or will of the entrepreneur to keep the doors open may result in the director reducing his/her ability to rely on the due diligence defense.
http://www.content.onlypunjab.com/Article/Bankruptcy---The-Director-s-Liability/4200320092003240466
If you sit on a Board of Directors of a corporation then exposure to liability exists under various statutes. For example, unpaid wages and vacation pay, workplace liabilities, liabilities under corporate statutes as well as environmental liabilities are a major concern of the corporate director.
Amounts owing to the Crown with respect to taxes are the most common of the liability claims. Unremitted source deductions which consists of income taxes, employment insurance and Canada Pension Plan premiums from employee wages is the liability that the Crown has been very aggressive in collecting in recent years. The Crown is also being more aggressive in the collection of other taxes such as unpaid sale taxes and the ever controversial Goods and Service Tax (GST).
A common scenario in creating director’s liability is that a business that is struggling financially is using the unremitted source deductions as capital to keep the corporation in business rather than close the doors. However, when the corporation realizes that the unremitted source deductions is not enough capital to keep the operations going, the company goes out of business. Canada Revenue Agency (CRA) has a statutory right to go after the directors for unremitted source deductions plus interest and penalties.
For CRA to successfully claim against a director it must meet certain requirements under the Income Tax Act. CRA must file a certificate in respect of the corporations tax liability and CRA must attempt to have execution against the corporation and the execution must be returned unsatisfied. In the case of a liquidation in bankruptcy, CRA must prove its claim within 6 months of the date of bankruptcy. If these actions have not been met by CRA then the director has no liability.
CRA also has only 2 years to attempt to collect the liability from the director. If the 2-year period passes then the director escapes any liability for the unremitted deductions. In order to attempt to collect from the director, it must be established that the funds could not be collected from the corporation or from the Receiver or Trustee in bankruptcy.
CRA has first priority on all assets of a bankrupt company. If a company files a bankruptcy CRA has priority over all other secured creditors even those who had security on the assets of a company prior to CRA having a debt owed, such as a General Security Agreement by a banking institution. This priority is given to CRA through the Income Tax Act. If the company continues to go forward in a receivership CRA must be paid for any arrears in crown taxes.
There are only a few defenses available to a director in order to avoid payment of the liability. In order to be liable you must be a ‘director in law” at the time the source deductions were not remitted. For example, the individual may not have been properly appointed as a director or may have resigned prior to the failure to remit.
If the above exemptions do not apply then the only defense is the “due diligence” defense as set out in the Income Tax Act. This defense provides that the director is not liable for the corporation’s failure to remit source deductions where he/she exercises the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would exercise in a similar situation.
In determining if a director has acted with due diligence the court will look at a variety of factors such as, the capability of the person, their business knowledge, education and the actions taken by the director to prevent the failures. The courts have stated that there is a positive duty to take action to prevent the failures.
To prevent failure the director should familiarize himself with the withholding and remittance requirements. Ensure that an appropriate system is in place to withhold and remit all taxes and require on a timely basis written reports to ensure that the remitting procedures are being done correctly.
It is human nature especially for most entrepreneurs to do anything to find away to keep the doors of their company open. This determination sometimes leads to the careless use of unremitted source deductions and other government taxes to fund the operations. The courts have said where a corporation reaches the point where it cannot issue a remittance cheque for fear that it won’t be honored it is time to close down the business. Thus, the mere decision or will of the entrepreneur to keep the doors open may result in the director reducing his/her ability to rely on the due diligence defense.
http://www.content.onlypunjab.com/Article/Bankruptcy---The-Director-s-Liability/4200320092003240466
Storehouse Inc. to Hold Bankruptcy Liquidation Sale
Storehouse Inc., a specialty home furnishings chain known for quality design at affordable prices, will conduct a court-ordered bankruptcy liquidation sale beginning Friday, October 6. The sale was ordered by the bankruptcy court as a result of the Atlanta-based chain’s Chapter 11 filing. The sale was announced by Hudson Capital Partners, LLC, a national firm specializing in retail dispositions and asset recovery, which is managing the liquidation.
Following the liquidation sale, which is expected to take several weeks, all of the Storehouse retail locations will be closed. Storehouse Inc. filed for bankruptcy on May 9, 2006 in the U.S. District Court for the Eastern District of Virginia (Docket #06-0114-SSM).
“The Storehouse liquidation sale was ordered following exhaustive efforts to sell the chain or obtain fresh equity, which proved unsuccessful. The inventory to be liquidated has a value of approximately $60 million,” noted Hudson Capital Partners co-founder Jim Schaye.
The Storehouse merchandise to be liquidated will include furniture, accessories, wall décor, lighting, rugs and other designer items. The sale will involve all of the nearly 70 Storehouse locations in Alabama, Delaware, Florida, Georgia, Louisiana, Maryland, Michigan, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington, D.C.
About Storehouse Inc.
Storehouse offers a sophisticated and eclectic blend of unique furnishings that offer all the elements of home décor. The specialty home furnishings retailer is known for its distinctive collection of upholstery, dining, bedroom and home office furniture with style ranging from contemporary to classic. Two-time winner of the ARTS Award as the most outstanding National Furniture Store and Retailer of the Year for 2003 from Home Magazine.
http://www.content.onlypunjab.com/Article/Storehouse-Inc--to-Hold-Bankruptcy-Liquidation-Sale/4200320092003220845
Following the liquidation sale, which is expected to take several weeks, all of the Storehouse retail locations will be closed. Storehouse Inc. filed for bankruptcy on May 9, 2006 in the U.S. District Court for the Eastern District of Virginia (Docket #06-0114-SSM).
“The Storehouse liquidation sale was ordered following exhaustive efforts to sell the chain or obtain fresh equity, which proved unsuccessful. The inventory to be liquidated has a value of approximately $60 million,” noted Hudson Capital Partners co-founder Jim Schaye.
The Storehouse merchandise to be liquidated will include furniture, accessories, wall décor, lighting, rugs and other designer items. The sale will involve all of the nearly 70 Storehouse locations in Alabama, Delaware, Florida, Georgia, Louisiana, Maryland, Michigan, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington, D.C.
About Storehouse Inc.
Storehouse offers a sophisticated and eclectic blend of unique furnishings that offer all the elements of home décor. The specialty home furnishings retailer is known for its distinctive collection of upholstery, dining, bedroom and home office furniture with style ranging from contemporary to classic. Two-time winner of the ARTS Award as the most outstanding National Furniture Store and Retailer of the Year for 2003 from Home Magazine.
http://www.content.onlypunjab.com/Article/Storehouse-Inc--to-Hold-Bankruptcy-Liquidation-Sale/4200320092003220845
How Credit Counseling During Personal Bankruptcy is Different in Canada and the United States
Credit counseling became part of the bankruptcy process in the United States with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As a result of this legislation, your Chapter 7 or Chapter 13 bankruptcy case will be dismissed if you cannot prove that you completed a credit counseling session, with an approved credit counselor, within the preceding 180 days.
In other words, in the United States, your bankruptcy will not start until you can prove that you have completed credit counseling.
This is in direct contrast to the personal bankruptcy system in Canada, where credit counselling (yes, in Canada we spell it with two l's) is an integral part of the bankruptcy process, but it is completed during the bankruptcy, not before you file.
It appears that the American bankruptcy reform in 2005 was championed largely by large credit card companies and other lenders, and they argued in favor of the credit counseling requirement primarily, it would appear, as a way to talk people out of filing bankruptcy. The mandatory pre-bankruptcy credit counseling session, among other things, discusses alternatives to bankruptcy. Since credit counselors do not also serve as bankruptcy attorneys, it is logical to assume that they will, at the very least, make sure all debtors are fully aware of their non-bankruptcy options.
In Canada, the process is somewhat different. First, all bankruptcies are handled by private individuals, generally with an accounting background, who are licensed by the federal government. In Canada, practicing lawyers are not permitted to act as trustees in bankruptcy. The trustee handles all aspects of the file, including collecting assets from the debtor, and distributing the proceeds to creditors.
In Canada, prior to filing a consumer proposal (similar to a Chapter 13 filing in the United States) or a personal bankruptcy (similar to Chapter 7), the debtor is required to meet with a licensed trustee in bankruptcy, and the trustee is required to explain to the debtor all of their options, including such non-legislative options as debt consolidation and debt management plans through a credit counselor. The debtor then decides whether or not they will file bankruptcy.
During the bankruptcy (or proposal) the debtor is required to attend two credit counselling sessions.
The first credit counselling session discusses money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit.
The second stage credit counseling session is designed to determine the causes of the insolvency, and to provide the debtor with the skills necessary to avoid future financial problems. The credit counselor will follow up on the principles discussed in the first session, and then help identify non-budgetary causes of financial problems (such as marriage break up, job loss, family problems, excessive gambling, compulsive behavior, and substance abuse).
In contrast to the American system where pre-bankruptcy credit counseling appears designed to talk people out of going bankrupt, the Canadian bankruptcy credit counselling system is designed to help debtors avoid financial problems in the future.
Obviously as a Canadian bankruptcy trustee I am somewhat biased, but given my experience with the over 3,000 personal bankruptcies and consumer proposals that I have personally handled, I can say with confidence that in most cases the debtors viewed the credit counselling sessions as a positive experience. Many people over the years have told me that they learned many money management skills, and the vast majority of people I have helped over the years don't go bankrupt again, so I believe the Canadian credit counselling system works.
The American system has only been in place for a short period of time, so perhaps in a few years a comparison will be done of both credit counseling systems to determine which approach is most beneficial to people with money problems.
http://www.content.onlypunjab.com/Article/How-Credit-Counseling-During-Personal-Bankruptcy-is-Different-in-Canada-and-the-United-States/4200320092003238105
In other words, in the United States, your bankruptcy will not start until you can prove that you have completed credit counseling.
This is in direct contrast to the personal bankruptcy system in Canada, where credit counselling (yes, in Canada we spell it with two l's) is an integral part of the bankruptcy process, but it is completed during the bankruptcy, not before you file.
It appears that the American bankruptcy reform in 2005 was championed largely by large credit card companies and other lenders, and they argued in favor of the credit counseling requirement primarily, it would appear, as a way to talk people out of filing bankruptcy. The mandatory pre-bankruptcy credit counseling session, among other things, discusses alternatives to bankruptcy. Since credit counselors do not also serve as bankruptcy attorneys, it is logical to assume that they will, at the very least, make sure all debtors are fully aware of their non-bankruptcy options.
In Canada, the process is somewhat different. First, all bankruptcies are handled by private individuals, generally with an accounting background, who are licensed by the federal government. In Canada, practicing lawyers are not permitted to act as trustees in bankruptcy. The trustee handles all aspects of the file, including collecting assets from the debtor, and distributing the proceeds to creditors.
In Canada, prior to filing a consumer proposal (similar to a Chapter 13 filing in the United States) or a personal bankruptcy (similar to Chapter 7), the debtor is required to meet with a licensed trustee in bankruptcy, and the trustee is required to explain to the debtor all of their options, including such non-legislative options as debt consolidation and debt management plans through a credit counselor. The debtor then decides whether or not they will file bankruptcy.
During the bankruptcy (or proposal) the debtor is required to attend two credit counselling sessions.
The first credit counselling session discusses money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit.
The second stage credit counseling session is designed to determine the causes of the insolvency, and to provide the debtor with the skills necessary to avoid future financial problems. The credit counselor will follow up on the principles discussed in the first session, and then help identify non-budgetary causes of financial problems (such as marriage break up, job loss, family problems, excessive gambling, compulsive behavior, and substance abuse).
In contrast to the American system where pre-bankruptcy credit counseling appears designed to talk people out of going bankrupt, the Canadian bankruptcy credit counselling system is designed to help debtors avoid financial problems in the future.
Obviously as a Canadian bankruptcy trustee I am somewhat biased, but given my experience with the over 3,000 personal bankruptcies and consumer proposals that I have personally handled, I can say with confidence that in most cases the debtors viewed the credit counselling sessions as a positive experience. Many people over the years have told me that they learned many money management skills, and the vast majority of people I have helped over the years don't go bankrupt again, so I believe the Canadian credit counselling system works.
The American system has only been in place for a short period of time, so perhaps in a few years a comparison will be done of both credit counseling systems to determine which approach is most beneficial to people with money problems.
http://www.content.onlypunjab.com/Article/How-Credit-Counseling-During-Personal-Bankruptcy-is-Different-in-Canada-and-the-United-States/4200320092003238105
Fonix Restructures and Liquidates Telecom Group
Fonix Corporation® (OTCBB: FNIX), an innovative speech technology company, announces a significant restructuring and liquidation of its telecom subsidiaries. LTEL Holdings, Inc., LecStar DataNet, Inc., LecStar Telecom, Inc. and Fonix Telecom, Inc. filed for bankruptcy protection on October 2, 2006 in Delaware pursuant to Chapter 7 under the United States Bankruptcy Code. A trustee has been appointed to liquidate the assets of those entities. Except as to the consolidated financial statements, those filings do not affect the operations of Fonix Corporation or Fonix Speech, Inc.
“During the last 12 months of mounting regulatory pressure and aggressive price increases from the incumbent telecom service providers, particularly BellSouth, the business model for our telecom assets became unsustainable,” says Thomas A. Murdock, Chairman and CEO, Fonix Corp. “The liquidation is primarily the result of BellSouth’s actions to collect its account payable without respect to the arbitration process provided in LecStar’s Interconnect Agreement with BellSouth. We believe LecStar has substantial and meritorious billing disputes with BellSouth that exceed the payable, but BellSouth acted unilaterally and ceased settlement negotiations without notice. Prior to this filing, the telecom group pursued various alternatives to restructure business operations including significantly reducing operating costs by outsourcing all call center and billing functions and the sale of all assets. In the end, however, the BellSouth position became an insurmountable hurdle for any interested third-party buyer.”
Further, Fonix has learned that McCormack Avenue, Ltd., the holder of significant debt associated with Fonix’s purchase of the telecom group, has noticed a foreclosure action of Fonix’s stock of LTEL Acquisition Inc., the sole shareholder of LTEL Holdings Inc. The foreclosure action is scheduled to occur on or before October 20, 2006.
“The liquidation of the telecom group and subsequent foreclosure action by McCormack will eliminate approximately $17 million of accrued liabilities on the Fonix consolidated balance sheet,” says Roger D. Dudley, Executive VP and CFO, Fonix Corp. “While consolidated annual revenues will decrease due to the liquidation of the telecom subsidiaries, consolidated operating losses will also dramatically decrease. Going forward, management will focus energy on Fonix Speech’s award-winning speech technologies without the financial burden of the telecom operations and liabilities. Management will concentrate sales and marketing efforts toward increasing revenue in the high-margin speech interface markets with particular focus on embedded devices such as electronic dictionaries in Asia, console-based videogames, and mobile phones and PDAs.”
Financial results reflecting the liquidation and McCormack foreclosure action will be reported in the Company’s 10-K and audited financial statements for the period ending December 31, 2006.
About Fonix
Fonix Corporation (OTCBB: FNIX), based in Salt Lake City, Utah, is an innovative speech recognition and text-to-speech technology company that provides value-added speech solutions through its wholly owned subsidiary – Fonix Speech, Inc. Interactive speech technologies allow Fonix to provide customers with comprehensive cost-effective solutions to enhance and expand their communications needs.
Statements released by Fonix that are not purely historical are forward-looking within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s expectations, hopes, intentions and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the Company’s business prospects and performance. The Company’s actual results could differ materially from those in such forward-looking statements. Risk factors include general economic, competitive, governmental and technological factors as discussed in the Company’s filings with the SEC on Forms 10-K, 10-Q and 8-K. The Company does not undertake any responsibility to update the forward-looking statements contained in this release.
http://www.content.onlypunjab.com/Article/Fonix-Restructures-and-Liquidates-Telecom-Group/4200320092003218131
“During the last 12 months of mounting regulatory pressure and aggressive price increases from the incumbent telecom service providers, particularly BellSouth, the business model for our telecom assets became unsustainable,” says Thomas A. Murdock, Chairman and CEO, Fonix Corp. “The liquidation is primarily the result of BellSouth’s actions to collect its account payable without respect to the arbitration process provided in LecStar’s Interconnect Agreement with BellSouth. We believe LecStar has substantial and meritorious billing disputes with BellSouth that exceed the payable, but BellSouth acted unilaterally and ceased settlement negotiations without notice. Prior to this filing, the telecom group pursued various alternatives to restructure business operations including significantly reducing operating costs by outsourcing all call center and billing functions and the sale of all assets. In the end, however, the BellSouth position became an insurmountable hurdle for any interested third-party buyer.”
Further, Fonix has learned that McCormack Avenue, Ltd., the holder of significant debt associated with Fonix’s purchase of the telecom group, has noticed a foreclosure action of Fonix’s stock of LTEL Acquisition Inc., the sole shareholder of LTEL Holdings Inc. The foreclosure action is scheduled to occur on or before October 20, 2006.
“The liquidation of the telecom group and subsequent foreclosure action by McCormack will eliminate approximately $17 million of accrued liabilities on the Fonix consolidated balance sheet,” says Roger D. Dudley, Executive VP and CFO, Fonix Corp. “While consolidated annual revenues will decrease due to the liquidation of the telecom subsidiaries, consolidated operating losses will also dramatically decrease. Going forward, management will focus energy on Fonix Speech’s award-winning speech technologies without the financial burden of the telecom operations and liabilities. Management will concentrate sales and marketing efforts toward increasing revenue in the high-margin speech interface markets with particular focus on embedded devices such as electronic dictionaries in Asia, console-based videogames, and mobile phones and PDAs.”
Financial results reflecting the liquidation and McCormack foreclosure action will be reported in the Company’s 10-K and audited financial statements for the period ending December 31, 2006.
About Fonix
Fonix Corporation (OTCBB: FNIX), based in Salt Lake City, Utah, is an innovative speech recognition and text-to-speech technology company that provides value-added speech solutions through its wholly owned subsidiary – Fonix Speech, Inc. Interactive speech technologies allow Fonix to provide customers with comprehensive cost-effective solutions to enhance and expand their communications needs.
Statements released by Fonix that are not purely historical are forward-looking within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s expectations, hopes, intentions and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the Company’s business prospects and performance. The Company’s actual results could differ materially from those in such forward-looking statements. Risk factors include general economic, competitive, governmental and technological factors as discussed in the Company’s filings with the SEC on Forms 10-K, 10-Q and 8-K. The Company does not undertake any responsibility to update the forward-looking statements contained in this release.
http://www.content.onlypunjab.com/Article/Fonix-Restructures-and-Liquidates-Telecom-Group/4200320092003218131
Three Credit Counseling Traps to Avoid For Your Mandatory Pre-Bankruptcy Credit Counseling
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it mandatory for all debtors to receive credit counseling before they will be allowed to file bankruptcy. This credit counseling was made mandatory to ensure that all debtors understood their options before going bankrupt.
While it can be argued that credit counseling is a good thing, there are also three dangerous credit counseling traps to be aware of if you are considering filing bankruptcy.
First, and most importantly, your pre-bankruptcy credit counseling session must be completed within the 180 days prior to your bankruptcy filing. If you go to bankruptcy court to file bankruptcy, and you have not completed your credit counseling, you will not be permitted to go bankrupt. Your bankruptcy petition will be dismissed.
Having your case dismissed means that you will not get relief from your creditors. Obviously the purpose of going bankrupt is to prevent your creditors from taking any further legal or collection action against you, so having your case dismissed, simply because you did not attend a one hour counseling session, is a very serious trap.
Second, your credit counseling session must be completed by an approved credit counselor. Credit counseling services are approved by the Department of Justice's U.S. Trustee Program, except in Alabama and North Carolina where court officials (known as Bankruptcy Administrators) approve pre-bankruptcy credit counseling services.
Before you agree to credit counseling, check the Department of Justice's web site to make sure that your counselor is on the approved list. There is little point in completing the counseling if the credit counselor is not an approved credit counselor.
The third and final trap is that you must have proof of completion of your credit counseling for the court. Within 24 hours of the completion of your credit counseling you will receive a certificate of completion. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
If you don't have the certificate of completion when you appear at your bankruptcy hearing, your case will be dismissed.
The bankruptcy process was already complicated, and the credit counseling requirement adds another level of complexity, so either do your own research, or hire a competent bankruptcy attorney to represent you, so that you don't fall into one of these credit counseling traps.
http://www.content.onlypunjab.com/Article/Three-Credit-Counseling-Traps-to-Avoid-For-Your-Mandatory-Pre-Bankruptcy-Credit-Counseling/4200320092003234551
While it can be argued that credit counseling is a good thing, there are also three dangerous credit counseling traps to be aware of if you are considering filing bankruptcy.
First, and most importantly, your pre-bankruptcy credit counseling session must be completed within the 180 days prior to your bankruptcy filing. If you go to bankruptcy court to file bankruptcy, and you have not completed your credit counseling, you will not be permitted to go bankrupt. Your bankruptcy petition will be dismissed.
Having your case dismissed means that you will not get relief from your creditors. Obviously the purpose of going bankrupt is to prevent your creditors from taking any further legal or collection action against you, so having your case dismissed, simply because you did not attend a one hour counseling session, is a very serious trap.
Second, your credit counseling session must be completed by an approved credit counselor. Credit counseling services are approved by the Department of Justice's U.S. Trustee Program, except in Alabama and North Carolina where court officials (known as Bankruptcy Administrators) approve pre-bankruptcy credit counseling services.
Before you agree to credit counseling, check the Department of Justice's web site to make sure that your counselor is on the approved list. There is little point in completing the counseling if the credit counselor is not an approved credit counselor.
The third and final trap is that you must have proof of completion of your credit counseling for the court. Within 24 hours of the completion of your credit counseling you will receive a certificate of completion. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
If you don't have the certificate of completion when you appear at your bankruptcy hearing, your case will be dismissed.
The bankruptcy process was already complicated, and the credit counseling requirement adds another level of complexity, so either do your own research, or hire a competent bankruptcy attorney to represent you, so that you don't fall into one of these credit counseling traps.
http://www.content.onlypunjab.com/Article/Three-Credit-Counseling-Traps-to-Avoid-For-Your-Mandatory-Pre-Bankruptcy-Credit-Counseling/4200320092003234551
The Dangers of Not Having Credit Counseling Before you File for Bankruptcy
In order to apply for bankruptcy protection, either under Chapter 7 or Chapter 13, you must attend a mandatory credit counseling session. You must attend this credit counseling session within the six months preceding your bankruptcy filing.
You must receive this credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program, except in Alabama and North Carolina where court officials (called Bankruptcy Administrators) approve pre-bankruptcy credit counseling services. The pre-bankruptcy credit counseling session with the approved credit counseling organization will include an evaluation of your personal financial situation, a discussion of the alternatives to bankruptcy; and tools to help you make a personal budget plan.
A typical credit counseling session will last for about one hour. While these sessions are typically provided in a face to face meeting between the debtor and the credit counselor, they can also be conducted by phone or online.
The credit counseling organization will typically charge a fee of approximately $50 for the session, although these fees will vary based on where you live, the types of services you receive, you ability to pay, and how the counseling was delivered. The counseling organization must disclose all fees to you prior to starting the counseling session. If you cannot afford to pay the fee for credit counseling, you must request a fee waiver from the counseling organization before the counseling session starts. Credit counseling services are required to provide the counseling free of charge to debtors who cannot afford to pay the standard counseling fee.
Once your counseling session is completed, you will receive a certificate as proof of the completion of your counseling. Your credit counselor may not charge extra for this certificate, and they must provide you with the certificate within 24 hours of the completion of your counseling.
You must file a certificate of credit counseling completion when you file for bankruptcy protection. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
The point to remember is this: you must have your credit counseling session completed before you file for bankruptcy. If you do not have a certificate proving that you have completed your credit counseling, your bankruptcy case will be dismissed, and you will not receive relief from your debts.
http://www.content.onlypunjab.com/Article/The-Dangers-of-Not-Having-Credit-Counseling-Before-you-File-for-Bankruptcy/4200320092003232667
You must receive this credit counseling from an organization approved by the Department of Justice’s U.S. Trustee Program, except in Alabama and North Carolina where court officials (called Bankruptcy Administrators) approve pre-bankruptcy credit counseling services. The pre-bankruptcy credit counseling session with the approved credit counseling organization will include an evaluation of your personal financial situation, a discussion of the alternatives to bankruptcy; and tools to help you make a personal budget plan.
A typical credit counseling session will last for about one hour. While these sessions are typically provided in a face to face meeting between the debtor and the credit counselor, they can also be conducted by phone or online.
The credit counseling organization will typically charge a fee of approximately $50 for the session, although these fees will vary based on where you live, the types of services you receive, you ability to pay, and how the counseling was delivered. The counseling organization must disclose all fees to you prior to starting the counseling session. If you cannot afford to pay the fee for credit counseling, you must request a fee waiver from the counseling organization before the counseling session starts. Credit counseling services are required to provide the counseling free of charge to debtors who cannot afford to pay the standard counseling fee.
Once your counseling session is completed, you will receive a certificate as proof of the completion of your counseling. Your credit counselor may not charge extra for this certificate, and they must provide you with the certificate within 24 hours of the completion of your counseling.
You must file a certificate of credit counseling completion when you file for bankruptcy protection. Only credit counseling organizations that have been approved by the U.S. Trustee Program may issue these certificates. As a fraud prevention measure, these certificates are sequentially numbered, and produced through a central automated processing system.
The point to remember is this: you must have your credit counseling session completed before you file for bankruptcy. If you do not have a certificate proving that you have completed your credit counseling, your bankruptcy case will be dismissed, and you will not receive relief from your debts.
http://www.content.onlypunjab.com/Article/The-Dangers-of-Not-Having-Credit-Counseling-Before-you-File-for-Bankruptcy/4200320092003232667
Announcing the Formation of Greystone Private Equity LLC: Financial Leader with Asset Acquisition
Jonathan Reich and Adam Reich, former principals and Co-Presidents of Michael Fox International, are pleased to announce that they have formed Greystone Private Equity LLC, a member of the Greystone family of companies.
Greystone Private Equity LLC specializes in purchasing all categories of assets, including industrial machinery & equipment, real estate, inventory, accounts receivables, as well as controlling and non-controlling equity investments in operating companies.
Jonathan and Adam Reich, Co-CEOs of the newly formed Greystone Private Equity LLC, are former practicing bankruptcy attorneys and have been assisting legal, financial and corporate clients with their surplus asset management needs for over 20 years. Additionally, they both have extensive experience representing debtors, and secured and unsecured creditors in asset sales arising from complex bankruptcy matters and over the years have recovered millions of dollars from asset dispositions on behalf of their clients.
“The financial support and strength that we have from joining the Greystone family of companies enables us to purchase all types of assets, ranging from complete facilities and entire companies as well as single assets,” commented Jonathan Reich, Co-CEO. “We will continue to service the legal, financial and corporate community with their distressed and non-distressed assets but can now provide them with a wider range of services, including asset acquisitions, equity investments, receivables portfolio acquisitions, real estate sale leasebacks, as well as arranging traditional asset disposition services such as auctions, liquidations, and negotiated sales,” said Adam Reich, Co-CEO.
http://www.content.onlypunjab.com/Article/Announcing-the-Formation-of-Greystone-Private-Equity-LLC--Financial-Leader-with-Asset-Acquisition/4200320092003216308
Greystone Private Equity LLC specializes in purchasing all categories of assets, including industrial machinery & equipment, real estate, inventory, accounts receivables, as well as controlling and non-controlling equity investments in operating companies.
Jonathan and Adam Reich, Co-CEOs of the newly formed Greystone Private Equity LLC, are former practicing bankruptcy attorneys and have been assisting legal, financial and corporate clients with their surplus asset management needs for over 20 years. Additionally, they both have extensive experience representing debtors, and secured and unsecured creditors in asset sales arising from complex bankruptcy matters and over the years have recovered millions of dollars from asset dispositions on behalf of their clients.
“The financial support and strength that we have from joining the Greystone family of companies enables us to purchase all types of assets, ranging from complete facilities and entire companies as well as single assets,” commented Jonathan Reich, Co-CEO. “We will continue to service the legal, financial and corporate community with their distressed and non-distressed assets but can now provide them with a wider range of services, including asset acquisitions, equity investments, receivables portfolio acquisitions, real estate sale leasebacks, as well as arranging traditional asset disposition services such as auctions, liquidations, and negotiated sales,” said Adam Reich, Co-CEO.
http://www.content.onlypunjab.com/Article/Announcing-the-Formation-of-Greystone-Private-Equity-LLC--Financial-Leader-with-Asset-Acquisition/4200320092003216308
Bankruptcy May Be Your Way Out
Have you suddenly found yourself swimming in rivers of debt? Have you found yourself avoiding the phone like the plague daily because of harassing creditors? Are you out of money? Have you, without knowing it, overextended yourself? If you can answer these questions with a yes, bankruptcy may be the answer for you. Many people who cannot pay their bills and are grossly involved in debt opt for bankruptcy. Within the United States, there are two specific bankruptcy types known as Chapter 7 and Chapter 13.
The most common form of bankruptcy is the Chapter 7. This option allows people to liquidate non-exempt assets by selling them to apply them to their debt.
A Chapter 13 bankruptcy allows a business or individual to undergo a court-approved reorganization of their debt. This type of bankruptcy gives the debtor time to repay their creditors, typically within a three to five year period of time. During this time, if a creditor wishes to pursue collection efforts, they can only do so through the courts. In most cases, those filing a Chapter 13 bankruptcy, are able to keep their property.
Over the years, the laws of bankruptcy have changed quite a bit. For example, now any person filing for bankruptcy, according the laws, must attend credit counseling. Furthermore, those filing bankruptcy must adhere to the new laws and go through what is called a means test. The means test is used to determine which type of bankruptcy the person can file under. If the person earns less than the state’s median income or not.
If they do earn less, they are required to file a Chapter 7 bankruptcy. This means they may be required to sell off some of their property and assets in order to cancel the debt. If they find that they earn more than the median income in the state, they are required to file a Chapter 13 bankruptcy and repay the debts through a plan.
Before you file bankruptcy, you should consider all of these aspects and talk to a lawyer that is well versed in the proceedings and laws as they pertain to bankruptcy. They will help you in knowing which chapter you must file under, by looking at your debt and your income.
http://www.content.onlypunjab.com/Article/Bankruptcy-May-Be-Your-Way-Out/4200320092003232022
The most common form of bankruptcy is the Chapter 7. This option allows people to liquidate non-exempt assets by selling them to apply them to their debt.
A Chapter 13 bankruptcy allows a business or individual to undergo a court-approved reorganization of their debt. This type of bankruptcy gives the debtor time to repay their creditors, typically within a three to five year period of time. During this time, if a creditor wishes to pursue collection efforts, they can only do so through the courts. In most cases, those filing a Chapter 13 bankruptcy, are able to keep their property.
Over the years, the laws of bankruptcy have changed quite a bit. For example, now any person filing for bankruptcy, according the laws, must attend credit counseling. Furthermore, those filing bankruptcy must adhere to the new laws and go through what is called a means test. The means test is used to determine which type of bankruptcy the person can file under. If the person earns less than the state’s median income or not.
If they do earn less, they are required to file a Chapter 7 bankruptcy. This means they may be required to sell off some of their property and assets in order to cancel the debt. If they find that they earn more than the median income in the state, they are required to file a Chapter 13 bankruptcy and repay the debts through a plan.
Before you file bankruptcy, you should consider all of these aspects and talk to a lawyer that is well versed in the proceedings and laws as they pertain to bankruptcy. They will help you in knowing which chapter you must file under, by looking at your debt and your income.
http://www.content.onlypunjab.com/Article/Bankruptcy-May-Be-Your-Way-Out/4200320092003232022
Bankruptcy Attorneys - Let Them Do The Work
If you are facing financial horrors such as property repossession, debt lawsuits, property liens, foreclosure, or just in some serious debts, you should consider a bankruptcy attorney. A bankruptcy attorney is well versed in the various laws of bankruptcy and can give you advice on the options you may have.
By providing legal assistance, bankruptcy attorneys, can help you eliminate your debt, as well as liquidating your assets to pay off your creditors. If you need to reorganize your debt, a bankruptcy attorney can help you with this as well, by helping form a court-approved plan to pay back the creditors in a specific period of time.
Furthermore, bankruptcy attorneys have full knowledge of the United States Bankruptcy code, such as Title 11. When it comes to bankruptcy proceedings, this is the regulation code. Because bankruptcy is an often confusing process, bankruptcy attorneys can help guide you through it. There are two general practices when it comes to bankruptcy attorneys and bankruptcy proceedings. These are Chapter 7 debt liquidation or reorganization and a repayment plan under Chapter 9, 11, 12, or 13 bankruptcies.
Any person thinking about filing for bankruptcy, needs to consider obtaining a bankruptcy attorney. Thanks to the new laws set forth in 2005 in regards to the bankruptcy laws, the United States government has made the process of bankruptcy that much harder. Which means if you are wanting to declare bankruptcy, you may very well need to talk to a few bankruptcy attorneys and find one you would like to work with. They will work with you and determine which bills you can eliminate, which property and assets you can retain, and what type of bankruptcy you can file. You may find that if you do not retain a bankruptcy attorney, the outcome in court may not be favorable to your situation.
Bankruptcy attorneys also help creditors at the same time, many people are not aware of this. They help in making sure that the creditor can retrieve their money, as much as possible. Though it does not happen very often, it is possible for a company to hire a bankruptcy attorney and seek an involuntary bankruptcy against you.
http://www.content.onlypunjab.com/Article/Bankruptcy-Attorneys---Let-Them-Do-The-Work/4200320092003232017
By providing legal assistance, bankruptcy attorneys, can help you eliminate your debt, as well as liquidating your assets to pay off your creditors. If you need to reorganize your debt, a bankruptcy attorney can help you with this as well, by helping form a court-approved plan to pay back the creditors in a specific period of time.
Furthermore, bankruptcy attorneys have full knowledge of the United States Bankruptcy code, such as Title 11. When it comes to bankruptcy proceedings, this is the regulation code. Because bankruptcy is an often confusing process, bankruptcy attorneys can help guide you through it. There are two general practices when it comes to bankruptcy attorneys and bankruptcy proceedings. These are Chapter 7 debt liquidation or reorganization and a repayment plan under Chapter 9, 11, 12, or 13 bankruptcies.
Any person thinking about filing for bankruptcy, needs to consider obtaining a bankruptcy attorney. Thanks to the new laws set forth in 2005 in regards to the bankruptcy laws, the United States government has made the process of bankruptcy that much harder. Which means if you are wanting to declare bankruptcy, you may very well need to talk to a few bankruptcy attorneys and find one you would like to work with. They will work with you and determine which bills you can eliminate, which property and assets you can retain, and what type of bankruptcy you can file. You may find that if you do not retain a bankruptcy attorney, the outcome in court may not be favorable to your situation.
Bankruptcy attorneys also help creditors at the same time, many people are not aware of this. They help in making sure that the creditor can retrieve their money, as much as possible. Though it does not happen very often, it is possible for a company to hire a bankruptcy attorney and seek an involuntary bankruptcy against you.
http://www.content.onlypunjab.com/Article/Bankruptcy-Attorneys---Let-Them-Do-The-Work/4200320092003232017
Avoid Bankruptcy with Debt Consolidation!
Bankruptcy should only be a last resort solution because it will remain on your credit report for 10 years, almost no lender will even consider you as a borrower for at least 2 years and if you are lucky enough to get a loan after going through a bankruptcy, the interest rates, fees and costs will be a lot higher than in other circumstances.
Bankruptcy no longer so easy
A recent modification to the law that regulates bankruptcy has made the bankruptcy process even more costly and difficult. It is not longer as easy as it was to get all your debts dismissed and get a fresh start. Chances are that you’ll be required to commit to repay some debt in a period of time agreed with the court.
Thus it makes no sense to resort to such an extreme solution to your debt problems when you can get some aid in negotiating with your creditors and avoid costly legal fees that would add up to your debt. There are debt consolidation agencies out there that can reduce your debt significantly and help you avoid the consequences of bankruptcy.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Debt Consolidation agencies
When you contact a debt consolidation agency you’ll be assigned an agent with a wide experience in negotiating with creditors that will interview you first in order to analyze your case. He will ask you questions regarding your assets, your income, your debt, your job, your expenses, etc. You will probably be required to provide documentation regarding these subjects too.
Then, he will work with you in order to arrange a reasonable budget leaving your debt repayments out so as to see what your essential expenses are. He will then arrange meetings with your creditors and negotiate with them new repayment programs.
This will have many effects: For starters, debt will stop accumulating. The amount of money you spend on interests will be considerably reduced. The loan terms will be extended and you may also be able to get a reduction on your debts’ principals. Sometimes by means of debt consolidation people can get a reduction on their debt of up to 65%.
Repayment
Once the consolidation process has ended, you’ll have to start repaying your debt. There are different ways this can be arranged: If after debt negotiation, you’ve applied for a debt consolidation loan and been approved, then you’ll only have to make a single payment towards cancellation of your consolidation loan.
However, if you didn’t apply for a consolidation loan, sometimes you can also get a single payment because some credit agencies agree with creditors as part of the negotiation process that they’ll collect your payments and deliver the money to the creditors. Thus, you make a single monthly payment to the credit agency and the agency takes care of repaying all of your debt.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Bankruptcy no longer so easy
A recent modification to the law that regulates bankruptcy has made the bankruptcy process even more costly and difficult. It is not longer as easy as it was to get all your debts dismissed and get a fresh start. Chances are that you’ll be required to commit to repay some debt in a period of time agreed with the court.
Thus it makes no sense to resort to such an extreme solution to your debt problems when you can get some aid in negotiating with your creditors and avoid costly legal fees that would add up to your debt. There are debt consolidation agencies out there that can reduce your debt significantly and help you avoid the consequences of bankruptcy.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Debt Consolidation agencies
When you contact a debt consolidation agency you’ll be assigned an agent with a wide experience in negotiating with creditors that will interview you first in order to analyze your case. He will ask you questions regarding your assets, your income, your debt, your job, your expenses, etc. You will probably be required to provide documentation regarding these subjects too.
Then, he will work with you in order to arrange a reasonable budget leaving your debt repayments out so as to see what your essential expenses are. He will then arrange meetings with your creditors and negotiate with them new repayment programs.
This will have many effects: For starters, debt will stop accumulating. The amount of money you spend on interests will be considerably reduced. The loan terms will be extended and you may also be able to get a reduction on your debts’ principals. Sometimes by means of debt consolidation people can get a reduction on their debt of up to 65%.
Repayment
Once the consolidation process has ended, you’ll have to start repaying your debt. There are different ways this can be arranged: If after debt negotiation, you’ve applied for a debt consolidation loan and been approved, then you’ll only have to make a single payment towards cancellation of your consolidation loan.
However, if you didn’t apply for a consolidation loan, sometimes you can also get a single payment because some credit agencies agree with creditors as part of the negotiation process that they’ll collect your payments and deliver the money to the creditors. Thus, you make a single monthly payment to the credit agency and the agency takes care of repaying all of your debt.
http://www.content.onlypunjab.com/Article/Avoid-Bankruptcy-with-Debt-Consolidation-/4200320092003230582
Bad Debt Blues or Bankruptcy?
If you were doing the logical thing and sunning yourself on holiday at the start of August 2006 you may have missed some pretty scary news about personal debt in the UK.
As if from nowhere, a flurry of announcements arrived in the space of a few days.
The Bank of England raised interest rates for the first time in two years, making debts just that little bit harder to service in the coming months.
The DTI reported that IVAs (Individual Voluntary Arrangements) went up to 23,000 in the first quarter of 2006. That is a 73% increase over quarter one 2005. If you thought that sounded bad, the second quarter saw 26,000, a 66% rise.
HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland all reported rises in impairment charges or provision against bad debts in the first half of 2006. To pick just one, Lloyds TSB set aside £632 million in the first half of 2006, that is a 16% increase.
Going back to June, it was announced that UK mortgage debt passed the £1 trillion mark and in May the debt counseling charity Citizens Advice issued a report explaining that the average person they help would need 77 years to repay their debts! Having just checked on a government website, I found that girls and boys born in 2002 have a life expectancy of 81 and 76 respectively.
Does this qualify as a serious problem?
If you are still unsure, consider this. In early 2006, the Office of Fair Trading told many credit card firms to cut their average default fees. As you may be aware, default fees can be pretty high and are a great source of revenue for the card firms. Losing this revenue was not part of the card companies plan, so they have been looking for ways to recover that lost income. Many have chosen to increase their interest rates. This will of course, impact many credit card borrowers and hasten the collapse of some families finances.
To help me with a little research, I logged on to a forum for people with debt problems in the UK. Rather amazingly, it appeared that the flavour of the month is to be declared a bankrupt. When I suggested the obvious (spending less and trying to earn more) I was abused with a torrent of angry posts for being 'unrealistic'.
No matter how hard I try, I cannot seem to get away from the logic that if a person gets into debt by continually spending more than they earn, doing the exact opposite will (sooner or later) help them to escape these debts. Think of it as a financial diet.
An IVA is essentially a voluntary bankruptcy for an individual. Rather than being forced into bankruptcy by a lender who is chasing the individual for repayment, the individual can 'opt out' as it were. Once the IVA has been declared, the lenders are no longer allowed to chase these debts. The rules are obviously far more complex than this, I am just trying to offer a flavour.
If you are anything like me, you probably think of bankruptcy as something that happens to entrepreneurs who borrowed millions to expand a business. It seems however, that now, any debts above £15,000 might be worth 'opting out' of. Amazing.
In 2004 The Enterprise Act changed the rules relating to bankruptcy. It is now possible to be discharged in just one year rather than three. In other words, my new forum 'buddies' seem to feel that bankruptcy is the least worst option. It seems that the act of repaying debts is now less appealing than bankruptcy!
I can't deny that I have an issue with this. Someone, somewhere will need to make good on those bad debts. Right now, it seems as though the responsibility will fall to shareholders in the major high street lenders. As a small shareholder myself, I'm not sure I am too happy with this outcome. I had always been of the opinion that someone else paying my debts was 'unrealistsic'.
Whatever the outcome, I fear that the crest of this particular wave is still in the distance.
http://www.content.onlypunjab.com/Article/Bad-Debt-Blues-or-Bankruptcy-/4200320092003230206
As if from nowhere, a flurry of announcements arrived in the space of a few days.
The Bank of England raised interest rates for the first time in two years, making debts just that little bit harder to service in the coming months.
The DTI reported that IVAs (Individual Voluntary Arrangements) went up to 23,000 in the first quarter of 2006. That is a 73% increase over quarter one 2005. If you thought that sounded bad, the second quarter saw 26,000, a 66% rise.
HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland all reported rises in impairment charges or provision against bad debts in the first half of 2006. To pick just one, Lloyds TSB set aside £632 million in the first half of 2006, that is a 16% increase.
Going back to June, it was announced that UK mortgage debt passed the £1 trillion mark and in May the debt counseling charity Citizens Advice issued a report explaining that the average person they help would need 77 years to repay their debts! Having just checked on a government website, I found that girls and boys born in 2002 have a life expectancy of 81 and 76 respectively.
Does this qualify as a serious problem?
If you are still unsure, consider this. In early 2006, the Office of Fair Trading told many credit card firms to cut their average default fees. As you may be aware, default fees can be pretty high and are a great source of revenue for the card firms. Losing this revenue was not part of the card companies plan, so they have been looking for ways to recover that lost income. Many have chosen to increase their interest rates. This will of course, impact many credit card borrowers and hasten the collapse of some families finances.
To help me with a little research, I logged on to a forum for people with debt problems in the UK. Rather amazingly, it appeared that the flavour of the month is to be declared a bankrupt. When I suggested the obvious (spending less and trying to earn more) I was abused with a torrent of angry posts for being 'unrealistic'.
No matter how hard I try, I cannot seem to get away from the logic that if a person gets into debt by continually spending more than they earn, doing the exact opposite will (sooner or later) help them to escape these debts. Think of it as a financial diet.
An IVA is essentially a voluntary bankruptcy for an individual. Rather than being forced into bankruptcy by a lender who is chasing the individual for repayment, the individual can 'opt out' as it were. Once the IVA has been declared, the lenders are no longer allowed to chase these debts. The rules are obviously far more complex than this, I am just trying to offer a flavour.
If you are anything like me, you probably think of bankruptcy as something that happens to entrepreneurs who borrowed millions to expand a business. It seems however, that now, any debts above £15,000 might be worth 'opting out' of. Amazing.
In 2004 The Enterprise Act changed the rules relating to bankruptcy. It is now possible to be discharged in just one year rather than three. In other words, my new forum 'buddies' seem to feel that bankruptcy is the least worst option. It seems that the act of repaying debts is now less appealing than bankruptcy!
I can't deny that I have an issue with this. Someone, somewhere will need to make good on those bad debts. Right now, it seems as though the responsibility will fall to shareholders in the major high street lenders. As a small shareholder myself, I'm not sure I am too happy with this outcome. I had always been of the opinion that someone else paying my debts was 'unrealistsic'.
Whatever the outcome, I fear that the crest of this particular wave is still in the distance.
http://www.content.onlypunjab.com/Article/Bad-Debt-Blues-or-Bankruptcy-/4200320092003230206
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