Filing for bankruptcy enables a person to rid themselves of debt, halt annoying creditor calls, and even stop the foreclosure of their home.  Filing for bankruptcy has helped countless individuals just like you, get out of debt, and get on with their lives.  However, bankruptcy filing must be done correctly and in an educated manner, or you might end up with more problems than you had in the first place.  Before you jump the gun on thinking about filing, you should inform yourself about the “Means Test,” a critical evaluation that gauges your worthiness for bankruptcy.

What is a Chapter 7 Means Test?

It is a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy, in an attempt to wipe out their debts completely.  The Means Test was added in a new bankruptcy law that was passed in 2005.

Eligibility

A person can file for Chapter 7 Bankruptcy, only if their monthly income is less than the median income in their state of residence. Only those filers with primarily consumer debts need to take the Means Test.  If the household income of the filer exceeds the state median, the Means Test calculations become a bit more complicated.  With these cases, the disposable income is calculated by subtracting certain monthly expenses from the filer’s current monthly income.

Purpose of the Test

The whole point of the Means Test is to secure Chapter 7 bankruptcy for an individual who has absolutely no way of paying back their debts.  A local bankruptcy lawyer might need to become involved in the test in order to determine if the filer qualifies for Chapter 7 bankruptcy.

Requirements for Filers

• obtain debt management counseling.

• take an approved credit counseling course within the 6 months before filing a Chapter 7 bankruptcy petition.

• work with agencies that have been approved by the U.S. Trustee Program.

Failure of the Test

In the case that a filer doesn’t pass the chapter 7 bankruptcy Means Test, they can still apply for Chapter 13. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy requires monthly payments over a three or five-year span.

Misconceptions

Although it’s commonly thought, it’s not necessary for the filer to be literally “penniless,” in order qualify for Chapter 7 bankruptcy.  If they have a great deal of expenses ( high mortgage payments), they can qualify for bankruptcy, despite earning a significant income.

Whether you have some basic questions about the Means Test, or you’re seriously considering filing, please contact the Adkins Firm, your premier bankruptcy attorneys in Atlanta!

While we are only half way through 2010, the number of personal bankruptcy filings in the US for this year almost reaches the 2009 totals.  Atlanta personal bankruptcy filings are certainly no exception here. The article below was published by The New York Times on April 1st 2009.

March 2010 Sees Sharp Increase Personal Bankruptcies

More Americans filed for bankruptcy protection in March than during any month since the federal personal bankruptcy law was tightened in October 2005, a new report says, a result of high unemployment and the housing crash.

Federal courts reported over 158,000 bankruptcy filings in March, or 6,900 a day, a rise of 35 percent from February, according to a report to be released on Friday by Automated Access to Court Electronic Records, a data collection company known as Aacer. Filings were up 19 percent over March 2009. The previous record over the last five years was 133,000 in October.

“Even with the restrictive new law, we’re back up over where we were before the law changed,” Mike Bickford, president of Aacer, said in a phone interview Thursday from his headquarters in Oklahoma City. He faulted the stagnant economy, saying a surge in bankruptcies generally follows economic contraction by 6 to 18 months, and he pointed to March as a historically busy month for bankruptcy filings.

Other experts point out that filings invoking Chapter 7 Bankruptcy, a simple and inexpensive option, are rising faster than more complex Chapter 13 reorganization filings, under which consumers repay a portion of their debts so they can keep their homes, suggesting that more homeowners are simply walking away from underwater mortgages.

“Fewer people are trying to save their homes,” Katherine M. Porter, a University of Iowa law professor and bankruptcy expert, said in an interview by phone on Thursday. “They realize their payments are not affordable, and bankruptcy judges do not have the power to adjust the mortgages to make them more affordable.”

Statistics from the United States Trustee Program

The Justice Department office that oversees bankruptcy cases, show that Chapter 7 filings as a percentage of all bankruptcies have increased to about 73 percent in 2009 from about 62 percent in 2006-07. Of the 158,141 bankruptcy filings in March, 118,505, or 75 percent, were Chapter 7s and 38,241 were Chapter 13s, the Aacer report says.

“We think that means fewer and fewer families think they’re really going to save their homes,” Professor Porter said. “They don’t have any equity, so why try to keep up with their home payments?”

The nation’s high unemployment rate is one more reason for people to choose Chapter 7, Professor Porter said. “To file Chapter 13, you need ongoing income, and to the extent we have more people who are unemployed, they can’t use Chapter 13 because they don’t have that income to pay into the plan,” she said.

Finally, Professor Porter said, March is the high season for bankruptcy filings because many people in financial distress get a tax refund check that they can use to pay the $1,500 to $3,500 that a bankruptcy lawyer charges.

“People use their tax refunds to pay their attorney fees,” she said.

Although filing for personal bankruptcy has become relatively common in this economic downturn, that doesn’t mean that it’s not difficult to do correctly.  If you’re considering bankruptcy, please feel free to contact The Adkins Firm, your “go to” Georgia bankruptcy attorneys!

Car Loans and Filing Bankruptcy

Filing for bankruptcy is extremely stressful, and the last questions you probably want to ask are: “what’s going to happen to my car?”  “How am I going to get to work?”  “How am I going to get groceries?”  Although these are understandable concerns, knowing how to deal with your car loan during bankruptcy, will help alleviate some of your stress, and give you the best possible financial future.

Reaffirm your car loan

Most lenders will allow you to sign a legal agreement that states your promise to repay all, or some of the debt that might otherwise have been subject to discharge in your bankruptcy case.  Because the use of a car is necessary for your transportation, bankruptcy law tends to make an allowances, in this regard.  A good way of thinking about reaffirming your car loan, is as if there was never any bankruptcy filed against it.  However, if you find that you are unable to make the loan payments, creditors can take you to court, and reposess your car.

Keep the car and continue making payments

Here, you include your car loan in the bankruptcy, and continue making your payments, as usual.  It is necessary that you take responsibility in staying current with the payments – making sure to keep in contact with the lender to determine when the loan id fully paid-off.  If you fall behind on your payments, the creditors can still take your car, but won’t be able to receive any sort of judgement amount, besides the money they’d get for auctioning the vehicle.

Surrender the car

If you really find yourself unable to make the payments on the vehicle, it might be better to find a cheaper car that you can buy with cash.  Remember you don’t need luxury, just sufficient transportation.  In this situation, you would include your car loan in the bankruptcy, and allow the lender to repossess and auction it.  If the car is worth less than you owe, it might be the best choice you have.

Before making any decisions about your car payments in bankruptcy, make sure you discuss all of your options with a bankruptcy attorney.  Don’t hesitate to contact the Adkins Firm by phone: 404-997-8942 or use our contact form. Our Atlanta bankruptcy attorneys are ready to serve you!

Many people are virtually clueless on the differences between types of bankruptcy, and when they are faced with a decision of whether or not to file, they panic, due to lack of knowledge.  Although you should always consult a bankruptcy attorney in this situation, knowing the basic differences between Chapter 7 and Chapter 13 might ease some stress in your tough financial time.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy filing is an indivdual or business becoming exempt from having to pay certain debts, while retaining some assets like their home, car, and other household essentials – as long as they do not exceed certain values determined by the U.S. Bankruptcy Code.

If Chapter 7 is filed correctly, using the Bankruptcy Code to the best of one’s ability, some assets can be retained, while severe debt will be removed.  It is the quickest and simplest form of bankruptcy available.

To be eligible to file a Chapter 7 bankruptcy you must…

• reside in the United States
• not have been a debtor in a bankruptcy case in the 180 day period prior to filing the current case
• receive counseling from an approved non-profit budget and credit counseling agency before filing
• pass the “median family income” test.

Your Median Family Income Level

The most important factor in determing whether or not you will be able to file Chapter 7 is your median family income level.

Review the income made in the previous six months and average it out.  If the average income falls below the “median family income,” as stated in 11 U.S.C. 707(b)(7),  then filing for Chapter 7 is appropriate.  If it exceeds the “median family income,” then you will most likely be subject to…

Means Testing

The means testing calculation averages the amount of the income you received during the six-month period before to the bankruptcy filing, and subtracts it from your average monthly expenses. This determines the margin of excess income. Using this number, you determine if the excess income exceeds the margin allowed by 11 U.S.C. 707 (2)(A)(i), and if you are eligible to file Chapter 7 bankruptcy.

What If I’m Not Able to File For Chapter 7?

If you are unable to file for Chapter 7 due to the “median family income” level being too high, as well as failing the means testing, then your other option is filing a Chapter 13.

How Do I Receive a Chapter 7 Discharge?

• must not have received a Chapter 7 bankruptcy discharge in the previous eight years
• must not have receive a Chapter 13 discharge in the previous six years

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy filing allows you to seek protection of your property and develop a plan of paying creditors by making monthly payments to a Trustee under Court supervision. The plan can be for as little as 2 years, or for as long as 5 years.

To be eligible to file a Chapter 13 bankruptcy, you must….

• reside in the United States
• have a regular income
• have unsecured debt less hand $336,900
• have secured debt less than $1,010,650
• receive counseling from an approved non-profit budget and credit counseling agency.

Pros of Chapter 13

• you can obtain discharge of unpaid balances while retaining all of your assets, by paying a portion of your debts over the duration of the Chapter 13 plan
• avoid foreclosure of your home
• more debts are discharagable in Chapter 13 than in Chapter 7

Cons of Chapter 13

• you must pay a reduced amount against the entire debt, to unsecured creditors
• the discharge will not be received until all payments are complete, but in chapter 7, it usually takes about four months.

How Do I Receive a Chapter 13 Discharge?

• you must not have been granted a Chapter 7 bankruptcy discharge in the previous four years.
• you must not have been granted a Chapter 13 discharge in the previous two years.

Filing for bankruptcy is a complicated and life-changing procedure.  Don’t go through it alone.  Contact The Adkins Firm, your bankruptcy attorneys in Georgia, ready to serve you.

Do you feel like it’s hard to keep your head above water with your finances?  If “yes,” then that’s a good start.  The first step to not sinking in debt, is being aware of it.  Unfortunately, many people don’t realize they’re treading water, until it’s too late! 

Here are some tell tale signs that you might have a debt problem:

1. You’re constantly spending more money than you earn
2. All your cards are maxed out and you keep getting new ones to transfer the balances
3. You only manage to pay the minimum required payment on your credit cards
4. You have an embarrasingly low credit score
5. You are constantly bombarded with calls from creditors
6. You skip certain bill payments, in order to pay other bills
7. Lack of money, and disputes over how to spend it, are causes of severe distress in your marriage
8. You’ve been turned down for multiple loans
9. You can’t afford to make regular major payments like your car, school loan, etc
10. The possibility of filing for bankruptcy has seriously crossed your mind.

If most of what you read above sounds like your situation: don’t hesitate to contact the Adkins Firm by phone: 404-997-8942 or by email: madkinslaw@gmail.com. Our Atlanta bankruptcy attorneys are ready to serve you!

Disclaimer: This is a repost of an article. The original article can be located here:
http://www.housingwatch.com/2010/04/19/foreclosures-rise-in-military-army-wife-goes-to-battle/

Some mortgage companies have no mercy, even on military families. According to RealtyTrac, a popular online marketplace for foreclosed homes, military zip codes have shown a 10 percent increase in foreclosures over the last year. Army wife Nicole Rosen is fighting to keep her family’s home out of those statistics.

In 2005, Staff Sgt. John Rosen’s military duty sent him to Washington State. He and his wife Nicole bought a house there at a high interest rate. Not long after, their infant son was diagnosed with kidney disease, and Nicole quit her job to care for him around the clock.

With Nicole no longer employed, the family suffered a significant drop in income and before long, they began missing mortgage payments. Rather than ignore the problem, Nicole confronted it, reached out to her mortgage lender (formerly IndyMac Bank, now OneWest Bank) and sent several requests for a loan modification. She never received a response.

Finally, when Nicole was able to speak with an IndyMac employee on the phone, she was told her loan modification was “being worked on.” Just weeks later, however, she was notified that her lender was selling the house out from under her, and she and her family had just 10 days to vacate the property.

After a request for foreclosure relief under the Service members Civil Relief Act (SCRA) was denied, Nicole did what she felt she had to do, given her rapidly approaching eviction deadline … she filed an emergency petition for bankruptcy. Though the emergency petition bought her some time, Nicole’s case continues to drag on, in and out of courtrooms. While caring for her two sons and managing a tax office part time, she is fighting to keep her house without the help of an attorney and the chances are good, she might lose the battle. It’s a sad case, and one that families are dealing with throughout the United States every day.

If you’re a Georgia homeowner facing the possibility of losing your house to foreclosure, I urge you to contact me immediately for a free consultation. We’ll discuss your situation and determine together if Chapter 13 Debt Relief is the right answer for you. A Chapter 13 bankruptcy stops foreclosure, consolidates your debt and gives you 36 to 60 months to bring your mortgage current and get back on your feet.

No one likes to think about bankruptcy, but homelessness is an even tougher situation to face. Don’t let your mortgage lender put you and your family out on the street. Call me today at 404-763-3623 or send me an email for the fast, friendly, professional help you need.