Peter Francis Geraci A Bankruptcy Blog - Chapter 7 & 13

We hear it all over the place: “Be smart with your spending.” But how does that apply to charitable giving?

Many people who are filing a bankruptcy often deal with this dilemma. They are confronted with a choice: give to the needy, or keep what’s needed to pay the insurance/day care/prescriptions. While giving money to charity may be a moral obligation and/or gratification to you, you must consider it as one of your monthly expenses and budget your donations appropriately. $10 every week at church could mean a year’s worth of electricity, or $50 per paycheck could be the difference between your car in the garage or in the “repo” lot. A lot of the time, people struggling with their finances simply don’t have someone to tell them that it’s better, for the time being, to save their monetary contributions at least until they have their feet back on the ground. Well, I’m here to tell you now that if you need it, you’ve got to keep it.

The more you give does not make you a better person. Remember that saying, “it’s the thought that counts”? It didn’t just apply that one time you burned the casserole at Thanksgiving. The greatest acts of charity don’t start and end with a checkbook; if you’ve got the heart and the time, you can positively impact your community (and beyond) through volunteer work virtually anywhere. These acts of kindness can say a lot more than just “here you go” from Abraham Lincoln, Andrew Jackson, or even Benjamin Franklin. If you believe in karma, you’ll have a lot more coming back to you, and the return on investment is immediate.

At least for now, instead of giving away your much-needed dollars, spend a little time giving back to your community. You’ll never know how much fulfillment it’ll give you until you try it.

For years, Michael Scott and his office clan have entertained millions of Americans on the hit NBC mockumentary series, “The Office.” Its popularity is due, in large part, to the old comedy trick that the audience knows something that the characters don’t. In the case of “The Office,” the television audience is aware that the events on the show are fictitious, and can therefore find humor through satire. However, in the fourth season episode “Money,” the show completely misleads its viewers about the life-saving system of bankruptcy, and actually leads them to believe that it’s a procedure to be avoided. So, where’s the comedy when it’s the audience that’s been tricked?

“I…DECLARE…BANKRUPTCY!” Haha, very funny, Michael Scott. We all know that that’s not how it works. The audience does realize that Michael’s excessive spending and poor budgeting has led him to reevaluate his lifestyle (like, not buying magic kits or bass fishing equipment), but in our real world, the audience probably understands just about as much about bankruptcy as he does. Michael believes and even states, “In Monopoly, you go bankrupt, you lose.” Well, that is true, but Monopoly is also a 1930s-era board game and this is real life: in this world, you go bankrupt, you get another chance at financial freedom.

After Michael literally declares the word bankruptcy, one of the office accountants decides to look over his budget and offer some professional advice. This is where experienced accountants, attorneys, and burned debtors know that “The Office” is doling out some pretty bad advice. Michael is advised to meet with a debt consolidator by Oscar Nuñez, the office accountant – red flag! Wrong! An educated accountant would know that debt consolidation is really a scam: first of all, it rarely works, and second, the program tricks clueless debtors into extending the terms of their repayment (which is why interest is lowered). I don’t know about anyone else, but I’d like to see what university gave Oscar Nuñez a degree in accounting!

So, who is responsible for giving millions of Americans bad advice? Is it the producers, the writers, maybe even the network? It looks like that adage “Don’t believe everything you see on T.V.” remains true to this day. It’s really up to the American people to make themselves aware of the subjects presented on television, especially regarding finance and debt. Don’t be like Michael Scott – consult real bankruptcy attorneys, like those at Geraci Law, LLC. They’ll give you the kind of advice NBC didn’t – good advice!

People who file for Chapter 7 and Chapter 13 bankruptcies are relieved to find out that the majority of their household goods and personal property can be protected by exemptions (that vary depending on each state). That means you won’t need to expect the trustee to march into your home, have some breakfast, and walk out with your blender and DVD collection. But what worry a lot of filers are those “priceless” bands they wear around their fingers. Those are exempt…or are they? The short answer is no, there is no automatic exemption for sentimental value. However, there are ways to determine and even protect valuable assets like engagement and wedding rings.

Here’s a question: “Can I just pretend I don’t have any?” Now ask yourself this: would you swear to this lie in front of a judge, knowing it can land you in an even bigger mess? Remember that bankruptcy is a solution only for honest people. It’s both smart and constitutional to be up front about your assets so that we at Geraci Law can help you. Let your attorney know your concerns. He or she will probably recommend one of two things: one, get a low, trade-in valuation at a place like a pawn shop. You may be shocked to find that wedding and engagement rings won’t bring in more than several hundred dollars. Don’t take it as an insult, however; the lower the value, the easier it will be to protect your priceless asset. If it turns out that your jewelry is worth more than what our exemptions can protect, you may be able to “buy out” the equity of the rings from the trustee. And if all else fails, you can always file a Chapter 13 bankruptcy to save your assets.

A final suggestion: don’t wear anything excessively sparkly or obviously expensive to your meeting of creditors. It is not unheard of for the trustee to demand those assets right then and there! A bankruptcy court hearing isn’t Studio 54 or the opera: it certainly is not the place to show off what you have when you’re convincing people you can’t pay your debt.

“I love romantic walks on the beach, bubble baths, and losing sleep over my $10,000 in credit card debt!” …not a likely response you’ll hear on The Dating Game, is it? According to a 2009 survey issued by Credit Card Statistics, people are more likely to discuss classically taboo topics like their weight and political views before they admit to how much they owe. Those recognized off-limits topics hold the same possible consequence as debt: rejection. So, why is it that Bachelor #1 would rather dish the saga of his man gut or his political crush before ever admitting that he – like most Americans – gets the occasional call from a bill collector?

For one, debt is hardly something to brag about. Even saying that you’re paying down a debt sets off the red flag that you owe at least one creditor money; do you think your date wants to stick around to find out how many more you owe? The fact alone that people are keeping this dirty little secret hidden under the rug indicates they’re not only ashamed of it, but they’re scared of it. And yes – debt is scary. It means constant harassment from creditors, lawsuits, garnishments, foreclosures…the future is long and grim when you’re buried with debt. Unlike weight and political association, which fluctuate by the day, debt either goes down at a snail’s pace or grows quietly and ominously like a tumor. “So, can I call you later?” No, thank you.

Fortunately, there is a way to clear one’s debt faster than it took President Bush to leave office, and definitely more efficiently than a liquid-only diet. For those who qualify for a Chapter 7 bankruptcy, they can go from debt-stressing to debt-free in as little as four months. With a Chapter 13 bankruptcy, people start seeing their debt drop consistently every month – beat that, Biggest Loser! Before you know it, your debt will be the last of your problems and then the only numbers you’ll be paying attention to will be the ones on your phone, and not on your credit report.

One in four people do it…Facebook stalking, that is. Over 500 million people actively use Facebook today. They’re checking out photos of family vacations, commenting about their friend’s beautiful new Corvette, even doing a little updating of their own. Since 2004, the world’s population has been at your fingertips…and at your debt collectors’, too.

Facebook is a debt collector’s dream: not only is it free, it can potentially give them unlimited access to personal information like your job, family contacts, hobbies, recent purchases, vacations…are you scared yet? These days, your debt collectors don’t have to be secret agents to uncover evidence against you and legally force you to pay your debts.

What you can do to protect yourself? First of all, know your privacy settings and adjust them to the highest levels. Second, be careful whose “friendship” you accept. You may see a good-looking person with a conventional name from your old school and assume you once knew them. Don’t be fooled! That may very well be Joe Creditor, the scum-sucking collector terrorizing your home phone and family members. Lastly, it’d be smart to go through all of your photos, status updates, and personal information so as not to reveal anything you wouldn’t want your debt collectors to know…

Start considering your debt collectors as dangerous and ruthless as identity thieves – they’ll go anywhere and do anything to get your money. Debt collectors are not your friends – especially not on Facebook.

When you’re stuck in debt, your life is stressful enough as it is without balancing the angel and devil on your shoulder (let alone your checkbook). A lot of people take the debt they’ve acquired very hard on themselves and many wonder, “is it better for me to live under the weight of my mistakes if it’s what I deserve?” The answer, for hundreds of years, is: no. No one – not your family, your government, your religion – can force this weight on you forever. And, if you’re an honest, hard working, out of luck American, then bankruptcy is not stealing; it’s saving you.

Let’s examine the definition of the world “steal.” Scary word, isn’t it? A universal definition goes, “To take (the property of another) without right or permission.” When somebody has to file for bankruptcy, nine times out of ten, it’s for a debt they were approved for. You can’t walk into a bank or a store and apply for their credit card without getting approved, after all. If your intention was always to pay it back, then filing bankruptcy on that loan is certainly not stealing. Stealing, simply said, is illegal. Even a simple shoplifting charge can land anybody in jail for up to a year! Bankruptcy, on the other hand, is a perfectly legal process based off of the ideals of our founding fathers: a chance for a fresh start for honest people who want a better life.

So, if “Thou Shalt Not Steal” is keeping you up at night, keep in mind that even the Old Testament approves of debt elimination (Deuteronomy 15: 1-2). You’re living in the 21st century, and life isn’t much longer now than it was then. Don’t spend it eating away at your conscience while your debts acquire interest. Bankruptcy is your golden, legal answer: time-tested, shoulder angel approved.