Peter Francis Geraci A Bankruptcy Blog - Chapter 7 & 13

“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.

Continuing Attorney Curtis entry, "Selecting the Right Bankruptcy Attorney for You - Experience Counts," the right attorney is one who will file your case in a timely matter and correctly the first time. When the economy turned, attorneys who file bankruptcy are appearing like campaign ads in November. These attorneys are ones who quote $400 bankruptcy fee and disappear after the case is filed. You know the saying you get what you pay for.

Recently, two Illinois bankruptcy attorneys have been charged with several counts of bankruptcy fraud. Including lying under oath, filing false documents, and hiding case dismissals from clients. This attorney also allegeldy collected fees to file for Chapter 13 bankruptcy protection with the promise to put the money toward the mortgage. However, the court alleges they used the money for their own benefits. When it comes to your financial situation you want an attorney to file your case correctly - and legally - so you are not paying an attorney to get you further in the hole.

When considering an attorney, it is important to look ahead to the future. A Chapter 13 bankruptcy can range anywhere from three to five years meaning you want to know your attorney will be around for the next three to five years. Peter Francis Geraci and his firm have been practicing for 35+ years helping numerous people get out of debt. When a previous client calls needing a reprint of bankruptcy information, a person answers the phone instead of a dial tone for attorneys who have closed up shop.

You can read more about the indictment in today's Chicago Sun Times.  

Come check out Peter Francis Geraci's new Twitter Page. He will be tweeting up to date information about bankruptcy and other interesting things!

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.

You file a bankruptcy, your debt is eliminated and now what? Being debt-free is a great thing and you want to rebuild your credit but maybe you don't know how? Post-bankruptcy brings credit cards and financing options but with higher interest rates. Creditors want you to be in debt - if you apply for one of these credit cards and get overwhelmed again, the safety net of a Chapter 7 bankruptcy is not an option again for eight years.  It is easier said then done to create a budget and save money. Many people are not educated in handling finances and bankruptcy can eliminate the old debt but to manage future debt they need the tools to succeed.

When the bankruptcy laws changed in 2005, certification of credit counseling and debt management became mandatory for a case to filed and a case to be discharged. The debtor is required to spend time learning financial management to receive his certification. The credit counseling course focuses on reasons a person gets into debt and possible solutions. So, a person filing for a bankruptcy completes the course and can identify possible reasons as to how they got into debt in the first place. The debtor education course outlines short term and long term goals along with creating a budget so post-bankruptcy, the debtor has background in financial management.

The courses are important. The majority of bankruptcies are filed due to factors like divorce and medical problems.  But, there are people who used credit and were possibly not educated in the ramifications of missed payments, high interest, etc. For a person who is overwhelmed by their debt, these courses can provide the tools for a better financial future.

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.

The idea of filing for bankruptcy is a scary one for most people. So, when you have made the decision to file for bankruptcy protection, you want to be certain you find the right firm to help you. Not all bankruptcy lawyers and law firms are the same, and having an experienced bankruptcy lawyer is a huge benefit.

Attorneys with a larger number of bankruptcy filings are usually more familiar with the different types of bankruptcy, and the various issues that can arise in a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. They are more familiar with the bankruptcy trustees and the procedures used in the local US Bankruptcy Court. More experienced attorneys can answer your bankruptcy questions, go over your bankruptcy alternatives, and ensure you receive the bankruptcy help you are requesting. Having a less experienced law firm file your bankruptcy could lead to loss of property in a Chapter 7, or a dismissal of your Chapter 13.

Peter Francis Geraci and his law firm Geraci Law L.L.C. have been representing debtors in consumer bankruptcy (personal bankruptcy) for almost 35 years. The experienced attorneys are familiar with all aspects of the new bankruptcy laws and can ensure the best result for you in your time of financial distress. Filing bankruptcy is such an important decision. Make sure you have the right people helping you.

It’s very complex to discharge student loans in bankruptcy. Section 523(a)(8) of the Bankruptcy Code requires a separate process in the bankruptcy and a finding of undue hardship – basically, the inability to make any payment ever. There are too many client-specific particulars, multi-part tests, and litigation strategies for anyone to address in a (hopefully) pithy blog post. Our firm has repeatedly overcome these hurdles on behalf of educational borrowers, but it’s not easy and can never be guaranteed.

There’s currently a measure of hope out there for those with sizable student loans, however. Two laws have been introduced to expand the ordinary bankruptcy discharge to include some educational debt.

But first a tiny bit of context: By 2014, the government is going to be the originator of all student loans, unless the college itself is doing the lending. The changeover has already started, but for now, there are two types of student loans: public (originated by the government or nonprofit educational institutions) and private (originated by the big banks or for-profit educational institutions).

Even after 2014, though, borrowers who have already borrowed would be saddled with their debts as they are. The House’s Private Student Loan Bankruptcy Fairness Act (H.R. 5043) and the Senate’s Fairness for Struggling Students Act of 2010 (S. 3219) would treat private student loans the same as other loans – these debts would be easily dischargable in bankruptcy alongside (for example) credit card debt and medical bills.

Both proposals were first presented last year, but because the new Congress is now in session, they'd need to be reintroduced. If you, or someone you love, would be helped by this reform, please contact your legislators and make sure your voice is heard.

According to an article by Julie Schmit of USA Today, the average forecloure time takes 17 months - this number is up from 11 months from two years ago. Job loss is the leading cause of foreclosure for homeowners and the common misconception is you will lose your home when you are only a few months behind. The best, easiest, and probably the cheapest way to save your home is by filing a Chapter 13 bankruptcy. A Chapter 13 repayment plan will STOP foreclosure proceedings and you will enter a repayment plan with the bankruptcy court for the arrears on your home and debt without the interest and penalties.

Think about it - you lose your job in March and fall behind on the mortgage, you have a new job starting in June and would be able to make the mortgage payment but not all the arrears at once. While on unemployment you can't afford to make your mortgage payment and the house goes into foreclosure before the new job starts.  Solution - file a Chapter 13 bankruptcy! Your income at the new job will be more than enough to cover your mortgage payment and you will pay a small additional amount to cover the arrears in a three to five year repayment. The foreclosure proceedings stop and you are able to stay in your home.

A chapter 13 can be filed the same day as a sheriff sale in order to stop the auction of your home. Do not wait that long, if you fall behind and can afford your home then get a case filed. Sooner is always better than later - especially if you are behind on your home.  If a foreclosure takes over a year to complete, it is more time for you to save your home but the quicker you file the faster you can become current on your mortgage payment.

The opposite side is if you want to walk away from your home. If you have unsecured debt that you know you won't be able to pay off and a mortgage that doubles your monthly income - filing a Chapter 7 bankruptcy is a good way to get a fresh start. A Chapter 7 bankruptcy will eliminate the credit card debt and your obligation to pay the mortgage deficiency. If foreclosure takes 17 months to complete, you can file a Chapter 7 and eliminate the credit card debt and stay in your home until the sheriff sale. It's rent free! Just keep the property insured and maintained and you can save money until the end of the foreclosure.

Read Julie Schmit's article in USA Today at http://www.usatoday.com/money/economy/housing/2011-02-21-unpaidmortgages21_ST_N.htm

Will it ruin my credit?

- You probably don’t have great credit now! Filing a bankruptcy can eliminate your debt and provide you with the opportunity to rebuild your credit. Even if you have a 700+ credit score, having too much credit is not good credit.

Will I lose my house?

- Not if you don’t want to. To keep your house, you must stay current with your mortgage payments. The attorney you meet with will determine which bankruptcy will allow you to keep your home. Geraci Law has not lost a house in over 35 years and doesn't want to start with yours.

Do I have to include all of my credit cards?

- You cannot pick and choose your debt and why would you want to? Filing a bankruptcy can eliminate all of your debt giving you an opportunity for a fresh start.   

Can I keep my boat/motorcycle/rocket ship?

- You can keep your assets if you can afford to keep them. The attorney you meet with will determine which bankruptcy will protect all of your assets.

Do I have to be behind on my bills to file for bankruptcy?

- No! You can be up to date with the minimum payments and still have a tremendous amount of debt. Making the minimum payments is probably not getting your anywhere close to being debt free. For example, if you have $2,500 in credit card debt with 21% APR and you are only making the minimum payment – it will take you 40 years and 8 months to pay back the original charge of $2,500!

How much is it going to cost?

- Going and meeting with an attorney is like going to the doctor. A lawyer like a doctor needs to diagnose what the problem is and assess the amount of work to be done to fix the problem. After filling out our forms and meeting with a lawyer, your fee will be quoted to you. Our fees can be done in payment plans and will be based on your case and your financial situation.

I talk to people all day, every day. People who by overspending, medical issues, divorce, etc. have found themselves in a hole they can't dig themselves out of.  Knowing they are in fact "buried" there is still hesitation to filing a bankruptcy. Somehow, bankruptcy has been dubbed the end all, be all to your financial future. The somehow could be answered with the boisterous words of people like Sue Orman. In an interview with "Us Money Talk" she said bankruptcy is the worst choice to make and it will have a negative impact on a credit score. Obviously, Ms. Orman! Applying for too much credit, multiple inquires into a person's credit, debt settlement and missed payments can also have a negative impact. 

Orman's brilliant solution is creating a budget with a credit counseling agency. Sure, credit counseling with a non-profit, legitimate agency can help people budget and plan for their future. BUT - how does it help when you have $50,000 in credit card with 30% APR. There's a negative impact on a budget, if a person can't meet the minimum payments due to a job loss, income reduction, etc. how will budgeting with a loss of income help plan for their financial future. 

A person with $50,000 in credit card debt at 30% APR is looking at a minimum payment of $1,725.00 per month and it will take the person 525 months to pay off the debt! That's over 43 years and the person will pay $124,263.52 in interest! Instead the person files a Chapter 7 bankruptcy, eliminates the debt and the money spent on minimum payments is allocated to their financial future. If a person is so overwhelmed by their debt, with interest rates and minimum payments skyrocketing, debt settlement and budget planning are a Band Aid for a massive debt wound.

Orman and others like her ignore the real numbers and consider one of the country's oldest laws the worst option for struggling people. Why spend thousands upon thousands of dollars in interest, lose sleepless nights from stress and still have Orman's "negative impact" on your credit when you can file a bankruptcy and be debt free!