Tips for Getting Personal Finances in Order

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No one likes having financial problems or living from paycheck to paycheck, desperately hoping that you can keep on the lights and the other utilities while still paying the rent. It’s a terrible feeling, but is one that many San Diegans have to deal with each day. Whether they aren’t making enough at their current job, or they are taking care of family members, or for any other number of reasons, it’s quite easy for personal finances to become quite dismal. Here are some tips that you can use to help get your finances in order.

Commit to Making Changes
You need to start making changes in your life, and you need to commit to them. Even little changes, such as foregoing coffee at Starbucks and eating at home instead of eating out can help. Cutting back on other things, such as cable television, could help you to save some money each month as well.

Understand Your Situation
Order a credit report to see where you stand right now. Get your financial paperwork together to see whom you owe and how much you owe, and compare that with your income. Contact those companies that you owe and see if you can work out a payment arrangement with them that fits your current finances. Try to set a small amount of money aside each month for emergencies. Even if it is just a few dollars, it can add up over time and come in handy on a rainy day.

You Can Consider Bankruptcy
While the media might paint it as a terrible choice to make, it is actually a good and viable option for many people. If you are in need of a fresh start, bankruptcy might be the best thing that you can do. Take some time to talk with an attorney in San Diego to learn more about what it entails and how it can help you.

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Rebuilding Your Credit After Bankruptcy

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One of the reasons that so many in San Diego say they are reluctant to file for bankruptcy is because they fear what it will do to their credit. It’s a natural fear, but you have to understand that living in a situation where you aren’t paying your bills on time or where you are neglecting them can actually cause your credit to be even worse than what bankruptcy will do. You can recover and you can rebuild after you go through a bankruptcy. It takes time, but it is possible. Many others in San Diego have done it before you, and you can do it as well. Here are some tips to show you how you can do it.

First, after the dust of your bankruptcy settles, get a credit card. That’s right; you can get a card after you go through the process. However, understand that you will have a higher rate in the beginning. Get just one card and make sure that you choose one that is actually going to help you rebuild your credit. Get a secured card. When you charge small amounts each month and pay them back, you can slowly start to rebuild your credit.

Second, as you start to rebuild that credit, consider taking out a very small personal loan. Get one for as little as $500, but don’t actually buy anything with it. Instead, turn around and use the money to pay back the loan over the course of a couple of months. You will still have to pay interest, but doing this will work toward improving your credit.

Third, be careful with your bills. Pay them off as soon as you can and try not to carry too much debt with you from month to month. In time, your credit rating will go higher and higher, and your life will be back on track.

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Bankruptcy Is Not the End for San Diego Residents

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Law firms in San Diego have been seeing quite a large number of bankruptcy cases over the past few years. Even though the economy is starting to do better, people have still been struggling to make ends meet financially. They are behind on their bills, their credit score is dropping like a stone, and keeping up with all of the debt is simply too much to bear for many. Whether they have high mortgages or car payments, massive credit card debt, or other loans, it is hard for some who fall on hard times to get their personal finances in order. Sometimes the best and only way to handle the issue is to go through a bankruptcy.

Bankruptcy, as scary as it might seem, is not the end of your life. Instead, you can look at it as a new beginning, just as many other people in San Diego have done. You can recover from bankruptcy. You’ll still be able to have credit cards and get car loans, and eventually, you will be able to get a home loan as well. In the first years after the bankruptcy, your rates will likely be higher. However, if you are careful with your finances and keep your credit and debt in check, you will be fine.

Keep in mind that the best way to proceed with a bankruptcy is to understand everything that it entails as well as what it will mean to you and your current lifestyle. Speak with an attorney to learn exactly what it will mean for you and what you need to do in order to proceed with a bankruptcy case. The lawyer will prepare you for what happens, ensure that you complete all of the proper paperwork, and will be able to walk you through the process. It is not as frightening as you might think.

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The History of Bankruptcy

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A Rake's Progress by William Hogarth.

Bankruptcy has a long history that goes back to Biblical times.

In ancient Rome, lenders did business on a bench, or bancus, from which we get the English word “bank.” When a money-handler went out of business, their bench was symbolically broken (ruptus), as a sign of their failure. Together, the words bancus and ruptus are usually considered to be the origin of the word bankruptcy.

The first bankruptcy laws in modern history went into effect in England, during 1542. Under the reign of Henry VIII, penalties for unpaid debt could be as severe as debtors prison or even death.

Spain became the first sovereign nation to ever declare bankruptcy in 1557. Over the next four decades, Phillip II would declare bankruptcy for Spain three more times.

In 1710, the Parliament of England established the Statute of Anne, which provided the world’s first copyright laws. The act also enacted the first protections for debtors doing their best to make payments to creditors, even if their income was too low for full repayment.

In 1800, the first bankruptcy laws in the United States were passed in response to failed land deals. The law provided partial protection for private debtors, but was repealed three years later.

A major recession was triggered by the Panic of 1837, which sent the American economy into a downturn, from which it would not recover for several years. In response, the Federal Government enacted a second wave of bankruptcy protection in 1841. Those laws were repealed just two years after they were enacted.

In the wake of the Civil War, the American government re-established bankruptcy laws in 1867, and for the first time, they covered corporations.

The Great Depression provided the impetus for the next pair of bankruptcy reforms, the Bankruptcy Acts of 1933 and 1934. Banks were held from repossessing many farms under the 1934 reforms. The Chandler Act of 1938 later modified the laws, providing the first trustees appointed by courts charged with overseeing corporate reorganization.

The Bankruptcy Reform Act of 1978 standardized bankruptcy laws, and made it easier for people and businesses to file for protection.

Modern bankruptcies are usually divided between Chapter 7 and Chapter 13 proceedings. The first type has a goal of eliminating medical and credit card bills. Chapter 13 laws work with wage earners to repay loans over the course of three to five years.

Early bankruptcy laws were largely focused on recovering the assets of the creditor. Today, collection usually tries to work with debtors to resolve old debts. That’s a long way from debtor’s prison.

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GM Gives Lawmakers 200,000 Pages in Ignition Recall Case

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A 2003 Saturn Ion, one of the models affected by the ignition recall. Public domain photo by IFCAR. General Motors sent 200,000 pages of evidence to U.S. officials looking into a faulty ignition system, which may have caused 13 deaths.

The National Highway Traffic Safety Administration wants to know why General Motors took more than ten years to recall the faulty systems. This occurred as the company was emerging from one of the largest corporate bankruptcies in history. The Chapter 11 proceedings were filed in 2009.

Ignition systems in 2.6 million automobiles have a fault that can cause stalling, and prevent the operation of power steering and brakes, as well as airbags.

The automaker said a majority of the answers investigators are seeking are included among the papers.

Greg Martin, spokesman for General Motors, said the papers include answers to 65 percent of the 107 questions asked of them by the NHTSA.

“GM is cooperating fully with NHTSA and is keeping the agency apprised at every step of its progress as it works to respond to the remaining questions within the special order,” Martin wrote to Reuters via email.

The Federal government purchased more than 25 percent of the company’s stock in order to save it from going out of business.

Corporate leaders are facing harsh questions from government investigators, who are especially concerned over inaction during bankruptcy and the bailout.

In addition to the NHTSA investigation, the automaker is also facing a criminal probe from the Department of Justice.

Affected models include cars made during model years 2003 to 2007. several Chevrolet and Pontiac models are involved in the massive recall.

Automobile owners who own GM cars subject to the recall, but who have not had the update installed on their cars, should bring their car to the nearest dealer as soon as possible. In the short term, the manufacturer recommends drivers disconnect their ignition key from all other keys and accessories.

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U.S. Supreme Court Hears Bankruptcy IRA Case

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Supreme Court building

The Supreme Court has agreed to hear the case of a Wisconsin woman who filed bankruptcy in 2010.

Heidi Heffron-Clark and her husband are battling a court-appointed trustee over ownership of $293,000 the 35-year-old woman inherited from an IRA account, owned by her mother.

The couple claim the money should be off limit to creditors, who are pursuing the couple for unpaid debts resulting from the failure of a pizza shop the couple owned until 2009. After the restaurant, located in Stoughton, closed, the couple took other jobs. He worked as a bricklayer, while she was a cashier at a Cracker Barrel Restaurant. A landlord won a judgment against the couple for $74,000.

Individuals may keep up to $1.3 million in retirement savings stashed away in a retirement account, safe from creditors. But, courts have, so far, been undecided about whether that protection extends to money inherited from IRA accounts belonging to relatives.

As baby-boomers begin to die in large numbers, savings collected in millions of IRA accounts will need to appropriated to heirs.

This case could give the high court a chance to clear up sections of the laws about individual retirement accounts that have never been clarified.

The way the law is currently written, people who inherit IRA money from people who are not their spouses cannot add more funds to the account. They must also spend much of the money almost immediately. This makes some people describe current retirement account laws as being “anti-retirement.”

“That doesn’t seem like a retirement fund in people’s natural understanding of the language,” Justice Elena Kagan said during arguments on March 24th.

Chapter 7 bankruptcy allows people to retain some items like an inexpensive car and a few hundred dollars worth of furniture to assist them in starting a new life after bankruptcy.

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Detroit Sued by Insurance Investors

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Bus terminal

Detroit may be an example of the premise that if anything can go wrong, it will. The city became the largest municipal region to ever file for bankruptcy. Now, a large bond insurer is filing suit against the Motor City. This will set back the bankruptcy plan scheduled for Detroit. It could even completely unravel plans to pay off creditors to the Motor City.

Detroit filed for bankruptcy in July 2013, with a total of $18 billion dollars in debt. In January, the city filed suit against trusts and service corporations, over pension debt which saw heavy growth ten years ago.

The Financial Guaranty Insurance Company claim terms of the agreement allowing the city to leave bankruptcy would unfairly discriminate against one group of creditors. Those are the investors who provided financial backing for worker’s pensions soon after the turn of the century. That initial cost totaled 1.4 billion dollars, paid for by the insurance company, with a partner, Syncora. In exchange, the investors received a type of security called a “certificate of participation.”

When Detroit went bankrupt late last year, the securities were among the first debts on which the city defaulted. Now, the city is claiming the agreement was illegitimate, calling it a “sham transaction.” They have offered investors the lowest return rate available through the bankruptcy deal.

“The city’s opportunism and revisionist history have broad repercussions, not the least of which being the impact on the funded status of the city’s retirement systems,” Financial Guaranty wrote in court documents filed with the suit.

Retirees and those with pensions due from the city began a campaign, sending hand-written letters to U.S. Bankruptcy Judge Steven Rose, asking him to save their pensions from cuts.

Bankruptcy can be hard, even under the best of conditions, but Detroit is providing a historical lesson in how challenging it can be when a city is in need of protection.

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Chapter 13 Bankruptcy Protection in Action

Posted by & filed under Chapter 13 Debt Relief.

High POint NC

Chapter 13 bankruptcy is protecting one man from city debt collectors, while municipal officials speak out against a recent court decision.

In High Point, North Carolina, the city council may be hard-pressed to ever recover money owed to them by City Councilman Foster Douglas. Benjamin Kahn, a judge in the U.S. Bankruptcy court, ruled the city may not be eligible for repayment of an earlier judgment.

Douglas filed a Chapter 13 bankruptcy protection plan in December, which keeps the city from being named as a secured creditor, eligible for immediate repayment. The city continues as an unsecured creditor in the proceedings.

In 2002, Foster and his brother Jerry Douglas, filed a civil rights lawsuit against the city of High Point. This case was dismissed for lack of evidence, and the pair were responsible for the debt to the city of 106,000 residents.

The local lawmaker owes $32,216 to the city, according to the bankruptcy court handling the case. He has agreed to pay $1,125 a month for five years in restitution. That totals $67,500, which will be paid to Bank of America, the Internal Revenue Service, and the North Carolina Department of Revenue.

The amount Douglas will pay is not expected to cover any unsecured creditors in the case, which could leave the city holding the debt. If Douglas completes this court order successfully, his debt to the city would be discharged.

City officials did little with the judgment, until August 2013, when they re-executed the court order.

In the latest ruling, Kahn ruled the defendant’s debt to his mortgage company, totaling $78,800 and $30,900 in back taxes take precedent over debt owed to the city. Municipal officials in High Point argued their debt should be paid first, since the ruling ordering payment occurred before mortgage on the house became overdue.

Bankruptcy cases can become complicated, and this example in North Carolina shows just how complex these proceedings can become at times.

Protect Cosigners

Posted by & filed under Chapter 13 Debt Relief.

San Diego Bankruptcy Lawyers

Many prospective Chapter 13 clients in San Diego are concerned about the effect the Chapter 13 bankruptcy debt relief plan will have on a cosigner or an unsecured debt.  When you file Chapter 13 with experienced bankruptcy lawyers, you can lessen the effect of any action against the consigner.

When you file a Chapter 13 debt relief plan with bankruptcy lawyers, here are your options:

1. The San Diego debtor can just relinquish the property to the lender or creditor.  For example, you purchased a car with your mother as a cosigner, you can simply return the vehicle to the creditor during the Chapter 13.  But, if the creditor is not able to get what he or she is owed by selling the vehicle, they may go after the cosigner for whatever is leftover.  If this is what you choose to do, make sure your bankruptcy lawyers in San Diego give you all your options.

2. When you submit your Chapter 13 plan to the bankruptcy trustee, you can make sure your plan calls for full repayment to that particular creditor so that they will not go after the cosigner.  The Chapter 13 bankruptcy trustee must approve this request; however, it is an option.

3. Request that your bankruptcy lawyers ask the court to modify the terms of the loan agreement in Chapter 13.  This may allow you to only have to pay a certain portion of the loan or just the principal. Once you do this, the creditor can still seek contribution from the cosigner.

Before filing for Chapter 13 bankruptcy, we strongly suggest that you discuss all options with your bankruptcy lawyers in order to minimize the effect on the cosigner.

Creditors will be very aggressive in trying to collect any outstanding debt owed.  You need an aggressive bankruptcy lawyer to fight back.  For over 35 years, Thompson | Wedeking has helped thousands of individuals in San Diego, Southern California and California get the fresh start and debt relief they deserve.   Call our office today at 619.615.0767 for more information.

Consolidate Student Loans

Posted by & filed under Chapter 13 Debt Relief.

San Diego Bankruptcy Attorney

Most bankruptcy attorneys know as a general rule that student loans cannot be discharged in a Chapter 7 bankruptcy.  It is possible, but very difficult.  The debtor must meet certain standards of undue hardship in order to have the debt discharged under Chapter 7.  Student loans should be handled by your San Diego bankruptcy attorneys in a Chapter 13 debt relief plan.

As bankruptcy attorneys know, a Chapter 13 debt relief plan is one of reorganization.  In a Chapter 13 case, individuals propose a repayment plan to the Chapter 13 trustee on how they will be able to repay certain creditors based on their future income.  The Chapter 13 debt relief plan will allow them to make-up delinquent payments on student loans, cars and other secured debts.  If they cannot meet the student loan undue hardship standard under a Chapter 7 bankruptcy or Chapter 13 bankruptcy, there are other benefits of including their student loans in a debt relief plan. One benefit is that they determine the size of the payment rather than the student loan company.  Another is that there are no harassing phone calls or collection actions during the Chapter 13 plan.  These are all things you should discuss with your bankruptcy lawyers.

Some San Diego bankruptcy lawyers like to allocate more of the debtor’s money to student loan debts rather than other debts. Your other debts will be completely discharged after 3 to 5 years.  Bankruptcy lawyers will say that the debtor will continue to pay on his or her own rather than having the Chapter 13 trustee pay it out of the plan.  This has the net effect of reducing the debtors obligations under the Chapter 13 plan.  Your bankruptcy lawyers will be able to structure the Chapter 13 plan for you.

The student loan companies will be very aggressive in trying to collect any student loan debt owed.  You need an aggressive bankruptcy lawyer to fight back.  For over 35 years, Thompson | Wedeking has helped thousands of individuals in San Diego, Southern California and California get the fresh start and student loan relief they deserve.  Call our office today at 619.615.0767 for more information.

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