3420825FindLaw IM Template2024-03-07T22:18:44Zhttps://www.phoenixfreshstart.com/feed/atom/WordPressOn Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482612024-03-07T22:18:44Z2024-03-06T22:18:14ZBank profits
These statistics suggest that millions of Americans are struggling to cope financially, but their problems are a major source of income for banking institutions. Banks earned $15.47 billion from insufficient funds revenue and overdraft fees in 2019, and most of this money went to the nation's largest financial institutions. Banks with assets of $1 billion or more earn 44% of their profits from overdraft fees and related revenue streams according to the CFPB.
Limited borrowing options
About 80% of this revenue comes from bank customers with accounts that are often overdrawn. These accounts frequently become overdrawn when money is withdrawn at ATMs, which indicates that many people see overdrafts as convenient but expensive short-term loans. Many consumers who pay frequent overdraft fees are unable to qualify for more affordable loans, and many of them choose to file for bankruptcy when their financial situations become unmanageable.
A fresh financial start
People often turn to credit cards to pay for necessities and use overdrafts as a form of short-term borrowing when they are struggling to make ends meet. This kind of behavior provides temporary relief, but it makes financial situations much worse in the long run. Personal bankruptcy offers consumers who have suffered financial setbacks the possibility of a fresh start, and filing a Chapter 7 or Chapter 13 petition puts an immediate end to daily harassment from debt collectors.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482592024-02-19T19:42:11Z2024-02-19T19:42:11ZStart with the most expensive debt
One way to deal with your debt is to use the avalanche repayment method. Using this method means that you target the balance with the highest interest rate. Although it may take longer to pay down a given balance, it will save you money in the long run if you stick to the plan.
Ask lenders for relief
A creditor may agree to temporarily reduce your interest rate in an effort to help you get current on your credit card debt. In some cases, they may waive interest charges entirely for a period of several months to help you get current. Alternatively, you can try to transfer an existing debt to a card with a lower interest rate. A debt consolidation loan may help you reduce the interest rate on credit card and other debt balances. This may help you get current on all of your obligations or even begin to pay them off before inflation continues to eat away at your wages and purchasing power.
If you are struggling to pay credit card or other bills on time, bankruptcy may be an option. In a Chapter 7 case, you may be able to have some or all of your debts reduced or eliminated without losing property or making any payments to your creditors.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482562024-02-08T08:41:13Z2024-02-08T08:41:13ZDebts that can be discharged
When filing for personal bankruptcy, you want to ensure you have all the facts. Some people mistakenly believe they can file for Chapter 7 or Chapter 13 bankruptcy and have all of their debts wiped out. Unfortunately, that isn’t the case; only certain debts can be discharged. Your unsecured debts, which are those you don’t back by collateral, are those you can discharge. This includes credit card debt, medical debt and personal loans.
Debts that cannot be discharged
Secured debts are those that are backed by assets. They cannot be discharged through a bankruptcy filing, and what this means is that if you owe, you run the risk of forfeiting those assets unless you make timely payments. Debts, such as child support, alimony, many taxes, personal injury judgments against you and some student loans, cannot be discharged after you file for bankruptcy.
Bankruptcy options
If you have debt that you’ve been unable to satisfy, it might be worth pursuing bankruptcy. Chapter 7 is appropriate for those who have little to no assets and lower incomes. With this option, a bankruptcy trustee is assigned to your case to liquidate your assets so your creditors can receive the proceeds. Your unsecured debts are discharged by the end of your case.
Chapter 13 bankruptcy is good for individuals who have the funds to repay their debts but need more time to do so. You are given a repayment plan of three or five years to repay, easing the burden.
Bankruptcy often carries a stigma; however, even responsible people can have serious debt. Going through this process can help you start fresh.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482522024-01-22T20:48:08Z2024-01-22T20:48:08ZIrresponsible credit card use
Most people who overwhelmed by credit card debt are between the ages of 18 and 29. This group accounts for 76% of delinquency rates. Irresponsible credit card use is one of the biggest reasons for the steep rise in debt. Younger people may not understand the rules of using credit cards and become used to regularly using their cards even for smaller purchases; this can quickly add up their debt to the point where it becomes unmanageable.
Limited introductory perks
Often, when a consumer signs up for a credit card, something attractive lures them. Usually, that is an introductory interest rate of 0% for the first year. Depending on how responsible the person is with their card, the issuer can increase the rate after that time after giving the holder a 45-day notice. This can quickly lead to significant debt for some users.
Exceeding the credit utilization ratio
People who regularly use their credit cards often fail to stay within 30% of their limit. This leads to exceeding their credit utilization ratio, which can hurt their credit score and cause their balance to be high. It can also cause their debt to rise. With so many people using their cards daily or weekly instead of monthly or less, it’s only natural that collective debt has skyrocketed. According to Experian, the average credit utilization ratio in 2022 was 28%.
Sadly, many people fall into massive credit card debt because they don’t know any better. Educating yourself about responsible usage and spending wisely could make a difference in your finances.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482492024-01-15T04:47:26Z2024-01-15T04:47:26ZThey may be able to adjust their payments
When someone experiences a financial emergency, there’s a chance they can adjust their payments. Notifying their bankruptcy trustee can help them get help with their monthly payments.
Their Chapter 13 bankruptcy may get canceled
When people miss their Chapter 13 payments, the courts can take action to remedy the situation. One of the actions the courts can take is to cancel the Chapter 13 case altogether.
When that happens, full repayment of debts can come due again. One recourse is to file for Chapter 13 bankruptcy protection again. Refiling can start the process over, which can help individuals get back on track.
Their Chapter 13 bankruptcy may change to Chapter 7
When someone falls behind on their Chapter 13 payments, there’s another option the courts can take. The court can decide to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy. Under the terms of a Chapter 7 bankruptcy, the court can liquidate all nonexempt assets to take care of the outstanding debt.
Falling behind on Chapter 13 payments due to a financial emergency can happen. Knowing what to do when an emergency occurs can help prevent long-term problems.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482462023-12-28T06:08:47Z2023-12-28T06:08:47ZSecured credit card
Your chance of getting an unsecured credit card after personal bankruptcy is slim. Another option is to apply for a secure credit card.
A secured credit card requires a cash deposit. The deposit is usually equal to your credit limit. If your credit limit is $250, you’ll need a $250 deposit to open the account. Bankrate reports that a secured credit card can possibly help raise your credit score in less than six months.
To benefit from a secured credit card, you must use the card wisely. Use this opportunity to show that you’re responsible and creditworthy.
Additional options
An alternative to a secured credit card is a card for people with poor credit. You’re likely to get approved even if you have a history of bankruptcy. The catch is that you’ll pay more interest or an annual fee. If you decide to take this option, compare several cards so you can choose the card that’s best for you.
You can also apply for a retail store credit card. Some retail stores are less strict with their approval process. It’s not a major credit card, but it can help you rebuild your credit.
You must prove you’re trustworthy and can pay your bills on time. When you get a credit card after bankruptcy, using it responsibly is important. Pay on time and never max out the card. Doing this will slowly rebuild your credit after bankruptcy.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482412023-12-12T18:57:34Z2023-12-12T18:57:34ZDelaying the inevitable
When people who are struggling to pay their bills owe relatively small amounts, they are sometimes able to bring their financial situations under control within a few months by reevaluating their budgets to identify and eliminate unnecessary spending. However, this approach may not be viable when an individual has suffered a financial setback and is using their credit cards to pay for necessities like food and shelter. When a financial situation is likely to worsen over time, opting to file a personal bankruptcy petition sooner rather than later could be a wise decision.
Bankruptcy and credit scores
A person with comparatively little debt may put off seeking relief because they are concerned about the impact that filing a bankruptcy would have on their credit rating. This may do more harm than good if an individual’s financial situation will almost certainly get worse and a bankruptcy filing is likely inevitable. Chapter 13 bankruptcies remain on credit reports for seven years, and Chapter 7 bankruptcies are not removed from credit reports until 10 years have passed. The sooner this time period begins, the sooner it ends.
A fresh start
Filing a personal bankruptcy puts an end to creditor harassment and offers the opportunity for a fresh financial start. It is usually not a good idea to file a Chapter 7 or Chapter 13 bankruptcy when debts are relatively small and could be managed by prudent budgeting. However, filing a bankruptcy could make sense even when debts are modest if an individual’s financial situation is likely to get worse rather than better.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482142023-11-29T03:04:36Z2023-11-29T03:04:36ZNon-exempt assets in Chapter 7
When you qualify for Chapter 7 bankruptcy in Michigan, the court will appoint a trustee to oversee your case. The trustee's main role is to identify any non-exempt assets (properties not protected by state and federal law) that they can sell to pay off your creditors. These include:
A house or other residential property that's not your primary residence
Rental properties
Luxury items, such as expensive jewelry, collections or antiques
Valuable vehicles that you have equity in (the difference between the car's value and what you owe on it)
Stocks, bonds and investment accounts
If you don't have any of these properties, your case will be a "no asset" case, meaning there are no assets for the trustee to sell. In this situation, you will still be able to discharge your debts and get a fresh start.
Exempt assets in Chapter 7
Fortunately, Michigan has a generous list of assets that they will let you keep during Chapter 7 bankruptcy. These include:
Your primary residence (up to $35,000 in equity)
One car (up to $3,520 in equity)
Earnings from wages or salary (up to 40-60% of your wages, depending on whether you are the sole breadwinner)
Personal property, such as clothing, furniture and household goods (up to $3,825 in value)
Worker's compensation benefits
Federal government benefits, such as social security and veteran's benefits
Note that you can choose between federal or state exemptions, but you cannot mix and match. Federal exemptions are slightly lower for things, such as primary residence and car equity, but they do include wildcard exemptions that you can use for any asset.
Chapter 7 bankruptcy can provide much-needed relief when in debt, but if liquidating some of your most valuable assets is a concern, there are other options, such as Chapter 13 bankruptcy or debt negotiation. It's important to understand the full implications of each option to make an informed decision based on your unique financial situation.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482112023-11-14T03:34:04Z2023-11-14T03:34:04ZBankruptcy and credit score
Before filing for bankruptcy, you should know it will likely impact your credit score. Like most negative reports, a personal bankruptcy filing can decrease your score in the short term. However, with time, the negative report may have less of an impact.
In many cases, your bankruptcy will often no longer be on your credit score after about seven to ten years. In the meantime, you may have access to limited credit. However, the advantages of filing may outweigh the negatives if you cannot pay back your debts on time.
Debt and the Bankruptcy Process
The reality is that while bankruptcy is a useful tool to help you and your family get back on the right financial path, it does not guarantee that the entirety of your debt will go away. Many types of debt may remain after this process. Some unremovable debts include child support, spousal payments, and, in many cases, student loans.
Potential loss of assets
A top concern when filing for bankruptcy is the loss of personal assets such as a home or car. Despite these concerns, you should know that most bankruptcy filings will not lead to the loss of these assets. In fact, you can keep these items to prevent unfair challenges for you and your loved ones.
Bankruptcy is a tool to help those struggling financially. Understanding more about the bankruptcy process may help you to make better-informed decisions about your financial life.]]>On Behalf of Phoenix Lawhttps://www.phoenixfreshstart.com/?p=482082023-10-31T01:08:46Z2023-10-31T01:08:46ZChapter 13 bankruptcy and lending
Chapter 13 bankruptcy is not total liquidation bankruptcy like Chapter 7. With Chapter 13 bankruptcy, the debtor restructures their obligations and sets up a court-approved payment plan. The payment plans run for three to five years, and a trustee oversees the process. Debtors must follow the rules associated with Chapter 13 bankruptcy, and those rules could affect any attempt to procure additional financing.
Seeking a loan while in Chapter 13 involves requesting the court's permission. If the court does not approve the debtor's request, the would-be borrower may need to pursue other options. The debtor must meet specific criteria when seeking a loan. The court would not likely approve unnecessary borrowing.
Credit scores and Chapter 13
While Chapter 13 presents many potential benefits to someone struggling with crushing debt, the effect on a credit score will be negative. Those negative remarks remain on a credit history for up to seven years. Receiving approvals on loan applications in the seven years following Chapter 13 could be difficult. Filing while in Chapter 13 might be far more challenging.
Individual circumstances vary. Some may find it necessary to seek a loan while paying their Chapter 13 obligations. Expect the parties to provide paperwork to the bankruptcy court when interested in a loan. Ultimately, there are numerous steps, but someone might find following them worth the effort.]]>