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My Credit Score After Filing Bankruptcy:

Your credit score will take a hit after filing a chapter 7 bankruptcy. If your score was low before you filed, the drop will not be as significant as if your score is high. The fact that you filed bankruptcy will show up on your credit score for about 10 years, but that alone is not going to keep you from getting that new car, apartment, house, etc. Needless to say, the fact that you filed and a drop in your credit score is not the end of the financial world. The key is what you choose to do after the bankruptcy. Rebuild.

Filing your chapter 7 bankruptcy will the stop the bleeding in the injuries caused by your debt. As soon as your case is filed the creditors stop calling, wage garnishments and bank levies come to an end, foreclosure or repossession actions come to a halt, and minimal payments are no longer required.  Once the stress of creditor harassment comes to an end, it is time to rebuild your credit. This is an endeavor we do not want you to undertake alone. Our office works with the 720 Credit Score program to help our clients rebuild towards their financial goals after filing. 720 Credit Score is a seven step program that guarantees your credit score will be 720 or higher within 12-24 months after receiving your chapter 7 discharge. Call us today to set up an appointment and learn more about this program.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What are Exemptions in Bankruptcy?

There is a myth that filing for bankruptcy means you have to give up your assets. This is simply not true. Bankruptcy law lays out specific exemptions which are used to protect your assets when you file for bankruptcy. (Federal exemptions are found in 11 U.S.C. § 522). In your petition you need to list all of your assets. These are all part of the “estate” and become property of the trustee. Exemptions are used to pull your property of the estate and protect it as yours. There are both federal and state exemptions and each state varies. When filing you can either choose one or the other, you cannot mix and match. There are also rules as to which state’s laws you are allowed to use based on where you live. Your attorney will usually be the one to choose what is best for your circumstances. In general, federal exemptions cover more items because of the “wildcard exemption.” Most exemptions are for specific items, but the wildcard can be used on any property up to $12,725 (depending on the amount of equity in your home).

The most common reason to use Minnesota exemptions, specifically, is if you have a home with a lot of equity. Minnesota has a large homestead exemption to protect your home, which is one of the most important assets to people and the most important to protect. If you need to use Minnesota’s exemptions, you may end up with “non-exempt” property. This means that you are not able to protect it and it will become part of your estate for the trustee. The most common non-exempt items are tax refunds and bank account balances. If you have a few non-exempt items it is not something to worry too much about. In most cases a tax refund is small in comparison with the amount of debt being discharged. Just because an item is “non-exempt” doesn’t mean you will lose it. You can pay the trustee to keep it, essentially buying it back from the trustee. Please consult an attorney, as the exemption laws are very technical and may result in loss of property if they are not used correctly.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What is a Bankruptcy Means Test?

A bankruptcy means test is a tool that is used to determine whether or not you are eligible for Chapter 7 bankruptcy. Prior to 2005, the means test was non-existent and it was much easier to be found eligible for bankruptcy. In order to reduce the leniency of the program, the Bankruptcy Protection Act of 2005 was passed and therefore the means test came into play.

There are two parts to the means test. The first part of the test looks at your average income for the last 6 months prior to filing bankruptcy. This average is then compared to the median family income of the state you apply in. If it is found that you meet the median family income or fall short of it, you will be found eligible for Chapter 7. In this type of test, your average monthly income isn’t solely based off of what you make at work (wage, overtime, tips, etc.); it also looks at all aspects in your life that contribute to how much money you receive in a month (child support, alimony, workers’ compensation, rental income, etc.) However, there are a few things that are not included in calculating your monthly income; some of those are: Supplemental Security Income, Social Security retirement benefits, or tax refunds.

You will need to look into the second half of the test if it is found that your average income exceeds that of the median family income of the state you’re filing in. This part of the test will look at necessary expenses (rent/mortgage payment, groceries, etc.) and subtract that from your income. If the remaining amount of income won’t cover your unsecured debt you will be found eligible to file bankruptcy under Chapter 7. If not, you will need to file for bankruptcy under Chapter 13 where a payment plan will be created for you to pay off your debts (priority, secured, and some unsecured debts). There are, however, rare circumstances that will allow you to still file under Chapter 7 even if you fail the means test. These circumstances are attributed by “special circumstances” such as a serious medical condition or becoming unemployed within recent months. Every case will vary, though, and if no special circumstances are found than you will need to file under Chapter 13.

https://bankruptcy.findlaw.com/chapter-7/the-bankruptcy-means-test.html

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can Wage Garnishments be Stopped when Filing for Bankruptcy?

If you haven’t yet filed for bankruptcy, but are in debt to some creditors, it is possible that they can have the court order that your wages be garnished if they provide evidence you are not paying them. This simply means that your payments to the creditor are directly pulled from your paychecks before you actually get the money. However, filing under Chapter 7 or Chapter 13 bankruptcy should stop your wages from being garnished by creditor debts. This only applies to dischargeable debts, though; your non-dischargeable debts such as student loans can still be pulled from your paychecks if you’re late on payments.

Filing for bankruptcy puts what is called an “automatic stay” on any dischargeable debt you owe creditors. This means that creditors are no longer allowed to collect money from you, which ultimately means they are no longer able to go through with garnishing your wages. The “automatic stay” only stops your wage garnishments during the process of filing for bankruptcy, what happens to wage garnishments after your bankruptcy all depends on which type of bankruptcy you file under.

Under Chapter 7 bankruptcy, your nonexempt property is sold to help pay off whatever debt is owed to creditors. Any debt that you have remaining will be discharged. Because this type of bankruptcy wipes out any dischargeable debt, it will permanently stop creditors from garnishing your wages because you will no longer owe them money.

Chapter 13 bankruptcy has a much different plan for dealing with debts than Chapter 7. When filing for this type of bankruptcy, you won’t need to sell any of your property (exempt or nonexempt); instead, you will create a type of affordable payment plan to pay off your debts. With this type of bankruptcy you will include the debt causing the wage garnishments in to your payment plan.

Just remember that wage garnishments can only be stopped for dischargeable debt, they cannot be stopped for any non-dischargeable debt such as child support, alimony, or student loans.

https://www.alllaw.com/articles/bankruptcy/using-chapter-7-wage-garnishment.htm

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What to Do: Bankruptcy or Debt Consolidation?

When facing issues with debts, there are a couple of ways to go about fixing it, two of which being more popular: bankruptcy and debt consolidation. Much like other decisions made in life, each one has its own benefits and consequences. However, filing bankruptcy is usually the better route to take when deciding between the two.

Unlike bankruptcy, debt consolidation does not completely discharge your debts. Instead, your credit counselor will need to try and negotiate with creditors to create affordable interest rates for you, lowered monthly payments, or help you obtain a larger loan to pay off credit debts. This is problematic because it does not wipe out your debts, but practically creates more being as you may need to take out a loan. Another pitfall of debt consolidation is the fact that not all creditors will want to make a deal with a credit counselor; nor do they have to be dealt with all at once. If your credit counselor so chooses, they can deal with your creditors one at a time which will both prolong the process and make you susceptible to problems with your other creditors who have yet to be dealt with. One more thing to keep in mind about debt consolidation is that credit counselors usually only help out with unsecured debts (credit cards, medical bills, etc.), not secured debts (mortgages, vehicle loans, etc.). Bankruptcy, however, does deal with both.

As you may have guessed after reading the previous paragraph, filing bankruptcy is most likely the best option to go with. If you were to file under Chapter 7, a large portion of unsecured debts will be discharged and unlike debt consolidation, all creditors must oblige by it. They cannot choose whether to be a part of the discharged debts or not. If you were to go the route of Chapter 13, you will set up an affordable payment plan with creditors to pay off debts with the additional benefit of protecting your secured assets from being repossessed (unlike in debt consolidation). One final thing to keep in mind is that debt consolidation has a tendency to cost more than bankruptcy, as well as have fewer benefits. Although every person’s situation is different and their solutions to debt may vary, filing bankruptcy should be considered before going through with debt consolidation.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Supreme Court Will Decide Whether Farmers Pay Tax On Bankruptcy Sale

The Supreme Court recently granted an appeal from Lynwood and Brenda Hall, farmers who were compelled to sell their farm in bankruptcy. The farm was sold for $960,000, and the proceeds were used to resolve the Halls’ bankruptcy debts. As a result of the sale, the Halls owed $26,000 in capital gains taxes. The Halls attempted to pay a portion of the capital gains taxes, but wanted some of taxes discharged by the bankruptcy court. The IRS insisted that the entire $26,000 be paid. The case ended up in the U.S. Court of Appeals for the 9th Circuit in San Francisco. The 9th Circuit Court ruled in favor of the IRS. The United States Supreme Court granted the Halls’ petition for review, and will ultimately decide whether the taxes must be paid.

Source:

Associated Press, Supreme Court to Decide Whether Couple Must Pay Tax on Bankruptcy Sale of Family Farm, https://www.startribune.com/nation/123747189.html (accessed June 21, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Young Americans Feel Empowered By Debt

New research conducted at Ohio State University indicates that 18 to 27 year olds feel empowered by their debt. The study found that a greater amount of education loan and credit card debt corresponded to higher self-esteem. Additionally, young people with high debt feel more in control of their lives. (Anand)

The study compared information about credit card and student loan debt with participants’ self-esteem and feelings about their ability to accomplish goals and control their lives. Lower income people were the most affected by their debt. Participants with the lowest income felt the most empowered, with higher debt corresponding to higher self-esteem. Young people in the middle class felt no effect from student loan debt, but experienced higher self esteem by holding more credit card debt. Participants with the highest income felt no self-esteem increase from either education or credit card debt. (ScienceDaily)

Researchers also found that at age 28 young people start to realize the consequences of their debt. At 28, study participants felt more stress about their debt, understood that they may have overestimated their future income, and realized paying off their debts would not be easy. (ScienceDaily)

Source:

Anika Anand, Young Adults Wear Their Debt Like a New Tattoo, https://lifeinc.today.com/_news/2011/06/08/6814827-young-adults-wear-their-debt-like-a-new-tattoo (accessed June 21, 2011).

 

What, Me Worry? Young Adults Get Self-Esteem Boost From Debt, https://www.sciencedaily.com/releases/2011/06/110606113401.htm (accessed June 21, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Consumer Bankruptcies Down in First Half of 2011

The number of Americans who filed for bankruptcy in January through June of this year decreased from the same period in 2010. According to data from the National Bankruptcy Research Center, 709,303 consumer bankruptcies have been filed in 2011. During the first six months of 2010, 770,117 consumer bankruptcies were filed. The 2011 numbers represent an 8% decrease from the number of filings in the first half of 2010.

Bankruptcy filings in June 2011 decreased 5% from the number of filings in June 2010.  However, the bankruptcy filings in June represent a 4% increase from May filings. The director of the American Bankruptcy Institute has said that the recent decrease in bankruptcy filings indicates that consumers are attempting to lower their debt.

In Minnesota, 10,376 consumer bankruptcies were filed in the first six months of 2011. This represents a 10% decrease from the 11,532 filings in the first half of 2010. June bankruptcy filings in Minnesota were down from May filings, and also down from the number of filings in June 2010 and June 2009.

 

Source:

Kara McGuire, Bankruptcies Decline in 2011,

https://www.startribune.com/lifestyle/blogs/125007464.html (accessed July 5, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Beware of credit repair scams.

Beware of credit repair scams.

There are many credit repair companies that are essentially scams. They take your money and they do not improve your credit or they only temporarily improve it. The Federal Trade Commission (FTC) offers this advice for avoiding credit repair scams:

  • Do not work with a company that wants you to pay for credit repair services before they have provided services
  • Don’t work with a company that won’t tell you your legal rights or explain what you can do on your own
  • Don’t work with any credit repair company that tells you not to contact a credit reporting company directly
  • Avoid a company that suggests disputing all of the information on your credit report, whether or not it is accurate
  • You cannot legally create a new “credit identity”; if you follow illegal advice and commit fraud, you may be charged with a crime

 

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Princess Diana’s Dresses Will Be Auctioned To Cover Bankruptcy Debt

Fourteen well-known dresses worn by the late Princess Diana will be auctioned off in Toronto. The proceeds from the sale will be used to settle bankruptcy debts. Maureen Rorech Dunkel, a Florida entrepreneur, bought the dresses in 1997 when Diana sold them to raise money for charity. Princess Diana died in a car accident just two months after the original sale.

Dunkel belived the dresses were a good investment when she purchased them. She put the dresses on display in many different countries and formed the People’s Princess Charitable Foundation. However, Dunkel went bankrupt in 2010 and decided to sell the dresses to cover her debts. The fourteen dresses are worth more than she owes.

One of the most famous dresses in the collection is a black dress Diana wore to a White House dinner in 1985, where she danced with John Travolta. That dress is expected to raise between $800,000 and $1 million. Bidders from the United States, Canada, China, Germany, and Britain have all shown interest in the dress.

Source:

Ellen Tumposky, 14 Dresses: Princess Diana’s Iconic Gowns Go Under the Hammer, https://abcnews.go.com/US/princess-dianas-dresses-hammer-toronto/story?id=13904367 (accessed June 23, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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