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How do I love Chapter 13? Let me count

By Cathy Moran, California bankruptcy lawyer on Aug 27, 2007 in Bankruptcy Practice and Procedure, Chapter 13 Bankruptcy

I often recommend Chapter 13 to clients who qualify for Chapter 7. Why? One well known bankruptcy lawyer has a 53 item list of reasons to file Chapter 13. My favorite reason is because it’s flexible.

A Chapter 13 plan can be dismissed at the debtor’s request at any time, for any reason, or for no reason. That might be a very important option if the debtor’s circumstances changed after filing bankruptcy.

Suppose the debtor received a large inheritance or incurred a large unanticipated debt like a hospital bill or caused an auto accident. The trustee in a Chapter 7 case will not support dismissal if it cuts the creditors out of the inheritance; the court has no reason to allow the debtor to include a post filing debt in the case that reduces the dividend to the other creditors. The debtor in a Chapter 7 is out of luck.

In Chapter 13, the debtor has the option to dismiss the case. The dismissed case does not count as a bankruptcy for purposes of when the debtor is eligible to file another case. It may impact the duration of the automatic stay in the new case, however.

That flexibility to deal with the unknown or new developments leaves the debtor the maximum number of options to deal with their debts.

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NC Attorney General Warning About Fake IRS Contact

New Alert from NC Attorney General Roy Cooper warnng against giving out any information that appear to be requests from the IRS.Attorney General Roy Cooper Warns North Carolina Consumers about Fake IRS EmaiSCAM: Consumers in North Carolina have received phishing emails that claim to come from the IRS. The phony emails tell people that they have qualified for an economic stimulus refund and can receive their money more quickly by providing their bank account information. The phishing emails include a link to a website where people are asked to provide their bank account and other personal information, supposedly so their economic stimulus refund can be deposited directly into their account. The fake emails even tell people that their refund will be delayed if they don’t provide this information.TIPS: The IRS is not contacting people about their refunds by email, so don’t take the bait. Always beware of emails that ask for personal information such as your Social Security Number or bank account number. Many times, these emails contain the logos of real companies to make them more believable. Don’t be fooled by them. Never reply to these emails or click on any links. If you do respond to a phishing email, contact your bank and credit card company immediately. Finally, it’s always a good idea to use updated antivirus and firewall software on your computer.If you’ve been the victim of a similar scam, please contact Attorney General Roy Cooper’s Consumer Protection Division for assistance at 1-877-5-NO-SCAM.This message brought to you on behalf of North Carolina Attorney General Roy Cooper.*** Visit our Identity Theft website at www.noscamnc.gov ***

Untitled

On NPR this past weekend was a program called "This AmericanLife" with Ira Glass. They had an incredibly detailed, interestingaccount of the subprime/housing mess, including the terminology andlots of statistics, and how consumers and Wall Street bankers accepted the huge risks.Below is a link to the show, "355: The Giant Pool of Money" which you can play to hear:Link to This American Life

Why You Should Be Thinking About Christmas Now

Christmas isn't something that most people think about in April, but they should. It is amazing how much people spend each year buying presents, and a lot of it goes on credit cards. In fact I believe a major reason people overspend is because it is so easy if you are using plastic to 'pay' for it. I am filing bankruptcy cases now for people and see the Christmas charges on the statements and while the purchases may not be extravagant, many purchased more than someone in financial stress should have paid.For people who don't file bankruptcy to get out from under the debt load, it will take years to pay off those 2007 Christmas purchases. If people started a little savings account now and put $25-$50 per pay check into the account, there would be cash to buy presents for the next holiday season. Maybe you wont' be able to afford anything big, but the security of knowing that those presents won't be causing your debt obligations to climb will be the best present you'll get.

Mortgage Crisis

You can't turn on the TV or open a newspaper without seeing another report on the mortgage crisis. This isn't just the problem of the people whose homes are foreclosed - this problem is affecting everyone. Homes are being foreclosed upon in unprecedented numbers, and neighborhoods everywhere are seeing home values dropping as more houses flood the real estate market. Lenders have less money to loan out, and even borrowers with good credit are having problems finding financing.This is a controversial subject, with many people blaming the borrowers for getting in over their heads. But it isn't that simple. In my encounters with clients, these homeowners (or former homeowners) didn't intend to get into this mess. Many faced job and income loss, medical problems or divorce - all problems that were beyond their control. Others didn't realize that A.R.M. rates would rise beyond their ability to pay, or believed brokers and other real estate advisers who told them that they could refinance before the rates increased.No matter the reason, America has a problem that has to be dealt with, and soon. Bills are being introduced into the House and Senate that may hold some relief, with borrowers paying lenders, lenders making a profit, and the government not being the one to provide the bail out. These bills would allow court supervised modification of loans in the United States Bankruptcy Court. Lenders will bear some of the responsibility of this solution in sacrificing higher interest rate returns, but still being paid for the loans at rates that will still provide profits. In fact, keeping people in their homes and preserving a performing loan will help provide a profit that was destined to be lost in the foreclosure.For more information regarding the mortgage crisis and the mortgage solution, please read my article on the BankruptcyLawNetwork, where you will find many articles on this issue as well as other information about bankruptcy.

How Is Bankruptcy Like Gastric Bypass Surgery?

Like gastric bypass surgery, bankruptcy can yield dramatic results in a short period of time and give you the ability to get where you need to be quickly. Like surgery, it isn't for everyone and it can be painful. Like surgery, bankruptcy can be life saving; financially life saving when you have debts you can't repay. Most important, like gastric bypass surgery, bankruptcy is a tool for good short term success, but the long term success depends on the ability of the person to live on a healthy financial "diet". If a person files for bankruptcy, but doesn't have a budget that is balanced, they stand a good chance of getting back into debt again. Therefore when someone takes the serious step of filing for Chapter 7 or Chapter 13 bankruptcy to get out of debt, it is important for their financial future that they take steps to stay out of debt. Think of the budget like a financial diet plan, crucial to your long term health.

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How do I love Chapter 13? Let me count

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How do I love Chapter 13? Let me count

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