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Why Bankruptcy Can Be Good For Your Credit

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Why Bankruptcy Can Be Good For Your Credit- Bankruptcy can be very good for improving your credit score. A credit score that has suffered from default in payments or other negative credit reporting can be restored though eventually after a bankruptcy filing. Let’s discuss how Chapter 7 Bankruptcy or Chapter 13 Bankruptcy can help restore your credit score.

Bankruptcy can be good for your credit score by wiping the slate clean. After you file Chapter 7 Bankruptcy, the slate is wiped clean on your credit. Everything that was on your credit history before is now replaced with a blank credit history that can be a solid foundation to build upon. If you continue to struggle with your past credit or attempt to settle your debts, your negative credit reporting will stay on your credit report. However, with bankruptcy, your past credit is erased. Your credit is erased and replaced with a single entry: the date, place, and chapter of your bankruptcy discharge. Bankruptcy can be good for your credit by creating a new clean foundation to build upon.

After all of your credit data is eliminated, you will have a new foundation to build upon after filing bankruptcy. Any future good credit payment history will be of a very high benefit to you in restoring your credit. Because this good credit will stand out alone with no blemishes, you will be able to build your credit very quickly.

Bankruptcy can be good for your credit because some people may have a higher credit score immediately after the bankruptcy. Most people believe that after bankruptcy they will have somewhat of an “F” credit rating. However, to most creditors, you more of have a C credit rating. This is because you do not have any more debt on your credit report and you cannot file bankruptcy for approximately eight more years. Many creditors, such as small loan or auto finance providers, are willing to take a chance on such a restored credit situation. This availability of limited loans allows many people to rebuild their credit history even faster after bankruptcy.

Bankruptcy can be good for your credit score because many people are able to get larger loans or even finance houses after two years. Even just two years after filing bankruptcy, it may be possible to be applicable for mortgage loans and loans of a larger nature. If you take the time to carefully rebuild your credit after bankruptcy, you may be able to pursue lifelong dreams such as buying a home. Such possibilities would have been very difficult to achieve for many people outside of starting over with bankruptcy relief.

Do not hesitate if bankruptcy is what your credit needs. If you have excessive defaults and other negative material on your credit report, do not hesitate if bankruptcy is what your credit needs for recovery. Bankruptcy could very likely be the first step in recovering your credit situation so that you can enjoy a life that is not plagued with the difficulties that come with bad credit. If you need help in recovering your credit or want any more information about debt relief, give our office a call.

~Indianapolis Bankruptcy Attorney John F. Bymaster

Post-Bankruptcy Debtors Financial Management Course: Top 5 Things to Know

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Post-Bankruptcy Debtors Financial Management Course –Every person in Chapter 7 or Chapter 13 bankruptcy is required to take a post bankruptcy debtors financial management course. This course helps teach financial principles for making a budget and making sure that you will be able to manage your finances after bankruptcy. This article is about the top five things to know about the post bankruptcy debtors financial management course.

1.  Post Bankruptcy Debtors Financial Management Course Top Things to Know 

You are required to take this second class after the bankruptcy case is filed but before you receive your discharge in your case. Every person that files Chapter 7 Chapter 13 bankruptcy case must take this second, “post” bankruptcy class after the bankruptcy case is filed. You will be required to provide your bankruptcy case number before taking the second bankruptcy class on financial management in order to prove that your bankruptcy case has already been filed. It is best to take this second bankruptcy class right after your bankruptcy case is filed. The last possible time you will have to take the class is right before your discharge, but do not wait that late to take it!

2.  Post Bankruptcy Debtors Financial Management Course Top Things to Know 

Do not forget to take the second class or take it too late. If you do not take your second bankruptcy class on financial management before you receive the discharge in your bankruptcy case, it will be closed without a discharge. The court will require a large reopening fee to reopen your case. Do not make a $300 mistake. Take your second bankruptcy class early, right after your bankruptcy case is filed.

 3.  Post Bankruptcy Debtors Financial Management Course Top Things to Know 

This class is about managing your finances in the future after the bankruptcy.  Congress felt that it was necessary to require the second bankruptcy class in order to teach financial management to those who have filed for bankruptcy relief. Many debtors get into bankruptcy situations because they do not understand proper and effective financial management. This class was a minimal effort by Congress to at least teach basic financial principles to those who have found it necessary to file for bankruptcy.

4.  Post Bankruptcy Debtors Financial Management Course Top Things to Know 

The class is very affordable. Although there are a variety of providers of the second bankruptcy class, almost all of them now are very affordable. Many providers charge as little as $8 to $15 for the second required class. Some providers may provide additional information in a better to understand format that gives you better financial training. These classes may cost a little bit more than the lower end of the spectrum but usually do not exceed $50.

5.  Post Bankruptcy Debtors Financial Management Course Top Things to Know 

Keep getting financial education even after you take the second course. The value of financial knowledge cannot be overstated. Acquiring financial knowledge and living by it can completely change your life forever. If you make it your mission to acquire and live by financial understanding, then your life will truly get the fresh start that you need.

Conclusion

The post bankruptcy financial management class can be a powerful beginning to new financial understanding. After you file bankruptcy, you truly have a fresh start. However, it’s up to you what you would do with that fresh start. Use the post bankruptcy financial management class to kick off a new life of financial responsibility and learning. This is what Congress intended by requiring people to take this course: a life that is much better now because of new financial understanding.

~Indianapolis Bankruptcy Attorney John F. Bymaster

 

Pre-Bankruptcy Credit Counseling – The Top Five Things to Know

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Pre-Bankruptcy Credit Counseling – Every debtor is now required to take a bankruptcy credit counseling course before they file a Chapter 7 or Chapter 13 bankruptcy case. This pre-bankruptcy credit counseling course can be taken through several different course providers. This article is about the top five things to know about this course.

Number One: The pre-bankruptcy credit counseling course is usually very affordable. The pre-bankruptcy credit counseling course is usually only a cost of $10 to $20 at this time for an affordable and reliable course provider. When the original requirement for the pre-bankruptcy course was put into effect in October 2005, courses usually ranged anywhere from $50-$75. Over time as the course became more clear and more providers got involved, the cost gradually declined until now when the approximate cost is usually $10-$20 per bankruptcy per course provider. If you are paying more than $10-$20 for this pre-bankruptcy course now, you may be paying too much and could possibly find more affordable options.

In certain situations, the pre-bankruptcy credit counseling course can even be obtained for free or reduced charge. This is because the bankruptcy code requires all providers to provide the course either free or at a reduced charge to people who do not have the means financially to take the course.

Number Two: The pre-bankruptcy credit counseling course usually only takes one hour to complete. Unlike other more intensive courses provided for various legal settings, the pre-bankruptcy credit counseling course only takes one hour to complete. You may spend more than one hour working on the course if you choose, but you are required by the federal law to spend at least one hour in completing the course.

Number Three: The pre-bankruptcy credit counseling course goes over alternative options to bankruptcy such as repaying your debts. The content of the pre-bankruptcy credit counseling course is a repayment plan or other method that may be available to repay your debts. This repayment plan (or other viable information that can help you avoid bankruptcy) is not very useful to many people who already thoughtfully have considered whether they should file for bankruptcy. However, in some situations it may be an advantage to the debtor to know that it is their best option to file bankruptcy.

Number Four: The pre-bankruptcy credit counseling course can be taken easily either through the Internet or on the phone.  Because of opposition in Congress, the requirements for taking the pre-bankruptcy credit counseling course are not very difficult. Congress decided that it is necessary to allow people to take the class quickly either through the Internet or through the phone to make it less of a burden for those seeking to file bankruptcy. Therefore, if necessary, it can be very easy to obtain the pre-bankruptcy credit counseling course certificate either by contacting an institution that will do it right away over the phone or by doing it immediately through the Internet.

Number Five: The pre-bankruptcy credit counseling course must be taken before the bankruptcy case is filed. There are absolutely no exceptions except for some very limited situations. It is extremely important to note that all debtors must take the pre-bankruptcy credit counseling course before they file for bankruptcy. Any person who is an individual (such as a person, not a business) must take the course before the bankruptcy case is filed or their case will be shortly dismissed thereafter.

There are only very limited exceptions to those who are not required to take the pre-bankruptcy credit counseling course. The first exception is for incapacity: a person who does not have the mental capacity to take or understand the course. You will be required to provide detailed medical information and file a motion to have the credit counseling requirement waived for incapacity.

A second less common exception is for those in active military service who do not have the ability to take the course. It is advisable that even people on active military duty should still take the course but may be able to avoid if taking the course is absolutely impossible.

Take the pre-bankruptcy credit counseling course. It will not be a burden to you. If you are seriously considering filing bankruptcy, do not let the pre-bankruptcy credit counseling course deter you from filing bankruptcy. The pre-bankruptcy credit counseling course is very easy to complete and very affordable: if you need help taking the course you can contact our office and we will send you to a provider who is reliable and affordable so that you can prepare to file Chapter 7 or Chapter 13 bankruptcy.

-Indianapolis Bankruptcy Attorney John F. Bymaster

Unsecured Mortgages

CAN COMPLETELY UNSECURED OR “UNDERWATER” MORTGAGES BE ELIMINATED THROUGH FILING FOR BANKRUPTCY?

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The premise can be explained somewhat simply: a second mortgage is completely underwater.  The mortgage is no longer attached to ANY equity in your house because the first mortgage eats up all the value of the house.  This kind of thing is pretty common after the 2008 financial crisis.  Home values plummeted.  The bottom “dropped out” of many real estate markets.

If a second or third mortgage has no ACTUAL secured interest in your real estate because the first mortgage by itself exceeds your home’s value, the bankruptcy code appears to allow you to avoid these second or third mortgages that are “wholly unsecured.”   Section 506 of the bankruptcy code along with relevant sections should in theory allow the avoidance of such a “wholly unsecured” mortgage in either a Chapter 7 or Chapter 13 case.

However, courts are split on the decision of when (if ever) “underwater” mortgages can be avoided in bankruptcy.  The bankruptcy courts usually fully deny such an avoidance under a Chapter 7 case.  Although there are some conflicting opinions, several bankruptcy courts, including the Indiana Southern District (Indianapolis’s Court), allow such wholly unsecured mortgages to be avoided only in Chapter 13 filings.

Challenges to the inability to strip wholly unsecured mortgages during Chapter 7 cases have lead to the recent in Supreme Court decision of Bank of America v. Caulkett.   In this case, the Supreme Court made very clear that they would not allow avoidance of “unsecured mortgages” in Chapter 7 cases simply due to the lack of previous precedent being an “unfair taking” of potentially valuable rights of these mortgage holders.

Bank of America argued the value of retaining their secured status: the right to receive payments and the benefits of retaining their liens to realize future gains in value.  The Supreme Court decided to allow wholly unsecured mortgage avoidance in Chapter 13 but denied it for all Chapter 7 cases.

Therefore, the rules remain the same for greater Indianapolis-Area bankruptcy filers.   You can “avoid” a wholly unsecured mortgage in Chapter 13 potentially, but the right to avoid a wholly unsecured mortgage will NOT be allowed still in Chapter 7 cases.

If you are interested in any form of debt relief, especially in stripping mortgages off your home, give our office a call.

~Indianapolis Bankruptcy Attorney John F. Bymaster

John F. Bymaster

God’s View on Finances

IS GOD’S VIEW OF FINANCES  MUCH DIFFERENT THAN OURS?

God's View on Finances

What is God’s view on finances?  None of us are perfect.  We live in a very imperfect world.  Each of us has different financial difficulties we face.  We all have learned faulty and imperfect perceptions and habits about money.  Let’s take a quick view at some of God’s views about finances in the Bible (an insightful look for those who believe or do not believe the Bible alike):

For Israel, debts were to be short term, limited, and automatically released every seven years WITH the retention of inherited, ancestral property.  This is MUCH different than our current system:

Deuteronomy 15:1-2

At the end of every seven years thou shalt make a release. And this is the manner of the release: every creditor shall release that which he hath lent unto his neighbor; he shall not exact it of his neighbor and his brother; because Jehovah’s release hath been proclaimed.

It is Very Unwise to Take out Any Debts based on your Home and Personal Belongings – Do not get loans/mortgages if at all possible- they are arguably anti-biblical (if long term) and are NOT God’s system for doing things:

Proverbs 17:18

A man void of understanding striketh hands, And becometh surety in the presence of his neighbor.Proverbs 22:26-27

Be thou not one of them that strike hands, Or of them that are sureties for debts. If thou hast not wherewith to pay, Why should he take away thy bed from under thee?

*NOTE:  Before the 1950’s, mortgages and car loans were EXTREMELY uncommon practices.  Now the vast majority of people believe mortgages and car loans are okay or even beneficial for society.  Has it been beneficial?

DO NOT LEND OR BORROW PRINCIPLES- ESPECIALLY DO NOT BORROW:

Proverbs 22:7

The rich ruleth over the poor; And the borrower is servant to the lender.

Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”

NOTE: Romans 13:8 is frequently quoted to convince people to have “no debt”.  This is most likely an over application.   However, if you make a lifestyle of debt with no financial understanding,  it will take away your ability to love other people and live the life God intends for you.  God wants us to live a “simple” life.

GET RID OF THE RICH IS BAD, POOR IS GOOD MENTALITY: IT’S ALMOST ALWAYS MISAPPLIED AND TO MANY’S SHAME

In the book of Proverbs and throughout the Bible, it says continuously that the rich are wise and the poor are not wise.    We have to take out of our mind the glorification of being poor.  The lack of study and understanding prevents earthly riches and blessing that you can use to help others.  A poor person can be VERY limited in what they can do for the Lord on this earth (both in time and money).

GOD DESIRES US ALL TO BE GOOD STEWARDS

If the Holy Spirit leads you in a ministry that makes you very poor, then that is WONDERFUL because it is for God’s Kingdom.  Otherwise, you are to be the ABSOLUTELY BEST STEWARD OF ALL – which will usually result in much better use of your time and money.   Money and time management can be the beginning of putting your life in order and becoming a biblical “good steward.”  Greater spiritual blessings may follow quickly after you allow God to put physical things- such as your finances –  in order.

~Indianapolis Bankruptcy Attorney John F. Bymaster