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Are There Any Rules to Follow at the Bankruptcy Meeting?

The bankruptcy meeting, sometimes called “the meeting of creditors” is an administrative hearing that requires the respect and timeliness of all who participate.   This “Section 341” bankruptcy meeting has a few rules that must be followed in order to have a successful meeting.  Let’s go over the few basic rules of the bankruptcy meeting of creditors.

Rule One: Be on Time and be Professional

Although the bankruptcy meeting is not as formal as some court hearings, it is critical to be on time and to act professional during the meeting.  Your bankruptcy meeting will be scheduled some 30 to 40 days in advance.  If you are not on time, then the court will know that it is your fault. The court and your attorney have given you several documents as to the nature and scheduled timing of the meeting.  If you are too late, the court will reset the meeting once.  A second late appearance could result in the case being dismissed.

During the bankruptcy meeting you must act and dress professionally.  You do not need to wear your best “high-dress” attire, but you need to come in a reasonable and respectful form of dress that is appropriate for a legal hearing. During the meeting, you should also remove any hats if you are a man.  Also, no one should be chewing gum or doing any other form of distracting activity.

Rule Number Two: Bring all Required Documents

The bankruptcy meeting also requires documents that must be brought to the meeting.  If these documents are not brought to the meeting, then you may have to come back because your meeting will be canceled or postponed.  First, you must bring your Drivers License and Social Security card: these two documents are absolutely necessary for the bankruptcy meeting to occur.  Second, you must bring your two most recent paycheck stubs.  Third, you must bring 90 days bank statements for each bank account.  This time period to bring must cover the 90 days directly before the bankruptcy case was filed.

In some cases you may already have brought these documents to your attorney at his or her office. However, the local rules require that you also bring these documents to the bankruptcy meeting. The above documents presented do not include every potential document that could be requested for your bankruptcy meeting. The above documents are only the basic documents that are required for every Chapter 7 case.

Rule Number Three: Tell the Truth

The most important rule to follow during the bankruptcy meeting is to tell the truth. The bankruptcy meeting is an examination where you are put under oath. If you do not tell the truth or be transparent during the examination, you will be breaking the law.  Not telling the truth can easily come back to haunt you later.  Resolve from the beginning to tell the truth every time both to your bankruptcy attorney and the bankruptcy trustee. If you always tell the truth, then your bankruptcy attorney can better guide you as to what your options may be an any particular situation.

Get Financially Savvy Before You “Take the Hit”

Get financially savvy before you take the big hit

Everything builds up in our financial lives. If we are moving in the wrong direction financially, eventually we are going to “take the hit.”  Years of bad financial decisions and no improvement on financial understanding will add up.  Eventually, it will lead to one massive, financial, knock-out “hit.”  It may come in bankruptcy, loss of relationships, a mental breakdown, or many other negative ways.  It all simply becomes unbearable.  

Savvy means workable knowledge.  Getting financially “savvy” can help you to avoid this future “hit.” It will also give you the hope needed to continue after a financial “knock-out” has already come into your life. 

Financial Savvy Requires Massive Life Changes 

You can read all the financial books you want. You can go to a multitude of financial seminars. However, knowledge is simply not enough.  You must be willing to make a massive life changes to become financially savvy.

If you are currently working so much that you have no time to relax or study, you are going to need a massive life change. It is better to shut your entire financial life down than to continue in financial folly.  You may need to surrender your house and everything you own.  You may need to file for bankruptcy.  You will still be better off in the end if you make the commitment to change financially and never go back to your old financial ways.

No Change No Gain: Get Out of “Payment” Bondage

Many people are unwilling to change.  They put financial education and financial savvy on the lowest part of their priority list. However, the same people work hard day in and day out to barely live paycheck to paycheck.  They somehow believe that they must hang on to the possessions they are barely buying on installment  through mortgage or car loans.   If they lose these items, it would be he highest anguish and a clear sign of personal failure.  This mindset is damaging and counterproductive. 

This “monthly payment” perception of financial reality is false.  You already do not own anything.  Only financial bondage follows.    The person with a 100 year old $75,000 house with two cars- all paid in full- this person is successful financially.   The person with a $400,000 house and two new cars -all with heavy loans- this person is in bondage.   If the paychecks stop, this second person instantly loses everything. 

The Payment Mentality Is Doomed to Failure: Drop it for Financial Savvy

To become financially savvy, you need to adopt the opposite of a payment mentality. Your mentality needs to be based on acquisition: the acquisition of financial knowledge and wealth.   Every month and every year should be measured by this question: has my wealth and my financial knowledge increased?  Every year a financially savvy person has a higher net worth.  Also, each year a financially savvy person has acquired more financial knowledge.  

Dropping the “payment mentality” is the first step towards becoming financially savvy. First, it frees up time and takes away all illusions.  What you own is what you own.  If you want to acquire something else, you seek new financial knowledge to do it.

Secondly, dropping the payment mentality will help you focus on acquiring true wealth. If your total assets are not slowly increasing every year, you will know something is wrong.  In such an event, you will make the appropriate changes. Essentially, you will no longer be satisfied to “spin your wheels” financially.   Being financially savvy will be a number one goal and sometimes even a pretty enjoyable hobby!  No longer will financial knowledge be dreaded.  Financial savvy will become a natural and desirable part of your life.  

Should You Be Able To Get Rid of Student Loans Through Bankruptcy?

Find out if student loans are discharegable in bankruptcy

The answer to this question is probably “Yes.”  You should be able to discharge student loans in bankruptcy during most situations.    However, under the current law you cannot discharge student loans in bankruptcy with almost no exceptions.  Many strongly argue that the legislation which culminated in the complete banning of student loan bankruptcy in 2005 is immoral and biased.  The legislation was clearly motivated by private business interests.  It has created a “student loan debt crisis,” a new hot topic of interest and debate.   Some say this “crisis” is next “melting point” our economy will face.  

But, more importantly, what about the moral perspective?   From a moral perspective, you SHOULD be able to discharge student loans in bankruptcy. But why?

Student Loan Lending is Oppressive and Should Be Against Public Policy

Student loan lending is clearly oppressive and should be against public policy.  The student loan industry has quickly transformed education into an “industry” as well.  Higher education should never be allowed to grow into a profit-driven industry.  Education should be affordable or free: it should always be about the students or society as a whole.  Higher education in the past was promoted and controlled by churches, charities, and true non-for-profit organizations.  Higher education should be a mainstay of freedom.   Higher education should remain untainted by corporate greed and economic oppression.

Higher education has grown into a monster funded by never ending student loan funding.   Astronomical building projects, sports programs, and other non-necessary ventures dominate the higher education world.   This money-raking beast has replaced previous higher education system.  The old system was focused on the students, the welfare of society, and higher ideals.   

Students are charged astronomical rates to attend classes.  These 18-19 year old students are told not to worry: just sign the loans documents.   However, most of these students have never had a job or a loan in the past. The students have no concept of the oppressive debts they quickly assign to themselves so early in life.    

What do the students get in return?  Many times absolutely nothing.  In fact, many places of “higher” education are so devoted to a profit model that they accept almost anyone with no regard to their drop-out rates.  Other schools are slightly more dignified, but almost the entire system has been corrupted by this student loan legislation.   A good part of these problems can be eliminated over time with a single law change: the full discharge of student loans in bankruptcy. 

Falsified claims of “immoral” bankruptcy filings were the Trojan Horse

The Trojan Horse was simple: some people were filing bankruptcy to immorally discharge their student loans.   However, these minor immoral occurrences were showcased intentionally to get law changes passed that were clearly against common sense public policy.   Student loans became the norm: this far greater evil quickly seeped into our entire higher education system. 

By intention, the real question at hand was improperly phrased: should the government allow and support a large student loan industry?  By progressively disallowing the discharge of student loans in bankruptcy, two new industries for profit developed.  The “big” education and the “big” student loan industries. Both of these industries are very bad for society.  They should have never been allowed to develop.  Education was once considered a “sacred” institution.   Can such a claim of sacredness still apply after the changes “big” business has made?

Student Loans are Not Dischargeable in Bankruptcy . . . But Probably Should Be

The non-dischargeability of debts is oppressive in any case.  Obviously, it is very oppressive for the government to support non-dischargeable loans for young students who have no proper financial understanding.  When educational debts were forbidden for discharge, many undesirable, profit-driven aspects began to be woven into our higher education system. 

Therefore, should student loan debts be discharged in most bankruptcy cases?  The answer this question is probably “yes” for obvious societal reasons.  Current legislation forbids student loan discharge.  Hopefully, the future will see the need to change this law after the full effects of our altered education system become apparent.   

PERSONAL NOTE: I write to support law change.  Student loans should be discharged like any other form of debt.  This is not due to personal reasons: I have no student loan debts.  Instead, I have seen this immoral system and it’s result “up-close.”  My experience as a Bankruptcy attorney and with higher education have clearly revealed all the abuses that are taking place under the current legal system. 

Credit Card Havoc May Follow 2017 Federal Reserve Rate Increases

The Federal Reserve has reported that it anticipates raises in the Federal Reserve prime rates for 2017.   This raise in rates may have a massive “trickle down” effect that will alter many current financial norms.   Among these “norms,” credit card interest rates may soon be increasing.

Credit Card Interest Rates are Adjustable

Credit card interest rates are usually set to a variable or adjustable rates according to the terms of the credit card contract. This essentially means that credit cards rarely have “hard terms” when it comes to minimum payments or charged interest.  When the Federal Reserve changes the prime rate, the entire financial industry makes massive changes to adapt to these increases.   Many mortgages, investment loans, and smaller loans like credit cards will instantly become much more difficult to repay or even service monthly.

Credit Card Interest Rate Increases will Create More Payment Defaults

Essentially, the moment that interest rates increase on credit cards via prime rate increases, everything becomes much more expensive. All the items purchased through the credit card and the continuation of the credit card services greatly increase in price.  Because the total cost of servicing the credit cards increases, this increase can sometimes break an already tight budget.  Once a credit card payment is missed or late, many times the interest rate then increases exponentially. Interest rates as high as 24% in such situations are not uncommon. This can equate to charging up to four times the original amount or greater for the good or service that was purchased through the credit card.

Credit Card Defaults Frequently Lead to Bankruptcy

Because credit card defaults are very difficult from which to recover, bankruptcy frequently follows.  An already stretched budget cannot accommodate such large required monthly payments. In fact, the increase in interest rates cause defaults across the entire financial spectrum.  Credit cards are not the only avenue to bankruptcy during a Federal Reserve rate increase. 

The Rates Must Increase: Are We Living on Borrowed Time?

Because of the nature of our financial systems, eventually the Federal Reserve Bank rate must increase. The United States currently operates on an excessively over-leveraged, debt laden financial system.  As a nation, we may only be living on borrowed time.  Massive changes to our nation’s financial and debt systems will likely be required to put things back on track. If you are in need of a personal financial overhaul, do not take it personally.   The entire national financial system is right there with you. If you need to talk to somebody about debt relief or possibly about bankruptcy, do not hesitate to give our office a call.   

7 “Guaranteed” Financial Tips to Start 2017

With the start of 2017, an opportunity for a new financial future awaits for those who are willing to make financial changes in their life.  This article discusses seven tips for turning over a new financial leaf in 2017. These tips are not “pop culture” advice or entertainment: they require great life changes and sacrifice.  However, committing to these simple tips will guarantee new financial growth and success.  These tips are truly life-changing. 

Tip Number One: Reduce Your Expenses

Reducing expenses can quickly relieve financial stress.  Restructure your expenses such as monthly housing costs, automobile payment, or other reoccurring monthly expenses to be as close to $0 as possible.  Nothing is impossible unless you do not try. Remember, finances are determined by the numbers. Numbers do not lie and they do not change. If you can structure your budget with as low expenses as possible, your financial life will always be much easier.   Some of these reductions may require some major life changes. 

Tip Number Two: Go “Paid in Full”

Many Americans have become accustomed to purchasing homes and vehicles through financing. Mortgages, car loans, and personal loans only make life more difficult.  By adopting a paid-in-full mentality, everything in life becomes much less expensive. In addition, a paid-in-full mentality can quickly increase your net worth.  Sacrifice and even massive financial changes such as bankruptcy maybe necessary before you can adopt a complete paid-in-full mentality.  Also, a realignment of what’s important in life may also be in order before a paid in full mentality can be adopted.  If you are required to rent the least expensive option possible as you acquire financial knowledge so that you can live “paid-in-full,” it is still worth it.   Starting from the “ground-up” will revolutionize every financial aspect of your life. 

Tip Number Three: Work Easier

Over the years, we have seen many people working incredibly long hours. Sometimes people work two jobs or work a full-time job while operating a full-time business. Even in these situations, we have seen people desperately struggle just to stay afloat financially. Sometimes the best advice is to simply set up an easier work situation. If you’re too exhausted or simply do not have time to learn about financial things, then you need to shut down the direction you are going.  You need to shut everything down.  Take the time to slow down and plan the financial direction of your life.  Make life easier and much more financially rewarding!

Tip Number Four: Work Smart

Hard work alone can bring very disappointing results.  To achieve success in life, you must also work smart.  How much you can achieve in your financial life usually comes down to a simple equation: how hard you work is multiplied by how smart you work.  If you only spent 1/10 of the time each week planning on how you would work “smart,” then drastic improvement to your financial situation would rapidly occur.  If you make plans to work “smart,” then your precious labor hours will no longer be stolen away on generating just enough income to pay the bills.

Tip Number Five: Do Not Put Off Financial Education Any Longer

Following closely the previous tip of working smart, tip number five is to finally spend time seeking a full financial education.  People who do not have a financial education tend to work more hours with much less reward.   In order to get a full financial education, you must first forget and reject everything that you currently believe about finances. A financial education can be life-changing if you are willing also to make massive life changes in accordance with your new financial knowledge.  If you make following your new financial education a “life mission”, new wealth and ease of living will quickly follow.

Tip Number Six: Have Fun Getting Financially Smart

Getting financially smart can actually be fun. We all enjoyed playing Monopoly and over financial games when we were children. Financial endeavors and the accumulation of financial knowledge can feel more like an adventure then a burden if you pursue it in some a child-like, enjoyable manner. Setting up your life to enjoy a productive financial journey can be one of the best decisions you make during life.  Make it fun.   Turn it into an adventure.   

Tip Number Seven: Get Out of Debt

Getting out of debt is great way to restore financial freedom. If you are able to make a solid plan that can get you out of debt in two to three years, take action on that plan!  Treat it like an adventure. If you are unable to make a reasonable plan for getting out at debt, then you need to speak with a bankruptcy attorney.  It is pointless to “spin your financial wheels” your whole life.   It is also very disheartening to live your entire life paycheck to paycheck.   Make a resolution this year that will truly change your life forever: get out of debt and make it your life mission to make a solid plan for your financial future.