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Why Do Millionaires File Bankruptcy?

Millionaires – Why Do They File For Bankruptcy?

Millionaires file for bankruptcy due to the simplest reason: numbers.  They are always dealing with large numbers with their investments, assets, and banking endeavors.  Sometimes these numbers can quickly get millionaires into financial trouble that cannot be overcome without bankruptcy.

Millionaires’ Investment Downturns Cause Bankruptcy

Millionaire Bankruptcy

Investment downturns can be devastating.  We have all seen what the market can do to stock funds.  We have also all seen a business endeavor fail, even if it was only on a small scale.

The downturns that millionaires face with the business and investments that they own are multiplied due to the shear size of the numbers involved.   The asset sheet of a millionaire can decline rapidly.  These downfalls can quickly plunge a millionaire into financial ruin.  Sometimes only bankruptcy can satisfy all of their creditor obligations.

When a millionaire’s income source is strong and constant, they have the ability to indulge in an expense lifestyle.  If this lifestyle cannot be supported after a financial downturn, the assets of the millionaire are depleted quickly.   Some are unwilling to make major life changes quickly.  This is another source of millionaire bankruptcies that hit the headlines each year.

Millionaires will also have their Corporations File For Bankruptcy

The news also covers a multitude of millionaires that file bankruptcy cases on their corporations (that they own or partially own).   Bankruptcy is frequently the natural demise of any large business endeavor.  In fact, it can create a fair and proper venue for equally distributing the business’s remaining money and assets.  Sometimes, a Chapter 11 case can even result in the successful reorganization of the business. The news usually portrays these “millionaire” bankruptcy cases in a negative light whether or not the case was best for the corporation.

Millionaires Recover After Bankruptcy

Somehow millionaires frequently recover after bankruptcy.  Remember, millionaires usually know how money works.  They are also familiar with large numbers.  Millionaires frequently spearhead large projects even after bankruptcy.  Bankruptcy always offers bold relief after extreme economic downturns.  After bankruptcy, new financial opportunities abound.  Millionaires are not an exception to this rule by any means.  They are able to act on these opportunities and find financial success once again.

Build Credit

5 Ways to Build Credit

5 Ways to Build Credit

Building credit opens up a whole new world of options and savings that can be enjoyed throughout a lifetime.   Whether your credit is low or you recently filed for bankruptcy, you can still quickly build your credit.   Below are 5 quick ways to build the credit that you desperately need.

Settle or Dispute “Untidy” Credit Reporting

If you can settle debts that cause negative reporting, then you will be able to build your new credit on a solid foundation.   It does not matter how much new credit you can build if there are still several “untidy” spots on your credit report.   If you cannot settle the debt or if something is reported incorrectly, consider disputing the credit reporting.  Sometimes this can remove negative reporting from your credit report altogether.  If you face an impossible credit situation, consider filing for Chapter 7 bankruptcy.  Chapter 7 will also give you a solid foundation because it removes all negative reporting of your debts.

Acquire a Secured Credit Card Account

Consider setting up a secured credit card with a bank or financial institution.  This can be a very quick and easy way to build credit.  Make sure that you are able to leave a $500 to $1000 deposit or greater for the security interest.   You will need to find a bank or financial institution that offers secured credit card programs.  Not all banks offer these programs.   The credit that will be reported will be very beneficial.  It will achieve similar credit results as a normal credit card account.  The credit requirements, however, for starting such an account are not as strict or selective.   This can help get your credit reestablish your credit when no one is willing to offer you a conventional credit card account.

Small Bank Loan

A small bank loan is another quick way to build credit.  Whether the loan is secured or unsecured does not matter.  The bank will report your credit either way.  You can many times just start a CD account (certificate of deposit) with the bank where you will leave $1000 within the account as a security.   The bank may not require this and will simply offer you a $1000 loan with no security or restrictions.   If you can progressively build credit with 2-3 banks in this fashion, then you will always have a source for future loan needs in the future.   Over time, the bank will offer you much larger loans with no security required.

Affordable Automobile Loan

Affordable auto loans can also be a quick way to build credit.   Be careful.   Only purchase an automobile with a loan if you can afford to pay off the loan early in 1-2 years.   Although an auto loan can be a great method for building credit, high-balance and high-interest-rate auto loans can also easily drag a person back into financial problems.  Make sure that you can control and afford the automobile loan.   Place up to 50% down or greater when you purchase the vehicle also if possible.

Affordable Mortgage History

Eventually, purchasing a home through an affordable mortgage can also be a quick way to build your credit.  Home mortgages are usually long-term debts.  Consistently paying a large, long-term debt is one of the most powerful ways of building credit.  It can quickly build your credit up to the higher end of the spectrum.   Make sure to set up automatic payments with your banking institution.   Nothing builds credit more quickly and easily than setting up a payment (such as a mortgage or other loan account) on an auto-pay system.

Spring Clean Your Finances

What does it mean to spring clean your finances?  Spring cleaning occurs every year.   Some people clean up their yards.   Others deep clean their houses, removing unnecessary items.  Many people also attempt to “spring clean” their finances.  Getting things in order in your financial life could be the most important decision you make all year.  Extend this year’s spring cleaning into a brand-new domain by seeking some of the below goals for your finances.

De-Clutter Your Financial Life

Just as we “de-clutter” our house, sometimes you also need to de-clutter your finances.   You can de-clutter your finances by removing all unnecessary items out of your budget.  Your goal should be to reduce your expenses as much as possible.  Some expenses may be possible to reduce or rearrange.   Some expenses will simply need to be eliminated.

Systematically Pay Off Your Debts

Taking care of your debts and becoming as debt free as possible should also be your goal when Spring cleaning your finances.   The most basic way of achieving this is to make a plan to systematically pay off your debts.   Although your plan may take several months or even a few years, you should always have a solid plan for permanently eliminating your debt.  If you do not have this plan, then your financial house will remain in impossible disorder.  Plan for where every dollar goes and make sure every dollar counts towards your long-term goals.

Settle Your Debts

When Spring cleaning your finances, sometimes a particular debt may be too large to pay in full.  Many times, you can allow these debts to go into default and then arrange to pay the debt off with a single lump sum payment.   Sometimes you can only pay as little as 20-30% of the original debt.  If your debts become too large to repay, settling your debts can be a wonderful technique for putting your financial house back in order.

File for Bankruptcy

Spring cleaning your finances sometimes requires more bold and powerful action.  If your debt situation is truly impossible, you need to seek the advice of a bankruptcy attorney.  The most common time that people file for bankruptcy is during Spring.  A bankruptcy attorney can guide you through the bankruptcy process.  In addition, if bankruptcy is not the correct choice, the attorney will very likely also present other options for dealing with your debts.

Take Action Right Away

Do not be afraid to take bold action when Spring cleaning your finances.  Your financial life needs to be in order. It is actually even much more important than just the physical order of your home!  Make it your goal to get your financial Spring cleaning plans into action as soon as possible.

Indianapolis Bankruptcy Attorney John Bymaster explains how to spring clean your finances.

Chapter 13 Plan Payment Too High?

Is your Chapter 13 plan payment too high in your bankruptcy case?  You can sometimes have your bankruptcy trustee agree to reduce your plan payment.  Your Chapter 13 plan payment can be reduced due to variety of reasons.  If your payment is too high, such a reduction can save an otherwise impossible case.

Chapter 13 Bankruptcy Payment Too High

Reduction in Income Could Reduce your Payment

If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income.  If your income reduces, you are many times also allowed to reduce your plan payment.   This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.   Or, alternatively, if your plan is not yet confirmed, you can sometimes just have your attorney file an amended plan.  If your income has dropped considerably, you may even be able to convert your case to a Chapter 7 in some situations.

However, even if your Chapter 13 plan payment is too high, you cannot always reduce it simply due to a drop of income.  Some cases are already calculated at the absolute minimum level for achieving your Chapter 13’s goals.   For instance, if you are paying your mortgage and car payment through the Chapter 13 plan, you could very likely already be paying the minimum amount required for case.   In such cases, a drop of income would have no effect on reducing even an impossibly high Chapter 13 payment.  You would likely need to change the plan by surrendering the car or house in such a situation in order to drop the payment any further.

“Changing Your Plans” to Change Your Payment

Your plan payment can many times be reduced in Chapter 13 by “changing your plans.”  For instance, consider if you changed your plans by surrendering an over-priced, high-balanced automobile in your Chapter 13 case.   If this automobile had a balance of $35,000 in your Chapter 13 case, you could reduce your Chapter 13 payment up to even $650 per month.  Surrendering a house, a boat, a motorcycle, or other items can also sometimes have a similar effect.

Remember, however, not all cases are alike.   Every case has different requirements on repayment to creditors.  If your income is too high, you may not realize a significant reduction in your plan payment by “changing your plans.”  You may be required to pay back up to 100% of your debt in your Chapter 13 case depending on your debt and income levels.  Although you will generally always reduce your plan payment by surrendering items, a 100%-pay-back case may not receive the same dramatic discount on plan payment that other cases may realize in surrendering items.

Changes in Expenses or Circumstances

When a Chapter 13 payment is too high, a change of expenses or circumstances can also warrant a reduction in your Chapter 13 plan payment.  New expenses (if high enough) are many times valid justification for reducing your plan payment.  For instance, if a family is required to take on massive new daycare or child care costs, a reduction in the Chapter 13 plan payment may be possible.  If a family member becomes ill, this may result in new medical costs and a reduction of the Chapter 13 plan payment may be possible.

If your circumstances change, you can also sometimes reduce your Chapter 13 plan payment.  For instance, if you are encounter marital problems and become separated, you may be able to reduce your plan payment.   If more family members or dependents are added to your home, you may also be able to reduce your plan payment.

Chapter 13 Payment Too High?  Bankruptcy Lawyers Have the Know-How

Remember, always seek the advice of an experienced bankruptcy attorney if you want to reduce your Chapter 13 plan payment.  Most Chapter 13 bankruptcy attorneys have dealt with these Chapter 13 payment issues hundreds of times.  They have the experience to explain exactly what is possible in reducing your payment.

Service of Process to Bankruptcy Creditors

If I file Bankruptcy, Will I Need to Provide Service of Process to All My Creditors?

If you file for bankruptcy, all of your creditors will receive appropriate service of process automatically through the Federal Court’s noticing system.   Usually, you or your attorney will not need to directly notice your creditors.   Initial “service of process” occurs automatically when the federal court sends out the bankruptcy notice to each of your creditors.

What is Service of Process?

Service of Process is simply giving correct legal notice to another party that you have initiated a lawsuit or other legal proceeding.   The party in which you “serve” notice is usually a defendant or somebody else who has a stake in the case at hand.   Essentially, all appropriate parties must receive service of process in some legally-appointed fashion.

Proper legal service can occur in many ways.   It all depends on the type of law case being initiated.   Most forms of legal service do not occur “automatically” such as in Federal Bankruptcy Court’s noticing of the creditors.   In many non-bankruptcy cases, notice is frequently required either through signed certified mail or delivery by the county sheriff’s office.  Because of varying service requirements, refer to your attorney and your court’s local rules to see how service is appropriately made in any specific filing.

Service of process can also occur through a process server.   Process server companies will track down a defendant and personally deliver appropriate service.  This type of service has huge advantages for at least two important reasons.  First, the process server will many times be able to track down hard-to-find defendants on a case.   Second, the process server will have proof that the party received actual, personal notice.  It creates a situation where undeniable service took place with the opposing party.   The other party will be forced to attend hearings or other matters on the case.   If they do not attend, they will be held in contempt of court. The party will not be able to argue that there was no appropriate legal notice.

For more information on Service of Process, visit Hoosier Process Servers.

Bankruptcy Service of Process

How does Initial Service of Process (Notice) Occur on a Bankruptcy Case?

In a bankruptcy, a creditor list is required to be provided to the court in the bankruptcy petition.  In addition, at text file of all the creditor’s addresses (and other relevant parties) must also be provided.   By using this text file, the court’s noticing system will generate and mail out the bankruptcy notice to each creditor in the case.  This is part of the reason why the $335 and $310 filing fees are required on Chapter 7 and Chapter 13 cases respectively.   Part of these fees go to the cost of providing mailed notice to the creditors in each case.