Changes in Policy May Make Declaring Bankruptcy on Student Loans Possible

Despite what many students would likely prefer, at this moment it is all but impossible to include and have your student debt forgiven when filing for bankruptcy. To understand how massive this problem is, you should know that about 40% of those borrowing student loans will find themselves in default within the next five years. That’s a pretty extreme number; even more so when you consider that student loan borrowers currently owe almost $1.5 trillion.

Current State of Student Loan Bankruptcy Options

Right now, while it is technically possible to discharge student loans during bankruptcy, actually doing so is a complicated undertaking. There are three steps involved in the process, with the first being relatively standard: the person seeking bankruptcy needs to choose and hire a lawyer.

After that, the individual will need to determine precisely what type of bankruptcy they would like to pursue. Both of these steps are typical for anyone seeking to fine for bankruptcy, whether student loans are included or not.

The third step is the problem area. The person who is looking to file for bankruptcy must prove that they are facing undue financial hardship.

The reason this is complicated is because there is no universal definition of what undue hardship is. In fact, there is still no real consensus on what it even means. Proving something without an explicit definition is a challenging task, which is why student loans are typically not forgiven during bankruptcy.

Potential Changes to Definition

Currently, the Department of Education is working out how undue hardship should be defined. As it stands, the most common way to show undue hardship is to prove you do not have enough money to pay your loans. You also must prove that this inability will continue throughout a significant portion of the repayment period.

Some advocates for the inclusion of student loans in bankruptcy have suggested that there should be precise criteria for determining who qualifies. This might include having a disability related to military service, or being eligible to receive social security.

Recent testimony by the Chairman of the Federal Reserve, Jerome Powell, contained comments pertaining to the current state of loan debt and a borrower’s inability to discharge during bankruptcy. Most notably, he explained that individuals who are unable to pay off loans will see adverse effects on their credit ratings, and long-term negative impacts felt throughout their financial futures.

If you are curious about your rights when it comes to bankruptcy, Brent George Law in Thousand Oaks will happily provide you with a free consultation.

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How to Rebound from Bankruptcy

Filing for bankruptcy has become commonplace in the United States in the last several years. While it is not something anyone is eager to do, it does not carry the stigma it once did. Although this is often the best option to wipe the slate clean and move forward, your credit rating will take a nosedive.

Even though it may not have been the greatest before bankruptcy, this new addition can hinder your ability to get an auto loan, credit cards or mortgage for up to ten years. Working with a local bankruptcy lawyer can help you understand the ramifications and decide if this is the right choice for you. Once Chapter 7 or 13 has been filed and discharged, there are several steps you can take to begin rebuilding your credit.

Take a Breath and Regroup

Now that some of the weight of those finances has been lifted from your shoulders, the emotional impact of the discharge may hit. Throughout the process, most people don’t realize the how their life can change. There may be some disappointment and shame mixed in with the reality of rebuilding credit from the ground up. Take some time to reflect on what choices contributed to the situation and learn from them. Surround yourself with people who support you and can help you deal and healthily cope with the upcoming challenges.

Embrace a No-Frills Lifestyle

Depending on the type of discharge, the court may dictate that certain assets be sold to satisfy creditors. There may also be existing debts that have a specific payoff period, typically three to five years, designated by the court. As a result, frugality may be necessary. Downsized living quarters and tighter grocery and other spending budgets may be required. The Law Offices of Brent George can help you create a plan that meets the discharge requirements yet still allows you to move forward financially.

Rebuild Your Credit

Although it may be difficult in the beginning to rebuild your credit, it’s not impossible. Start with a secured credit card. Take some time to find one that has good rates and doesn’t report to the credit bureaus that it’s secured. Pay the bills that you have on time to show that you can be financially responsible. If you need to get a car or take out a loan, shop for lenders. You may be surprised at the options available.

Bankruptcy was designed to provide individuals and organizations a way to discharge some of their debts and start again fresh. With offices in both Oxnard and Thousand Oaks, The Law Offices of Brent George is an accessible resource that can walk you through the best options for your personal situation to get out of the clutches of debt and begin rebuilding your life.

Please explore our website, and reach out to us for any questions. Our first consultation is free!

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How Do Businesses Go Bankrupt?

The financial crisis between 2007 and 2008 saw many businesses file for bankruptcy. However, hundreds of companies file every year for a litany of reasons. As a precaution, it is worth it for any entrepreneur to speak to a bankruptcy lawyer well before the risk of filing is on the horizon, just to become familiar with the risks and also how to avoid going bankrupt. Consider it as part of an investment for the ‘health’ of your business.

Lack of Viability

A lack of viability is a sure way to struggle with your business. Part of ensuring viability involves making sure people want your product or service over a long period of time. Many businesses fail because they are entering an oversaturated market and there is too much competition. Every business needs to find a niche or a unique take on their product or service. If you open a small clothing store, then you need to offer consumers something they will not get by going to Target or Wal-Mart. Additionally, some businesses are based around an idea that is simply poorly thought out. Before starting any business, you should ask yourself what problem your company solves, and how is it different or better than the next guy.

Lack of Liquidity

In the event your company requires an influx of cash, the easiest thing you can do is sell off an asset. A bankruptcy lawyer can look at the assets you have acquired over the years and determine what would be best to turn into cash. This can include equipment, property, or even labor. A company may even need to sell excess inventory to pay employees’ paychecks.

Poor Leadership

When you run a business, you want to bring on other people to help you make important decisions. Candidates and employees should be carefully vetted so that you know you are only bringing on the best. You want to hire people who know how to make hard decisions, know how to prioritize, and are able to inspire employees.

No Solvency

Solvency is similar to liquidity, but it is more closely related to the debts a company needs to repay. Every business will require a loan at one point or another, but it needs to pay off this loan in a timely fashion with interest. You should be able to make loan payments on time while still being able to keep the business operational. Identify your “current ratio.” This is the rate of current assets, such as inventory, supplies and receivables, compared to current liabilities, which include monthly payments, payroll taxes and debts. Ideally, you want a current ratio of 2:1.

There are a number of ways businesses can lose revenue to an extreme degree. If your business seems to be inching toward this downward trend, then it would be wise to consult a bankruptcy lawyer to review your options.

The Law Offices of Brent D. George are here to help. Feel free to contact us – our first consultation is free.

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Should You File for Bankruptcy After the Holidays?

The decision of whether or not to file for bankruptcy is always a stressful one, but when you have to make it around the holidays, it’s even worse. You might be wondering whether it’s better to just get it over with or if there are smart reasons to wait until after. While consulting with experts such as Brent George Law in person is probably your best bet, here are some of the things that will need to be considered.

Income
There are two types of bankruptcy, Chapter 7 and Chapter 13. In order to determine which you are eligible for, your income for the six calendar months prior to filing will be taken into consideration. This means that if you file in December, Christmas or end of year bonuses will not be included. This is true whether the bonuses are in the form of check or cash. If you wait until after the holidays, then this additional income will be included in your income determination.

Holiday Expenses
No matter how poorly you’re doing financially, you’re probably going to be spending some money on gifts. According to the laws surrounding bankruptcy, anything you purchase within three months before or three months after the Christmas holiday cannot be included in the bankruptcy filing, meaning it is debt that won’t be forgiven. Whether you pay that debt off immediately or agree to a payment plan, you must pay for these debts unless the purchases during these months were for things you legitimately needed.

Taxes
Income tax is another area to consider when deciding when to file for bankruptcy. The IRS always gets paid eventually, no matter what type of bankruptcy you file. If you’re filing Chapter 7 bankruptcy and you have no assets, you’ll have to make a payment plan with the IRS. If you do have assets, then they can be sold off to pay your debts, of which that owed to the IRS comes first. If filing a Chapter 13 bankruptcy, you’ll likely want to do it after taxes are due. Among the benefits to this are that you will be able to pay off other debts first and you will avoid penalties and interest added during your case.

There are much more intricate details that you will want to think about when determining when you should file for bankruptcy, but these are a few of the key items to bear in mind when making the decision around holiday time. Because of the complexity and fine legal print involved, meeting with a specialist in bankruptcy like Brent George Law can help you decide if you are a good candidate for filing and when the best time to do so would be.

Don’t hesitate to give us a call if you have any questions – our first consultation is free!

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Avoid These Mistakes That Can Bankrupt Your Business

Owning a business is more challenging than most people expect. Every decision you make has the potential to affect the bottom line, both short and long-term. Furthermore, the people you work with may not have the same vision for your business as you, or they might not have the same work ethic necessary.

For the same reason, hiring a good, reliable staff can be difficult as well. In the end, you can create a great culture with the best staff and have problems keeping your business afloat.

Not all mistakes are the learning opportunity you hope for. Some mistakes can actually lead to bankruptcy for your business. Here are some tips to help keep you from having to call a bankruptcy attorney.

Beautiful Office Space

Many people imagine their ideal office space location in a downtown hub where all the activity is. A cool office with a great location means real business, right? The reality is, prime office space costs money and adds to your overhead. If you’re just laying the foundations, so to speak, it’s best to start modestly until you can gain your financial footing. Most startups can run from home and are probably better off that way in the beginning. Hold off getting yourself into debt before your business is mature enough to handle it.

Hiring Staff

If possible, holding off on hiring full-time employees may be a money-saver. If you have a task that needs to be done that is beyond your experience, consider hiring a freelancer. You can budget for particular projects without taking on the overhead of an employee. Many small businesses don’t have the workload to support such an employee early on. Take your business one step at a time.

That being said, if your company is ready to expand, don’t hinder its growth by holding back. Investing in the human capital necessary to grow your business could make all the difference in helping your business reach its full potential.

Saving Money

Always make an effort to save money. Before you even make your first dime, set up these five accounts: income, owner’s compensation, taxes, profit, expenses and savings. Any money that comes into your business should go into the income account. Twice a month distribute the money among the accounts based on a predetermined percentage.

Don’t be afraid to run your business lean. You want to be able to pay your bills, but by limiting the money available for expenses you become more intentional with your spending habits. It also frees up money to put aside for emergencies. Instead of waking up one day and realizing your finances are a mess and you may need a bankruptcy lawyer, you can fall back on your savings to get through the rough patch.

When running a business, it is easy to get caught up in what others are doing. Your business has its own special needs. Maybe you don’t have that fancy office downtown or have the most expensive computers or the largest staff, but you do have a business that is turning a real profit.

If ever you find yourself struggling financially and may be considering bankruptcy, contact Brent George Law, or reach us at 805-494-8400. Our first consultation is free.

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Can I File Bankruptcy If I Recently Used Credit Cards?

What happens if you use your credit card before you file for bankruptcy? We explain in our latest information video:

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How Does Bankruptcy Affect the Economy?

When an individual, business or corporation finds themselves overwhelmed by debt, they are faced with the option of bankruptcy. There are different types of bankruptcy, but they all involve finding ways for the floundering borrower to come to terms with the lenders. This may involve a payment plan, the selling of assets to pay the loan, a discharge of debt or other solution. When big corporations declare bankruptcy, it makes the news; however, there are smaller bankruptcies taking place around the country almost every day. This begs the question, is it healthy for the economy?

Large-Scale Advantages of Bankruptcy

Whether talking about consumer or corporate bankruptcy, one of the main benefits of bankruptcy is that it provides a way for borrowers to get out of debt, even if it has some downsides to the individual or company going through it. This provides some safety in case unforeseen problems occur, which makes borrowing money a little less risky for consumers and businesses. This facilitates borrowing to stimulate the economy through buying goods, property or taking risks in business. Creditors also know that they have a last recourse in case they are unable to collect outstanding debts, so they feel more secure in giving out riskier loans.

Additionally, consumers have a chance to stimulate the economy even when they are in massive debt. If it were not for the option of bankruptcy, many of them would be forced to quit their job and not own any property out of fear of assets seizure. With the option for bankruptcy, these individuals have a chance to work with a bankruptcy lawyer, such as Brent George Law, to find a solution that allows them to continue to work, pay taxes and consume, all of which stimulates the country’s economy.

The Negative Impact of Bankruptcy

When individuals and/or businesses start to enter bankruptcy in large numbers, it does have the potential to negatively impact the economy. This is generally a sign of a large-scale problem in the economy, such as a depression or recession. When there are large numbers of bankruptcies, then consumers and companies start becoming more conscious about lending and spending beyond their means, which could stifle the economy. When consumers stop spending, this could lead to more companies losing profits and facing bankruptcy themselves.

Generally, bankruptcy is a positive influence on the economy. It allows consumers to find a way out of massive debt so they can once again start engaging in the economy through buying goods, services and large-scale assets such as vehicles and real estate.

For more information or inquiries about bankruptcy, visit our contact page, or call The Law Offices of Brent George at 805-494-8400. Our first consultation is free.

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Bounce Back From Bankruptcy

Filing bankruptcy can give you the opportunity for a fresh financial start. Working with a knowledgeable bankruptcy lawyer such as Brent George can relieve pressure from creditors and stop garnishments or other collection activity. Once the bankruptcy is discharged, it’s time to rebuild credit and focus on the future.

Budget Spending and Saving

First, understand your spending habits. After tracking income and expenses for a couple of months, develop a budget that you can adhere to. Make saving part of each month’s budget so you’re ready for unexpected expenses or great opportunities. As your circumstances change over time, update your budget to reflect these changes.

Monitor Your Credit

Even though your credit score may have gone down due to past delinquencies, it’s never too soon to start rebuilding. Make sure your credit report accurately represents your credit activity. You may want to discuss options for correcting errors with your bankruptcy lawyer.

Make Timely Payments

By making timely payments, your credit score can start to improve. It’s also important to avoid bouncing checks, incurring overdraft fees, or taking out payday loans. When these credit options are on your credit report, they may give your creditors the impression that you’re experiencing cash flow issues.

Rebuild Credit with Credit

While you may use cash or debit for the majority of purchases, you may also look for opportunities to purchase on credit when possible. It can be helpful to set up a credit card account and use it only when you plan to fully repay the balance each month. In addition to helping rebuild credit, you may also earn awards such as cash back, airline miles or discounts.

Once you have a couple of credit accounts established, you may not want to add or move accounts for at least a couple of years. Although you may qualify for a lower rate or introductory offer, opening and closing accounts, or adding too many accounts, may lower your credit score in the long run.

Postpone Making Major Purchases

You may be able to find lenders to finance automobiles or other major purchases immediately after bankruptcy. If possible, postpone these types of purchases for at least a couple of years. You may qualify for better rates and terms once you can show positive payment history.

Share Your Story

Bankruptcies occur for many reasons. Sharing your story with potential creditors, including the steps you’re taking to rebuild your credit, may positively influence their credit decisions. Consult with your bankruptcy lawyer on how to present your circumstances in the best light as you move forward with rebuilding your credit and bouncing back from bankruptcy.

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How Does Bankruptcy Affect Your Credit Score?

When considering options for debt relief, it is important to be aware of the impact your choices may have upon your credit score. There are various factors that influence a credit score rating, and while filing for bankruptcy will undoubtedly lower your credit score, having your debts go to collection agencies will also have a negative impact. It is not unusual for a credit score to go up as much as 100 points within 12 months after filing a Chapter 7 bankruptcy. In some instances a debtor’s credit score has increased as such as 150 points within the 12 month post-filing-period. If you find it difficult to understand all your debt relief options, Brent George Law in Ventura County is here to help.

Chapter 7 vs Chapter 13

The two types of bankruptcy used for personal debts are Chapter 7 and Chapter 13. How many points they knock off your credit score is partly based on how good your score is prior to filing. Higher scores tend to fall farther than lower scores, although other factors such as the amount and type of debt also play a role. The drop in the credit score can range from 150 to 260 points. The main difference between Chapter 7 and Chapter 13 is how long they stay on your credit report. Chapter 13 may be on your report for seven years and Chapter 7 lasts as long as 10 years.

Credit Recovery

There are some steps What can you do after a bankruptcy to improve your credit score? The first step is to monitor your credit report on a regular basis. Check it for inaccuracies and make sure that as your debts are discharged they are no longer listed as delinquent on your credit report. You should apply for credit that has less stringent requirements, such as car loans and department store cards. Also keep your older lines of credit active, if possible. That credit card you’ve had for 20 years gives you extra points on your credit score for the length of its credit history. With careful and judicious use of credit, after a few years you can emerge from your Chapter 7 or Chapter 13 filing with better financial health.

Professional Help

Be sure to seek professional help when dealing with debt. Brent George Law can assist you in wading through all your options. They have the experience and qualifications to advise you with your finances. It is difficult to live without good credit. Everything from renting a home, getting a job, and buying furniture on the installment plan can be affected by your credit rating. No one plans for a bankruptcy, but it may give you the clean slate you need to start over. With Brent George Law of Ventura County on your side you can get the competent help you need to make an informed decision.

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Chapter 7 Bankruptcy: Four Ways an Attorney Protects You

Filing for bankruptcy is a difficult decision. If it’s one you’re facing, you are likely wondering if you can afford to hire a bankruptcy attorney. To make the right decision, you need to understand how they can help. You also need to know what you’ll be facing if you proceed on your own. Only then can you make the best choice for your situation.

Knowing Which Chapter to File

Many problems that occur during a bankruptcy come from prebankruptcy decisions. Deciding which chapter to file is one of those, as different chapters protect different things. Many people who represent themselves file under the wrong chapter for their situation simply because the law is so complex. In fact, some people don’t need to file for bankruptcy at all! Having an experienced, reputable firm like Brent George Law behind you will prevent that.

Filing Documents

There is a plethora of documents that must be filed to start the bankruptcy process. There are even more during the process as well as after the hearing. Incorrect or missing documents can disrupt the entire case. Using the wrong property exemption forms can cause you to lose assets you hoped to protect. A well-versed attorney will save you time, frustration and potentially costly mistakes.

Meeting Requirements

There are specific requirements that must be met prior to filing that many people misunderstand or miss. A vivid example of this is the requirement of credit counseling in Chapter 7 and Chapter 13 cases. The counseling has to come from an approved provider and usually requires a certificate of completion to be filed before the bankruptcy itself. People representing themselves often don’t realize this and either miss it completely or receive the counseling from a firm that isn’t an approved provider. A bankruptcy attorney knows the requirements you’ll need to meet, as well as when and how you have to meet them.

Preparing for the Unexpected

During the hearing itself, creditors can file motions for a variety of reasons. If you’re representing yourself, you may not know how to respond or defend yourself. This can also result in the need to file additional documents that you don’t understand or are unable to complete inaccurately. This is where a bankruptcy attorney is of the most value, as their expertise will let them respond immediately.

Making Your Decision

Understanding the complex requirements of filing for bankruptcy is only part of what you need to know. Understanding how just one incorrect form can lead to your case being dismissed or property being lost is just as critical, if not more so. Hiring a bankruptcy attorney will protect you from unnecessary loss, save you time and be the expert you need in this already difficult time. Call the Law Offices of Brent George for a free consultation on your case.

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