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December 20, 2018 By Jen Lee 1 Comment

What’s So Special About Chapter 13?

Whenever I mention Chapter 13, I get looks of horror from clients and people listening to talks I give about financial stress. Chapter 13 is a repayment plan of 3-5 years and many seem to think that it is the end of the world, so I decided to do a blog post about how powerful Chapter 13 really can be in the right situation.

Why declare bankruptcy if I have to pay it back??

The first thing that is totally misunderstood or misrepresented about Chapter 13 is that you have to pay back everything you owe. While that may be true if you have a lot of equity in your house or other assets, Chapter 13 often results in a very low payment to unsecured debts like credit cards. In fact, many cases pay back 0% to credit cards. However, Chapter 13’s power comes in being able to pay back other debts (like taxes or mortgage arrears), relieving the pressure of minimum payments, and restructuring what you have so that you come out of the payment plan with a fresh start.

Isn’t debt settlement a better option?

Yes, debt settlement is a better option…for debt settlement companies. I always explain to clients that Chapter 13 IS debt settlement, but with a court order. There is little to no negotiation and the court reviews everything to make sure that creditors are getting what they are legally entitled to under the bankruptcy law. Again, that often means that your credit card companies get a small percentage of what they would under a debt settlement agreement.

But, my credit is ruined for 10 years and I can’t buy a house for 10 years!

Wrong. You can actually buy a house while in Chapter 13. If someone offered you a deal that you could be out of debt in 5 years, buy a new house, and have a 700 credit score (or higher) if you agree to make a monthly payment on time each month, would you say no or that it is a horrible idea? Not that Chapter 13 is all fun and games, but it’s a viable tool for getting a fresh start, clearing debt, and restructuring.

Aren’t the only people filing for Chapter 13 bad with finances?

Nope. One of the analogies I often use is that business owners and successful individuals do not have a problem using the laws as needed to get the best deal, whether it is tax planning, estate planning, or yes, even bankruptcy. There seems to be this idea in more middle-class populations that using laws to our advantage is somehow taboo and even unethical. Whether you are bad at finances or not, understanding the rights and options available to you is a smart move. Please note that I’m not encouraging people to run out and file bankruptcy for the fun of it. My point is that sometimes the smartest move is to get back on track and avoid the possibility of being homeless before the financial stress of the situation causes bigger problems.

So, this post was written a little tongue-in-cheek. I find that there is so much misinformation about what Chapter 13 is, what it can do, and why it’s often a good thing, that I tend to get a bit sarcastic. However, while Chapter 13 isn’t always a fun idea, it can often be life-saving, marriage-saving, and the fresh start that people need to move forward.

This is just a basic overview and is not legal advice specific to your situation. If you have questions about your rights when it comes to debt and credit, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment on our scheduling site.

Filed Under: Bankruptcy, Bankruptcy Process, Debt Consolidation

January 17, 2018 By Jen Lee Leave a Comment

Identity Theft and Tax Returns

Taxes and ID Theft
Taxes and ID Theft

If you are not expecting a nice big refund on your tax return, you still want to file your taxes as soon as possible. This time of year, we start getting a lot of phone calls regarding identity theft, rejected tax returns, and missing refunds. The general story is almost always the same:

Jane files her tax return on April 1st. She gets a response back from the IRS that her tax return has been rejected because it has already been filed. Jane knows that she hasn’t already filed her tax return and starts investigating.

She finds out that someone else has filed using her social security number and likely bogus income/deduction numbers that resulted in a mid-size refund back to the scammer’s bank account. Before the whole thing can be tracked down, the scammers are gone with the refund and Jane is left with a mess to resolve with the IRS.

There’s a second part to these stories. Once we find out that the tax return is rejected, we recommend that the victim get a credit report for all family members. At that point, there is often identity theft involving new lines of credit, new car loans, or other accounts that family members have no idea existed.

Another reason to worry this year: Equifax.

I’ve done some writing on the Equifax data breach over the past few months. One big reason to especially worry this year is because of the Equifax data breach. We have no idea who has access to social security numbers and other identifying information. Filing your tax return as soon as you are able cuts off some of the risk of falling victim to this scam.

This is just a basic overview and is not legal advice specific to your situation. If you have questions about your rights when it comes to debt and credit, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment on our scheduling site.

Filed Under: Credit, Identity Theft Tagged With: Credit, ID Theft, Taxes

January 3, 2018 By Jen Lee Leave a Comment

Top 7 Lies about Chapter 7 Bankruptcy

Chapter 7 Lies

I’m always interested in seeing what others are saying about bankruptcy on the internet. Last night, I ran across an article that made my toes curl because it purported to explain the pros and cons about Chapter 7 bankruptcy. I’m not going to link the article (I don’t want traffic going to misinformation), but these myths can be found all over the internet. This is the list of “cons” for Chapter 7 bankruptcy. I’ll break them down for you and talk about truth vs. misconception:

  1. The negative consequences are long-lasting.

    This is kind of a half-truth. Yes, filing bankruptcy is a tough position to be in. But, this article went on to say that “your credit is RUINED for 10 years.” Not true. You can have a 700 credit score one year after filing bankruptcy, if you do it right and rebuild.

  2. You are going to lose your property.

    According to this article, “there’s no way around losing your property. All of your stuff will be sold to pay your creditors.” Um, no. Very few bankruptcies that are filed result in the sale of assets. And, in those cases, it’s more than likely a planned liquidation where you go in knowing which assets are going to be sold. This is one of the benefits of having a bankruptcy attorney help figure out your options and a plan.

  3. You will have to give up all your credit cards as part of the bankruptcy.

    Ok, this one is true. All credit cards get canceled as soon as you file. However, part of rebuilding can include getting secured cards, as soon as 90 days after filing. The main point is that you get a fresh start and you don’t want to revert back to any situations that got you into bankruptcy in the first place.

  4. It will be nearly impossible to obtain a mortgage for a long period of time.

    The article equated this to the credit card issue above. However, this one is false. Unless 1 year after filing bankruptcy is considered a long period of time. If you rebuild (not repair), most people qualify for a new mortgage from a credit standpoint 1 year after filing bankruptcy. You just need a knowledgeable mortgage lender.

  5. If there is more trouble down the road, your options will be limited.

    The article then goes on to say that you can only file Chapter 7 once in a six-year period, which is completely incorrect. It’s actually 8 years, but there are other options for dealing with debt, both inside and outside of bankruptcy.

  6. Some debts survive bankruptcy.

    This is true, but then the article goes on to state that child support, alimony, or student loans cannot be eliminated. This is not entirely true, as there are cases where student loans can be discharged in bankruptcy. It’s fairly rare, but you want to make sure you find out how all of your debts are being dealt with as part of the process.

  7. It’s embarrassing.

    This one has completely incorrect information. It says that “you will have to explain to both a judge and/or bankruptcy trustee what led you to having to file bankruptcy.” Absolutely false. In most Chapter 7 cases, you never even see a judge. The trustee reviews your documents, confirms that the information is accurate, and nowhere in the documents is it stated why you are filing bankruptcy. It may be embarrassing to you because you don’t want to be in the situation or try to explain it to friends and family, but you do not have to sit and be judged for it in court.

  8. In closing, please make sure that you know your rights and options. It’s very frustrating to hear from someone that they avoided finding out their options because of misinformation.

    This is just a basic overview and is not legal advice specific to your situation. If you are considering bankruptcy or are feeling overwhelmed by debt, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment on our scheduling site.

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Filed Under: Uncategorized

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LEGAL ADVERTISEMENT. The information included on this website is not intended as legal advice. You should consult with a lawyer before acting on any information contained in this website.

Jen Lee Law, Inc. is a federally designated Debt Relief Agency. Jen Lee helps clients file for bankruptcy protection under the laws of the United States.

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