Massachusetts residents and others who are in a Chapter 13 bankruptcy can usually still get financing to buy a car. However, doing so will require court approval. In many cases, subprime lenders will be the ones to make offers to those involved in a bankruptcy proceeding. It is also possible that a bank or credit union will work with an individual if he or she has a relationship with that financial institution.
After the terms of the purchase have been negotiated, a prospective buyer will take a buyer's order to the bankruptcy trustee. Requests are generally only approved if a debtor can prove that there is a need to purchase it. Therefore, it is unlikely that a trustee will allow someone involved in a Chapter 13 bankruptcy to buy a luxury vehicle. If the trustee approves, it will send a Motion to Incur Additional Debt to the court.
The judge in a given bankruptcy case as well as the creditors involved in it will have a chance to object to accruing more debt. If the request is approved, the court will provide a debtor with an Order to Incur Additional Debt. This will be given to the dealer and lender that a person has chosen to work with. From there, the auto purchase process will proceed as it would in any other transaction.
By filing for Chapter 13 bankruptcy, an individual may be allowed to reorganize mortgage, credit card and medical debt. It may also allow individuals to keep their house or car during the debt repayment period. In some cases, it may be possible to accrue new debt if it is needed to help find a job or support a child. An attorney may help debtors learn more about the process of filing for bankruptcy.
Hip-hop fans in Massachusetts and around the country may know Kimberly Denise Jones better by her stage name Lil Kim. The diva shot to stardom in 1996 when her debut album 'Hard Core" topped the Billboard 200, but she has not always fared as well outside the recording studio. Lil Kim's money problems have provided grist for gossip columnists for several months, and media outlets have now reported that the beleaguered rapper filed a Chapter 13 bankruptcy petition in early May just days before a bank foreclosed on her Alpine, New Jersey, mansion.
The artist's Chapter 13 filing suggests that her money issues are largely a result of declining income. Lil Kim says that she earned more than $800,000 in 2016, but court documents reveal that her income fell by more than 50 percent to $398,000 in 2017. The rapper claims that she now earns $18,286 per month and pays $12,784 in expenses.
Assets owned by Lil Kim include a 2000 Mercedes-Benz, a 2005 Bentley and jewelry worth about $25,000. Court documents reveal that Kim owes more than $4 million in secured and unsecured debts including $664,474 in delinquent mortgage payments on the New Jersey mansion she purchased in 2002. Media reports claim that she also owes $1.47 million in back taxes.
Even highly successful people can find themselves in unmanageable financial situations. The bankruptcy laws were drafted to allow individuals to escape crippling debt and provide them with the possibility of a fresh start, but myths and misconceptions prevent many people from taking action. Attorneys with debt relief experience may help dispel these misunderstandings and explain how filing a Chapter 7 or Chapter 13 personal bankruptcy petition puts an immediate end to creditor harassment and opens the door to a new financial future.
Massachusetts individuals and couples sometimes consider bankruptcy when they don't have enough money to pay their bills. However, there are some important things to know about bankruptcy laws and what types of debts can or cannot be discharged.
Most unsecured debts such as credit cards, utilities, payday loans and past-due rent may be discharged. These debts often make up a large part of Chapter 7 bankruptcy claims. Chapter 7 bankruptcy could help a low-income individual or couple get a fresh financial start after job loss or a serious illness. Although there are some obvious benefits to filing for this type of bankruptcy, it's important to note that the court could sell a person's property to help pay back some of their debts before they are discharged.
For those who want to keep their home, vehicles and other valuable property but have trouble paying all of their debts in full every month, Chapter 13 bankruptcy may be an option. This type of debt relief may allow people to include some federal income taxes and debts related to marital settlements. Debts are not immediately discharged with Chapter 13 bankruptcy; individuals and married couples who choose this option enter into a payment plan that spreads the debts over several years.
Some debts are difficult to have discharged in bankruptcy. For example, student loan debt, federal taxes and homeowners association fees are typically not discharged. Although a person might qualify for an exception, the approval process may be long and potentially expensive. Those with these types of debts may consult with an experienced bankruptcy attorney for advice regarding how to handle these and other debts.
As people in Massachusetts and throughout the country get older, their healthcare expenses generally increase. One way to cover some of these expenses is to apply for Medicare. Individuals are eligible to enroll starting three months prior to turning 65 and for another four months after turning 65. Those who work for a company that has more than 20 employees can enroll for Medicare Part B and Part D after retirement without penalty.
It is important to plan for deductibles and other out-of-pocket costs that may be incurred even after signing up for Medicare. These can be covered by a Medicare Advantage program or by opting for other supplement plans. Medicare Advantage is sometimes referred to as Medicare Part C. Individuals may also be able to reduce their healthcare expenses in retirement by simply looking at their bills and asking questions.
There is a chance that something has been coded improperly or otherwise put into a bill by mistake. Those who receive medical services are urged to never assume that they owe whatever they have been asked to pay. A third party can review an invoice to help ensure that it is accurate. To make it even easier to pay healthcare costs in retirement, individuals can contribute up to $3,450 in 2018 to a health savings account.
Anyone who is having trouble paying their medical bills may be able to have them discharged through bankruptcy. A Chapter 7 bankruptcy proceeding may allow debts to be discharged immediately while Chapter 13 protection allows a person to have the debt reorganized and repaid over a period of three or five years. While a bankruptcy case is open, creditors are generally unable to contact a debtor or take action such as repossessing property or foreclosing on a home.
Some residents of Salem, Massachusetts, may be finding themselves deeper in consumer debt these days. If so, they are following a national trend. According to a leading financial institution, consumer borrowing is at an all-time high.
Nonmortgage consumer debt is approaching $4 trillion nationwide, and it is possible that it will exceed the 4-trillion mark by the end of 2018. According to the institution, the largest portion of this figure is credit cards, auto loans and student loans. In terms of a debt-to-income ratio, the percentage of consumer debt to disposable income is higher than it was in the years preceding the mortgage collapse of the last decade.
There may be several reasons for the rise. First, interest rates are low for both credit cards and auto loans. Second, the cost of post-secondary education continues to rise, leading to an increase in the student loan debt. Finally, consumers may be feeling more comfortable in both their own finances and the economy.
On the good side, the default rate remains relatively low at present. On the other hand, the Federal Reserve is expected to raise interest rates later this year. For those with variable rate loans, an increase in payments on those loans can be expected.
Many people do not foresee financial trouble until it is too late. Increased borrowing may fit into the monthly budget at present, but an illness, a job loss or unexpected expenses can do a great deal of damage to a person's finances. If someone begins to default on payments, the cost of credit becomes more expensive. For individuals who are experiencing financial distress, meeting with a nonprofit credit agency or a bankruptcy attorney is a wise decision. In some cases, filing for bankruptcy can forgive some of a person's debt and provide him or her with much-needed financial relief.
Massachusetts residents who are struggling with overwhelming debt often put off filing for bankruptcy because they worry that a Chapter 7 or Chapter 13 petition will ruin their credit and make future borrowing difficult or impossible. However, a report recently released by the online financial exchange Lending Tree suggests that these fears may be exaggerated. Researchers discovered that 43 percent of Americans who file a bankruptcy have credit scores of 640 or higher just a year later, and this figure rises to 65 percent after three years.
The Lending Tree report also reveals that a previous bankruptcy may not have much of an influence on auto loan rates. While individuals who take out a $15,000 car loan within a year of filing for bankruptcy pay about $2,171 more in finance charges, these additional costs drop by almost two-thirds to $799 within two years.
However, experts say that recovering from a bankruptcy quickly involves planning. Financial planners advise those who have filed a personal bankruptcy to budget carefully and borrow sparingly to avoid falling into the debt trap once again. They also urge debtors to look at the positive aspects of pursuing debt relief and the fresh start that taking action can provide.
Attorneys with experience in this area may be familiar with several myths and misunderstandings surrounding personal bankruptcy. A lawyer could address such issues by explaining to a client how the bankruptcy laws were not written to punish poor decisions but to provide second chances. Legal counsel could also point out that filing a Chapter 7 or Chapter 13 bankruptcy petition will prompt an automatic stay that puts an immediate end to all collection efforts and protects paychecks from garnishments.
Credit card account holders in Massachusetts generally fall into two categories. The first type charges many transactions to build up points and rewards and pays off the balance every month. The second type cannot pay off the balance every month and accrues interest charges on their revolving debt balances.
According to data from Experian, 43 percent of card holders have revolving debt. Experian reported that on average people carrying balances owed interest payments of approximately $1,000 every month. These high balances have pushed the total amount of credit card debt in the country over the $1 trillion mark. The average balance owed on credit cards stands at $6,354 as of 2017.
Utilization rate impacts the credit scores of consumers as well. This rate refers to the percentage of an available credit line that people use. Even people who pay off balances in full every month might have reduced credit scores if they are accessing high percentages of their credit routinely. To avoid negative scoring, people should ideally use less than 30 percent of available credit. The credit scoring agency recommends that people hesitate to open new credit card accounts. Every time people open new credit accounts, their credit scores take a hit.
Even people who manage their money carefully might fall into debt due to circumstances like job loss or a medical emergency. Someone overwhelmed by credit card debt might benefit from consulting a lawyer. Legal advice could inform the person about consumer rights and strategies for debt relief. A lawyer could take action to challenge harassment by creditors and potentially negotiate a new payment plan that lets the person catch up. At times, bankruptcy presents a viable option for creating a financial fresh start. A lawyer could explain which debts a bankruptcy could discharge and prepare the court filings.
The weight of overwhelming debt is a heavy burden for many people across Massachusetts. Bankruptcy may offer a way out, but many are concerned about the stigma and financial consequences that come with a bankruptcy filing. Despite that, bankruptcy is the best option for many.
According to the U.S. Trustees Program, approximately 733,000 business and people are expected to file for bankruptcy in 2018. That number is up from 2017 but far below the peak of 1.5 filings in 2010. The high number of filings is due to the massive personal debt the American people face. By the end of 2017, Americans held over $13 trillion dollars in debt. According to the Federal Reserve, $8.8 of that included mortgages while the rest was on student loans, car loans, and credit card debt.
The benefits of filing bankruptcy are clear. Bankruptcy will allow a debtor to eliminate or lower many of their debts if they comply with the bankruptcy rules. A fresh financial start has allowed millions of Americans to get their life back on track. Simply filing instead of delaying the inevitable can help some individuals keep from wasting assets that would otherwise be untouchable in bankruptcy court. There are downsides to bankruptcy, of course. The most important one is the effect a filing can have on a person's credit score. While a bankruptcy filing can make it difficult to get financing for larger purposes, many who are facing bankruptcy already have a credit score wrecked by defaulted debt.
While it can be scary, personal bankruptcy can be the best option for breaking the cycle of endless collection calls. A fresh financial start could mean an entirely new life for some. An attorney with experience in bankruptcy law may be able to help someone with heavy debt file for bankruptcy and eventually discharge their debts.
Massachusetts debtors may gain some relief from their debts through the bankruptcy process. However, there are some types of debts such as tax liabilities that may be mostly nondischargeable. While tax liabilities might be discharged in some situations, the ability to do so is limited.
In general, tax debts must date to a return that was due at least three years before the bankruptcy petition was filed. The tax return with which the debt is associated must have been filed at least two years prior to the bankruptcy petition. The debt must have been assessed against the debtor at least 240 days before the filing of the petition.
Tax debts that are associated with frivolous or fraudulent tax returns are not dischargeable. They also cannot be related to tax evasion. In most cases, people are not able to discharge tax debts that arise from returns that they failed to file. They also cannot be from late tax returns that were filed within two years of when people filed for bankruptcy. Finally, people cannot discharge withholding taxes for which they are responsible.
People who have questions about how their tax liabilities might be handled during their bankruptcy cases might want to talk to bankruptcy law attorneys. The lawyers may evaluate whether or not the tax debts might be dischargeable. If they are, the attorneys may then seek to have them discharged in bankruptcy. If the tax debts are not dischargeable in Chapter 7, the attorneys might recommend that people consider filing for Chapter 13 protection instead. This is a type of debt reorganization bankruptcy. Choosing Chapter 13 might give people longer periods of time to repay their tax liabilities while paying a small percentage of their other unsecured debts. If they successfully complete their repayment plans, the other unsecured balances may be discharged.
The average household in Massachusetts and throughout America has a credit card balance of $6,081. It is not uncommon for credit card balance holders to carry that debt for many years, which can lead to thousands of dollars in accrued interest.
Someone who made just the minimum payment on a $6,081 balance with an interest rate of 14.99 percent would pay $4,063.89 in accrued interest. However, by paying $100 more than the minimum payment each month, that person would accrue just $1,409.26 in interest. By making the minimum payment each month, an individual would take 169 months to pay off that debt. Paying $100 more than the minimum each month would allow a debtor to pay that balance off in just 41 months. Eliminating the need to pay interest on credit card debt can actually produce a better return on a person's money compared to most investments.
Individuals who are interested in paying down their credit card debt as quickly as possible can use either the snowball or avalanche method. The snowball method focuses on paying down the smallest balances first while the avalanche method focuses on paying down the cards with the highest interest rates first. After getting out of debt, it is worthwhile to continue paying off balances in full each month.
Filing for bankruptcy might be an effective way to obtain debt relief. In a Chapter 7 case, an individual may have credit card and other unsecured debts discharged in a short period of time. While a bankruptcy case is ongoing, creditors generally cannot contact a debtor or take actions such as repossessing a car or foreclosing on a home. An attorney may be able to explain the process of filing for bankruptcy or who may qualify for Chapter 7 bankruptcy protection.
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