CALL TODAY FOR AN APPOINTMENT 877-GO-GO-NLO (877-464-6656)

New Year’s Fresh Start Bankruptcy Timeline

New Year’s Fresh Start Bankruptcy Timeline

Set Up your Free Bankruptcy Consultation Today!  Fill out the form below for an immediate response.

Your Name (required)

Your Telephone (required)

Your Email (required)

Subject

Your Message

Input this code: captcha

Input this code: captcha

Input this code: captcha

NLO Nelson Law Office is a Debt Relief Agency offering debt relief through bankruptcy.

2012 New Year's Eve Fireworks Navy Pier Chicago, Illinois

2012 New Year’s Eve Fireworks Navy Pier Chicago, Illinois

1)  Get Through the Holiday, spend wisely and see our post about credit card use during the holidays
2)  File your taxes as soon as possible
3)  See a Bankruptcy Attorney about Debt Relief Options early in January to find out your options
4)  Receive your tax refund in February and file your bankruptcy.

Why is the New Year such a popular time to file bankruptcy?

Tax Refunds are usually received prior to May 31st of the New Year.  Tax Refunds can be used for legal fees and court costs in a bankruptcy.  The tax refund is listed on the bankruptcy petition, but the portion used for legal fees and filing fees is exempt.

Holiday spending often times puts people “over the top” after years of family budget deficits caused by medical bills, illness, loss of job or overspending.

What should I do if I don’t have much of a tax refund?

You can either wait to file your bankruptcy later after you have saved enough money to pay for it, or you can file a Chapter 13 bankruptcy which allows for all of your legal fee to be included in the bankruptcy “plan”.

Need more options?  Have Questions?

Call David Nelson at 877-464-6656 to set up a free bankruptcy consultation.

See me on Facebook!

Can I Use My Credit Cards for Christmas Gifts and Still File Bankruptcy?

Can I Use My Credit Cards for Christmas Gifts and Still File Bankruptcy?

  • Schedule Your Free Bankruptcy Consultation By Filling Out this Form




Yes, you can use your credit cards for Christmas and still file bankruptcy. However, you must be extremely careful. If you are filing within ninety days of using your credit cards, you must make sure that you have used them only for “necessary” i

Daley Center Christmas Tree

Daley Center Christmas Tree

tems and not for “luxury” items. If you are filing more than 90 days since you last used your credit card, you can essentially charge anything onto the credit cards except it cannot be in bad faith or with a fraudulent intent. Schedule a Bankruptcy Consultation

At this “Christmas” time of year, people spend excessively and often use credit cards. A large portion of Chapter 7 Bankruptcies are filed in the months of February, March and April because tax refunds can be used for paying your bankruptcy attorney fees, filing fees and due diligence costs such as credit reports.

1. Best Solution: Do not use your credit cards – At All. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund.

2. Fair Solution: Use your credit card over the holidays and prior to your bankruptcy for “necessary” items such as groceries and clothing from non-luxury retailers. File Bankruptcy with your tax refund as early as January or anytime after you receive your tax refund. Before even considering this solution, you should seek out a qualified bankruptcy attorney.

3. So-So Solution: Use your credit card for non-luxury items that might be objectionable as non-necessary, such as toys, electronics or other items are not basic survival items, such as food and clothing. You could possibly file in January, February or March but best choice is to file April 30th or later.

4. Not so great solution: Use your credit card for all items at all retailers, including luxury retailers. Purchase jewelry, electronics and just about anything you want. File your bankruptcy at least ninety days after the last purchase. Take the chance that you have made such flagrantly offensive purchases that the creditor files an adversary petition to take away your discharge, or, worse yet, fraud. Bottom line: this is risky at best, but if the purchases are small enough, a calculated risk.

5. Terrible solution that will nearly always run into problems: Use your credit card during the holidays on anything and run every card up to the limit. Include luxury items at luxury retailers. File your bankruptcy whenever you want, such as February. Chances are that if the purchase is over $500 at any one creditor, the creditor will file an adversary lawsuit.

One scenario that happens over and over again (often times with bad results) is the “blowout” Christmas Charger who decides to “let it all out” one last time before filing for bankruptcy. This charger may still have up to $1000 left in credit and may often purchase entirely luxury goods, such as an iPad, Wii, Xbox, large screen T.V., an unnecessary computer, a trip to the Caribbean, or a bunch of jewelry. Then the charger stops in to a local attorney’s office and doesn’t mention the charging, the bankruptcy attorney doesn’t check out the charge bills, the bankruptcy is filed in February and then a lawsuit is file by the credit card company to take away the bankruptcy discharge with regard to the credit purchases. Usually, the debtor is forced to hire a second attorney at $2000 or more to represent the debtor in a defense of the discharge action and usually results in the debtor entering into a promise to pay the entire debt to the creditor with interest over a period of time.

What is the lesson of this article? If you are contemplating bankruptcy, stop using your credit cards and keep it simple. If you must use your credit cards, then use them only on food and clothing and at non-luxury retailers. Under all circumstances, try to not use your credit cards at all 90 days prior to the filing of your bankruptcy.

Three true stories:

Client purchases an $8,000 hot tub one week prior to filing on a line a credit issued from a credit card style creditor. Client files bankruptcy. 2 & 1/2 month after filing bankruptcy, debtor is sued by the credit card company. Creditor seeks to take away the debtor’s discharge with regard to the $8000 debt plus attorney fees and interest or about $10,500 total. If the case was not settled, this would have eventually been a garnishment on debtor’s income for about five years at 15% of his gross salary. Due to a settlement, the debtor was able to pay off the debt under a new agreement over 5 years at a reasonable interest rate. What does this teach us? A luxury item purchased within 90 days prior to a bankruptcy filing that is obnoxious and unnecessary and expensive will result in a nasty lawsuit that will cost the debtor another $1000-2000 in legal fees and possibly ruin all of the benefit of the bankruptcy.

Client purchases a tennis bracelet at Nordstrom as a “gift to herself” for filing bankruptcy…Good Luck! Nordstrom filed suit against the debtor, debtor ended up returning the item and paying about $600 in attorney fees to Nordstrom as a settlement instead of a fraud judgment, which would have resulted in the denial of an entire discharge of all debts. Bottom line: no “gifts” for successfully filing bankruptcy. No jewelry purchases on credit cards included in the bankruptcy up to one day before filing.

Client knows he isn’t going to be able to afford a new riding lawn mower for many years after filing bankruptcy, and one week prior to bankruptcy he purchases a new riding lawn mower for $1500.00. Client files bankruptcy one week later. Client does not tell his attorney about this purchase and does not make the bill available to the attorney, and the attorney must rely upon a credit report to file the bankruptcy petition. Debtor is sued in an adversary petition to deny the discharge of this debt. Result: client ends up paying the debt back over 36 months at 10% interest. Not much better result than if he had purchased it one year after the bankruptcy legitimately.

The one resounding rule throughout these cases seems to be that creditors object to the discharge, but this “un-permitted” purchasing in effect gives the debtor access to a tool right away that he may have needed immediately but would not have been able to get after the bankruptcy. Bottom line: even though the behavior above is in violation of the bankruptcy code and even though creditors dislike this behavior, they do end up preferring to extend a loan at a reasonable interest rate.

NLO Nelson Law Office is a debt relief agency offering debt relief through bankruptcy. To schedule a free confirmation click here and write “Bankruptcy Consultation Request” and hit send. Our office will respond with a variety of times and date for your consultation. Or…call our national toll-free number 877-GO-GO-NLO or 877-464-6656.

Why is the “Right of Set-Off” So Dangerous?

Bottom line: it means the bank can take your assets without a court order.  Here’s an example:

Sam has $1000 in a Savings Account at US Bank.  Sam owes US Bank $20,000 on a credit card.  Sam hasn’t paid the credit card in 3 months and is in default.  One day, Sam notices that the $1000 in his savings account has been taken by US Bank as payment on the $20,000 credit.  This is the right of set-off.

Most commonly, people who file bankruptcy experience the effect of “set-off”.  Commonly debtors will owe $5000 to a credit card issued by Chase Bank and also have their checking account at Chase.  Sometimes a debtor will file bankruptcy on Monday and receive their paycheck on Friday.  Chase can “take” the entire balance of the checking account including the paycheck without warning as a set-off against the credit card because the filing of bankruptcy immediately puts the credit card in default..

Recommendation:  If you are considering filing bankruptcy, make sure to get rid of all of your asset checking and savings account from a bank that you owe money to.  This will ensure that the right of set off does not occur.

When Should I File Bankruptcy?

When Should I File Bankruptcy? – NLO Nelson Law Office  Generally people should file a bankruptcy immediately if possible to avoid further damage to their credit, stop lawsuits and eliminate harassing phone calls and solicitations.  However, the time to file can change when the following situations arise.

1.  Home Mortgage Modification.  Generally speaking, you should wait to file a bankruptcy after the modification has become permanent.  It is a good idea to wait until the modification is delivered to you in  writing.  However, if a lender is delaying a decision on a modification or has withdrawn a trial modification then the time to file a bankruptcy is now.  Oftentimes after a trial modification has failed, the next step is a Chapter 13 bankruptcy which allows a debtor to command debt relief instead of requesting it from a lender.  The only downside being that a Chapter 13 requires adequate income to afford the Chapter 13 Plan.

2.  Foreclosure not started or not completed where a deficiency judgment is unknown.  In a situation where a debtor is filing a bankruptcy for no other reason than to get rid of the liability on a deficiency judgment in foreclosure, often times it is good to wait to see if the deficiency judgment is actually entered and whether the creditor pursues collection.  Bottom line – if it is beneficial to wait and see if a bankruptcy is necessary – than wait – however, what is you become ineligible for a Chapter 7 bankruptcy while waiting or you have unnecessary stress while waiting to file bankruptcy.  The key is case by case, however, the old rule of thumb which is to file now is usually good except for special circumstances such as these.

3.  Recently a debtor came into my office with about $60,000 in credit card debt and two lawsuit filed.  He asked whether he need to file now and was worried about having enough time to get his legal fees together prior to filing.  Basically in this case, you file shortly before the garnishment actions start from the lawsuits.  The best time to file is several days before any citation order is entered.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. CALL 877-GO-GO-NLO (877-464-6656) FOR A FREE BANKRUPTCY CONSULTATION TODAY! SATURDAY APPOINTMENTS ARE AVAILABLE.