Who's paying for college?

Image courtesy of imagerymajestic
at FreeDigitalPhotos.net

College tuition is a hot topic. Many people talk about how high the cost but do they talk to their children?  What do their children think about tuition and who should foot the bill? This month in NJ, a college student sued her parent for her tuition to Temple. (see http://bit.ly/13FFfPK) When I discussed the case in my business law class, I had one 24 y/o student who absolutely believed parents owed a college education to their kids. Fortunately, Pennsylvania does not recognize a child's right to have his/her college paid for by their parents.

I think the NJ case (actually cases) are still the extreme but that doesn't mean the topic should not be discussed. This article offers four topics to consider when planning someone's college education: http://bit.ly/1vDhy29 The topic I believe most important is to discuss with your child who is going to pay what for college. The article points out: "Some children expect their parents to pick up the tab for college, but they could be in for a rude awakening. A Fidelity survey found that 'parents expect their children to pay for more than one-third of college costs, but only 57% of those parents shared that information with their children.'"

If you are looking forward to college in some way, take a quick look at this article. It gives you food for thought and a little planning now can help keep you out of an office like mine in the future.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

Did you know a short sale of your home could create income for you? ... but not this year ...

Congress extends protection for Homeowners in short sales of their primary residence in 2014 ... 2015 still in question. People forced to sell their homes in short sales in 2014 get a tax break. Congress extended the break earlier in December. Before the housing bubble bursting, people who were forced to sell their homes in a short sale were issued a 1099-C reporting income for the seller. The income was the difference between what was owed and what the house sold for. The tax code considers the amount forgiven at the sale as income to the sellers.


Image courtesy of ratch0013
at FreeDigitalPhotos.net

So if a couple owns a house with a mortgage of $300,000 and they sell it in a short sale for $225,000, the tax code sees that as a benefit of $75,000 and tax it as income. The mortgage will issue the couple a 1099-C for $75,000 and the couple will be required to add it as income on their tax return. This can significantly increase their tax obligation.

Congress has extended a law preventing the IRS from taxing this reduction of debt through 2014. That means anyone who sold their home in a short sale in 2014 will not pay income tax on the amount forgiven. It is not clear if Congress will extend it into 2015. Reports state Congress discuss extending it for two years but the final bill only extended it through 2014. http://bit.ly/1HO2GUC That means anyone having problems in the new year will be betting on or hoping for an extension in 2015. This problem can be avoided in Bankruptcy. I'll explain that in another blog.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

I'm not sure I find these all that Weird ...

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

I was drawn to an article titled: "4 of the Weirdest Reasons People Have Gone Into Debt"  http://bit.ly/1zmKwVs. I thought it might help people understand how crazy it can get. The author lists:

"1. The Child Spoiler Client
  2. The Dream Wedding Client
  3. The “Don’t Tell My Spouse I Have Debt” Client
  4. The House Flipper Client."

These reasons don't seem so weird to me; though the cases she uses are a little extreme. While the author's explanation of the events that caused her clients to go into debt show some questionable choices, it is easy to understand how the events could unfold as they did.

Many people over-spend on their minor children and bail out their adult children (a topic in my next blog). We all want the best for our children and sometimes we are not practical about it. The dream wedding ... this is a reflection, I think, on our society. Who has been to a formal wedding recently and thought, "WOW! this was so simply done and I'm sure it was done at a reasonable price." Credit has been too easy for us and we have allowed the prices of everything from weddings to college to be driven up to a ridiculous price point. It is hard to balance reasonableness with what has become the norm.

The spouse with secret debt is not new either. I remember an entire "I Love Lucy" episode where Lucy ordered a dress, I think, on store credit without Ricky knowing about it. Secret debt was the basis for the humor of the plot. I had one bankruptcy client who bought a house without her husband knowing. She did it for another family member because he was going to lose the home and it work for awhile. Her intentions were all good but the results were bad.

Finally, the House Flipper should be no shock. People try and fail at businesses all the time. Many people go through several businesses learning before they get it right... it happens.

My point here is normal people do create debt they cannot handle alone. We all need to be more realistic and practical with our finances. But we all make decisions and sometimes they are bad. Some decisions are bad from the start ... and sometimes, they turn out to bad for some other reason. But that doesn't mean you should do nothing and suffer this alone.

Some people may be able to use the advice in the article or take advantage of services like that offered by the author of the article referenced above. Sometimes people let it go too long or it grows too fast that they need the services of a bankruptcy attorney. But know you are not alone and you are not "weird." You may have made mistakes and you need to face them. It is really that simple to start.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Happy Holidays!

I truly want to wish everyone a festive but peaceful Holiday Season. Merry Christmas to my family and Christian friends, students, and clients. I realize Chanukah is almost complete but I hope it was/is a time of peace for the people I know celebrating their Jewish faith. For those anticipating the celebration of Kwanzaa, I also wish you a peaceful and joyous celebration. For those traditions I am not aware of, please excuse my ignorance. I want to thank everyone for the support they have given us here at the firm. Without your trust, we could not survive as a firm. I am wishing us all a Peaceful and Prosperous New Year.

Rebuilding credit after Bankruptcy...

Image courtesy of sixninepixels at
FreeDigitalPhotos.net

We all know it is hard to live in this day and age without credit. Also, it is an import aspect of putting your life back together and moving forward. One of the things I recommend my clients do after discharge is to find a secure credit card. A secured credit card is one where the borrower deposits cash with a creditor and the creditor gives the borrower a credit card with a limit connected to the deposit.

The following article further explains what to look for in a secured card. "The Best Credit Cards After Bankruptcy" http://bit.ly/12Ak8hz explains you need to find a card that reports to the credit agencies so a positive credit history develops and why interest rates are less important. The article also identifies a couple good cards to consider and links to other articles for more information. This is one way to start to get back on track after filing a bankruptcy.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Bankruptcy - not perfect but still necessary - steps to try to make it better

Image courtesy of phanlop88
at FreeDigitalPhotos.net

Debt reporting after Bankruptcy can still be a problem. Reports are showing many of the big banks are failing to update credit reporting. As a result, bad debt is being reported after it has been discharged in bankruptcy. It may be because there is no profit in it for a bank to sink resources into monitoring discharged debt. Or it could be as disconcerting as the banks want to try and make debtors suffer further for dumping the debt. Many people think it is the latter but there are steps you can take to try to minimize the impact before returning to court.

 “Judge Robert D. Drain of the federal bankruptcy court in White Plains said in one opinion that debt buyers know that a bank “will refuse to correct the credit report to reflect the obligor’s bankruptcy discharge, which means that the debtor will feel significant added pressure to obtain a ‘clean’ report by paying the debt,” according to court documents.” Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores http://nyti.ms/14sR1xP  (this article discusses the problem further).

 This practice has caught the attention of Federal Authorities. “Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations.” Reports the NYT’s article cited above and further reported in  - Feds Investigating Banks’ and Debt Buyers’ Treatment of Bankruptcy Account http://bit.ly/1xJDA7p.

As the articles indicate, fighting this reporting in court can be tough and time consuming. I think there are a couple things people can do to lessen the blow of this reporting while the Federal Government works to resolve this issue. First, debtors need to hold their bankruptcy discharge paperwork like they would their birth certificate or a divorce decree. Next they can check their credit reports about a year after their bankruptcy to see what is still being reported. If some of the debts are incorrectly reported, challenge them with the agency. If that doesn’t work, add a comment to the report for the incorrectly reported debt including discharge date and docket number.

Finally, be ready to answer creditors' questions about incorrect debt reporting. For larger loans, like a mortgage, many creditors will ask the borrower about reported information. Have a copy of the discharge ready and answer the questions. Don’t let it throw you off. An explanation coupled with a positive current credit history may go a long way. A creditor may or may not accept the explanation but it is worth a shot. These are steps you might try before you go back into court again.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

President's Action on Immigration - No procedure yet - don't get ripped off

US Citizenship and Immigration Services has issued this notice:

"Important notice: These initiatives have not yet been implemented, and USCIS is not accepting any requests or applications at this time. Beware of anyone who offers to help you submit an application or a request for any of these actions before they are available. You could become a victim of an immigration scam. Subscribe to this page to get updates when new information is posted."

http://www.uscis.gov/immigrationaction

 

Immigrants need to understand there are other people in their own community waiting to take advantage of undocumented immigrants desperate to gain legal status in the US. The Philadelphia area has many questionable and illegal immigration offices, advisors and attorneys offering bogus services to unknowing immigrants. Local organizations are specifically working to protect the community from "Notarios."

 

The Friends of Farmworkers  (http://www.friendsfw.org) working with AILA set up this website http://www.stopnotariofraud.org to inform our community and help stop immigration fraud. Their website "Stop Notario Fraud!" states:

 

"Notarios are not lawyers. They also are not valid accredited representatives approved by the U.S. government. Often, they use the term “notario publico” to advertise their services in the Hispanic community. That title is not recognized in the United States as it is in some Latin American countries.

While many legitimate community and religious organizations provide immigration-related services, non-lawyers who advertise as legal “consultants” or “notarios publicos” are not authorized or qualified to help with immigration law-related matters.

These notarios often take advantage of people from their own ethnic community. Some attempt to provide legal service, but are not competent. Still others will take your money without ever intending to file your documents or help you in any way.

¿Quiénes son los “notarios”?
Los notarios no son abogados ni representantes acreditados válidos autorizados por el gobierno de los Estados Unidos. A menudo utilizan el término “notario público” para publicitar sus servicios en la comunidad hispana, Este título no está reconocido en los Estados Unidos como lo está en los países de América Latina.

Mientras que muchas organizaciones religiosas y comunitarias legítimas prestan servicios relacionados con la inmigración, las personas que no son abogados y que se publicitan como “consultores legales” o “notarios públicos” no están autorizadas ni calificadas para ayudar en asuntos relacionados con las leyes de inmigración.

Estos notarios muchas veces se aprovechan de personas de su propia comunidad étnica. Algunos intentan brindar servicios legales, pero no son competentes. Aún así, otros tomarán su dinero sin siquiera intentar presentar sus documentos ni ayudarlo de alguna manera. ¡No permita que lo perjudiquen a usted ni a su familia!
http://www.stopnotariofraud.org/faq-es.php

CZYM SĄ “AGENCJE”?
Załatwiacze nie są adwokatami. Nie są również uznanymi akredytowanymi zastępcami prawnymi z uprawnieniami od rządu federalnego USA. Używają oni często określenia “notariusz publiczny”, dla reklamy swych usług w środowisku latynoskim. Tytuł taki nie jest uznawany w USA na równi z uznaniem w niektórych krajach Ameryki Łaci ńskiej.

Mimo, że usługi w sprawach imigracyjnych bywają świadczone przez uznane instytucje religijne i socjalne, nie-adwokaci reklamujący się jako “konsultanci” w sprawach prawnych, czy też “załatwiacze” nie posiadają upoważnie ń do udzielania porad w kwestiach prawnych.

Osoby takie często wyzyskują innych w swoim środowisku narodowościowym. Niektóre z nich faktycznie starają się służyć poradą prawną, lecz tego nie potrafią. Inni jeszcze przyjmują od klienta pieniądze, nie zamierzając nigdy nawet składać odnośnych papierów w jego imieniu, czy służyć inną pomocą. Nie daj skrzywdzić siebie ani swoich bliskich!"
http://www.stopnotariofraud.org/faq-pl.php

This may be a life changing event for many. But the process to gain the benefit has not been established yet. It is important to continue to be patient and cautious when seeking help to apply for this new benefit. This may be the start of sweeping immigration changes in the US. Undocumented immigrants need to find reputable counsel to make sure they get the services they need. We will continue watching how this unfolds.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

School Loans are still hard (if not impossible) to discharge in Bankruptcy

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

With all the talk in Congress about student loan debt and the idea of trying to lift the debt off the struggling former students, very little has been do to actually make it happen. Young people who come in to talk about bankruptcy are usually servicing a big chunk of school debt. While the bankruptcy code allows debtors to discharge school debt if it is causing a hardship, I haven't seen a case where the debt has reached that standard.

Parents need to keep in mind when they take out the school loans, they must meet the same standard to discharge the debt. This can become a real issue as the parents approach retirement age and their children default or fail to pay the loans the parents took or co-signed for. Parents and students need to be mindful of the loans they take.

Recently in Forbes (on-line) was an article that offered points to consider when taking school loans: "The 3 Biggest Mistakes People Make With Student Loans" http://onforb.es/1t3q1cK. It is short and gives some practical advice on school loans.

The 3 biggest mistakes, it states, are:


"Going To College "To Find Yourself"
...
Using That Student Loan Refund Check For Extracurricular Activities
...
Not Working To Minimize Student Loan Debt"


I know many parents feel compelled to pay for college as well. I always suggest to my clients that they let their children take the loans, if necessary and then, help pay them if the student successfully makes it through school. I've seen many times when kids who don't have any skin in the game goof off on their parents' money. This way, if the student blows school, it is on them to pay for their mistake.

But the bottom-line here is bad decisions about school loans can haunt a family for decades. Congress has publicly spoken about the issue but nothing has really changed.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

Planning to maximize your Social Security Benefits

Image courtesy of Witthaya Phonsawat at FreeDigitalPhotos.net

Like many people, as I age, I think more and more about what my life is going to look like after retirement. One of the main components of retirement, I  think, is social security. I know too many people rely too heavily on this benefit but we should understand it no matter what.


I've listened to senior family members discuss Medicare, Part A and Part B coverage, the "doughnut hole" and prescription prices. But I never heard anyone talk about when to start benefits in general. I have been looking into social security myself. I know the decisions I make will impact me the rest of my retirement. I'm not close to retirement but I feel I may be starting a little late myself.  Here are a couple articles I found recently I thought might be helpful to people finding this blog:


"How Social Security works" - http://bit.ly/1qaoiI0
"How much do you understand your Social Security Benefits"  http://bit.ly/1xGhRw0
"How Social Security raise impacts retirees" - http://bit.ly/14wUE5Q


At some point I will seek advice from a financial professional. I know people hesitate to do this. I hesitate myself even though I know how important professional advice is and want people to come to me for related advice. I think people feel like it is an unnecessary cost, maybe a little embarrassed about how they have handled their money over their life, they can handle it themselves, they don't have enough money to warrant professional planning, etc. I have some of these feelings.


But I can tell you one thing for sure; through my practice, I know failing to plan for retirement is a harder problem to fix after you retire than it is approaching retirement. So if you haven't started thinking about, the articles listed above might be a good place to start. After your research, consider talking to a financial professional. If you don't know one, talk to friends, co-workers or other professionals you do know to refer you to someone you can trust. You can include attorney in this planning because this will lead into your estate planning as well.


NOTE: I apologize for a gap in my postings. I had major computer issues over the last week or so and all my attention has been focused on work-arounds to work and getting my computer fixed. I hope to be back on regular schedule this week. Also, I'm having issues uploading photos to this blog as well.

New Survey of College-Educated Immigrants

The Welcoming Center for New Pennsylvanians: IMPRINT, a national partner with the Welcoming Center for New Pennsylvanians, received funding from the Knight Foundation to conduct a pioneering survey of college-educated immigrants.


Philadelphia is one of just 6 metropolitan areas chosen to participate in the New Survey of College-Educated Immigrants. The survey is now open. The Welcoming Center for New Pennsylvanians would truly appreciate help in sharing the below survey links far and wide.


They are looking for a broad response from college-educated immigrants of every background -- new arrivals and longtime residents, working professionals and those in "survival jobs," men and women of every race and ethnicity.


The survey deadline is December 1.  Results of this study will be publicly announced in March 2015, and posted on the IMPRINT website (www.imprintproject.org).


The study focuses on residents of six metropolitan areas: Boston, Detroit, Miami, Philadelphia, Seattle, and San Jose, CA.


For more information-  http://myemail.constantcontact.com/Please-Share--New-Survey-of-College-Educated-Immigrants.html?soid=1101138922900&aid=ngiHtmrwDgI

Bankruptcy and the Affordable Care Act ... any connection?

Image courtesy of Ambro at FreeDigitalPhotos.net

I have found through my career the primary reasons people are forced to file bankruptcy are medical bills, an ugly divorce, and prolonged periods of unemployment. Most of the time, I find it is a combination of these things. That doesn't mean I haven't found other reasons pushing people into bankruptcy but I have found them to be common reasons.

An assistant professor of Health Policy,  Department of Health Policy and Management at Columbia University wrote an article about the potential impact of the expansion of Medicaid through the Affordable Care Act on the rate of Bankruptcy filings - "Deaths and bankruptcies: What awaits states that don't expand Medicaid?" http://bit.ly/1tbXyBh. I'm not sure how much practical information will come from this discussion but it has caught my interest.

The researchers "... hypothesized that Medicaid coverage might allow some families to avoid bankruptcy. After all, one of the chief benefits of health insurance is that---when you really need health care---you don't have to pay for it. Perhaps, we thought, families given Medicaid coverage are less likely to get stuck with a big hospital bill, and so are less likely to end up in bankruptcy."

In the article, the author stated, "To test that hypothesis, we dug up data on the Medicaid expansions of the 1990s and early 2000s. We found that, in the years after states expanded Medicaid, fewer families declared bankruptcy. Every ten-percentage-point increase in Medicaid eligibility---typical of 1990s-era Medicaid expansions---led to an eight-percent reduction in bankruptcy rates."

Again, I agree one cause of bankruptcy can be a serious medical issue and high medical bills. It is unclear if the researchers drilled down into the dockets to see the types of debts listed in the schedules. I don't know if the researchers uncovered evidence the expansion actually reduced the number of bankruptcies with medical debt being discharged. I can see some correlation but I suspect the dramatic reduction was due to multiple factors.

The article seems to ignore the fact that the 1990's ushered in one of the longest periods of expansion in the US since WWII. The unemployment rate declined from a high of 7.5% to under 5% by the end of the decade. The second half of the decade saw growth of the GDP averaging over 4%. And I found one report that stated over 22 million jobs were created in the 1990's. The bottom-line is the economy really started to move in that decade after a sluggish start. It make sense that bankruptcy rates dropped through the 1990's for many reasons.

But my experience is explaining the cause of bankruptcy isn't this simple.  Most of the time debtors are good people who believe they will be able to get themselves out of the hole they are in and sometimes they do. Most of the time, they throw good money after bad. While I think real, affordable medical care could help many with less means, I don't believe people should look to the expansion of Medicaid to bail them out of their financial hole. If you even think you might be in over your head, talk to a bankruptcy attorney. The only thing you have to lose is your debt.

USCIS Bulletin - Reminder for Temporary Protected Status Applicants and Re-registrants

U.S. Citizenship and Immigration Services sent this bulletin at 11/05/2014 01:28 PM EST

You must submit biometrics if you are applying or re-registering for Temporary Protected Status (TPS) and are over 14 years old. Biometrics include a photograph, signature, and/or fingerprints. USCIS will schedule an appointment for you to go to an Application Support Center (ASC) to have your biometrics electronically captured about four to eight weeks after you file
Form I-821, Application for Temporary Protected Status.

USCIS will mail you a notice with the date, time, and location of your ASC appointment. You must wait to receive this appointment notice before going to the ASC for biometrics processing.
Biometrics are required for identity verification, background checks and the production of an Employment Authorization Document, if you are requesting one. If you do not go to your scheduled ASC appointment, you will delay the processing of your application and you could lose your TPS.

Market Watch - "... zombie foreclosures ..." up in New Jersey and "Philadelphia (5,405)"

Image courtesy of franky242 at FreeDigitalPhotos.net

"Zombie foreclosures rise in 16 states and 60 metro areas"
Market Watch http://on.mktw.net/1yMgaxb.
Even as the economy seems to be getting better, people are still leaving their homes before the foreclosure is complete. I know most clients are just trying to do the right thing and also trying to avoid additional embarrassment by leaving their homes before the sheriff shows up. But leaving your home could be a missed opportunity to help get you back on your feet. If you stay in the house and keep it in reasonable shape, you are helping the mortgage company to some degree and saving money for yourself.

Also, it helps limit new debt. As long as you "own" the house, you remain responsible for assessments, home owners' association fees and possibly other liabilities. Don't make a bad situation worse. It pays to plan your exit from your home during these trying financial times.



#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Short post for employers and managers - words have meaning, managers should offer opinions based in facts

Words you would not want said or, even more, meant in your work place:

       "That 'they' just want someone younger for the position of ______________."

In this blog is the analysis of a case out of the 6th Circuit: http://bit.ly/1p0KHag. It talks about how a case of a legitimate release of a subordinate can get bogged down in legal proceedings when managers offer off-handed opinions. Sometimes they are meant to make the person being release feel better. Sometimes people don't think about them at all. But when dealing with a problem employee, managers should be thinking about everything they say all the time.

If the statements in this case were stated because they were true, the manager stating the opinion should have been addressing them up the chain and not when releasing the employee. Just a short read for managers and things to keep in mind.

Is this a "one-off" for NY or the trend of the future?

Image courtesy of MR LIGHTMAN
at FreeDigitalPhotos.net

We have all seen the stories where police catch criminals because the criminals could not stay off social media. And we all think, how dumb can people be posting their criminal activity to the web? But, how would you like to find out you are being sued through your Facebook or through a Tweet? What if you get a photo of the court documents through a post on Instagram if that is a possibility?  (I don't use Instagram much). Congratulations! You've been served! Or have you?

Well it seems that may be the case in NY. In an article I read this morning, it seems a NY court in a Family Law case allowed a party to serve support papers through Facebook on a spouse that was dodging service. "You've got served!" http://bit.ly/10rt0Wr

Of course the article indicates the normal means of service were unsuccessful. So the moving party requested alternative service and must have proved the deadbeat spouse was active on her page. The court, with what I think is sound reasoning, allowed service through the social media outlet.

While I appreciate the value of the internet and have used it in my practice to find information myself, I'm still not sure how I feel about serving legal notice this way. I guess if I was the party trying to serve someone dodging service, I'd like this. But, my concern is I have noticed people I'm connected with who use social media in bursts. I'm sure many other people have friends that do this too. They are on social media pretty heavy for a few weeks or months and then the just seem to disappear. They take a break, maybe traveling for work, or sometimes just stop.

You never know when, why or for how long ... they just drop off. So what happens if the drop off just before you serve them? I guess it is better than public notice in a newspaper. Courts in NY and California are known for starting legal trends. It will be interesting to see where this goes. I think Pennsylvania will be slow to follow this example but who knows.

My house is in foreclosure ... when do I have to move out?

Image courtesy of Salvatore Vuono
at FreeDigitalPhotos.net

This is another question I get often. I tell my clients not to move out until you are evicted. I have talked to them about the problem of vacant properties. Right now there seems to be too many for the banks to handle. For some people, it may take a couple years between a default in a mortgage and a sheriff's sale in the foreclosure. And in Pennsylvania, the new owner after a sheriff's sale still needs to take action to evict the occupant of the property.

There is no reason for a home owner to leave the house, allow it to deteriorate, and pay rent for a "second" home. People should know even after a bankruptcy, new bills and fees can add up as the bank works through the foreclosure process. On Philly.com there is an article that discusses the vacant home problem in the region: "Zombie houses - vacated but not foreclosed - haunt the market" (http://bit.ly/1yY77vT). You can also read my previous blog "Even in Chapter 7 Bankruptcy, returning your house to the bank isn't like taking a sweater back to the store" (http://bit.ly/1mizq2h) about staying in a home even after bankruptcy.

If you cannot stay in the home, you could consider other options like work with the bank on a short sale, rent it, or let a family member use it. But remember, the house is the owners' until it is sold at a sheriff sale or transferred through some other transaction. Use it to help you get back on track instead of being an anchor to continue to drag you down.


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

When will I be able to buy a new home after bankruptcy?

Image courtesy of Stuart Miles
at FreeDigitalPhotos.net

"When will I be eligible to get financing for a home after bankruptcy?" is a pretty standard question I get when counseling people about bankruptcy. After talking to different loan agents and bankers, I usually tell my clients at least two years and depending on how things go maybe a little longer. This is what I've gathered from working and talking with lenders I know.

I found an article on blog.credit.com that lays out anticipated wait times in a little more detail. While I don't know much about the author, his comments seem consistent with what I've been told.

He discusses three events and different time periods one may need to wait before they will be able to mortgage a new home. He talks about bankruptcy, both Chapters 7 and 13; foreclosures without bankruptcy; and foreclosures with bankruptcy. As you may recall, I wrote about surrendering a home in a chapter 7 bankruptcy earlier this year: http://bit.ly/1mizq2h

Depending on circumstances, it could be a little as a year or as long as seven years before someone may qualify for a mortgage. It will depend on the circumstances surrounding his or her financial trouble, the institution the person is seeking the mortgage, and the type of mortgage they seek.

For a more detailed discussion of this topic, check out this article: "How Soon Can I Buy a House After Bankruptcy or Foreclosure?" http://bit.ly/1zfhYTh While there are no guarantees how long or short of a time you will need to wait after a severe financial crisis, this article may put it in perspective for you.


#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Are you ready to take care of your parents?

Talking about the future care of a parent can be one of the hardest conversations people have especially if the parents are included in the conversation. It seems parents are reluctant to explain their finances to their children and children are feel they are intruding if they push. This can lead to unexpected expenses later in life for adult children.


Image courtesy of photostock
at FreeDigitalPhotos.net

"A third of family caregivers spend over $10K a year," according to recent a article in the USA Today.  "About a third of family caregivers spend more than 30 hours a week on caregiving tasks, a new survey shows. And about a third spend more than $10,000 a year on caregiving expenses, such as medications, medical bills, in-home care and in some cases senior housing." http://usat.ly/1qKWLMs

This is a short article. It might be just the ice-breaker someone needs to start a dialogue with the family. If families can get their parents to open up earlier, it could make their parents' remaining years much more comfortable.

WSJ - "How to Plan for a Divorce"

Here is another article I found that has decent information about preparing for divorce: http://online.wsj.com/articles/how-to-plan-for-a-divorce-1410049066

Image courtesy of Stuart Miles at
FreeDigitalPhotos.net

Many times I find clients don't know enough about their financial affairs. This article lists financial affairs as its first point. The article states:

"1. Know What You Own and Make Copies.

Gather as much information as possible, as early as possible, regarding your family's finances..."

 

This is one of the most important things you can do as you prepare to initiate a divorce. As they say, information is power. Knowing what you own and being able to prove it can short-circuit some litigation.

I'm not sure I agree with every point. The fourth point may not do much for party:

"4. Watch the Timing.

Mr. Gambaccini suggests looking to file your divorce in a year when you're earning less money—for example, when you get no bonus or there is a big decline in the value of your investments. While a court will typically look at income over many years, having a recent decrease in earnings may lower future payments, such as alimony, he says."

 

In fact, depending on why a person is earning less money, this can backfire. Courts in Pennsylvania look for those people trying to spite their spouse by taking a downgrade on their jobs. If the court believes a party intentionally cut his or her salary, the court may impute the hirer income to the party. Timing is important and people need to consider their financial positions when filing. But I'm not sure how much mileage you will get in this area. 

 

The article list 4 other points to consider. They are all worth discussing with an attorney as you plan your divorce. You can use this as a guide for discussion during your initial meeting.

Bankruptcy Roulette ... "What could possibly happen?"

Image courtesy of patrisyu at FreeDigitalPhotos.net

When a client walks into my office to discuss bankruptcy, they usually ask what can happen or how long before creditors take action. These questions are not easy to answer. The answer to "what can happen" is everything from nothing to having a sheriff show up at your home to cease and sell your stuff. In Pennsylvania, creditors cannot garnish your wages but there is nothing from stopping them from garnishing your bank accounts and the chance at a paycheck if you have automatic deposit that hits before you know your account has been garnished.

In a previous blog, I talked about not panicking because someone threatens to sue you. I talked about and believe debtors and attorneys need to take time to understand the case they are getting ready to file. In addition to understanding the details, debtors should plan their bankruptcy when they can. The debtor should o work with an attorney and file the case on the debtor's timetable. Too many times people wait until a hearing is pending or a sheriff's sale is scheduled. It can be too late sometimes. If someone ceases money before the debtor files, the debtor may loose it. If a landlord wins an order for eviction or if a sheriff's sale on a house happens, the debtor may lose the ability to save their home.

If a debtor waits until the last minute, he or she may loose valuable assets they could have used for a new start. Within the last week, I've help or am helping people who almost lost two weeks pay in a garnishment action and had the power turned off in their home. They knew they were probably going to file for bankruptcy and that creditors were looking for their assets. They were hoping or betting the creditors would come this week.

Bankruptcy attorneys all over the internet tell people not to wait... not to throw good money after bad... not to put off the inevitable. If you know you are in financial trouble, talk to an attorney and make a plan. Don't let a creditor force you into a decision.

US News and World Report Article - 5 Bankruptcy Myths Debunked

I found this article while looking for something else. This is a decent, if only brief, look at some of the misconceptions surrounding bankruptcy. The one most people to believe is:

"1. People who file for bankruptcy are financially irresponsible. "There's always going to be some kind of abuse, but it's far more likely that people run into very serious personal problems in one of three areas: losing their job, going through a divorce, or suffering a serious illness," says Walter W. Miller Jr., who teaches bankruptcy law at Boston University School of Law."

Or worse yet, people believe if they file for bankruptcy protection, they will be perceived as financially irresponsible. This has been my experience for the most part.

If you want to read about more misconceptions, this is a short article worth a look:
http://money.usnews.com/money/personal-finance/articles/2012/05/14/5-bankruptcy-myths-debunked

My bankruptcy won't take my child support payments ... Right?

The short answer is probably not. But it isn't as cut and dried as many people seem to think when they come into my office. In 522(d)(10)(D) of the Bankruptcy Code, it states support is exempt "to the extent necessary for the support of the debtor and dependents." Since Pennsylvania Support Guidelines are directly connected to the estimated costs of rearing children, a creditor would be hard pressed to argue the support payments are not necessary for the support of the debtor and dependents. I suspect most states support orders are based on similar estimates; therefore, the exemption should apply.

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

But I ran into a different situation in a recent case. I met a debtor who has an outstanding support order and accrued arrearages that was in excess of $12,000.00. Her children had reached age of majority and were out of her home. During our initial, the debtor simply stated, "I received $10,000.00 of the arrears but it doesn't count because it's child support, right?" That statement triggered the preliminary review I'm discussing here.

As I stated above, normal support payments to a debtor with minor children are really safe under the exemption. Through the interview, I found the $10,000.00 payment had been spent down legitimately on living expenses. So, I think the exemption is not at issue here. But I believe the child support exemption could be challenged for cash that is accumulated in an account from child support. I think the fact the children have left the household reinforces the challenge. Finally, I would be concerned if the total arrears were still over $12,000.00 or more. I would be concerned a trustee might want to take the claim over as they do personal injury and other claims.

Now I'm not sure what the final result would be on many of these issues if a creditor or the trustee challenged the exemption. My preliminary research did not reveal any cases on point. I have discussed the issue with more experienced bankruptcy attorneys and they see the issues I'm raising but have no more insight than I have. I also believe this issue is not common when it is an issue, I suspect the value is not so great as to cause a challenge.

The main point here is I never want to surprise my client with bad news if I can prevent it. Even in what seems like a routine consumer bankruptcy case the devil is really in the details. (similar point in one of my earlier blogs - http://medveskylaw.blogspot.com/2014/08/bankruptcy-it-is-all-in-details.html) These are issues that need to be identified, reviewed with the client, evaluate the risk in light of the clients' goals, and identify alternate plans to maximize exemptions.

Who's Collecting your Debt?

Image courtesy of graur razvan ionut
at FreeDigitalPhotos.net

The truth is you really don't know if it is the person who actually and lawfully owns it or someone who stole it like people steal identities. An article the New York Times Magazine lays out the world of debt collecting in:  "Paper Boys: Inside the Dark, Labyrinthine, and Extremely Lucrative World of Consumer Debt Collection" http://nyti.ms/1qIXSMJ

Here are some excerpts from the article I found interesting and informative:

"As he soon discovered, after creditors sell off unpaid debts, those debts enter a financial netherworld where strange things can happen. A gamut of players — including debt buyers, collectors, brokers, street hustlers and criminals — all work together, and against one another, to recoup every penny on every dollar. In this often-lawless marketplace, large portfolios of debt — usually in the form of spreadsheets holding debtors’ names, contact information and balances — are bought, sold and sometimes simply stolen.
                                                                        ...

For Wilson, none of it was personal. Instead, he saw the challenge of collecting in very professional, even empirical terms. He’d developed his own quasi-scientific taxonomy, grouping debtors into some 38 different species or types. For example, a D.H.U. (Debtor Hung Up) was a sorry specimen because he had hung up the phone and would probably do so again; a C.B. (Call Back) was a better prospect, because he had at least bothered to call back; a Promised to Pay had potential, because he acknowledged that the debt was his; a Broken Promise had failed to honor his guarantee, but that wasn’t entirely bad because you could now use that against him; and a Broken Payment simply needed a little nudging because he had started to pay and just needed to get back on track. Using a software system that Wilson developed himself, he could program the office’s auto-dialer to call only those debtors who fell into certain classifications. One day, I watched as the auto-dialer at his office called Broken Promises, Broken Payments and C.B.s.

                                                                            ...

Yet Wilson’s pitch — you owe the money, and now you need to pay — was both simple and perfectly legal. In most states, you can still try to collect on a debt even after its statute of limitations has expired. As the Federal Trade Commission notes on its website: “Although the collector may not sue you to collect the debt, you still owe it. The collector can continue to contact you to try to collect.” Wilson knew the rules and used them to his advantage. As far as I could tell, that’s what Wilson loved about collections: It was a hustle, but a legitimate hustle..."

Many times, clients ask, "I really need to discharge my old debt. It's going to fall off my credit report." I always explain that they do not want it to pop up with some collector that buys old debt. It much easier to say it was discharged and move on. This way, they never have to question, is the call legitimate or a scam... is it a collectible debt ... can they really take me to court? If the debt is unsecure and you listed it on your bankruptcy schedules, these questions are answered with the discharge.

Don't fall prey to this collection system. If you are having financial trouble and have collectors hunting you, you may want to consider bankruptcy before you throw good money after bad and worse yet pay your money to a thief. This is an interesting article and I would recommend it to anyone.

From USCIS: DHS Announces 18-Month Extension of Temporary Protected Status for Sudan

Secretary of Homeland Security Jeh Johnson will extend Temporary Protected Status (TPS) for eligible nationals of Sudan for an additional 18 months, effective Nov. 3, 2014, through May 2, 2016.

Current Sudanese beneficiaries seeking to extend their TPS status must re-register during a 60-day period that runs from Sept. 2, 2014, through Nov. 3, 2014. U.S. Citizenship and Immigration Services (USCIS) encourages beneficiaries to re-register as soon as possible once the 60-day period begins. USCIS will not accept applications before Sept. 2, 2014.

For more information: http://www.uscis.gov/news/dhs-announces-18-month-extension-temporary-protected-status-sudan

"STUDY: For children, there is NO 'amicable divorce'"

A study led by Dr. Jonathon Beckmeyer of Indiana University, found that children's problems were no worse if parents continued to fight with each other after the divorce. As an attorney who tries to keep divorces as civil as possible, this is a tough study to take. The article states:

"The impact of the split on youngsters is just as devastating whether or not the mother and father keep cordial links, it found. These recent findings undermine a Government-backed consensus that the harm caused to children by separating parents can be limited if the couple remain friends."

Image courtesy of smarnad at FreeDigitalPhotos.net

I find this study difficult to believe. It definitely seems counter-intuitive. Unfortunately, couples will continue to divorce. It would be nice if they didn't. I wonder how it would compare to broken couples that stay together for the kids. Is the broken family the issue or the separation?

I guess a closer look at the study itself might be more enlightening. No matter what, this is not a reason to be unreasonable. Interesting read. less http://lnkd.in/dxdMM8t

Let's not fight over the things we agree on...

Image courtesy of digitalart at FreeDigitalPhotos.net

It is amazing how reasonable people can get so twisted when in a legal battle. I cannot tell you how many times I have a client who is basically in agreement with the other side on several issues in the case. They tell me what they want the other side wants the same thing and everything is fair for all the parties. But as soon as the one party starts telling the arbiter (conference officer, hearing officer, master, or judge) the areas of agreement, the other party seems to get defensive or agitated.

I had a conference in a family matter this week. The parties were in complete agreement as what the outcome should be. It was just a matter of getting it into an order. In fact, the conference officer offered a possible change thinking it might be more convenient for the parties. They both supported each other to keep everything as they agreed. My client is a good client and reasonable when I talk to her on the phone or in my office. But through the entire conference, her main concern was that the other side would "dictate" the terms, which amused me because both parties wanted the same thing. I told her, "let's not fight over the things we agree on."

Too many times people seem to want to fight over things that are of no consequence. Mostly I think, it happens as a backlash from things that happened during the relationship. As an attorney, I believe it is part of my job to try to keep my clients focused on the areas the parties don't agree on and to help clients keep things in perspective when their emotions are starting to take control.

So if you feel that emotion welling up inside you, think about your ultimate goal. If you are getting what you want or need at that moment in your case, don't pick a fight. There is no reason to. Save your strength and energy to for the issues you don't agree upon. If you can do that, it should make things a little easier.

OH MY GOD! ... I'm going to be sued! ... let's file bankruptcy... NOW!

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

But is this the time to panic? I don't think so. If you are contacted by a creditor with the threat that they are planning to file a lawsuit, don't panic yet. First, that is probably what the creditor is hoping for and that you will offer to settle the claim without legal action. You have time to consider your response. Before a creditor can take any action to collect on a debt, he will need to prepare and file a complaint; serve the complaint on you; allow you time to respond; if you respond, allow time to schedule a hearing date; and have a judgment entered against you. After judgment is entered, it becomes a lien on real property (a home).  If you do not have real estate, the creditor must complete additional legal actions to have the sheriff come out to your home to levy on personal property.

This process provides plenty of time to assess your options, including planning your bankruptcy. This week, I had a call from someone who was thinking about bankruptcy. I could tell he was shopping attorneys but he had a couple issues that needed to be considered. I knew the answer but I always try to double check issues I haven't visited recently. Anyway, I called the client back the next afternoon to confirm my thoughts and he told me, "I had to file today because my ex-landlord told me he was going to file a lawsuit against me for $6,000."

My bad because I obviously didn't hear something that was important to him. But from everything he told me, he had no real legal reason to file that day. The client will probably be fine and it is not inappropriate to file the day you meet your attorney. My approach is a little different.

As I said above, I think of bankruptcy as a plan. Unless there is a sheriff's sale scheduled the next day, I like to pull all the client's financial data together and analyze it trying to find the potential challenges and best time to file. My personal preference is to have the bankruptcy filed sometime before judgment because a judgment can add another dimension to the case. I think many treat bankruptcy as a routine general remedy; however, I look at a bankruptcy more like a chess game. There are certain moves that need to be taken at certain times. If you miss a move or your timing is off, you jeopardize the case. With all this said, the person who called me was panicky and in reality he probably had a few months to plan if they were needed.

On the other side of the problem, I don't necessarily advocate people wait as long as possible either. I had a recent client who dodged a judgment creditor for about 12 years. He didn't own real estate so the creditor never had a lien on a home and he put off the sheriff's levy once. He, along with his family, endured more stress than necessary especially since he ended up filing anyway. Plus, he paid on other debts he didn't need to. So holding out and dodging creditors isn't always a good plan either.

The bottom-line here is don't panic if someone tells you they are planning to sue you. They usually tell you to in an effort to squeeze their money from you. Instead of a knee-jerk reaction, talk to an attorney to pull everything together to examine your options including bankruptcy. It takes time for a credit to sue a debtor. Use it to your advantage.

Do You Know a Refugee or Asylee who wants to start a business around Philadelphia?

The Welcoming Center for New Pennsylvanians, in Philadelphia, has a Small Business program that is working to contact refugees and asylees in the Philadelphia region who want to open a business.


Image courtesy of renjith Krishnan
 at FreeDigitalPhotos.net

They're working with the Women's Opportunities Resource Center to provide small business loans to qualified refugees and asylees.
The program is open to existing business owners as well as new entrepreneurs. For more information: http://conta.cc/1tUUSuq 

You can overcome bankruptcy ...

When people come into my office to discuss bankruptcy as an option, they are usually at the end of their rope. They have been hounded by creditors, wreaked with embarrassment, and generally demoralized. But this doesn't need to be the end of their journey. People can leave bankruptcy with the fresh start it is meant to create. Here is a story I find inspirational:



Image courtesy of ddpavumba
at FreeDigitalPhotos.net

"Marine bankruptcy was business bootcamp; now runs profitable Alexandria moving firm" http://wapo.st/1tDqoOv. This article highlights a Marine veteran's great success after his failed house-flipping business. About a year after declaring bankruptcy in his house-flipping business, he started his own moving company. Now, he has a business that he expects to gross $4.2 million this year.

The Marine explains his "three takeaways thusly:

'Perseverance. I had a business that did not succeed. It was maddening, frightening and depressing. I didn’t let any of that stop me. I learned from my lessons, haven’t repeated them, and now I have a company that made Inc. Magazine’s list of fastest-growing companies in America.

'Leverage. I could grow Two Marines Moving at an even faster pace than our current trajectory by taking on debt or investors, but doing so would invite a host of new problems. We grow organically, reinvesting our profits in the company.

'Proficiency. I didn’t know how to do every job of everyone I employed with the construction business. I didn’t know the details of carpentry, plumbing, etc. Now, I know how to do every job that is done at Two Marines Moving . . . mover, driver, sales consultant, dispatcher, recruiter, marketer.'”

Without the bankruptcy, I believe this business owner would have had a much harder time establishing his second business. Also note, it didn't take years for him to get back on his feet.

People can rebound after filing for bankruptcy. This lesson is something for people to keep in mind as they weigh their options.

Putting money on the long shot ...

As the life expectancy increases and our savings drop, there is a good deal of talk about having a retirement fund to last as long as we do.   With that in mind, the US Treasury started pushing a new type of annuity. I came across this article on Bloomberg.com; "Betting on Getting to 80: Draw $40,000 a Year Forever, If You Don't Die First" http://bloom.bg/UwlTIb

"With $125,000, a 60-year-old man can buy a policy from New York Life that guarantees an income of almost $45,000 a year starting at age 80. The same $125,000 in a regular retirement account would need to grow at the unlikely rate of 11 percent a year from age 60 to 80 to provide that income, assuming 4 percent is withdrawn annually after age 80."

The new risk you face is not living long enough. "Those who die early help pay for those who live into their 90s and later." Every place you look and everyone you talk to talk about the risk of out-living your retirement savings. First came long term care insurance. This seems like a logical step as life expectancy increases. It surely is not for everyone and I'm not sure how I feel about tying up money for this long but definitely worth considering.

Attracting and retaining talent in Philadelphia the focus of new credentialing program for high-skilled immigrants

I have met and talked to people working with the Welcoming Center for New Pennsylvanians in Philadelphia. Immigrant Professionals and foreign credentials is one of the issues they discussed. They talked of one medical professional (a Doctor or Nurse) who took a job at a hospital as a janitor because they wanted to work in the medical field and it was too hard to transfer their credentials. Hopefully, this program will develop a process to help.

"Attracting and retaining talent in Philadelphia the focus of new credentialing program for high-skilled immigrants - The Welcoming Center for New Pennsylvanians receives $692,000 from Knight Foundation and The Barra Foundation to launch Immigrant Professionals Career Pathways Program - This program will be a powerful springboard for internationally-educated individuals who are eager to launch their professional work in the United States."

Check it out: http://myemail.constantcontact.com/We-re-Launching-a-New-Program-for-Immigrant-Professionals-.html?soid=1101138922900&aid=CD9t9sE4Q-o

Custody Challenge - the balance of a mother and father as a couple becomes the tension after they split

Many family experts talk about the different parenting styles between mother and father. They talk about the nurturing and protective nature of a mother and how the father allows independence and exploration. Though I never formally studied this area, my own experiences and observations lead me to believe this idea. I think because of these differences in parenting, this is one of the factors that causes angst with custody after parents split.


Image courtesy of africa at FreeDigitalPhotos.net

When parents live together, they tend to work together whether it is a conscious effort or not. The mother is protective and tries to keep safety paramount. That's not to say a mother cannot foster a sense of adventure and independence. But my sense is there is a more heightened concern for safety and security. The father seems to allow a child a greater deal of autonomy; even at the youngest ages. That's not to say fathers place their children at high risk of being harmed. But I think fathers will wait a little longer to see if the child identifies a risk before intervening. Together, parent seem to offset each other. Mother's reel kids in when fathers allow too much adventure and fathers push the envelope when mothers are being overly cautious. These roles and this balance, whatever it is, develops from the time the children are born.

(I realize these are broad generalization and do not fit every family. And I am not trying to offend with this entry. Read on because even if you disagree with my generalizations, I think some of my logic follows for couples filling the roles differently)

When parents separate, this balance is disrupted and just adds tension to an already traumatic event in the parents' lives. They are already angry, mistrust each other, and hurt. Then, they are forced to share or divide the most precious part of their lives, their children. The most upsetting point is when the parents realize they have lost most of their influence over the other parent while he/she is exercising custody. I have met very few mothers who truly believe their ex's can properly care for their child without instructions from them. Many fathers feel mothers can be over-protective and intrusive when they have custody. When the parents completely ignore the others concerns and desires, it becomes a flashpoint.

If parents fail to understand and accept they have lost significant control of the other party's parenting practices when that person has custody of their children; if parents fail to recognize that the balance is off and they need to find a new balance and lose to sight of the fact they still need to co-parent in their new relationship; if they find they cannot or decide not to cooperate with each other to raise their children; and/or if parents act on their own emotions only, then they the run the risk of committing themselves to years of litigation and thousands of dollars in attorneys fee. And ultimately not providing a better environment to raise their children.

I'm not suggesting one parent should not intervene through the legal system if a child is in real danger or at significant risk because of the other parent. But the court does not want to get involved with a true difference of opinion on parenting.

When my clients talk to me about concerns they have about the other person's parenting, I try to shift the focus from the objectionable activity and on to the probable effect on the child.  If the activity is not harmful and has no real negative long term impact on the child, chances are a court is not going to intervene. As a result, any emotions and resources spent on the issue are a waste and could be counterproductive for both parties.

If there is an issue that is just a little more serious, the court may intervene. But parents in Pennsylvania need to keep in mind the courts' preference is to divide custody as equally as possible. So the court's intervention will probably be minimal. As a result, the return on any efforts will be much less than desired.

With all this stated, I understand some people are just jerks and so selfish that they will use their children as a tool to agitate their ex-partners. Unfortunately, there is not much one can do to correct a poor personality. In fact many times any efforts to do so only encourages continued antagonistic behavior.

While it is not always possible, I encourage clients to negotiate as many issues as they can with their former partners and only litigate what they must. My goal for my clients is to establish the new balance as soon as possible so they can put the fighting behind them and refocus on the important task of co-parenting their children. Without building a new balance in their lives, a couple risks years of emotional distress and a significant financial burden in attorneys’ fees.

Great life advice; why do we forget it when it comes to financial trouble?

Will Rogers is credited with saying, “When you find yourself in a hole, quit digging.” Not many people argue with this wisdom. But, for some reason, people seem to throw such wisdom out the window when they find themselves in financial problems. You will find many articles like this talking about people throwing good money after bad and people waiting too long before filing for bankruptcy.


Image courtesy of dan at FreeDigitalPhotos.net

I think people do this for several reasons. First, I think most people just want to pay their debts. They feel obligated to pay their own bills. That is admirable. Other people want to keep the credit. They know that bankruptcy will crash their credit and they will be forced to stop spending. If that spending is for business reasons or medical bills, that is scary.

Also, people seem to be eternal optimists when it comes to paying bills. They always believe the balances are temporary. They will get a better pay soon, their next job will be bigger, etc. I think their debt is almost like that of a gambler; the next hand will bring them back. But the bump never comes and people have spent thousands of dollars they could have kept to help them with their fresh start.

Keep some things in mind. Think before you use your home's equity to pay off credit cards. Remember, credit card debt can be discharged in bankruptcy; a secured loan cannot. Also, pause before you take money from your retirement funds. Again, many times, retirement money is protected in bankruptcy and is money you will need as you age. Finally, think about what happens if you do get that new bigger, better job and a huge bump in pay. You could find your bills are still too much for you to handle but you make too much to qualify for protection under Chapter 7, Liquidation and your only option is a 5-year plan under Chapter 13.

So, take the advice you probably gave to your children. If you find yourself in a hole, stop digging. Don't continue to fund debt, you can never repay if you don't need to.