The average American’s debt hits records levels this year. The previous record holder was a collective $1.02 trillion in 2008 just before the Great Recession. The average American’s debt has now hit a collective $1.021 trillion – the highest it has ever been.

Average American’s Debt Hits Record Levels

We should all treat this as a huge wake-up call. Higher debt levels increase the risk of default when borrowers cannot service the debt. Current interest rates are also historically low resulting in easy access to credit. For the first time since the Great Recession, lenders are offering consumers with poor credit scores record amounts of credit. Each of these phenomena point to one conclusion – another recession is coming. It is just a matter of when.

Differences in Debt Types

One large difference between 2008 and today is that the debt type is different. Ask anyone “what was at the crux of the 2008 crash?” and they will tell you “the real estate market”. And they would, for the most part, be correct. However, today’s debt looks much different. Housing-related debt is now down; however, student loan debt is up $671 billion and auto loans are up $367 billion. Multiple factors such as the decrease in the perceived value of home-ownership and an increase in the cost of higher education contribute to this new mix of debt type.

What is the Solution?

Needless to say, there is no silver bullet. Each individual’s situation differs. Some may need to simply cut back on non-essential spending (eating out, online shopping – sorry Amazon). Others may need to investigate more acute solutions such as debt settlement or credit repair. In many cases, either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy may eliminate most, if not all, of the debt. Which option best suits you is going to depend on a number of factors. The most important questions to consider are: are you currently delinquent; how much debt do you have; what assets do you own and what are they worth; and how much money do you make?

If you have questions about debt or bankruptcy, contact The Law Offices of Dax J. Miller today to learn more.

Bankruptcy is good social policy.

There are many myths surrounding bankruptcy.  People think that you can just run up a bunch of debt, file a bankruptcy and walk away scot-free.  That is far from the case.  The bankruptcy code contains numerous provisions to explicitly prevent abuse.

Bankruptcy abuse prevention

For example, the bankruptcy code’s “means test” is a formula to prevent those who can repay their debt from just discharging it in a Chapter 7 Bankruptcy.  If you don’t pass the means test – no Chapter 7.  Your only other option then is Chapter 13 Bankruptcy where you are required to repay a portion of your debt.  Another example comes in the form of bankruptcy code exemptions.  Exemptions are the “asset protection” tool of the bankruptcy code.  They allow you to protect a certain dollar amount of your personal property.  However, you cannot purchase lots of luxury goods on credit and then file bankruptcy to wipe out the debt yet keep the goods.  The bankruptcy trustee has the right to seize those goods and sell them at auction to obtain funds to repay some of your creditors.

Bankruptcy is for the honest, but unfortunate debtor.

Like many things in life, a couple bad apples tend to spoil the bunch.  The general public only hears the bankruptcy horror stories.  You don’t hear about the tens of thousands of bankruptcies filed that result in people rightfully discharging debt and moving on with their lives.  You hear tales of people losing everything and bankruptcy ruining their lives.  Those tales are the exception, not the rule.  Also, if you looked closer at those horror stories, you will inevitably notice that the person filing did something dishonest or something they weren’t supposed to.  A well-executed bankruptcy achieves the desired result 99% of the time.  The most often comment I receive from clients after they finish their bankruptcy is that they wish they had done it sooner.

If you have questions about bankruptcy or just debt in general, contact The Law Offices of Dax J. Miller today for your free consultation.

Hot Yoga Files Bankruptcy

That’s right – the company that brought hot yoga to the U.S. files for Chapter 11 Bankruptcy after the founder’s sexual harassment scandals cost the company millions.

Chapter 11 Bankruptcy Due to Chapter 13 Debt Limits

Chapter 11 Bankruptcy applies to business entities like corporations. Chapter 11 Bankruptcy can enable a corporate debtor to reorganize its debt.  Chapter 11 Bankruptcy is also an option for individuals with so much debt that they are barred from filing Chapter 13 Bankruptcy.  Chapter 13 Bankruptcy contains “debt limits”.  One may not have more than $394,725.00 in unsecured debt and $1,184,200.00 in secured debt to qualify for a Chapter 13 Bankruptcy.

Bankruptcy May Not Save Hot Yoga

Bikram Choudhury Yoga Inc. listed over $16,000,000.00 in debt.  Much of that debt resulted from lawsuits that contained allegations of sexual abuse or assault.  The Bankruptcy Code states that some forms of debt are generally nondischargeable.  Debts like child support, alimony, and student loans are usually nondischargeable.  However, the Bankruptcy Code also contains a provision that states that a debt may be nondischargeable if they result from “willful and malicious injury by the debtor to another entity or to the property of another entity”.

Other Examples of “Willful and Malicious Injury”

Bankruptcy Courts have established numerous examples of what constitutes a “willful and malicious injury”.  Notably, one case involved an instance where the Debtor broke the creditor’s arm and then bit part of his finger off.  Other Courts have found that defamation may constitute “willful and malicious injury”.  However, the most common instances of “willful and malicious injury” usually also involve allegations of fraud.  The Bankruptcy Code separately lists “fraud” as a basis for nondischargeability.  This means that the creditor two separate avenues to obtain a ruling of nondischargeability.

Is My Debt Able to Be Discharged in Bankruptcy?

Naturally, if you are concerned about a specific debt, you need to seek answers.  Contact The Law Offices of Dax J. Miller, LLC to learn more about which debts you can eliminate and which ones you can’t.

Paying Off Student  Loans Early May Be a Big Mistake

Student Loans Start Off Well-intended

Student loans are great.  They allow you to seek out your dreams and pursue your passions.  Most importantly, they enable you to earn more money so you can provide a better life for yourself and your family.  But student loans come at a cost – literally.

Student Loans – The Cost

The average student in the class of 2016 had $37,172.00 in student loan debt.  That’s a down payment on a house or a brand new car.  If you’re actively repaying those student loans, you are not buying a new car or putting a down payment on a new house.  That means there is one less car being made and a whole slew of professions/industries that aren’t benefiting from a new house being purchased (construction, appliances/electronics, roofers, lawn care, etc.).  When you spend money, other people around you make money – then they spend money and other people around them make money.  Its not rocket science.

Student Loan Payments Leach From the Economy

However, when you have a whole swath of the wage-earning American population spending huge portions of their income to repay student loans – that money goes nowhere.  Correction – it goes to the federal government – which might as well be nowhere.  That money then gets folded back into the federal budget to get spent on projects like solar-powered beer, llama farmer regulations, or the search to find North Carolina’s best fiddler.

Ok – What’s the Solution?

The solution to the student loan problem may be this – don’t pay them.  Well, don’t pay all of them.  Current legislation says that if you use a certain type of repayment plan through the William D. Ford Program, then you may be eligible to have your student loans forgiven after 25 years of payments.  That may seem like a long time.  However, if you cannot afford your current student loan payments, you may want to learn more.  If paying your student loans are preventing you from making the major life purchases (a house, a new car, a nice vacation), then you may want to learn more.  If you simply want to minimize the amount of money you give Uncle Sam and maximize the amount of money you get to keep, you may want to learn more.

Learn More

Contact The Law Offices of Dax J. Miller, LLC today to learn how we can help you manage your student loans.  If you qualify, we may be able to help you get a lower payment and, eventually, get those student loans forgiven.

 

 

How Long Does Bankruptcy Stay on Your Credit Report?

How long bankruptcy stays on your credit report is a factor to consider prior to filing bankruptcy.  Your credit report is important when it comes to financing a car or a house.  Understanding how bankruptcy may affect your credit is key to knowing what to expect after bankruptcy.  Generally, federal law (the Fair Credit Reporting Act) dictates that credit bureaus may not report bankruptcy on your credit for more than 10 years from the date of filing.

How Long Does Chapter 7 Bankruptcy Stay on Your Credit Report?

Chapter 7 Bankruptcy stays on your credit for 10 years from the date of filing the bankruptcy.  Your credit report will read something similar to “Discharged – Chapter 7 Bankruptcy”.  However, you can obtain credit almost immediately after your receive your Chapter 7 Discharge.  You typically receive a Chapter 7 Discharge about 4 to 6 months after your Chapter 7 Bankruptcy is filed.  The old myth that “you cannot get credit for at least 10 years after bankruptcy” is just that – a myth.

How Long Does Chapter 13 Bankruptcy Stay on Your Credit Report?

Federal allows the credit bureaus to leave Chapter 13 Bankruptcy on your credit report for up to 10 years.  However, the major credit bureaus (Equifax, Experian, Transunion) choose to remove Chapter 13 Bankruptcy from your credit after 7 years from the date of filing.  They do this to incentivize consumers to file Chapter 13 (instead of Chapter 7) and attempt to repay some of their creditors.  Once you receive your Chapter 13 Discharge, your credit report will read something similar to “Paid as agreed – Chapter 13 Bankruptcy” or “$0.00 – Chapter 13 Bankruptcy”.

What Does Having Bankruptcy on Your Credit Mean?

Again, just because your credit report lists a Bankruptcy does not mean you cannot obtain credit.  It is just a way to give potential lenders notice that you file on a give date.  It will also tell those potential lenders what types of debts were included in the Bankruptcy.  The lenders use this information in two ways:  1.  They use it to determine whether to offer you credit and how much to charge you in interest; and 2.  They see that Bankruptcy date and know that they are safe because they know you cannot file bankruptcy again without waiting several years (depending on the type of bankruptcy you file).  Naturally, having a single Bankruptcy on your credit is better than having numerous past due credit card or collections account.  Plus, it shows that you take responsibility for your finances instead of just ignoring them.

Read “How Does Bankruptcy Affect My Credit Score?” to learn more or….

If you have questions, act now.  

Contact your local Evansville Bankruptcy Lawyer at The Law Offices of Dax J. Miller for free unlimited consultations.

How Does Bankruptcy Affect My Credit Score?

Generally speaking, most people try to protect their credit score.  Having a decent credit score allows you to finance a home, a car – any expense you cannot afford to pay for all up front.  But what if you are considering bankruptcy?  How will bankruptcy affect your credit score?

Bankruptcy May Positively or Negatively Impact Your Credit Score

Everyone assumes that filing bankruptcy is a death knell to one’s credit score.  That is rarely the case.  Consider the following examples:

Example:  Bob Smith

Bob Smith lost his job about six months ago.  He is in an industry where he knows it is going to take 4 – 6 months to find another decent paying job.  He has been trying as hard he can to find another one – he just can’t.  As a result, all of his medical bills have gone into collections, his credit cards are behind and he even lost a car to repossession.  About 30 different bill collectors call Bob everyday demanding payment.  Bob is now getting sued in Court.  Bob’s credit is probably sitting right around 450 or so.  Bob has gone to numerous banks to try to get a car loan so he can get transportation so he can get a job.  The banks won’t touch Bob because of his credit score.

Bob files bankruptcy.

After Bob’s bankruptcy is over, Bob’s creditors are now forced to report “Discharged in Chapter 7 Bankruptcy” on his credit report.  Now, when Bob goes to get that bank loan, the bank knows that all of the bad debts that used to be on Bob’s credit are now gone.  The bank knows that those creditors cannot collect on those old debts – that makes the bank feel more optimistic about actually receiving their monthly payments from Bob going forward.  Moreover, the bank knows that Bob cannot file another bankruptcy for quite some time (up to 8 years in some instances).

As far as Bob’s credit score goes, bankruptcy generally affects your score like this:

If you have really good credit, like an 850, your score will likely come down 100 – 150 points.

If you have an average score, like a 650, your score will likely fluctuate up or down by about 50 – 100 points.

However, if you have a poor score, like Bob’s 450, your score will likely increase by 75 – 150 points just because you are almost immediately eliminating all of that ongoing negative reporting to your credit.

Example:  Robert Smythe

Robert has had a great job for 15 years.  He has a perfect 850 credit score.  However, Robert just found out that after 15 years, he is being let go with no notice.  Robert is also in an industry where he knows it is going to take 4 – 6 months to find another decent paying job.  Robert does not have the savings to service all of his debt during that 4 – 6 months.  He knows, as a certainty, that bills will not get paid and his credit will begin to suffer.

While Robert is not currently behind on anything, he knows its coming.  He bites the bullet and files bankruptcy.

Robert has avoided the inevitable negative reporting to his credit.  He has avoided the phone calls, the collections letter, the lawsuits and being turned away by potential lenders.  Yes, Robert’s credit score of 850 has fallen to around a 700.  However, had Robert not acted when he did, all of those creditors would have started negatively reporting.  Robert’s score would have gone from an 850, down to a 750, down to a 650 – and, before you know it – Robert and Bob would have been right there together sitting at a 450.

The bottom line is that filing bankruptcy is not the end of your credit.  Usually, it’s just the beginning.

Check your credit score for free here and then act now. 

Contact your local Evansville Bankruptcy Lawyer at The Law Offices of Dax J. Miller for free unlimited consultations.

 

Chapter 13 Bankruptcy Claims Process

Chapter 13 Bankruptcy is reorganization bankruptcy.  It allows one to obtain the protection of the bankruptcy code in order to restructure one’s debt in a more manageable, affordable way.  Clients file Chapter 13 Bankruptcy for a number of reasons.  Some file to save a house or car from repossession or foreclosure.  Some file to reorganize state or federal tax debt.  Others file to reorganize credit cards, collections, medical bills and even student loan debt.

How Do My Creditors Know I Filed Bankruptcy?

When your attorney creates your bankruptcy petition, the Bankruptcy Code requires you to list each creditor to which you might owe money.  Then, once we file your case, the Bankruptcy Court sends out notices to to each of your creditors informing them of the bankruptcy.  The notice contains your name, address and social security number to better assist the creditor in identifying your account.

Claims Deadline

This notice also gives the creditor a specific deadline by which it must file a claim in your case.  This deadline is 70 days from the date of your case was filed.  However, governmental units (IRS, Indiana Department of Revenue, etc.) are permitted a full 180 days from the date your case was filed.  So – 180 days from filing for the government and 70 days from filing for everyone else.

Objecting to Claims

After the claims deadline passes, the Chapter 13 Trustee and your attorney have the opportunity to review each claim.  Each claim must comply with the Bankruptcy Code in order to be deemed a valid, payable claim.  If a claim does not comply with the Bankruptcy Code, both the Chapter 13 Trustee and your attorney can object to it.  The objection must cite with specificity the reason why the claim is invalid.  If the creditor fails to respond to the objection within 30 days, the Court will rule in your favor.

You heard right – Barbie might need a Bankruptcy Lawyer.  Toys R Us’ Chapter 11 Bankruptcy rocked Mattel toys, makers of Barbie and Hot Wheels.  Toys R Us filed Chapter 11 Bankruptcy last month as a result of a substantial decrease in sales and increase in debt.  Mattel had previously pulled back on shipping Barbie and Hot Wheels to Toys R Us.  Unfortunately,they were not prepared for the subsequent drop in sales.

Chapter 11 Bankruptcy vs. Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is reorganization bankruptcy for consumers.  It allows you to take all or most of your debt and consolidate it into one pool overseen by the Bankruptcy Court and Chapter 13 Bankruptcy Trustee.  A Chapter 13 Bankruptcy typically lasts three to five years but can be much shorter depending on several variable.  How your Evansville Bankruptcy Lawyer structures your plan of reorganization, whether your creditors actually get to file a claim against you and how much of that claim ends up being allowed all play into how long you are required to stay in the Chapter 13 Bankruptcy.

Chapter 11 Bankruptcy is reorganization bankruptcy for businesses OR for consumers with more than $1,184,200.00 in secured debt or more than $394,725.00 in unsecured debt.  Toys R Us filed Chapter 11 Bankruptcy to reorganize and barter down its $5 billion debt.  Chapter 11 Bankruptcies are not limited to the max five year plans in Chapter 13 BankruptciesChapter 11 Bankruptcy can last mere months or it can last off and on for years and years.  The duration of the plan depends on many factors including how favorable the plan treats the debtor-in-possession and whether the debtor-in-possession is able to consistently comply with the plan after it is confirmed by the Bankruptcy Judge.

Barbie’s Bankruptcy Lawyer

So unless Barbie racked up more than $1,184,200.00 in secured debt or $394,725.00 in unsecured debt (buying all those convertibles and beach houses), then she would likely file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Needless to say, Barbie would benefit from speaking to a Local Bankruptcy Lawyer.

If you have questions about the different chapters of Bankruptcy, contact us today.  We offer unlimited free consultations and Bankruptcy Fee Options to fit your budget.

Yet again, Congress has given multi-billion dollar banks more control over your daily life.  Yesterday Congress repealed a rule that would make it easier for American citizens to sue banks that had committed fraud or cheated customers.  

The Old Arbitration Rule

The old rule was simple – if you signed up for a credit card or a bank loan and you discovered some form of fraud by your bank, you were not forced into arbitration.  This rule was valuable to you because it allowed you to get together with other customers who were also wronged and sue your bank as one big class action.  Without the rule, you were forced to participate in arbitration if you wanted any chance at recovery.

The New Arbitration Rule

The situation doesn’t seem complicated on the surface but consider this:

  1. Banks tend to use the same arbitration companies over and over;
  2. Those arbitration company employees then get cozy with the bank employee (lawyers);
  3. The statistics show that arbitration overwhelmingly favors the banks, not the customers.

Think about it – you’re a bank who repeatedly hires the same arbitration company.  That arbitration company gets paid for each successful arbitration.  If that arbitration company consistently rules in favor of the bank that’s hiring it, it ensures that that bank will continue to hire the arbitration company.  It is not rocket science – these arbitration companies are clearly in the pocket of the banks that force their customers to use them.

Use Bankruptcy or Debt Relief to Fight the Arbitration Clause

Federal Bankruptcy Law is not subject to these arbitration clauses.  You can file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy and the big banks have no recourse against you as far arbitration clauses are concerned.  Additionally, non-Bankruptcy options like Debt Relief can sidestep arbitration clauses by dealing directly with the creditor or the creditor’s attorney.

The Bottom Line….

If you feel like you were wronged by a bank there is a good chance that your complaint might be subject to an arbitration.  If that is the case, you need to seek legal counsel.  Your bank likely already knows its rights.  Do you?  You can’t afford to “take a knife to a gunfight.”  

Call The Law Offices of Dax J. Miller today for a free consultation.

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Who is the best Evansville Bankruptcy Attorney?

Choosing the right Evansville Bankruptcy Attorney probably seems like an overwhelming task.  You know you want to make a good decision but you’re concerned because there are so many to choose from.  Some firms boast what sound like too-good-to-be-true attorney fees. Some firms are large and you worry you might become just another number to them.  Other firms may practice in multiple fields of law like family law or criminal law.  This may result in a lack of expertise in Bankruptcy law.

Be your own advocate

The best advice I can give you is “Be Your Own Advocate”.  Know what you want in an attorney and seek that person out.  You may have to speak to more than one law firm. You may have to hold more than one consultation. But at the end of the day, filing bankruptcy is one of the most important decisions you may ever make.  You want to hire an attorney that will zealously represent you and has the knowledge and skill to do so.

Read attorney reviews about your Evansville Bankruptcy Attorney

One of the best resources for choosing an attorney are attorney review websites.  Sites like Avvo and Lawyerratingz allow you to read what other clients have said about an attorney.  Obviously, an attorney with more good reviews might be a better choice than an attorney with few or poor reviews.

Get a second opinion

Getting a second opinion when it comes to bankruptcy is simply a smart decision to make.  In many, if not most instances, our firm may counsel against filing bankruptcy.   We explore all possible solutions before advising in favor of bankruptcy.

Some firms only have a hammer – so everything they see needs to be a nail.

At The Law Offices of Dax J. Miller, we use every tool in our tool belt to address your problem.  Moreover, we do so in the most cost-effective, streamlined way so that we may pass the savings on to you.  Call today for a free consultation. Better yet, if you’ve already spoke to an attorney at another firm, call today for a free second opinion.  We offer UNLIMITED FREE CONSULTATIONS so you can be confident in your decision.

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