Does it Make a Difference if I File Bankruptcy Before the End of the Month?

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If your income is above the median income for your household size in your state, you must complete a “means test” when you file your bankruptcy petition. To determine whether you are above or below the median income, your gross income for the six-month period prior to the month you file bankruptcy is considered.

 

So, if you would file, October 31, the six-month period under examination is April through September. If you file the next day, November 1, the six-month period excludes April but adds October. If you get the exact same paycheck each payday, this won’t make a difference. But what if you got a lump sum bonus or a retroactive pay raise in one of your October paychecks? In that case, you could be under the median today, but well over it tomorrow.

 

Some income may not need to be included in determining median income. Social Security income, for example is excluded.

 

Just because you are over the median income, it doesn’t necessarily mean that you can’t file a Chapter 7. For example, if more than 50% of your debt is business related and not consumer debt, you may be able to avoid the “means test” and qualify for Chapter 7 Bankruptcy. Therefore, be sure to work with an experienced bankruptcy lawyer to see what your best options are.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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What Are The Risks of Co-Signing a Loan?

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Co-signing a loan is a dangerous thing. Too many people end up in bankruptcy due to debts they just co-signed for, so here are a few points worth considering before co-signing for a friend or family member.

1. There is a reason they need a co-signor. A professional lender does not think they will pay the money back. An objective professional (or underwriting standards) arrived at this judgment. Why do you think you know differently?

2. If they do not pay or miss payments, it will affect your credit.

3. The fact that the debt exists, and you are liable for it, in itself, will affect your credit and will limit the amount of other debt you can contract due to your debt/income ratio.

4. In most states, the creditor doesn’t have to chase the primary borrower when they don’t pay. They will usually just pursue the co-signor in court, getting a judgment and attaching the co-signor’s property and wages. This is a real shocker for most people, and I’ve had many, many conversations with people in some stage of disbelief that they, and not the person who they co-signed for, is getting chased for the debt. However, the truth is that the co-signor is usually better off financially than the primary obligor and, consequently, is a more attractive target for a creditor.

5. Unless you agree otherwise with the lender, you may not even know if the primary obligor misses payments. They may be afraid to tell you while you are accruing mounting interest and late fees.

Co-signing a loan is serious business, and you should think about it as taking on the debt itself, rather than just helping someone out because a creditor is being unreasonable. Once you co-sign a loan it is your debt, and you should ask whether you can afford it and really want to take on the responsibility.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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Can Bankruptcy Be A New Day?

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I’ll admit that most of my clients never wanted to come see me.  Most of my clients are embarrassed by the fact that they even must ask about filing bankruptcy.  Struggling with debt is hard and it can literally suck the life right out of you.  For most, it seems like the end of the world.

 

Generally, when I speak with folks, the stories revolve around the same themes.  They have tried their best to manage their finances but through one thing or another, they just can no longer juggle the debts.  They are constantly badgered by telephone calls demanding payment immediately.  They are tired of going to the mailbox to get another batch of letters with red print shouting “pay now!”  They are tired of a sheriff’s deputy showing up at their home to serve yet another lawsuit against them.

 

Yet, once a bankruptcy case is filed, these problems go away.  As Jill Michaux explained, the crushing weight of debt is lifted off your back.  Because of the automatic stay, you will no longer receive collection calls or visits from the sheriff.  But, once your case is over and your debts discharged, you will find a new financial future.  To be sure, as far as credit goes, it may be initially more difficult, but credit is available.

 

The simple fact is that bankruptcy is not the end of the world.  It is a new beginning-a fresh start.  Just as the night is darkest before the sunrise, so it is with the bankruptcy world.  Once you decide that you are tired of laboring against insurmountable debt and take the action to rid yourself of that debt, the sun starts to peek through the horizon.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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Should I Be Worried About Going to My Meeting of Creditors?

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After you file a bankruptcy case, you are required to attend a Meeting of Creditors. This is scheduled for about a month after your petition is filed and is usually the only appearance you will need to make during the bankruptcy process. Should you be nervous about it? Probably not, especially if your bankruptcy lawyer knows what he or she is doing.

 

Your attorney should prepare your bankruptcy petition and schedules with plenty of attention to detail and accuracy. Before you sign your petition, you should carefully review it and correct any items that are incorrect or incomplete.

 

At the meeting of creditors, the bankruptcy trustee will ask you some questions which you will answer under oath.

 

1. Tell the truth.

2. Listen to the question.

3. Let the trustee finish before you start speaking.

4. Answer in as few words as possible.

 

The trustee will already know much about your financial affairs. Before your scheduled meeting, your attorney sends the trustee several documents. Prior to the meeting the trustee has reviewed your deed, mortgage, vehicle titles, and your most recent tax returns, in addition to your bankruptcy petition and schedules.

 

So, when you meet with the trustee, they may not have many questions for you other than “When you signed your bankruptcy petition and schedules did you review them? And were they true and accurate? Were there any errors or omissions?” You may be asked if you had sold any property in the last few years, or how much of a tax refund you expect to get. The trustee could ask if you have suffered any injuries that you could sue someone for, or if you expect to receive an inheritance. The trustee will also discuss with you what will happen to any property you own that is not protected by an exemption.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.

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