Filing Bankruptcy? Stop Paying Credit Cards

credit card bills during bankruptcy

 

I love Western Pennsylvania. We have an honest, hard­-working ethic that just will not go away. And we want to pay our bills. So when I tell most of our clients who are about to file for bankruptcy protection that they should stop paying their credit cards, they look at me in horror. “I can’t do that­­!” they say, “I have always paid my bills.”

Don’t Throw Money Away

I get it. I always pay my bills too. The difference is I have determined that you do not have enough money to pay for your food, clothing, rent or mortgage, utilities, car payment, gasoline, insurance, and other necessary expenses and still make payments on your credit cards. If that is the case, and if I have recommended that you file bankruptcy, then all you are doing by paying these bills is delaying the time that it takes to file. You are also throwing money away that can be used to catch up on a needed car repair, or buy food that the household needs, or pay for the filing of the bankruptcy.

There is a fear that creditors can swoop right in and take things from you, but those fears are generally unfounded, and we can tell you the situations where that might happen. In those few situations, we may tell you to keep on paying on the cards. Generally, creditors cannot come in and take anything. They would have to sue you, win, and you would have to decide not to appeal the decision before they can come in and take anything, and that process can take months, and often years, to happen.

If we tell you to stop paying the cards we mean it. Stop paying the credit cards.

Wondering if bankruptcy is the right option for you? Contact us today to schedule your free consultation.

How Does Bankruptcy Impact Your Kids?

bankruptcy-and-kids_v1-01

Raising kids is tough. Having two of my own, believe me, I know. As a parent, any major (or even minor) decision that you make can have an impact on your children. A bankruptcy can generally affect an individual in two ways; financially and/or emotionally. Consequently, in general, those are the same two ways a parent’s bankruptcy can affect their child. Let’s deal with the financial impacts on your kids first.

Thankfully, the financial impacts of a bankruptcy on a child are minimal, if any at all. The biggest financial concern for a parent as it relates to their child is usually college and student loans associated with going to college. There are specific provisions in the bankruptcy laws that prohibit an individual from being discriminated against for obtaining student loans due to the filing of a bankruptcy. So, your child cannot be turned down for a student loan due to a parent’s bankruptcy. Further, the parent cannot be turned down for obtaining or co-signing student loans for their children due to a prior bankruptcy. For the most part, it’s that simple. Of course though, there are some exceptions.

Student Loans

Some people are in a bankruptcy longer than others. It depends on the type of bankruptcy case that was filed. Some last for five months (or shorter) and some last for five years (or longer). When a parent is in an active bankruptcy, they may have to get Bankruptcy Court permission to obtain a student loan for a child. This isn’t the student loan people turning you down; it is a requirement of the bankruptcy laws that an individual in an active bankruptcy must get Court approval to borrow any money while in an active case. We do this often at Steidl and Steinberg and is normally no problem at all.

Finally, a parent who has student loans in default may not be able to get a student loan for their child. This isn’t really a bankruptcy issue. However, many parents who file for bankruptcy do have student loans that are in default due to their financial situation.

As you can see, in terms of actual financial impact on your kids, bankruptcy really has a minimal effect if any at all. Where the real impact on your kids can rear its head is more in the emotional realm. Your financial situation affects your demeanor and your demeanor can affect your relationship with your children.

While your child’s financial situation will most likely not be impacted  by your bankruptcy as a parent, your own financial situation certainly will be. That can have a trickle-down effect on the relationship you have with your child. This is not always a bad thing!

For example, many of our clients wake up in the morning, turn off the alarm, and immediately wonder how they are going to pay their bills due to massive credit card debt. They go through the day worrying about feeding their family and keeping the utilities from being shut off. Without the crushing credit card debt, they would be fine.

Dealing with Stress

As a parent, I know my stress can have a negative impact on my children. As much as I try to shield them from it, it’s impossible to do so all the time. Once the stress is relieved, my children notice a change, and I notice a change in how they react to me.

A bankruptcy can often times relieve the stress of crushing debt. After an initial consultation with my office related to debt problems, the phrase from my clients I hear most often on the way out the door is, “Now maybe I will be able to sleep tonight.” In other words, once there is some hope for relief from the debt issues, the stress relaxes. Your kids will most likely sense this relief.

On the flip side, a bankruptcy is not something anybody really wants to do. Just the mere fact that you have to file for bankruptcy can be extremely stressful. Your kids will most likely also sense it when stress and anxiety levels go up rather than down.

In this situation, my suggestion is always to be honest with your children about what’s going on. As a parent, you know that your child has an amazing intuitive sense when something is amiss or different. They may not understand what it is, but they sense “something”. Being honest with your child, may be the best way to get everyone on the same page in the household and to head off any issues.

Be Honest with Your Kids

Obviously, the honest approach will have to take on different forms based on the age of the child. Unless they are an absolute genius (and kudos to you if they are), an elementary school child will most likely not understand the concept of debt or bankruptcy. But they do understand when all of a sudden you can’t pay for things and take them to do things like you once could. A very low level conversation with your elementary school child about money and the value of money may be appropriate in that situation.

Conversely, a senior in high school “knows more about everything” than you do as a parent. A much more high level conversation about what’s going on may be appropriate in that circumstance. Explaining what bankruptcy is, why you have to do it, and how it will or won’t affect them may be the right move.

As a parent you know your child best. It is up to you to decide what to tell them, how, and when. Just know that your children feel the pressure and the stress when you do, so “head in the sand” is not the approach we recommend for a good family dynamic.

Everyone’s situation is different. If you are thinking of filing for bankruptcy and you have minor children, ask your attorney what financial impact, if any, it will have on them. As stated above, most of the time, the bigger impact is on an emotional level. Don’t hesitate to ask your attorney if they have any advice on the effect debt and bankruptcy can have on a family. Based on experience, they may have some good ideas on how to approach the issue.

As always, if you have questions about debt or bankruptcy, call Steidl and Steinberg for a free consultation with one of our attorneys. By the way, most of us have kids too.

There’s More to Debt Than Bills

There's more to debt than bills.

 

The bills keep coming in, and you can no longer keep up with them.

For the first time, some of the bills are not going to get paid. You have a headache. You have a sick feeling all over your body. You feel like a failure. You feel like you are drowning in air and it’s frightening.

There is a heaviness to everything you do, every step you take, every conversation you try to have. It is all encompassing. You want to scream, but you don’t think anyone is listening and, if they are, why would they care?

We talk a lot here about the technical parts of debt relief and bankruptcy. It is what we do here. We analyze your situation and come up with options on what you might do to alleviate the problems.

There is a Way Out

But there is something else we do. We also look for ways to address the other issues that go along with having debt that appears to you to be uncontrollable.

When our clients come in, they are in distress. Real distress. Distress that only those who have gone through similar anguish can relate to. Distress like I have described above.

We do this with honest, open discussion of the problems and the solutions. You need to know what is going to happen if you do this, or that, or the other.

The power of knowledge is what will give you the control you did not have before you came to see us. Just knowing that there are alternatives will make you feel better. You may not be dancing out of the office, but the information you will have when you leave will definitely lighten your step. The information and the consultation are free. The peace of mind that can come along with that information is priceless.

Contact us today to schedule your free consultation.

 

Debt Settlement Not Working, What Next?

debt settlement not working

When our clients get into problems with their bills, they look for all types of solutions. Working more hours. Second and third jobs. Negotiating with their creditors. Reducing their payments. Debt settlement. Debt negotiation.

Many of the so-­called solutions of debt settlement and debt negotiation involve placing your trust in people and entities with whom you have never met, and you never will, because they are in a state or a city far from here.

They promise some wonderful solutions and sound reassuring on the phone and seem to have the right answers for all of your questions. You are satisfied, sign the papers, and start sending them money or allow them to take money right out of your bank account.

I can’t tell you if these organizations can help you. I have represented so many clients with such horror stories that I cannot justifiably recommend any of these agencies to anyone except for one of the local Pennsylvania agencies, Advantage CCCS. Advantage is honest and experienced and local to us here in Northwest and Southwest Pennsylvania. But even Advantage can’t help everyone.

Bankruptcy’s An Option

What if you enter into a contract with one of the out­-of-­state agencies and find that your payments are too high, or you are being sued, or it is just not working out? What can you do?

The good news is that you can still consider filing for relief under the Bankruptcy Code, which would mean either Chapter 7 or Chapter 13 in most instances. Either of these will automatically get you out of your so-­called agreement to make payments to these debt settlement or debt negotiation agencies. If you want to stop the payments from coming out of your checking or savings account, you can do that on your own. You simply tell the bank to terminate the authorization you previously gave for the agency to withdraw money from your account. This is your account, and your money.

You can call or e-mail us at Steidl and Steinberg. We will give you a free, fair, and honest evaluation of possible solutions to your problems. In fact, you can do this even before you cancel your contract with the out-­of-town agency. Meet with us and compare your options.

State Announces Tax Amnesty Program

There’s good news if you have delinquent Pennsylvania taxes due. The state recently announced a tax amnesty program, which means you now have a new opportunity to resolve your delinquencies on a discounted basis.

Here are some of the features of the program:

  1. During the period beginning April 21, 2017 and ending June 19, 2017 you may pay any Pennsylvania tax delinquency by paying the tax due plus one-half (1/2) of the accrued interest. The taxes must be assessed before December 31, 2015 whether the delinquency is known or unknown to the department. Payment of the amnesty amount is required to be made in full before the end of the amnesty period.
  2. The amnesty applies to virtually all Pennsylvania taxes including Pennsylvania Income Tax, Sales and Use Tax, Capital Stock Tax, Corporate Loans Tax, Employer Withholding Tax, Fuel Use Tax, Inheritance and Estate Tax, as well as many others.
  3. Upon payment of the amnesty amount (tax due +half the interest) the department will rescind all liens and halt all enforcement actions.
  4. Individuals and entities like corporations and businesses are eligible to apply for the amnesty.
  5. Unpaid taxes due after December 31, 2015 are not eligible for the Amnesty Program. However, non-filed or under reported taxes due after December 31, 2015 must be filed by June 19, 2017, in order to participate in the program.
  6. Prior to the start of the Tax Amnesty period, April 21, 2017, the department will mail notices to taxpayers with known tax delinquencies with instructions on how to apply. If you have unknown liabilities, i.e. you have not filed returns, not paid or under reported your taxes, you could qualify for a limited filing period. In this case, only unknown tax delinquencies dating back to January 1, 2017 must be filed and paid before the close of the Tax Amnesty period. Non-filed period due after December 31, 2015 must be filed by June 19, 2017 to be approved for tax amnesty.
  7. You can be eligible for tax amnesty even if you are currently on a deferred payment plan.

For more information on the tax amnesty program for 2017, contact Steidl and Steinberg Tax Services.