Diamond Speaks His Mind on Bankruptcy and Related Topics

A NEW EVIL HAS EMERGED - DEBT RELIEF STOREFRONTS

Oh my God, today I spoke with a woman who was considering bankruptcy as a way to get out from under her credit card debt.  She like most people would rather pay off her debts than file for bankruptcy especially when you can wrap your arms around your debt total.  I applaud your ethics and values.  Sometimes, based on how much you owe in credit card debt it could take years and years and years to pay off especially due to mounting interest rates.  Some of these debt relief storefronts are no better in helping you than the exorbitant interest rates charged by the credit card companies.  Getting back to this woman I spoke to today, her debts today were approximately $6,000.  The company she was (at least I hope it's in the past now)  considering working with was going to charge her on top of her  monthly payment towards her credit card debt  - a service charge of $300 per month during the lifetime of the  payment schedule.  She was told that it would take approximately 24 months.  What is wrong with this picture?  A $6,000 debt without additional interest charges would cost this woman more than $13,000.  People do the math!!  I know how it feels to have bills you can't pay and to have creditors breathing down your neck.  I know how badly that can make you feel and so you think anyone that will work with you is a blessing.  NOT................  Read, read, read the fine print........... You're not buying a car ............. you're paying off debts.   DO THE MATH. 

If you choose to handle your credit card debt through a debt relief agency seek out a non- profit agency.  Or consider filing bankruptcy, Chapter 7 where you erase entirely your credit card debt as well as all unsecured debts if you qualify.

Bankruptcy, The Answer For Your Business?

 

Have you ever wondered why doctors and lawyers ‘practice' their profession?  I have.  Today you have to be lucky to find a doctor that focuses on ‘healing' and an attorney that focuses on ‘selfless problem solving'.  It has been my experience that the word ‘practice' gives professionals the freedom to make choices that may not best serve our needs.  It's important to sift through the rhetoric and do your homework.

I 'm Sidney Diamond wife and I can often be his worst critic.  He leaves his clothes everywhere, almost never closes a cabinet door and is constantly misplacing his keys.  He's also brilliant and has more integrity than anyone I know. 

Case in Point:  I sat in on a free initial consultation with a potential client this week.  The gentleman was devastated about his state of affairs and at his wits end.  He started his business over 10 years ago, incorporated his business and now due to the economy his industry came to a screeching halt. I was impressed by how prepared he was for this meeting.  He wanted to know if he should consider filing a business Chapter 7 or a Small Business Chapter 13.  He had corporation papers, his lease, credit card statements, tax information; he knew the answers to all the questions asked and had all the documents that Sidney asked for.  He had several years left on his lease (which he did not personally guarantee), credit card debt and bank loans (which he did not guarantee).  Basically his business was in debt for almost $100,000 and the business had no assets to protect.  

Sidney recommended closing the business and walking away.  Bankruptcy was not recommended in his situation.  It was amazing to see the relief on his face.  His reality is still scary, he worries how he'll continue to feed his family, pay his mortgage and find employment.  Lucky for him he found sound legal advice.   

STOP THE MADNESS - DON'T MAKE PROMISES YOU CAN'T KEEP!

 

There are a number of things a person should not do when considering bankruptcy or when bankruptcy is a solution but one you wish to avoid.  The bill collectors are hounding you with a barrage of telephone calls, in many cases they are breaking the law by calling your relatives,  your employer,  calling you very early in the morning,  after  9pm or when you are at work and/or  threatening  to do all kinds of awful things if you do not pay up.  It is understandable that all you can think about is getting them off of your back, at least for a little while.  So what do you do? You promise to make them a payment(s) in the future; knowing there is no way you'll have the money to pay them, short of a miracle.  In some cases people go so far as to sign a new agreement with their creditor.

You then seek the protection of the Bankruptcy Court and the creditor screams foul and seeks to have the debt you owe not be forgiven.  Why? You made a promise to pay and did not keep your promise and because you made the promise the creditor did not take any action to collect on the debt.  If a creditor can show you're promising to pay in the future delayed action to collect the money it was owed, you may well be denied forgiveness of that debt.

Do not make a creditor a promise or enter into an agreement with a creditor if there is any chance that you can not make the payments.  The best thing to do is make no promises of any kind.  If you are being hounded by creditors use the rights given to you under the Fair Debt Collection Practices Act,( which I have written about before) and write your creditors letters telling them to stop calling you, etc.   Remember empty promises can hurt.

Lobbyists Win and Congress Screws Its Constituents

 

Parties in control of Congress change, politicians that control the parties change, but it appears regardless of which party has the upper hand, the one thing that never changes is the people behind the scenes controlling the show.   The bankruptcy  bill that would give some protection back to the consumer is now stalled in the Senate, on the other hand, provisions that give businesses additional rights in bankruptcy, especially against the average guy trying to hang on to his job and support his family, is quietly moving through Congress and will probably end up being approved.  There is also another law that received a great deal of publicity, when it passed Congress, dealing with the abusive tactics used by banks and other companies issuing credit cards.  There is now a new proposed law that has been introduced in Congress that would push back the time that the law goes into effect by several years. 
After you read this, I hope you are as angry as I am and you contact your representatives.

CHAPTER 7 - CAN I KEEP THE DOG HOUSE?

 

If you have lived in Texas two (2) years prior to the date you filed your Chapter 7 bankruptcy (or plan on filing) you are entitled to use Texas Law to determine what property you get to keep.  That means you may either use the property that is "exempt (free to keep)" from bankruptcy under the Texas State Statute or you may choose to use the Federal Exemption Laws.  Which law you use is up to the person(s) filing Chapter 7, which means you get to choose the statute (Texas State or Federal) that gives you the most benefit.  For most people this generally means you get to keep everything you have, with few exceptions.

Which law is most advantageous depends on whether or not you own a home and how much equity you have in your home. Equity is determined by the difference between what you owe on the house and how much the house is worth.  If your house has a lot of equity one usually finds the Texas Statute gives a person the biggest relief.  While Texas Law protects most things it does not protect cash, cash in banks or income tax refunds.  Federal Law on the other hand would allow you to apply the "wild card".  The "Wild Card" under federal exemptions is exactly the same concept as the wild card used in a poker game - it is any card you want it to be.  In a bankruptcy case, it can be used to exempt from the bankruptcy anything that the debtor wants to keep that is not otherwise exempt.  The 'Wild Card' is contained in Section 5 of the Federal Statute.

The exemption laws are designed to allow people to keep enough of their property to have a "fresh start", not to strip them of their assets or dignity.

Click on these links to see an outline of the Texas Exemption Code and an outline of the Federal Exemption Code.

The fate of your property not protected by either statute (Texas or Federal) is in the hands of the Chapter 7 Trustee. The Chapter 7 Trustee is only going to take things he can turn into a relatively large amount of cash quickly which he can then use to pay your creditors.

6. What property will I get to keep?

BANKRUPTCY COURT LEVELS PLAYING FIELD WITH IRS

 

Dealing with the Internal Revenue Service is a scary proposition, especially if you owe them money.  The Bankruptcy Court is one of the tools a taxpayer has at his/her disposal in dealing with "the tax man" in a variety of situations. 

The Bankruptcy Court can be used to:

 -Stop wage garnishments, bank account garnishments, levies, seizures of property and remove income tax liens that are in excess of the value of the property claimed as exempt;

 -Income tax and certain other types of taxes become dischargeable after a period of time ranging from two to three years after the date tax returns were filed provided certain other conditions have been met;

 -Taxes can be paid in monthly installments over a period of five years, usually without interest or additional penalties accruing in a Chapter 13 case;

 -Disputes over how much is owed can be determined quickly and inexpensively by a Bankruptcy Judge;

 -Tax liability can be determined by a Bankruptcy Judge in a setting which the Internal Revenue Service is subject to a level playing field.

This is a general outline of the options a taxpayer has in the Bankruptcy Court.  As with anything dealing with taxes and the law can have numerous complications and exceptions.

BANKRUPTCY JUST A SIGN OF THE TIMES!

 Life is uncertain that's for sure.  You watch the news and we're told these are scary times and that our ‘banking institutions' have made mistakes and need help - billions of dollars of help.  Where is the money coming from - looks like it may come from you and me.

So, perhaps it's time to reconsider the stigma of filing for bankruptcy.  Let's face it - if you are not able to keep up with your expenses - why not take advantage of the laws that allow for ‘debt forgiveness'.   Bankruptcy does not give you permission to be irresponsible - bankruptcy gives you the ability to manage your finances (Chapter 13) or wipe out your unsecured debts (Chapter 7).   

No one likes to admit they made mistakes or even acted a bit irresponsible.  But no one likes arguing with their spouse over money and the tension that fear and unmanageable debt adds to a marriage can feel like the last straw.  Our debts don't define us.  Our ‘toys' and our ‘careers' don't define us.  When you look in the mirror and review your personal character inventory - how do you rate?  Are you someone that is caring, loving, generous of spirit, honest, forthright, etc.? I believe that's what defines us.The bottom line is - if you've made mistakes with finances - forgive yourself; if you have medical bills, lost your job, your divorce set you back, your mortgage payments are currently unaffordable - help yourself and your family by seeking ‘debt forgiveness'.  At least that's honest.  Now, can we say that about many of our financial institutions that have either failed or on the verge of failure?  Just something to thing about............