Modesto Bankruptcy Lawyer Blog

Modesto bankruptcy attorneys know that there are a host of reasons people seek relief from a Modesto bankruptcy.

Often, people think of home foreclosures or soaring medical bills. And those are all very common debt problems that can quickly get you in over your head.

However one thing that often isn't mentioned, but can be just as perilous financially, are automobile leases. Even if it's not quite enough to push you to the brink of bankruptcy on its own, it can be enough to push you over the edge.

Now, first thing's first: Bankruptcy is not a bad thing. No longer is it stigmatized, and in fact, it can do wonders for your credit and in releasing you from a mountain of debt from which there is no other way to escape.

That said, of course, it's better to avoid the debt in the first place if you can.

With regard to auto leases, some people find they like this because it allows them to have a new car every few years. And it's true that for some people, there may be situations in which leasing makes sense.

But the truth is, many leases can be a bad deal financially, especially with balloon payments and mileage payments that are due at the end of a lease. Bankruptcy can eliminate this kind of debt.

However, it's important to educate yourself on some of the pitfalls with regard to leasing a car, prior to having that debt spiral into something unmanageable.

First off, the amount of your lease contract isn't going to change, even if you get into an accident - and even if that accident isn't your fault. If the car is totaled, you are probably still going to be responsible to pay the dealership back the full amount of that lease - regardless of whether the insurance company gives you back less than you owe on it. One way you can try to avoid this is by purchasing gap insurance, which is going to cover you for the difference.

Secondly, there's a limit to how long you can drive a leased car and for how many miles. In a lot of cases, the leases are set for five years and 60,000 miles. So if you go over that mileage (which most people do - it's only 12,000 miles a year), you're going to pay a penalty for every single mile. And even if you do manage to keep it under the allotted mileage, you aren't going to get any credit for whatever you don't use.

Thirdly, if you run into financial difficulties - say, a job loss or layoff - and you can't afford to pay the remainder of your lease, the dealership will auction your car to recover whatever it can. Whatever it doesn't get? You're responsible for that.

Fourthly, while you don't own the vehicle, you are going to be responsible for maintenance and repairs. Of course, there may be fewer costs associated with this because generally, you'll be driving a newer car. However, if there are any problems, it's your problem - not the dealership's. That means that you are making an investment on something from which you are unlikely to get any return, other than the fact that you will be able to continue to drive it for the remainder of your lease, which you had expected anyway.

And finally, if you do get attached to that car, buying it after the term of your lease is almost never financially smart. In many cases, the car is worth way more than the sticker price you'll be asked to pay.

Continue reading "Modesto Bankruptcy & Auto Leases: Don't Drive Yourself Into Debt" »

It's tax season - that dreaded time of year when consumers must dig through earnings statements and income documents and try to figure out whether they must pay Uncle Sam or expect a check in the mail.

But, as CNNMoney is reporting, the Internal Revenue Service is warning consumers to beware of some common but problematic scams that can leave not only long-term economic stains on a person's record, but create debt problems as well.

Modesto bankruptcy lawyers understand that tax season isn't usually a fun time of year, but it's important to pay close attention to this aspect of your finances in order to ensure you don't have to deal with an IRS audit or face financial questions if victimized by a scam artist.

Also, bankruptcy in Modesto may be helpful for people who are dealing with long-term tax bankruptcy issues. While there are exceptions for what types of tax can be discharged and strict rules about how taxes and a bankruptcy filing are used.

For instance, in Chapter 7 bankruptcy in Modesto, a consumer can have income taxes wiped out through the process, but other types of taxes, such as payroll taxes, aren't eligible. There are also time limits on what will be eligible for discharge. The tax return that is in play must be due at least three years before filing for bankruptcy and the tax return had to have been filed at least two years before bankruptcy.

Taxes are eligible for bankruptcy help, but it depends on the circumstances. And there are many scams out there that can hurt consumers financially. Criminals are using any means necessary to try to rip off consumers and tax season is no different. Here are 12 scams that the government is warning consumers to look out for.

Identity theft: This one has gotten plenty of publicity in recent years and for good reason. Many thieves are intercepting income tax refund checks -- to the tune of $1.4 billion 2011.

Phishing: E-mails, text messages, social media and other mediums can be used to steal a person's identity. Once a scammer has a little bit of information about a person, they may be able to use it to ruin your finances.

Bad tax preparers: About 60 percent of consumers use professionals to prepare their taxes, but many of these workers have been found to be involved in scams. If the worker doesn't have a Preparer Tax Identification number, promises large refunds, takes a cut of the refund as a fee or encourages you include false information, it may be a scam.

Hiding offshore income: Taxpayers who hide money outside the country can end up facing major federal criminal charges. But the IRS has offered a reduction in penalties and no threat of criminal charges if people come forward and disclose their offshore accounts.

There's no free money: Some scammers have offered people to file returns with little documentation and get big returns back.

Inflating incomes and expenses: Changing income levels to get a better return is another trap that can lead to criminal charges and penalties.

Filing false forms: Fabricated information on forms or claiming deductions that aren't appropriate can get you in trouble.

Paying for argument advice: There are scam artists who will charge consumers to get advice on how to argue taxes with the IRS, even though many arguments have been discredited by judges.

Claiming zero wages: The IRS can usually spot when someone fraudulently files a "corrected" income form to lower the amount of wages.

Upping the amount of donations: If it seems as if the consumer has overstated how much they have donated, it can lead to an audit.

Disguising corporate ownership: The IRS is working with government entities to determine who are the true owners of small businesses.

Misusing trusts: Transferring money into a trust to reduce taxable income can be a scam to avoid how much liability a person has. The IRS is looking out for that.

Continue reading "Modesto Consumer Debt Could Result from Tax Scams, IRS Warns" »

CNNMoney is reporting that a new credit card could end up costing customers up to $400 per year just to use the card.

Sadly, this isn't shocking. Credit card companies continuously try everything they can to squeeze money out of their customers. The very people who keep their businesses profiting are the ones who end up suffering. Modesto bankruptcy attorneys have seen this happen many times.

And often bankruptcy in Modesto is an answer to the aggressive and predatory nature of credit card company tactics. Through bankruptcy, a consumer can eliminate large amounts of credit card debt.

This allows them to prepare for their financial future while helping them today. Filing for bankruptcy provides instant help for consumers through what's called an automatic stay. This action stops creditors and debt collectors from harassing consumers.

So, the hours of automated calls, harassing emails and letters that threaten legal action and wage garnishments come to an end. These actions are barred from happening and creditors must make a court appearance and file certain motions in order to be able to contact the debtor directly.

According to the news article, First Premier's Platinum card is aimed at consumers who have bad credit. It has a ridiculously high 36 percent APR and has some of the highest fees among all credit cards, analysts are saying.

A common myth of bankruptcy is that people who file are unable to get credit. This myth is easily disproved. Consumers who file for bankruptcy often get credit card offers as soon as they finish the process.

In some cases, these offers aren't very good, such as the First Premier Platinum card. But consumers will have the power to pick and choose whether they want to take these initial offers or leave them. They may choose to consider a secured credit card, where the consumer deposits money that will be act as a spending limit.

There are different ways to quickly build back credit after bankruptcy. Consumers shouldn't necessarily dive back into getting a credit card, unless it's with the plan of re-establishing credit and using bankruptcy protection to try to get back on track.

The news article also points out that First Premier has 2.6 million customers and solicits another 1.5 million each month. The company says that it is helping consumers who otherwise would be too risky to be offered credit. Therefore, they are balancing that risk with the higher rates.

And if a consumer seeks an increase in credit, they are charged 25 percent of the amount of the increase. So, if the consumer gets an additional $500 credit, they must pay the company $125. Between the high interest rates and the loads of fees, this card could spell trouble for consumers trying to get back on their feet. But this company isn't alone in offering high-interest, high-fee cards.

Consumers who have used bankruptcy to help their finances must be cautious about how they go about rebuilding credit. All consumers must be careful, as creditors are always looking to make a buck.

Continue reading "Cash-Strapped Modesto Consumers Targeted by Credit Card Companies" »

A recent article out of St. Louis looks at the two personal bankruptcy options available to all Americans -- Chapter 7 bankruptcy and Chapter 13 bankruptcy..

Modesto bankruptcy lawyers will take a look at which form of bankruptcy could be appropriate for the average consumer struggling with debt. Whether choosing Chapter 7 bankruptcy or Chapter 13 bankruptcy in Modesto, the consumer can obtain debt relief.

Both forms allow for either all or a majority of a person's unsecured debt to be discharged after going through the bankruptcy process. So, both are beneficial. But there are requirements for qualifying that are based on a person's income and their individual situation. That's why consulting with an experienced Modesto bankruptcy lawyer should be your first step if you're considering bankruptcy.

Chapter 7 bankruptcy is the form that most people think of when they think of bankruptcy. This is where a person's debts are discharged and they may be called on to give up some of their possessions to sell and pay off debt. But that's not always the case. There are many situations where a person has few pricey assets or they owe more on them than they're worth and creditors aren't interested in them.

That means a person can keep their assets and still have their credit card, medical and other debt wiped clean. This is a form of bankruptcy considered for non-wage earners or people who have more debt than their income can reasonably satisfy. They are unable to pay their debts either because of job loss or are overwhelmed with debt.

According to statistics from the American Bankruptcy Institute, Chapter 7 bankruptcies consistently make up about 70 percent of personal bankruptcies nationwide.

In the first two quarters of 2011, they made up 71.3 and 72.32 percent of bankruptcies, respectively. In 2010, they peaked at 73.45 percent during the second quarter and going back a few years they made up as low as 57.45 percent in 2006. The number of bankruptcies has more than doubled from 597,965 in 2006 to 1,536,799 in 2010. Numbers for 2011 should be relatively close to 2010 numbers.

But studies have shown that Chapter 13 bankruptcies have become increasingly popular. In 2005, lawmakers changed the standards for filing for Chapter 7 bankruptcy, making it more difficult. Since then, some people have been forced to file Chapter 13 because they make too much money for Chapter 7.

This may be because people who make money, but whose houses are dragging them down, are looking at bankruptcy as a viable option. If people bought a house at the peak of housing prices only to see them crumble and currently are living in a house that is worth 1/4 of what they paid for it, they may allow it to go into foreclosure.

That could be a strategic decision or it could be because of job loss or job transfer. In these cases, it may be possible for the bank to come after the homeowner and seek a deficiency judgment, which means the bank attempts to get the homeowner to pay the difference between the mortgage amount and the sale price at auction after foreclosure.

For these people, perhaps Chapter 13 bankruptcy in Modesto fits best. Under Chapter 13, all debts aren't simply discharged like in Chapter 7. In this form of bankruptcy, the debtor must set up a payment plan, typically over a 3- to 5-year period. During this time, they make monthly payments to pay back some of the debt. The exact portion is determined on a case-by-case basis.

After the payments are made, the debt is considered discharged. While this may be more expensive, it guarantees that a person's assets remain intact. This includes a house, vehicles and other assets.

Continue reading "Which Chapter of Bankruptcy in Modesto Is Right For You? 7 or 13?" »

Two Georgia legislators recently introduced a bill in Washington D.C. that would allow people to pull money from their retirement accounts penalty free if they use it to pay for their mortgages, The Atlanta Journal-Constitution reports.

While this may be a well-meaning attempt to solve the mortgage crisis that has hammered our country, this by no means is a good idea.

Filing for bankruptcy in Modesto is a much smarter move if you are struggling to make mortgage payments.

Here's why. In bankruptcy, retirement funds are protected from creditors. Without money stored away for the future, you'll be robbing from your retirement in order to save a house that likely has lost its value. Even if a person wants to stay in their house, bankruptcy can help.

As Modesto bankruptcy lawyers have seen time and time again, people can file for bankruptcy and stay in their home during the process even if they've missed payments. They ften can stay in their home with a modified payment plan after bankruptcy has ended.

Or, after all their debts have been discharged, they can be debt free and can start a new life without credit card balances or other debt. It makes much more sense to go that route that throw away whatever long-term savings you have.

Sen. Johnny Isakson and Rep. Tom Graves have said they believe their bills would help people stay in their homes in these difficult economic times.

Isakson said he doesn't think that the country will be able to recover financially until the housing market turns around. He said he believes the legislation would reduce foreclosures and "stabilize home values."

Graves said many Americans who have saved up for retirement are now out of work and the current tax laws don't allow for withdrawals without paying a 10 percent penalty. The law, he said, would quash that penalty for those using the money for their houses. He believes this will cut down on late payments, foreclosures and help boost the economy.

Maybe this would help the economy and it would be fine to have that option available, but tossing away your retirement to save a house can't be a strong consideration for most people. A house is a necessity, but so is having the money stored away for food, medical care and other cost-of-living expenses when you can no longer work.

While the economy is bad and jobs are scarce, being at an age where a person can still work makes it a lot easier to one day build a secure retirement. For older consumers who can no longer earn a paycheck, tossing away your savings is not a smart plan. It would be better to lose a house, get rid of existing debt through bankruptcy in Modesto and start to repair your credit without touching your retirement accounts.

Continue reading "Modesto Bankruptcy Watch: Retirement and Bad Real Estate Debt " »

An article out of Florida reports that more women than men are seeking help with personal debt, possibly brought on by job loss for men in recent years, the Orlando Sentinel reports.

Regardless of why people are seeking credit counseling, or which gender is more likely to seek help, it is a problem that harms and affects people of all backgrounds. Modesto Bankruptcy Lawyers have helped many people of various stages of life with filing for bankruptcy in Modesto.

Medical bills, job loss and predatory lending have left many Americans and people here in Modesto in over their head in debt. Some seek help with their homes and slip into mortgage foreclosure scams that can leave them in worse shape financially. Others look to credit counselors, who try to help the consumers reorganize debt or negotiate with creditors and lenders. But they charge a fee to people who are stuck trying to get by often by paying the minimum on their credit cards. With little authority, but only advise, sometimes it doesn't work. Other times it's a scam.

But filing for and qualifying for bankruptcy in Modesto will help people clear away debt and give them a fresh start. Being able to clear away debts that have creditors calling and threatening to garnish wages is refreshing for many of our clients who feel like there are few places to turn for help. We will assess your situation and help you figure out what avenues exist to best help you.

And for those who want to stay in a house that is on the brink of foreclosure, filing for bankruptcy immediately stops the process.

According to the article out of Florida, more than 62 percent of the clients of one of the largest credit-counseling agencies in the state are female. Historically, the gender gap has existed going back for most of the last decade.

The newspaper and others speculate that more women today are the breadwinners in households, though studies show women still make about 80 percent of what men make in the workplace. But with 4 million people -- mostly men -- losing their jobs in the construction industry during the Great Recession, it's possible that more women are being forced to lead the household and are more in charge of family finances.

Whatever the reason for out-of-control debt, credit counseling may not be the answer for everyone. Bankruptcy can sometimes be a more stable and long-term solution to debt and can be more beneficial to a person's credit score than counseling. If debt lingers, a credit score can suffer. But taking care of it in one fell swoop can more quickly get a person or family on a fresh path financially.

Continue reading "More Women Seek Credit Card Debt Help Than Men in California" »

The Stockton Record is reporting that while foreclosure filings in California are down nearly 28 percent from a year ago in May, the Stockton metro area remains among the hardest hit by the mortgage meltdown.

Consulting with a bankruptcy attorney in Stockton or Modesto could stop foreclosure or prevent you from being subjected to a deficiency judgment or other consequences. Bankruptcy laws are designed to help people take control of their finances, and using those laws to one's advantage can provide many advantages.

The Stockton metropolitan area, which includes all of San Joaquin County, ranked second nationwide in the rate of default filings, followed closely by Vallejo-Fairfield ranking third and Modesto ranking fourth. Las Vegas led the way with the most defaults filed followed by the Reno-Sparks area in fifth.

"It's a reflection of how deeply buried the Stockton area was by the mortgage tsunami. We're up to 18 straight months of year-over-year decreases in foreclosure activity," Daren Blomquist, a RealtyTrac spokesman said of San Joaquin County legal filings, which include trustee sales, notices of default and lender repossessions. "The trend is in the right direction, but the numbers are still persistently high."

According to RealtyTrac there were 1,652 recorded foreclosure filings on San Joaquin County houses in May. Though this shows an almost 26 percent decrease from the 2,222 recorded in the same month in 2010 it still means 1 out of 139 households are filing for foreclosure.

Nationally, RealtyTrac reported nearly 215,000 foreclosure filings in May, a drop of 2 percent from April and a drop of 33 percent from May 2010. That means that last month, 1 out of every 605 housing units filed for foreclosure. Led by California, five states accounted for 51 percent of the national foreclosure activity in May, where almost 52,000 properties got a foreclosure filing. Florida had 19,192 foreclosure filings followed by Michigan with 14,614, Arizona with 13,122 and Nevada with 11,039.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask," says James Saccacio, chief executive officer of RealtyTrac. "First, activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory.

Filing for bankruptcy doesn't have to be painful; millions of Americans do it every year. Many bankruptcies are beyond the debtor's control, caused by circumstances like a devastating illness or injury or loss of a job. Filing for bankruptcy is an option to rid yourself from debt due to medical bills, credit cards or student loans. Let our attorneys assess your case and determine the best course of action for you.

Continue reading "Foreclosure Filings Still up in Stockton, Modesto Areas" »

The Sacramento Bee recently chronicled the experiences of two couples struggling with credit card debt. Both couples used a debt solutions company and took more than five years to pay off their debts. Evaluating your options is recommended before you sign on with any agency claiming to make you debt-free.

Contacting a bankruptcy lawyer in Modesto could have given these couples a fresh start much sooner.

Most people think of bankruptcy as something to be ashamed of, but it's not. Consumers that have fallen on hard times because of medical bills, real estate debt and credit card debt deserve a new start. An experienced bankruptcy lawyer can explain the two types of bankruptcy options a consumer has. One can wipe out most of your debts immediately so you can start anew. Credit counseling, which won't save your credit rating, is another option. Your credit report will show late payments that will stay on the report for years. This will greatly affect your ability to obtain loans.

The state Department of Corporations keeps on eye on the credit counseling agencies in California.

Here are some cautionary tips and red flags regarding credit counseling agencies:

-Considerable upfront fees - most places charge you a set-up fee and then add on additional fees.

-Misplaced or diverted payments - some companies won't tell you your first month's payments are actually fees. So your money going to the credit counseling company and not your creditors. Missed payments mean bad marks on your credit report, which will last for years.

-Idealistic promises - no company will wipe out your debt for free without damaging your credit rating. Supervised payment plans involve systematically paying off your loans.

-No accreditation - agencies that aren't accredited by the National Foundation for Credit Counseling and/or Association of Independent Consumer Credit Counseling Agencies should be avoided. Accredited credit counseling agencies meet minimum standards for free or low-cost confidential services.

Bankruptcy laws give legal protection that most other debt-relief options don't; personal bankruptcy shouldn't be viewed as a last resort, but as a new beginning. Your own situation will determine if bankruptcy is the right choice for you. Let an experienced bankruptcy lawyer assess your financial needs and explain your options.

Continue reading "Those Considering Debt Solution Agency should speak with Modesto Bankruptcy Attorney " »

The end of first quarter 2011 reflected that the West region still holds the highest unemployment rate of any region in the country at 10.7 percent. It should be no surprise for those who are jobless then that California ranks 4th in bankruptcies per capita according to The Orange County Register.

Individuals who suffer from insurmountable debt should seek the help of an experienced Stockton bankruptcy lawyer in order to get your life back on track. You do have options -- an experienced bankruptcy attorney can help. One income households often find it impossible to keep up with mortgage payments, credit card bills, and medical expenses over time, which in many cases leads to filing for bankruptcy in California.

When we think of the classic bankruptcy candidate we often think of frivolous spenders, victims of divorce settlements or people who spend beyond their means. The recession has killed most of those old, unfair stereotypes. Recent data indicates that healthcare is the number one reason for bankruptcy in households that claim debt. The U.S. Department of Labor Bureau of Labor Statistics recently reported that California ranks 2nd in the nation in unemployment with a 12 percent rate. This is substantially higher than the national average recorded in March of 2011 at 8.8 percent. Twelve percent of Californians without jobs means a substantial amount of families without health benefits.

California reported 7.05 bankruptcy filings per 1,000 population for the 12 month period ending March 31, 2011. According to the U.S. Bankruptcy Court, California was ranked 4th highest among states, an increase from the previous year when the state was ranked 8th and had 6.15 bankruptcies reported per 1,000 population.

Nationally, there were over a million and a half filings for the 12 month period ending March 31, 2011 which is a 2.6 percent increase when compared to the same months of the previous year. Interestingly, personal bankruptcies filed increased by 6.8 percent while business bankruptcies filed decreased by 11.3 percent for the 12 month period ending March 31, 2011.

The stress of filing for bankruptcy can be overwhelming, especially when you are faced with the fear of potentially losing your home. Contacting an experienced bankruptcy law firm can help you make a fresh start -- experience the relief that comes with a new beginning.

Continue reading "California ranked near the top nationally in bankruptcies filed" »

Modesto bankruptcy lawyers have helped thousands deal with the economic downturn by seeking the fresh start that can come with bankruptcy protection. With the economy the way it is the last few years, many of us have had to take the necessary measures to keep our heads above water in order to protect our families. These steps have led to maxed out credit cards, bad credit, overdrawn accounts and unpaid mortgages or loans. The help of a bankruptcy lawyer can help you save your home from foreclosure and give you a clear vision on the right course of action to take.

Banks and lenders are continuing to take advantage of individuals who suffer from hardships and who can't make ends meet. The Modesto Bee recently reported about several cases of soured plans to build and develop northern Modesto. Multi-million dollar debts can't be paid, which have led to civil lawsuits and court dates. Westamerica Bank has captured one large development property after going to a foreclosure auction recently. Another 36 acre property was scheduled for foreclosure but the over $11 million debt was delayed when the developing company filed for bankruptcy the afternoon before the auction was to take place.

The state of California reported over 255,000 filings for bankruptcy in 2010. The filings per capita rate was 6.90 per 1,000 people. The ratio breakdown of filings were 76 percent filed to be discharged of all debts (Chapter 7) and 24 percent filed to pay off the debt under a three to five-year plan (Chapter 13). In 2010, there were over 500,000 projected foreclosures in California. It is estimated that during 2009 through 2012, there will be almost 2 million foreclosures.

Chapter 7 and Chapter 13 bankruptcy are option to help consumer gain a fresh start. Most homeowners may not know that it is possible to keep your home after filing for bankruptcy in Chapter 7 or Chapter 13. Furthermore, creditors can be fined for imposing or violating your rights if they continue to harass you about collecting on owed debts after you file. Determining which chapter and filing for bankruptcy can be a complicated process so having an experienced attorney who can monitor the situation and help you make the right decisions should be a top priority for any individual facing financial problems.

Continue reading "Preventing foreclosure after filing for bankruptcy a possibility with the help of an experienced Modesto bankruptcy lawyer" »

The number of January bankruptcy filings dipped below 100,000 last month for the first time in a year. January 2010 was the last time fewer than 100,000 filings were recorded, according to the National Bankruptcy Research Center, which reports filings were down 22 percent compared to December.

Bankruptcy lawyers in Stockton and Modesto continue to see consumers seeking Chapter 7 protection and Chapter 13 bankruptcy in record numbers throughout the U.S. Bankruptcy Court's Eastern District of California.

Primary drivers of bankruptcy filings continue to be foreclosures and bad real estate debt, unemployment, medical bills and insurmountable credit card debt. January filings totaled 3,924, up 5.7 percent from a year ago. By comparison, just 1,829 were reported in the Eastern District in January 2005.

Last year, 54,365 sought bankruptcy protection in the Eastern District of California, compared to 17,397 in 2007, before the economic downturn.

Nationwide, about 1 in every 3,000 people sought bankruptcy protection. As the economic recovery took tentative hold last year, the number of filings grew increasingly uneven across the country.

Filings in Nevada remain at a level more than twice the national average. And rates in Georgia, California and Tennessee remain at more than 1.5 times the national average. Eight areas reported rates less than half the national average: Alaska, South Dakota, District of Columbia, South Carolina, Vermont, New York, Wyoming and North Dakota.

California is one of just four states where January filing rates were higher than last year. The others were Delaware, Idaho and Utah. Several state reported levels at least 30 percent below last year's, including Vermont, Connecticut, New York and D.C.

Continue reading "Bankruptcies in Modesto, Stockton, Continue to Increase Even as Numbers Fall Nationwide" »

Short of winning the California State Lottery, bankruptcy is probably the fastest way for many overwhelmed Modesto residents to get out of debt. There are income restrictions as to who can file for Chapter 7, or total, bankruptcy, so a bankruptcy lawyer may recommend Chapter 13 bankruptcy instead. As opposed to eliminating your debt totally, Chapter 13 negotiates your debts down to a lower amount and puts you on an affordable payment plan to rid you of them over time.

That being said, many people wonder how long it actually takes for bankruptcy to clear away debts. In the case of Chapter 13 bankruptcy, it depends on the length of your payment plan, but the average plan is structured over three to five years.

For Chapter 7 bankruptcy, on the other hand, there are no payments to make. Most of your unsecured debts, like credit cards and medical bills, will be eliminated completely in a few short months. On average, people who file for Chapter 7 bankruptcy with a lawyer in Modesto can see their eligible debts gone within 90 to 120 days, although you may even start seeing the effects almost immediately since creditors and collections agencies have to stop calling once you file. Certain debts will still need to be paid, however, such as student loans, government loans, back taxes, child support and alimony.

Bankruptcy can stay on your credit report for seven to 10 years, but you can start rebuilding your credit immediately after you file for bankruptcy if you make smart financial decisions and timely payments. Contact a bankruptcy lawyer to devise a financial plan for your debts today.

Many Modesto residents find themselves considering bankruptcy to get rid of or pay down outstanding debts. As you educate yourself on your bankruptcy options, it's also a great idea to consider alternatives to bankruptcy. With the help of a bankruptcy lawyer and depending on your financial situation, some of these techniques might be helpful before you file for bankruptcy:

Negotiate Your Unsecured Debt. Credit card companies (one of the primary sources of unsecured debt) will sometimes work with you to negotiate down your debt without having to file for Chapter 13 (reorganization) bankruptcy. Since they are the last to get paid when you file for bankruptcy, it is better for most companies to settle your debt for a lower amount.

Surrender Your Property. Basically, this is like acting as your own repo man without the unexpected visit. This method works for secured loans, such as those for large appliances, cars, boats or electronics. Simply ask the retailer if they'll take back the item. You won't likely get any money back, but you will eliminate that payment. You can also sell off your high-priced possessions to the highest bidder, but this is likely to still leave you with a monthly payment until the original debt is paid off.

Do a Short Sale of Your Home. If you're upside down on your mortgage, you can sell your house for less than it's current market value. This is especially useful if you have enough equity built up to cover the cost of your loss. Keep in mind that you will have to work with your lenders to get their permission before you can do a short sale.

It's important to note that you may not even qualify for bankruptcy if you make too much money of if your debt is too high (more than $336,690 in unsecured debt and secured debt less than $1,010,650). If you do qualify, though, and these techniques simply aren't enough to get you out of debt, it might be time to ask a Modesto bankruptcy lawyer to explore your options for Chapter 7 or Chapter 13 bankruptcy.

Filing bankruptcy in Modesto is a fairly straightforward process. There are a few things you must do before you file in order to ensure that your bankruptcy filing is valid and in order to preserve as much of your credit rating as possible. Following these five steps can also help expedite the process:

1. Evaluate Your Recent Purchases. Any large purchases made just prior to filing may be seen by a bankruptcy court judge as fraudulent. Just because you know you're about to file doesn't mean you can run out and buy a new car, a new wardrobe and take out cash advances on your credit cards and think that the bankruptcy will wipe the slate clean. This is highly risky behavior that can end up getting your case dismissed at the least and having you charged with fraud at the worst.

2. Enroll in Approved Credit Counseling. According to the sweeping bankruptcy law changes in 2005, people who want to file for bankruptcy must attend mandatory credit counseling prior to filing. In this session, a counselor will spend 60 to 90 minutes reviewing your financial situation, suggesting alternatives to bankruptcy and creating a personal budget plan. This session costs around $50, depending on where you live and the services received.

3. Request a Fee Waiver. If you know you cannot pay for your credit counseling session, you must request a fee waiver from the organization conducting the counseling prior to your session. Approved credit counseling organizations can be found on the U.S. Trustee's website.

4. Obtain a Certificate of Proof. After your session, be sure to obtain a Certificate of Proof of completion. This is required in order to file.

5. Get a Professional Bankruptcy Attorney. Although you can file for bankruptcy on your own, it is not advisable. The paperwork involved is labor-intensive and you must know the intricacies of dozens of federal laws. Do yourself a favor and hire a professional.

Given the state of the economy in Modesto and throughout the nation, many people are finding it more and more difficult to maintain the high costs of homeownership. People who have been laid off or downsized due to the economy are struggling more than ever. They've had to use credit cards to make ends meet and with rising interest rates and mortgage balloon payments due from bad loans of the past few years, it's just tough going all the way around.

As a result, many people are considering filing Chapter 13 bankruptcy in order to begin to dig out from mountains of debt. But Chapter 13 bankruptcy is nothing to be embarrassed about. Thousands of Modesto residents are in the same boat financially. They're simply looking for a way out and Chapter 13 allows many people to reduce debt while keeping their homes.

Chapter 7 bankruptcy requires the sale of assets (like a home) in order to pay off debts. With the help of a Modesto bankruptcy lawyer, Chapter 13 bankruptcy simply reorganizes your debt so that you can pay it off over three to five years. You don't have to sell your home, and if you file for bankruptcy while your home is in foreclosure, you will likely be able to keep it.

How Does It Work?
Chapter 13 inducts an "automatic stay," which stops all foreclosure proceedings and collection activities as soon as you file. From there, you can negotiate a repayment plan with your lender to pay back your mortgage arrears through your Chapter 13 plan. You will still have to make all future mortgage payments, but you can't be foreclosed on due to outstanding payments due.