Modesto Bankruptcy Lawyer Blog

New census data regarding health care coverage in Stanislaus County is revealing a disturbing trend: nearly 1 in 4 adults (ages 18 to 64) live without health insurance of any kind. This statistic includes both those who cannot afford coverage as well as those who are young and healthy and opt to not pay for health insurance.

Many residents in the Modesto area who need care the most are going without health insurance in lieu of paying for the basic necessities. Among the 40 to 65 age group - those most at risk for chronic disease - a full 15 percent lack the ability to pay for treatment of conditions such as heart disease, diabetes, high blood pressure and cancer. On the other side of the age spectrum, an estimated 16,000 children in Stanislaus County do not have health insurance because their families can't afford it or because they are unaware of state-sponsored programs that provide coverage.

Without insurance, people don't get regular checkups and only have to visit a doctor when medical conditions are dire. This can lead to overwhelming bills for emergency surgery or ongoing treatment. No matter if a parent or a child gets sick, the exorbitant cost of medical bills for the uninsured and underinsured can be enough to drive any family to consider filing bankruptcy.

If you are swamped by incoming and past due medical bills, contact a bankruptcy attorney to examine your options. Chapter 7 or Chapter 13 bankruptcy may offer you choices that you didn't know you had. You can pay down your debts over time or perhaps get rid of your bills altogether.

A: In many cases, creditor calls will stop within 2 weeks of delivered notices of bankruptcy. However, if you've been sent to collections for delinquent accounts, it may take 30 days or more for calls to stop.

When you file for Chapter 7 or Chapter 13 bankruptcy, you immediately qualify for an "automatic stay," which is a court injunction that halts the actions of creditors (with some exceptions) to collect debts from you. This means that harassing letters, phone calls and emails must stop as soon as creditors receive notices of bankruptcy from your court-appointed trustee (the person in charge of your bankruptcy filing at the court level).

Since most of these notices are delivered via mail, though, the calls most certainly won't stop the same day you file for bankruptcy. You will need to allow at least a full business week for the trustee to mail the notices, another full week for the post office to deliver them and then another few days for processing time by your creditors. Some trustees will fax the notices, however, and this can reduce your wait time.

Still, you can expect to wait up to 30 days for most calls to stop completely. During this time, you can calmly let creditors and/or collection agencies know that you have filed for bankruptcy and even provide them with your trustee's name and contact information if they wish to verify this information. This may help reduce call volume as well.

In order to receive the fastest results and to get the most out of filing for bankruptcy, it is necessary to hire a Modesto bankruptcy lawyer. A lawyer can expedite the process where possible and ensure your protection every step of the way. The bankruptcy rules in California are constantly changing, so it is imperative that you have a professional legal representative to help you stop creditor harassment and help you get back on your feet financially.

Choosing a bankruptcy lawyer in Modesto can make all the difference in the outcome of your bankruptcy filing. According to Buzzle.com, you should take five key steps when selecting the right attorney for your bankruptcy:

1. Contact the Stanislaus County Bar Association in order to get a list of lawyers in the Modesto area. Scan your options to target lawyers who specifically work in the area of bankruptcy law (Chapter 7 or Chapter 13).

2. After you've developed a list of three to five options, research each attorney using Internet search engines. Even if an attorney doesn't have an individual firm website, you may be able to find information on newspaper websites, bar association notices or review sites.

3. Ask your neighbors and co-workers about lawyers they've used for their bankruptcy filings or other financial matters. The best way to get an accurate assessment of an attorney's ability is directly from former or current clients.

4. Set up initial consultations a handful of lawyers. Most lawyers will offer this meeting for free. Pay attention to your interaction with the lawyer - does he listen to your needs? Does he take notes? Is he responsive to your requests?

5. Once you've settled on the attorney you like, be sure to finalize a fee structure that you're satisfied with before signing any paperwork.

Bankruptcy attorneys must often handle several cases at once, so their attention may be divided. The key is to find a bankruptcy attorney who can devote individual attention to your case to get you the most efficient and effective results.

According to Lita Epstein of HousingWatch.com, Modesto-area homeowners are one of the hardest hit groups of the American population when it comes to negative equity in their homes. Her May 11, 2010 article cites CoreLogic's recent study of homeownership across more than 47 million homes, in which Modesto ranks as the #4 city with the highest number of underwater borrowers in the U.S (62 percent).

When coupled with unemployment or underemployment, being underwater, or owing more than your home is worth, is forcing many homeowners in Modesto and surrounding areas to consider Chapter 7 bankruptcy. Chapter 7, or total, bankruptcy allows your unsecured debts to be forgiven so that you can gain a fresh financial start. In some cases, you can even save your home.

CoreLogic estimates that the average underwater borrower will need another 10 to 20 years to make up for negative equity. Unfortunately, for many people, they just don't have the resources needed to stay in their homes for that length of time. This is why bankruptcy rates have been steadily rising in the Modesto area since 2007. Although bankruptcy can stay on your credit history for up to 10 years, it is also not considered as heavily as it once was by creditors. As a matter of fact, some filers find that they are able to apply for new lines of credit almost immediately after filing for Chapter 7.

Chapter 7 bankruptcy is strictly regulated by the government, and several steps must be completed before you can be approved and your debts can be wiped clean. A Modesto bankruptcy lawyer can walk you through the process to ensure a speedy and efficient solution to your financial problems.

Filing for bankruptcy doesn't have to be thought of as a negative financial move. Bankruptcy is truly a fresh start for people who are consumed by overwhelming debt. As a matter of fact, when you file for Chapter 7 or Chapter 13 bankruptcy, you may find that your credit actually takes a little jump up if you had a number of creditors who were reporting negative collections activity, late payments and charge-offs on your credit report prior to filing. Bankruptcy can clear all that away and give you a new financial beginning.

Personal Loans Can Kick Start Your New Way of Life
A personal loan can be the financial catalyst you need to get back on track. For example, if you filed for Chapter 7 bankruptcy and had to sell your house as a part of the bankruptcy agreement, then you might be looking to rent an apartment. However, you will need to pay a hefty down payment (often as much as the monthly rent itself) in addition to first, and maybe last, month's rent. This can quickly add up. You may also need to pay for movers, make down payments in order to turn on utilities or put a cash deposit on an unsecured credit card in order to start building up your credit again. All of these things require liquidity. A personal loan can give you the cash you need to get back on track.

In order to get a personal loan after bankruptcy, approach banks that you've had relationships with in the past. If you fell on hard times recently but have had an otherwise decent history with the institution, you may find that they are more likely to loan you money. Credit unions affiliated with your employer or labor union will also be friendlier as a general rule. You can expect to pay higher interest rates, but installment loans also help build your credit up quickly. If you need help filing for bankruptcy in Modesto, be sure to call a qualified lawyer in your area.

On April 1, 2010, the NUMMI (New United Motor Manufacturing Inc.) auto assembly plant in Fremont, CA shut it doors for good, leaving more than 4,700 employees jobless. It was the last auto plant in the entire state of California, producing more than 8 million Toyota vehicles during its 25 years of operation.

Some of the workers cried as they left for the day, while many worried about their futures. While most workers received an average severance package of around $21,000, instability in the auto manufacturing market has many worried that they'll have to declare bankruptcy in order to deal with mounting bills, the loss of health insurance and the lack of jobs within the state.

Will Filing for Bankruptcy Harm Chances for Future Employment?
Trying to get a job after filing for bankruptcy is often a concern for many people. However, bankruptcy doesn't have to hinder your chances at a job if you're upfront about your history. When you apply for any position, be honest about your bankruptcy. Explain the circumstances why you had to file and be sure to highlight your stellar credit behavior since you've filed.

Most employers check your credit history simply to make sure you're not a person who is gravely irresponsible with money or someone who would be prone to company theft or mismanagement. Although Section 525 of the U.S. Bankruptcy Code stipulates that employers cannot discriminate against you simply because you've filed for bankruptcy, it can happen if you're not clear with potential employers about your history.

At the end of the day, recent economic hard times have caused a lot of people to turn to bankruptcy, so it just doesn't mean as much to certain employers as it once did. As long as you're forthcoming and capable in your interview, bankruptcy shouldn't stop you from getting most jobs for which you're qualified.

In Part One, we discussed how a large down payment, installment credit and revolving credit could help you obtain a Modesto home mortgage shortly after bankruptcy. This article will focus on specific steps you can take to rebuild your credit to shorten the length of time you have to wait to get approved for a mortgage loan if you don't immediately qualify for one.

First, obtain a secured credit card. You will likely have a small credit limit ($500 or less) and you may even have to put down a deposit equal to the amount of your credit limit. With secured lines of credit, it's important to be wary of several factors so that you don't get hit with hidden fees and tricky terms. Look for cards with no application fees and low annual fees. Make sure the company offering the card regularly reports to all three major credit bureaus: Equifax, Experian and TransUnion. Otherwise, the account will have no affect on your credit score. Also, be sure that the secured card you choose converts to an unsecured card after 12 to 18 months of timely payments. Good behavior should be rewarded and this will reflect positively on your credit.

Second, if you can qualify for a secured line of credit, start a new account and charge small amounts that you pay off within 30 days. Never charge more than 30% of your credit limit and don't carry a balance. Contrary to what you might believe, carrying a high balance or maxing out your card is not a good thing, says Liz Pulliam Weston of MSN Money.

Third, check your credit report frequently and clear up any blemishes as quickly as possible. All accounts discharged by your bankruptcy should be marked as "included in bankruptcy." If not, contact creditors to make the adjustments. You can also ask them to remove records altogether. After you've got your credit score in the lender-friendly range, you will likely qualify for several types of mortgages at varying interest rates. If you need assistance with bankruptcy recovery or filing, contact an experienced Modesto lawyer.

Even after filing for bankruptcy, obtaining a mortgage on a home in Modesto may be easier than you think. Bankruptcy not only discharges your debt (or creates a reasonable payment plan to eliminate debt in a few years), it also signals to creditors that you've taken a big step in an effort to resolve credit blemishes and make a fresh start. And, under Federal law, you can't file for Chapter 7 bankruptcy again for another eight years, so you're actually less of a risk than other people who haven't yet filed for bankruptcy.

How Quickly Can I Get a Mortgage After I File?
Some people can get approved for traditional mortgages (albeit with high interest rates) as soon as the day after they file for bankruptcy. If you don't qualify for a traditional loan, you may qualify for an income-based FHA (Federal Housing Administration) loan through the government. If you don't qualify for either, you might need to work on your credit for six months to two years before obtaining a mortgage.

One way to ensure an immediate mortgage approval, though, is with a large down payment of 15% to 20% of the home's purchase price. This shows enough good faith that most lenders will jump at the chance to loan you the rest of the money, regardless of recent bankruptcy. Your interest rate will be higher than someone with stellar credit, but you can get approved.

For those who don't have access to this amount of cash, the biggest determining factor of your eligibility will be your credit score. Filing for bankruptcy will no doubt have an effect on your score, but there are ways to boost it back up quickly. Installment loans (auto loans, student loans and mortgages) are instant credit helpers, although you can expect higher interest rates across the board. Revolving credit options like secured or unsecured credit cards or home equity lines of credit can be more accessible tools for rebuilding your credit score as well.

In Part Two, we'll take a look at specific actions you can take to repair your credit quickly to secure a home mortgage. If you have questions about your particular situation and want to get individual advice, contact a bankruptcy lawyer in Modesto to help you devise a strategic financial plan.

After filing for bankruptcy, a strategically designed financial recovery plan can help you get back on the road to financial freedom. Sure, there are many companies out there promising to rebuild your credit overnight and give you a magically high credit score, but the only true (and legal) way to boost your credit score is with hard work, diligence and a smart financial plan devised with an experienced bankruptcy lawyer. Here are steps you can take to raise your FICO score:

1. If you know you're about to file for bankruptcy, pay off at least one of your low interest rate credit cards. If your creditor allows you to keep the card(s) after you file for bankruptcy, you'll have positive activity on your credit report, right from the start. Additionally, you can keep your previous line(s) of credit to help you rebuild your FICO score.

2. Contact all creditors to see if they are willing to remove their zeroed-out balances from your credit report, as opposed to leaving them notated as charge-offs. This will help you decrease the number of blemishes to raise your score faster. Target high-interest credit cards first.

3. Only spend what you have the cash to afford. Although it may seem obvious, poor choices in credit card spending likely got you in over your head in the first place. Don't make that same mistake twice. Use your credit cards to regain a positive credit history, but immediately pay them off, even before your bill arrives, to avoid slip ups. You may even be required to put cash down on new accounts as collateral.

4. Sign up as an authorized user on a third-party's credit card. This could be a friend or family member's card. Even if you don't make any purchases, the credit bureaus will reflect this as positive credit history.

5. Check your credit report often to clear up any errors immediately. You are entitled to a free credit report annually under Federal law, but you might want to invest in a program that allows you to check it more frequently for a monthly fee.

According to an article published by SmartMoney.com, declaring bankruptcy can actually improve your credit score in Modesto. Part of the reason, says the article, is that most people who file for bankruptcy don't have top-notch credit to begin with, so eliminating or reducing debt with bankruptcy can often put them in a better position than they were in pre-bankruptcy.

Also, bankruptcy changes the face of your credit report to make it more attractive to current and future creditors. Creditors use specific formulas to calculate your FICO score (short for Fair Isaac Company, the conglomerate that ranks your credit history from 300 to 850). An integral part of your FICO score is your current ranking with creditors. After you file for bankruptcy, your credit accounts will be marked with phrases such as "Included in Chapter 7 Bankruptcy," or "Included in Chapter 13 Wage Earner Plan." These terms show creditors that you've taken charge of your debt and made legal progress towards financial recovery.

Further, filing for bankruptcy can help improve your credit by putting an immediate end to creditor collections. If your accounts are marked negatively or being pursued legally for repayment, your credit score can take a big hit. When you file for bankruptcy, these actions must cease. That's why it is critical to keep track of your credit report regularly after you file for bankruptcy. You must follow up on accounts that are still marked as delinquent to improve your credit ranking. A Modesto bankruptcy attorney can help you devise a plan that will put you back on firm financial ground.

A significant change in the U.S. Bankruptcy Code in 2005 now requires a "means test" for people in Modesto who want to file for Chapter 7 bankruptcy. The means test is outlined in section 707(b)(2) of the Bankruptcy Code. It is designed to determine whether or not filings are valid (based on income) or if they will be dismissed or converted to another type of bankruptcy, such as Chapter 13.

The means test is based on your aggregate monthly income over the last five years, less certain deductions. It also takes into account the amount of disposable income you have versus the amount you owe in unsecured debt. If your disposable income is less than 25% of your debts over the past five years, you will likely qualify for Chapter 7 bankruptcy. Similarly, if your projected monthly disposable income is less than $100/month, you will likely pass the means test.

If approved by a judge, Chapter 7 bankruptcy erases debt entirely after certain nonexempt assets are sold by an appointed trustee to pay your debts. If your income allows you to make minimum monthly payments over three to five years, you may instead qualify for Chapter 13 bankruptcy. This type of bankruptcy allows for debt to be negotiated down and paid via an extended payment plan.

Although the Department of Justice cites that about 5% of Chapter 7 filers are converted over to Chapter 13 based on an ability to make payments on debt, the means test does totally disqualify as many as 20% of filers annually because they simply make too much money or because they've filed the paperwork incorrectly. The bankruptcy laws in the United States are detailed and extensive. That's why it's crucial to have a trusted bankruptcy lawyer on your side. A lawyer will take care of the paperwork for you and guide you on a path to financial recovery.

On February 9, 2010, California-based U.S. Senate candidate Carly Fiorina said that the state should consider declaring bankruptcy, suggesting that this action would help the government fix its budget woes. Although federal law prohibits a state from declaring bankruptcy, the former CEO of Hewlett-Packard went on to suggest that a measure comparable to bankruptcy would be a creative solution to the state's extreme financial strains in education, infrastructure, jobs, health care and other critical areas.

No matter what your political affiliations, there are thousands of Modesto residents who can relate to the state's looming debts and financial crises on an individual level. They are feeling the tension of job loss, foreclosure, credit card debt and dramatic interest rates hikes across the board. In these situations, bankruptcy becomes a plausible option for many men and women in Modesto.

Starting Over
Bankruptcy can help you reduce (Chapter 13) or eliminate (Chapter 7) most debt to wipe the slate clean. As the economy is slow to turn around, more people are considering bankruptcy as a way to repair severely damaged credit, reduce overall debt and end harassing calls, repossessions and garnishments by creditors. As a matter of fact, the U.S. Bankruptcy Court's Eastern Division of California office cites that 265 claims for Chapter 7 bankruptcy were filed in January 2010 in the Modesto area alone. If that number remains consistent over this coming year, it will be equal to nearly 2% of the city's population.

Bankruptcy can help many people get out of challenging financial situations. It can also give options to people who feel they're under a mountain of debt and collections. A Modesto bankruptcy lawyer can advise you on your options.

In 2005, the Bankruptcy Abuse Protection and Consumer Protection Act (BAPCPA) drastically changed the way that bankruptcy proceedings occur in the United States. According to the Department of Justice's U.S. Trustee Program website, one of the most significant changes in this act includes a requirement of certifying entities to provide credit counseling to people who file for Chapter 7 and Chapter 13 bankruptcy.

Under the BAPCPA's new regulations, consumers who wish to file for bankruptcy must attend credit counseling education within the six months prior to their filing date. The U.S. Trustee website provides an approved list of credit counseling centers nationwide so that you can select a nonprofit center near you. The agency you select must be on this list in order to satisfy the credit counseling requirement set forth by BAPCPA.

What is Credit Counseling?
Credit counseling is an educational meeting that can be completed in person, via the telephone and even on the Internet. During your credit counseling session, a qualified counselor will evaluate your personal finances (and those of your spouse, if filing jointly), discuss possible alternatives to bankruptcy and help you create a personal budget and debt reduction plan. Upon completion, you'll receive a certificate of proof that must be included at the time of bankruptcy filing.

After you file for bankruptcy, federal law also requires that you complete additional financial education/certification before your debts will be permanently discharged. It is important to note that your bankruptcy case can be thrown out without proper credit counseling certification. If you are unclear on the process of credit counseling or simply need help filing for Chapter 7 or Chapter 13, a bankruptcy lawyer in Modesto can help you get on the right track to put your mind at ease and get you on the road to recovery.

Personal Bankruptcy Basics: Terms You Need to Know

The details of federal bankruptcy laws can be confusing for many Modesto residents. With the help of a reputable Modesto bankruptcy attorney, though, filing for Chapter 7 or Chapter 13 bankruptcy can be an easy and quick process. To help you learn the terms you need to know before filing for bankruptcy, here's a brief list of some of the most commonly used language:

Automatic Stay: A court injunction that stops all collection activity related to debts (including lawsuits, foreclosures, garnishments and contact from creditors). Typically used in a Chapter 13 filing.

Chapters of Bankruptcy: Chapter 7 refers to liquidation, or total, bankruptcy. In this process, non-exempt assets are sold to pay off creditors. Chapter 13 bankruptcy negotiates debt down and spreads out payments over three to five years to eliminate debt over time.

Credit Counseling: A required meeting with a non-profit agency you must attend before debts are discharged. In the meeting, you will be informed of options for building and maintaining good credit.

Creditors: People or businesses to whom/which you owe money.

Current Monthly Income: The average monthly income you made six months before filing for bankruptcy.

Discharge: The release of liability (from debts).

Dischargeable Debt: Debt that can be dismissed after filing for bankruptcy (usually non-secured liabilities like credit card debt).

Joint Petition: Bankruptcy filed by a married couple.

Liquidation: The sale of assets to be used to pay creditors.

Means Test: The standard used to determine if you qualify (based on income) for Chapter 7 bankruptcy.

Secured Debt: Debt that is backed by collateral, such as a home mortgage.

Check out the U.S. Courts website for a helpful glossary of bankruptcy basics that lists definitions for legal terms as well as explanations of some of the basic procedures you can expect when you file.

Filling for bankruptcy in Modesto doesn't have to be a stressful situation. As a matter of fact, filing for bankruptcy can relieve your stress by putting an immediate end to harassing creditor calls, collection notices, repossessions and foreclosures. When you're stressed out by challenging financial difficulties, a Modesto bankruptcy lawyer can help you get a fresh start to rebuild your credit and your life.

The Effects of Stress in America
On February 8, 2010, The Associated Press published an article about this topic, entitled AP Analysis: US Economic Stress Hit a Peak in Dec. According to the piece, stress levels during two years of the recent economic recession hit a record high in December of 2009. Since that time, continued declines in mining and other regional industries have increased stress levels in western states even more than other areas of the nation. This can be partially attributed to the fact that foreclosure rates and bankruptcy filings continue to rise, even as unemployment falls in some areas.

Many Modesto residents are feeling high levels of stress caused by financial uncertainty throughout central California. The AP's Economic Stress Index found that the average U.S. statewide "stress score" was 10.2. This score is calculated based on a scale from 1 to 100, with higher scores indicating more stress. As a rule, an area is considered "stressed" with a score of 11 or more. California's rate was a whopping 16.25. With a level this high, California cities like Modesto are experiencing times of inflated anxiety without many resources being offered to offset these effects.

In her State of the Credit Counseling Sector address in 2006, the National Foundation for Credit Counseling's president and CEO Susan C. Keating predicted how a recession would affect millions of Americans: "Financial instability, unmanageable debts and bankruptcy are huge sources of stress that can tear families apart, destroy peoples' emotional and physical well being, and deprive children of a sense of security and limit their opportunities." To be true, tough economic times don't only affect individuals. They affect entire families, communities and future generations.

Bankruptcy can be the answer you're looking for in your path to eliminate the stress of insurmountable debt. An experienced bankruptcy lawyer in Modesto can help you file for bankruptcy to get you back on track. For many people, the day they file for bankruptcy is the day the slate is wiped clean and they're able to begin new, worry-free lives.