• Attorney fees
• Credit Counseling Fees
• Petition Fees
• Amendment Fees
• Reopening Fees
• Cost of converting from Ch. 13 to Ch. 7

Other long-term costs include:

• Higher interest rates on home loans
• Higher insurance rates

If you can possibly work your way out of debt through credit counseling, do so.  Bankruptcy is a huge event in anyone’s life, and fraught with frustrating situations.  If bankruptcy is your only option, know that, with a little work, you can rebuild your credit afterwords.

One way to rebuild credit after a bankruptcy is to make a major purchase, such as a car loan.  If the credit agencies see you’ve been carefully, dutifully paying your car loan payments on time every month, they’re likely to think better of you, and maybe even raise your credit score.  If you’re looking for an auto dealer that specializes in helping Bankruptcy Survivors, Bankruptcy Resource Group (BRG) can help. BRG maintains a nationwide network of such auto dealers.  Visit the Bankruptcy Resource Group homepage to learn more.

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Fortunately, today’s system of personal bankruptcy provides a far more rational, fair way to deal with overwhelming debt.  Still, many consumers may be unsure how much filing for bankrupcty actually costs.

The official court costs for filing for bankruptcy are low:

Chapter 7 - $200 ($170 filing fee + $30 noticing fee)

Chapter 13 - $185 - ($155 filing fee + $30 noticing fee)

Still, keep in mind that filing for bankruptcy usually includes other fees, such as for lawyers.  We’ll discuss other costs involved in personal bankruptcy tomorrow.

Until then, if you’re on the other side of bankruptcy and looking for ways to get your credit score up, why not take out an auto loan?  Goodness knows the Big 3 could use it.  Contact Bankruptcy Resource Group today to be connected with a auto dealer near you who specializes in working with people who have been through a bankruptcy.

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Marriage. If you’ve recently been married, you should definitely review your W4. Married couples are typically listed in a separate tax category because they get certain unique taxes and deductions.

A New Child.  The IRS also places parents in a special tax category.  Children and other dependents qualify you for certain deductions.

The Purchase of a Home.  Have a new mortgage?  Then you’re probably in the minority of tax payers who can actually tale advantage of historically low real estate values.  Buying a home also qualifies you for certain exceptions, so be sure to review your W4.

As mentioned in previous posts, you should also change your W4s if you have experienced or expect a big change in income this year.

Top photo by Teresa.

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When tax time rolled around, these people found themselves in an irksome situation–they had to write the IRS a big check.  To prevent such financial irritation the next year, such taxpayers should adjust their w4s to reflect their new income.

New freelancers often find themselves in a new, confusing world of actually owing taxes.  Since freelance work is usually done according to a contract, payroll taxes are not taken out.  This means that the freelancer has to pay all of those federal taxes him or herself.  One accounting rule of thumb holds that freelancers should save about a quarter of their income for taxes.  Those who meld freelance work and traditional employment may choose to ask their traditional employers to withhold more, to save up for that big tax burden from freelancing.

Tomorrow, in the final part of this series, we’ll talk about other times when taxpayers should check and probably change their W4s.

Top photo by Paul Sapiano.

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Today’s situation can be bittersweet for the tax payer.  In years when you worked less than expected, you can actually get a tax refund.  After realizing that you could have used that extra money during the year, you may be hoping to adjust your taxes to have less withheld.

Adjustment Situation #1: You Got Money Back, and You Want To Keep More In Your Pocket.
As The Sacramento Bee recently reported, many Americans got money back from the government this year, due to the slumping economy.  (Hey, at least if you got laid off, you made less than last year, so you get a little refund!  Woopee.) Legally, you’re required to withhold 110% what you owed on the previous year’s income.  If you earnedless this year, and anticipate making around the same amount last year, you can fill out your w4s accordingly and keep more money in your pocket.

In addition to having more liquidity during the year, having less money withheld in a situation like this offers a few benefits.  First, you may be able to earn interest on the money before handing it over to Uncle Sam.  If you keep that extra money in a safe investment with low but consistent returns, you can make money on your tax payment cushion.  (This sort of approach works best for those who know they’ll be able to handle a slightly larger tax figure than expected, as your estimate may be low if you make more money than you anticipate.) The MoneyTalks video here explains in more detail.

Top photo by Paul Keleher.

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Credit Canada, a non-profit organization dedicated to helping people in extreme financial difficulty, reports a 40% increase in phone calls from consumers seeking aid.  

In other words, many Canucks are in dire need of help.  Many of them are turning to bankruptcy for a second chance.  As I was raised Catholic, I found it especially amusing that Globe and Mail writer Sarah Hampson compared personal bankruptcy to Easter.  She writes, “Personal bankruptcy is like Easter, if you listen to those who might sell you on its merits. It’s an unfortunate financial death, followed by Resurrection.”

If you’re a Bankruptcy Survivor yourself, you’ve probably already spent nights wondering who should take the blame for personal bankruptcy.  In these times of economic crisis, some would blame bankrupt consumers for foolishly taking out more credit than they could afford.

Others, like Margaret Johnson, the president of Solutions Credit Counselling Service in BC, say the credit industry is to blame.  Ms. Johnson said, ”The credit industry holds the key to this. They could slow or stop the bankruptcies by being easier to get along with.  In cases that threaten personal bankruptcy, Ms. Johnson wonders why the credit agencies don’t do more to help overstretched customers.  ”Why not reduce the interest or forgive the interest or whatever we need to do to get this person back on their feet and retain them as a customer instead of throwing them to the wolves?”  she says.

Furthermore, many consumers were uninformed when they signed up for easy credit cards.  Too many credit companies glossed over details like booming interest rates down the line.  

What are your thoughts on this?  Who should take the blame for the current glut of bankruptcies?

If you’re through a bankruptcy, and looking for ways to rebuild your credit, give Bankruptcy Resource Group a call.  They maintain a nationwide network of car dealers who specialize in providing credit to post-bankruptcy consumers.  Making regular (or even early!) car payments is a great way to rebuild your credit after a bankruptcy.

Top photo by Howard Gees.

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Many California residents are filing for bankruptcy after struggling to make ends meet. The Modesto Bee recently reported that bankruptcy filings have increased 83% since 2007 in and around the Central Valley cities of Fresno, Modesto, and Sacramento. In part, California’s 89% increase in jobless claims has fueled the rise in bankruptcies.

Other factors often contribute to bankruptcies, as the editorial staff of the Modesto Bee recently noted: “The downward spiral often begins with residents becoming overextended on credit card debt, then breadwinners lose their jobs and mortgage payments mount and foreclosure begins. Once that occurs, many residents see bankruptcy as their only way out.”

Fortunately, after the hassle of bankruptcy is over, it is possible to rebuild credit.  Here’s hoping all of California’s recent bankruptcy filers will become strong, vibrant Bankruptcy Survivors, who have seen the other side of bankruptcy and carefully rebuilt their credit scores.  One way to improve your credit score after a bankruptcy is to take out a new car loan.  If this solution appeals to you, give Bankruptcy Resource Group a call.  BRG maintains a nationwide network of auto dealers who specialize in lending to Bankruptcy Survivors like you.

Top photo by Woodley Wonderworks.

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High school students are among the huddled masses of deep debtors.  One third of high school seniors have a credit card, and according to the Tacoma’s News Review, “The number of 18- to 24-year-olds declaring bankruptcy has increased 96 percent in 10 years.”  That’s from an article on a proposal from Washington state Democrat Patty Murray.  Ms. Murray’s proposal would make over a billion dollars available for programs on financial literacy.  The grant funding would be spread over the next five years, and could be used for education across age bands.  With such programs possible from first grade through college, Ms. Murray’s grants could change the way the next generation thinks about money.

It may already be too late for some, however.  After all, half of all college graduates have racked up $5,000 in high-interest credit card debt. From the same article:

Pat Williams, a bankruptcy judge in Spokane, says that when she walks into a class of 25 or so 10th- or 11th-graders, it’s not hard for her to spot the five that will end up in bankruptcy in three years.

“They are dealing with so much, cell phones, car insurance, credit cards, debit cards,” she said. “It was stunning to them to learn there were late charges on a credit card bill.”

If you’re a Bankruptcy Survivor, you may have learned the importance of keeping good credit habits the hard way.  Maybe you’ve spent long hours scheming and analysing, and you’re ready for a new car loan– as a way to rebuild your credit after a bankruptcy.  If so, give Bankruptcy Resourge Group a call.  They maintain a nationwide network of auto loan dealers who specialize in loaning to post-bankruptcy consumers.

Top photo by Lauren Clemson.

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But a bankruptcy changes the way lenders look at your credit, so it’s a good idea to be prepared for potential snags in the application process.  Here are a few tips to guide you through taking out an auto loan after a bankruptcy.

• Budget carefully. Your credit is like an empty canvas following a bankruptcy.  Aside from the record of the bankruptcy itself, your credit is clear, so be careful not to enter any credit agreements that could reflect negatively on you as a borrower.  One part of that caution is budgeting how much you can afford to pay on a car payment per month.  Here’s an online auto loan calculator to help you find a monthly payment you can afford. Learn more about setting up a monthly budget.

• Review your credit report. Since your arrangements were made for all of your debts in your bankruptcy case, you may assume your credit report is pretty clear.  Don’t assume– be sure.  Order a free credit report and see what your potential lenders will see.  You may consider adding a page explaining why you entered into bankruptcy, especially if extenuating circumstances lead you to file in the first place.  Some kind lenders will take such information into account when providing you with a loan. Get a free credit report from the Federal Trade Commission.
  

• Find a lender. Once you’ve gathered all of your information, it’s time to find a lender.  There are many online lenders who have experience arranging loans for Bankruptcy Survivors.  Of course, my favorite is Bankruptcy Resource Group. Call Bankruptcy Resource Group today to take advantage of their nationwide network of dealers specializing in loaning to consumers who have filed for bankruptcy.

• Make all of your payments early or on time. Once the new car’s in the driveway, make sure you keep up with your new car loan.  Dedicate yourself to making early payments every month, and pay more than required if possible.  Your car loan is a significant chance to prove your good credit habits to lenders.  If you’re a responsible borrower who pays on time every month, your credit score is likely to increase.  Additionally, after six months or a year of consistent payments, you may be able to refinance for a better interest rate or lower monthly payments.  Learn more about wise credit habits for Bankruptcy Survivors.

Top photo by dno1967.

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Speaking to WOWT Omaha reporter Jeff Sabin, bankruptcy attorney John Turco explained when bankruptcy is the best option for consumers:  “If you’re already at the bottom, if you have enormous credit card debt, you’re being sued, collectors are calling, and you ask me, ‘how is [filing for bankruptcy] going to affect me,’ I think it’s going to affect them in a positive way, because it’s already terrible.”

Chicago Tribune writer Mike Hughlett recently reported that consumers should seriously consider filing for bankruptcy in the following circumstances:

•If you are regularly dipping into your retirement savings.

•If your wages are being garnisheed by creditors.

•If you see no possibility of repaying your debts (being able to muster only minimum credit card payments is a sign).

•If your house is in foreclosure proceedings.

Turco also offered invaluable advice on when to avoid bankruptcy: “If you’re able to struggle through it and buckle down and cut your expenses and get some extra income coming into the household, then my recommendation is if you can avoid bankruptcy, you should. If it’s not necessary, don’t do it.”

Some events that commonly precipitate a bankruptcy are filing for divorce, medical expenses, and losing a job.

If you’re already a Bankruptcy Survivor, congratulations!  You made it through, and now you have a chance to rebuild your credit.  One way to rebuild credit after a bankruptcy is to make a significant new purchase on credit, and consistently make early payments on that purchase.  Taking out a new automobile loan is one way to rebuild credit.  If you’re looking for a reputable, local auto dealer that specializes in working with Bankruptcy Survivors like you, give Bankruptcy Resource Group a call today.  BRG has a nationwide network of friendly auto dealers who can help you rebuild credit through an auto loan.

Click here for further reading on deciding when to file for bankruptcy.

Top photo by Judith.

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