Credit

The Bankruptcy Abuse and Consumer Protection Act became law on October 17, 2005. This legislation was prompted in part by a spike in personal bankruptcy filings and was an effort by Congress to reduce the misuse of the bankruptcy system.  Congressional supporters of the law worried that abuse of the bankruptcy laws would unfairly increase costs for non-bankrupt consumers.

Ten years later, it is questionable as to whether the reform law actually achieved its goals.  The number of bankruptcy filings has dramatically declined since 2005, from almost 1.7 million to 920,000 in 2014, despite the Great Recession of 2008.

The “means test,” which measures a prospective bankruptcy filer’s ability to repay their debts along with other substantial changes to the bankruptcy code has decreased the number of “opportunistic” bankruptcy filings, but has also made filing for bankruptcy more difficult for consumers.

The requirement that prospective debtors must undergo credit counseling prior to filing for bankruptcy has had a positive impact.  According to the Department of Justice, there are at least 140 nonprofit agencies approved by the government to provide pre-bankruptcy counseling.  There are an additional 220 nonprofit entities approved to provide education for consumers while in the process of filing for bankruptcy.

These agencies are screened to make sure debtors are receiving valuable advice, free from scammers who prey on consumers in financial distress.  These resources also provide consumers with valuable financial tools to help them avoid having to file for bankruptcy, again.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

A federal grand jury has indicted “Dance Moms” star Abigale “Abby” Lee Miller, 50, on 20 counts of bankruptcy fraud.  The indictment alleged she concealed about $755,000 in assets and made false bankruptcy claims.  If guilty, Miller could be sentenced to five years in prison for each count.

According to the indictment, Federal bankruptcy judge Thomas Agresti was ready to approve Miller’s Chapter 11 voluntary bankruptcy reorganization when he suddenly ordered a new hearing that required Miller to fully disclose her income and contracts.

The new hearing was prompted after he was channel surfing one night and saw ads for Miller’s upcoming, “Ultimate Dance Competition,” “The Maniac is Back,” and her appearance on “American Idol.”  If it weren’t for the judge seeing the commercials, he said he would have never known about the contracts and additional income.

Miller is going to have to do some fancy footwork to get out of this one.  Lying to a federal bankruptcy judge is a crime, which undermines a process that is designed to give honest, hardworking individuals who are overwhelmed by debt, a fresh financial start.

When Miller filed for voluntary bankruptcy reorganization, she listed about $325,000 in assets — mostly consisting of her dance studio in Penn Hills and a house in Davenport, FL— and listed about $356,000 in debts.   But according to prosecutors, she hid more than $755,000 in income from her reality TV show, “Dance Moms,” several TV spin-offs and her merchandise and apparel sales.

Miller’s biggest debts were the mortgages on the two buildings, a $5,400 credit card debt and unpaid property and other taxes, according to court records. While she owed money to several vendors, the debt amounts owed were all less than the credit card debt.

During the three years of the bankruptcy proceeding, Miller was supposed to deposit her income into a special account and report that income to the court.  Instead, she set up separate bank accounts and funneled her income from the TV show and other ventures into those accounts, prosecutors said.

Click here to read more on this story.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

 

Deciding to file for bankruptcy is not an easy decision, but those who emerge from it are often thankful for a fresh financial start and the opportunity to rebuild their finances.  While one of the fastest ways to rebuild your credit is through opening up new credit, there are few cards available to those who have recently filed for bankruptcy.

The exception is secured credit cards.  Applicants who have recently filed for bankruptcy are generally approved by providing proof of identity.  These cards require a refundable security deposit be submitted, first.  Secured card holders are required to make monthly minimum payments and are subject to interest charges if the card is not paid off in full every month.  These payments are reported to the three major credit bureaus, giving you the opportunity to improve your credit score as you make on-time payments.

Below are five credit cards you can be approved for after your bankruptcy is fully discharged:

Capital One Secured MasterCard

This is one of the only secured credit cards with no annual fee. Cardholders must give a refundable security deposit of $49, $99 or $200 in order to receive an initial credit line of between $200 and $3,000. The standard interest rate for purchases is 24.9% APR.

Wells Fargo Secured Visa Credit Card

New card holders must submit a $300 refundable security deposit, which then becomes their credit limit. Benefits to this card include: auto rental collision damage waiver coverage, emergency card replacement and a roadside dispatch service. In addition, cardholders have a cell phone protection policy that covers theft or damage up to $600 (with a $25 deductible), when you charge your phone bill to the card.  This card comes with an annual fee of $25 and a standard interest rate of 18.99%.

BankAmericard Secured Credit Card

There is a minimum refundable security deposit of $300 to open an account. The maximum credit limit (up to $4,900) is based on income, the ability to pay and the size of the security deposit. After 12 months, the account will be reviewed and cardholders may qualify to have their security deposit returned, without any interruption of their existing account. There is a $39 annual fee for cardholders and the standard interest rate is 20.24% for this card.

US Bank AeroMexico Visa Secured Card

This card doubles as a rewards card.  Cardholders can receive double miles on gas and grocery purchases and a mile per dollar spent anywhere else. New card holders earn a 5,000-mile bonus and a complimentary companion certificate after their first use of the card, as well as a $99 companion certificate each year with renewal. Additional benefits include a complimentary checked bag on AeroMexico flights. There is a 22.99% APR and a $0 introductory annual fee for the first year, which is $25 per year after that.

USAA Secured Card American Express

This card requires a $250 deposit, which is placed in a two-year, interest-earning certificate of deposit (CD). The amount of your deposit, which can range from $250–$3,000 establishes your credit limit. This card includes benefits such as auto rental collision damage waiver, extended warranty coverage and travel accident insurance. This card is open to active and retired members of the military, as well as their families. There is an annual fee of $35 and the standard interest rate is 9.90%–19.90.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources: http://blog.credit.com/2015/05/5-credit-cards-you-can-get-after-bankruptcy-117184/

 

The U.S. Court of Appeals for the Third Circuit has issued an opinion that will have a significant impact on Chapter 11 bankruptcy cases.  Basically, the decision will reinforce the tendency to resolve Chapter 11 cases by what is referred to as 363 sales, as opposed to traditional reorganization plans.

The case involved a debtor described as a “leading operator of long-term acute care hospitals.”  The company was deep in debt, but attempts to sell resulted in offers that would not even clear the secured debt, not to mention the more than $100 million of unsecured debt.

So instead, the debtor decided to sell itself under Section 363 of the bankruptcy code.  But the only bidder to show up was a secured lender, who agreed to forgive most of the secured debt in exchange for all of the debtor’s assets.   The IRS noted that the debtor was going to owe capital gains taxes on the sale, but collecting the taxes would be tough, since the debtor did not have any assets.

The creditors’ committee also expressed some concern that its constituency was going to be left without anything in the deal and questioned whether it was an appropriate use of the federal bankruptcy code.  The secured lender had already agreed to pay the costs of the bankruptcy case, and agreed to make a token payment to the unsecured creditors.

Now with only the IRS objecting, the bankruptcy court approved the sale, and the appeals court upheld the bankruptcy court’s decision.   The IRS argued that it was just as entitled to payment as the bankruptcy professionals and was clearly entitled to payment before general unsecured creditors.

In the opinion of the Court of Appeals for the Third Circuit, Judge Thomas L. Ambro, who is a member of the American College of Bankruptcy, explained that plans involve the distribution of bankruptcy estate assets.  In this case, the payments to professionals and unsecured creditors were coming directly from the secured lender.  It is a subtle distinction- but an important one. This decision will greatly affect the structuring of bankruptcy plans in the future.  More importantly, it suggests flexibility in 363 sales that might not exist in traditional reorganization plans.  As a result, the case is apt to lead to even more quick sales in corporate bankruptcy cases.

Click here to read more on this story.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.