Toys “R” Us declared bankruptcy in September with a plan. The store was not going to give up. Instead, the story put together this plan to structure itself to reenter the marketplace successfully. Toys “R” Us is not giving up – it just went back to the drawing board to adjust its business model.
It may seem ironic that a business that thrives on keeping consumers in touch with their youth would provide valuable lessons in adulthood. Yet the store’s perseverance is applicable for anyone that is struggling financially. Lessons for those who are also struggling include:
Each form of bankruptcy has application requirements. In order to qualify, certain criteria must be met. An attorney experienced in these matters can review your situation and provide guidance on the best form of bankruptcy relief for you.
If you file for Chapter 13 bankruptcy, you may start receiving unsolicited mortgage modification offers from your lending company, which present you with a potential offer aimed at making your home more affordable. Modifying your mortgage differs from refinancing in that refinancing completely eliminates your original loan, replacing it with a new one, whereas a modification refers to a change in your existing loan.
Just how might the terms of your loan change should you decide to move forward with a mortgage modification?
Potential changes to loan terms
The main point of a mortgage modification is to lower your payments until they become more manageable. This might include lowering your interest rate, switching from an adjustable rate to a fixed rate, or extending the length of the loan to give you more time to pay. It may, too, give you more options in terms of deferring or forgiving some of your principal balance or adding an additional amount on the back end of your loan.
Advantages and disadvantages
When it comes to mortgage loan modifications, there are benefits and drawbacks. In terms of benefits, you may find that you can modify your loan faster than you can refinance it. Furthermore, your interest late on a mortgage modification will typically remain low for about five years, and even after that, it typically will not climb higher than your contract rate, or the standard rate reserved for well-qualified buyers.
In terms of drawbacks, mortgage modifications leave you with a new, 40-year amortization schedule. If you are already in middle age, this could mean taking on a new debt for the remainder of your life.
Ultimately, whether a mortgage modification is a good idea for you depends on the unique circumstances of your situation and finances. If you are experiencing considerable financial stress that stems in large part from your mortgage responsibility, a mortgage modification may help you manage your finances and avoid Chapter 13 bankruptcy.
If you are considering filing for personal bankruptcy you have likely looked into a Chapter 7 bankruptcy. A Chapter 7 petition for relief through bankruptcy takes many steps, including discharge.
What is discharge? Discharge is defined by the United States Courts as the process that “releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.”
Essentially, this means the debt is forgiven.
Can any type of debt get discharged? Note the above definition states “most debts.” There are certain types of debt that do not qualify for discharge through bankruptcy. It is important to carefully consider the role dischargeability will play in your bankruptcy petition before moving forward.
Examples of debt that generally do not qualify for relief include child support, alimony, tax debts and student loans. The failure to allow for discharge of student loan debt is a contentious issue. In some cases, an individual can overcome this general rule. Discharge of student loans may be available if the applicant can establish the loan results in an “undue hardship.”
In order to establish undue hardship, the applicant must meet a three part test. The test includes a review of the applicant’s income, duration of the repayment period and whether or not the individual has made a good-faith effort to repay the loans.
There are also some cases where a creditor may file a complaint objecting to the discharge. These cases are not often successful. Examples of success are present when the creditor can establish that the person seeking relief through bankruptcy has kept fraudulent records or committed perjury during the bankruptcy process.
The term bankruptcy is likely a familiar one, but did you know that there are many different types of bankruptcy? One of the more common types used for individuals is Chapter 7. The following provides more information on this type of bankruptcy:
Putting together a petition for relief requires completion of an application as well as submission of various schedules and paperwork. A failure to properly complete this petition can result in a denial of relief. As such, it is wise to seek legal counsel. An attorney experienced in handling Chapter 7 bankruptcy cases can provide assistance throughout the application process and help better ensure you receive the relief you need.
If you are giving some thought to filing for bankruptcy, you may be wondering about the bankruptcy means test, and what it means and entails. Essentially, the bankruptcy means test determines whether you will be able to move forward with a Chapter 7 bankruptcy, if preferable, or if your only option is to file for Chapter 13 bankruptcy.
There are benefits and drawbacks associated with both types of bankruptcy filings, but determining which bankruptcy process to follow is an important first step in regaining control over your finances.
What the bankruptcy means test involves
If you undergo a bankruptcy means test, the first step involves determining whether your household income over the last six months falls below the median income in place in Mississippi. If you have lost or taken on a new job within the last six months, you can expect that the income changes will factor in when determining whether you can proceed with a Chapter 7 bankruptcy. If your income falls below the median threshold in place in Mississippi, you automatically pass the test and can move on with your Chapter 7 filing.
If you do not pass the means test during the first step, the second step involves gathering documentation regarding all expenses you had in the last six months. Once you take into account expenditures for food, rent, medical bills and so on, any money left over is disposable income that you should reasonably be able to put toward your debt. If your amount of disposable income is below a particular level, you may still be able to proceed with a Chapter 7 bankruptcy.
If you really want to file for Chapter 7 bankruptcy but you do not pass the means test, you may wait six months and then try again. If you cannot wait another six months to file, your best bet may be to proceed with a Chapter 13 bankruptcy.
