What is a 341 Meeting in Bankruptcy?

By christina | Published: May 23, 2011

If you are considering filing for bankruptcy, you’ve probably heard of the 341 Meeting or the First Meeting of Creditors. The anticipation and anxiety one could go through while waiting for this “meeting” is enough to drive a person crazy (if the stress of bankruptcy were not enough). I thought it would be helpful to cover briefly what this meeting actually is.

What is a 341 Meeting or First Meeting of Creditors?

The First Meeting of Creditors is a meeting in which you (the bankruptcy petitioner), your attorney, and a bankruptcy trustee will essentially meet to go over the facts of the bankruptcy filing. It is usually scheduled 30 – 40 days after the bankruptcy petition is filed and anyone filing a Chapter 13 or Chapter 7 will need to attend one of these meetings. This is an opportunity for any creditors to appear that choose to do so, and either ask questions or challenge any part of the bankruptcy. Sounds scary, but creditors rarely show up and rarely challenge the bankruptcy.

What happens at the Bankruptcy Meeting?

You will be sworn in and asked a series of questions that range from your name to whether the information you have provided is correct. The meeting will also be recorded by court reporter or tape recorded. Questions you may be asked include the following:

  • Did you read the schedules before signing?
  • Did you list all of your assets?
  • Did you list all of your debts
  • Have you lived in this state for the past two years?
  • Are your cars insured?

This meeting is usually brief, and sometimes more than one is scheduled, so you may be waiting in line with your attorney with a bunch of other bankruptcy filers and their attorneys.

Tips for Surviving the Bankruptcy Meeting

It is important that you do not panic and freak out and just answer the questions. The 341 Meeting is not a test that you pass or fail, and no one is trying to trick you or catch you in a lie to throw you in the hoosegow. This meeting is simply to gather facts. In the unlikely event that a creditor does appear, they usually just want to make sure they have their facts correct as well and your attorney will be able to handle any challenges that may arise.

The creditors and trustee have 60 days after the 341 Meeting to challenge the discharge and if there are no issues, you’ll receive the discharge shortly after that. As long as you’ve been honest and haven’t tried to file bankruptcy fraudulently, both the 341 Meeting and bankruptcy procedure are fairly brief and painless. Before you know it, you’ll be in the process of repairing your credit.

 

 

 

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Donald Trump, Bankruptcy, and Chapter 11

By christina | Published: April 27, 2011

Here’s something strange. I actually mentioned Mr. Trump and his bankruptcies in April of last year, way before he became the voice of crazy and decided he’d like to be President of the United States. Anyway, whether you’re a supporter or not, my intention for this post was to try to figure out how Donald Trump can claim to be a billionaire even after filing bankruptcy (4 times, to be exact).

Because, I don’t know about you. But, I was broker after bankruptcy.

So from what I can gather, here are some of the details, which pretty much boil down to the fact that he filed bankruptcy on his businesses. Not personally. Which means any assets he owned personally were virtually untouched. And in Trump’s case, his casinos may have gone bankrupt, but he still made a 2 million dollar paycheck. Not a bad deal, I’d say.

Chapter 11

When Donald Trump’s casinos fell into a billion dollars of debt, they filed Chapter 11. Chapter 11 is a plan for reorganization and is often used by large businesses and corporations to restructure the debt. It is similar to a Chapter 13 in that it allows the debtor to keep assets while operating the business under the supervision of the court. In a Chapter 11 bankruptcy, if the debtor is dishonest or ineffective, a trustee may be appointed.

Otherwise, a trustees committee which is made up of the 20 largest unsecured creditors, is appointed by the U.S. Trustee. This committee represents all of the creditors and votes whether or not a Chapter 11 plan is confirmed.

Benefits of Filing Chapter 11

Chapter 11 allows for a couple of benefits.

1. The debtor can acquire financing and loans in which the new lenders gain priority to earnings.

2. The debtor may be able to cancel contracts.

3. The automatic stay applies to Chapter 11 bankruptcies. This means that debtors receive protection from litigation.

The Really Downside of Chapter 11

While the Chapter 11 is generally considered more flexible, it can cost the debtor more money and has an extremely low rate of success. Running the company while waiting for a plan to be approved can end up costing a lot of money with the possibility of having nothing and can result in having to file Chapter 7 and liquidating non-exempt property. Additionally, If the debt ends up being more than the assets in a Chapter 11, the owners have nothing and the newly reorganized company is handed over to the company’s creditors.

Basically, Donald Trump still has his money, regardless of how many of his businesses file bankruptcy. His bankruptcies probably have nothing to do with whether he is qualified to become President or not, although I wonder how a casino could possibly lose money when they’re obviously designed specifically to make money. One thing I do know is that while Mr. Trump can still brag about being a billionaire after filing bankruptcy four times, bankruptcy was never that good to the rest of us.

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Win a $100 American Express Gift Card

By christina | Published: April 25, 2011

Ask Mr. Credit Card is currently running a contest that offers a $100 American Express Gift Card. It’s really easy to enter and in my case, is the closest I may ever get to any American Express product. Yes, I know it’s a gift card. But it’s $100 and I know I could use extra money any time.

Here are the rules: You need to sign up for the newsletter, which isn’t a bad idea anyway. Even people that have filed bankruptcy deal with credit cards and Mr. Credit Card has information on ALL credit cards, including cards for people with bad credit and no credit. There are also tons of great deals not only with the credit cards but on rewards and other stuff that you may find useful.

You also need to “like” the fan page and “like” one of the updates and that’s it. You’re entered into the contest and can now wait with your fingers and toes crossed until they message you on Facebook and let you know you won.

The rest of the rules and contest information are on the website. Easy, right? Good luck and don’t forget me when you win.

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How Do You Video?

By christina | Published: April 18, 2011

I am seriously considering vlogging, because let’s face it it’s pretty cool to be able to watch an occasional video. I have tried a video app with my iPhone (I have the very first iPhone invented) but haven’t been so impressed with it that I used it more than once. I have also considered for vlogging’s sake to just use the webcam on the computer.

For my daughter’s events and things though, I can’t very well lug my laptop around and point the webcam at her. For all purposes, I have been considering one of those flip video cameras. I did find out recently that Cisco is ditching the Flip Camera Biz and that left me wondering if maybe a flip camcorder isn’t such a fantastic idea. As noted in the article, the blame seems to be on cell phones with video. I don’t think the iPhone can be entirely to blame for that though, since in my case shooting a vlog while holding my cell phone in the air would result in a) a pretty odd shot of me and b) very tired arms.

And of course, I am Miss Bankrupt so I must consider the price. Let’s just say I’m looking for basics and really, really cheap. So what kind of video camera do you use? And furthermore, what do you think of vlogging– or am I the only one that thinks that’s a super cool, awesome idea?

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5 Bankruptcy Filing Regrets

By christina | Published: April 12, 2011

I have been talking to bankruptcy filers and reading through bankruptcy stuff and have come across some of the things that people wish they had done differently. All in all, bankruptcy provides a fresh start and most people don’t regret the bankruptcy itself. There are a few things that seem to come up repeatedly about the bankruptcy process that a lot of people regret.

1.  I wish I had filed sooner.

Many bankruptcy filers wait until things are so bad that they have no choice. Oftentimes savings accounts and retirement funds are completely depleted, only to end up having to file bankruptcy anyway. Most people wish that they had filed sooner. If you cannot pay your bills, I would not suggest killing yourself and giving up everything you have only to remain in the same place. Take a look at your finances. Unless you can pay some of the bills off completely and get rid of them, you may need to consider bankruptcy sooner rather than later.

2.  I wish I had researched more bankruptcy attorneys.

Most of the time it won’t matter which attorney you hire to file  your bankruptcy. Research the costs of filing and compare attorneys. Another complaint that bankruptcy filers have had was that they paid too much for an attorney. If you are able to file yourself, then I would consider it. The bankruptcy filing fee is currently $299 which means that this is the minimum amount that you will pay. In my area, there are not very many bankruptcy attorneys and the cost is around $1200 on top of the filing fee. I have heard of people in other areas paying around $600 total. It just depends on where you live and if you’re willing to do some research. Also make sure you’re paying an attorney that is familiar with filing bankruptcies. Sometimes when this is considered, cheaper is not always better.

3.  I wish I had checked legal aid.

Sometimes you can qualify for a legal aid attorney that will only bill you the filing fee of $299. If you are at the poverty level and there are dire circumstances you can qualify to have that fee waived by the court. Above all, if you are finding that you’re having a hard time coming up with the money needed for an attorney, check legal aid and legal services in your area to see if they can help.

4.  I wish I had filed before I received a charge off.

Many bankruptcy filers wish they had filed before some of their accounts were charged off. The reason for this is that the charge off stays on your credit report. All other accounts included in the bankruptcy are reported as Included in Bankruptcy. They cannot be reported as charged off after bankruptcy but if they are charged off before, they can be. Just makes it look a little worse and can be more difficult in rebuilding.

5.  I wish I had not let everything get so far behind.

It’s better to file bankruptcy while the credit accounts are in good standing although, most people don’t consider it until they’re all 90 days late. Don’t wait for all of the accounts to be reflected as crazy late. Those late payments stay on your credit report also, even if the accounts are reported as In a Bankruptcy.

A little preparation and research can go a long way if you’re considering filing bankruptcy. Most of all, don’t wait until it’s too late. If you don’t foresee anything changing positively in your finances and you’re not able to make ends wait, it may be time to start forming a plan. It’ll make rebuilding afterwards a little bit easier.

 

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Epsilon Credit Card Email Hack

By christina | Published: April 4, 2011

As you’ve probably heard by now, Epsilon, which handles email marketing for various credit card companies, was hacked and apparently a large number of client names and emails were involved. Most likely millions. I first received the notice from Juniper (Barclay’s Bank) and figured it was no big deal because, well it’s Juniper. I’m currently paying it down and don’t use it. Their email was hacked and I may receive some spammy stuff from somewhere, I can live with that.

Then I received it from Best Buy and then again from Target. I’m starting to wonder if Epsilon does the email marketing for every credit card that I have.

The email messages that were sent clearly state that no personal or credit card information is involved only our names and email addresses are. This means that we could possibly receive spam that appears as though it’s personalized and thus trick us into thinking it’s real. It is best to keep some things in mind to prevent any possible harm from phishing attempts:

  • Don’t open emails from people you don’t know.
  • Don’t give out personal information via email. If you are contacted with a message that says the sender needs your account number or Social Security Number, it is most likely not a legitimate company or email.
  • Don’t transmit personal information outside a secure website. If the website doesn’t look right or you’re not familiar with the website, call them instead.

I’m sure I’ll receive a bunch more of the email messages as I am quite the credit card hog. The funny thing is that when I received the messages about the email situation, I immediately wondered if the email was a fraud and that nothing really had happened. Weird huh.

Here is a list of some of the other card companies involved from an article I read today regarding Epsilon and the email hacking.

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Means Test Calculator: How to Find Out if You Qualify for a Chapter 7 Bankruptcy

By christina | Published: March 30, 2011

If you are considering filing bankruptcy, you may want to check out this Means Test Calculator that I found online. The Means Test is basically some kind of mathematical formula based upon your income and expenses that determines whether a person filing bankruptcy would be considered an “abuse to the bankruptcy system”.  You just need to plug in your numbers and answer some questions to find out if you or your household would qualify for a Chapter 7. If you don’t qualify, you will be able to file a Chapter 13, but most debtors find that they do qualify according to the Means Test.

The good thing about this online calculator is that you can enter your zip code and everything is calculated according to where you actually live. Since the first part of the Means Test is based on a comparison of your household income with the average household income, it’s necessary of course to use the information according to the particular area of the country that you live in. If your household income is below the median income,  you qualify for filing a Chapter 7 according to the Means Test. If it is above, you need to fill out the second part of the test.

I chose a random zip code which ended up being McBee, South Carolina. For a household of 2, this is the comparison of household incomes:

So if I lived in McBee, South Carolina and made less than $25,250 in 6 months, I would qualify for Chapter 7. If I earned more, I could still possibly qualify by taking the second part of the Means Test. (Note: If I lived in McBee, South Carolina I would definitely qualify.)

The second part of the Means Test is based on disposable income that you have available to pay your creditors. For example, from the Nolo website:

  • If you can pay at least $11,725 ($195.42 per month), you can’t file for Chapter 7.
  • If you can pay at least $7,025 ( about $117 per month) and that is at least 25% of what you currently owe your unsecured creditors, you can’t file for Chapter 7.
  • If your disposable income is less than $117 per month, you can file for Chapter 7.

This is all calculated for you when you enter your expenses and required information and will give you an idea if you’ll qualify for either a Chapter 7 or Chapter 13.

So if you’re considering filing bankruptcy or are just interested in taking the Means Test, hop over to the site and try it out. I did find it to be an extremely interesting calculator, even though I don’t plan on filing bankruptcy ever again. Keep in mind that an online calculator cannot read your mind and it’s still best to consult with an attorney if you are seriously considering bankruptcy.

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What Happens When a Credit Card Company Disappears?

By christina | Published: March 28, 2011

While researching credit cards for consumers with bad credit and no credit, I’ve found that many of the secured cards that were once available are no longer operating. Many have statements on their websites (if there is a website) such as “this card is no longer available” and a couple, such as the Continental Finance MasterCard simply says “we are not accepting applications at this time”.  If the card company has not completely dropped off into a black hole but still has a website with account management, my guess is that they are still open at least to receive payments from current cardholders. Still, I would be hesitant to continue business with a card company that is just not accepting applications.

One of the other subprime cards I came across was the Rewards 660 which no longer exists. It looks as though the bank was purchased by MetaBank and became the Indigo card. When you go to the Indigo card website, however,  you are directed to the Milestone card by Genesis Financial Solutions, which looks a great deal like a secured card (with low minimum monthly payments of $35). You cannot just apply for this card though, you have to be invited and then insert your 8 digit code on the website so the information available for this card is limited.

Do I Still Have to Pay My Credit Card Bill if the Card Company is Closed?

Unfortunately, many people think that if the debt is sold to someone else or another bank takes over that you can stop paying and forget about it. If you choose not to pay your debt, it will be reported negatively by the new owners and possibly by the old one as well. If you have any of these cards that have suddenly dropped off the face of the earth, you still have to pay what you owe. You may be paying an entirely different company but I would suggest paying any outstanding debt that you have with the company.  Don’t worry, you will hear from someone because they’ll still want their money whether it’s the initial card company or new owner. Don’t make any other extra deposits especially if the company appears to be on shaky ground (which a lot of them are right now), and then move on to a more reliable card to continue building or rebuilding credit. It is definitely not a good sign when card companies are suddenly changing ownership or when the name of the card is changed over and over again. It just isn’t a stable or reliable line of credit that you should depend on (not to mention the enormous fees and interest rate that you are paying).

Two subprime cards that I know are still in existence and probably won’t be going anywhere for a while are the Orchard Bank card and First Premier card. Of the two cards, if you have absolutely no credit, bad credit, or have just filed bankruptcy, I would lean toward Orchard Bank. This is because the fees are a bit lower and they also have the pre application process where you can find out if you qualify for a better card. As I’ve said before, you could possibly qualify for an unsecured card and can skip the secured card route right away.

Let me know if you have any other information regarding any of the subprime cards, Tribute, Total Visa, Imagine Gold or Rewards 660. Just finding information on any of these cards has become quite difficult and I can only imagine what cardholders of these cards may be going through right now.

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The Most Forgiving Credit Cards for Bankruptcy Filers

By christina | Published: March 23, 2011

There are credit cards that a bankruptcy filer will not own until the bankruptcy is erased from the credit report (which, by the way, could be up to 10 years). I won’t list them because a) it’s depressing and b) all bankruptcy filers and broke people know which ones hate us.

We are also aware of all of the crappy credit cards that are out there specifically for people with bad credit and those that have filed bankruptcy.  Fortunately, there is an area between crappy credit cards and credit cards that hate us. In my opinion, these cards are reputable credit card companies or banks, with somewhat higher APRs (which we understand), credit limits that are large enough to allow us to build and repair our credit but small enough to keep us from getting into mischief, and very minimal fees if any.

The most forgiving credit cards for me, have been the following:

Hooters MasterCard- this card has a high interest rate but no annual fee or other fees. It also has a rewards program, which is not typical of cards that are offered to post bankruptcy filers. As I have mentioned before, Hooters (Merrick Bank) is known for giving consumers that have filed bankruptcy higher than normal credit limits. I was approved for this card a year after discharge with a credit limit of $3250.00.

Household Bank and HSBC- I was approved for a Household Bank credit card a year after bankruptcy as well as the Best Buy Rewards Zone MasterCard by HSBC. HSBC is also the provider of the Orchard Bank credit cards, which are specifically for people with bad or no credit. The good thing about HSBC is that when you apply, you will go through a pre qualification process that does not pull your credit report, but will give you an idea of the card(s) you may qualify for in advance.

Capital One- I received a Platinum card from Capital One with a 0% balance transfer for a year. I did transfer a balance from a higher interest card, but was also approved for an Orbitz card by Capital One which allows me to earn rewards. I was approved for both of these cards 2 or more years after my bankruptcy was discharged. Capital One also has a pre qualification process that allows you to decide in advance if you are interested in the card(s) you may be offered.

It is important to know ahead of time which ones you may have a shot at before you go applying around as each inquiry will stay on your report for 2 years. If you rack up a bunch of inquiries, whether you were approved for the cards or not, it could appear as though you are credit shopping (ie in a pinch so trying to get a ton of credit fast) and could hurt your credit score. I should add that I had nothing on my credit report when I applied for this cards except for the accounts that were included in the bankruptcy (which were noted as such on the report). If you are a year or two out from your discharge and have managed to keep it clean otherwise, these cards are worth trying for.

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What Should Be on My Credit Report After Bankruptcy?

By christina | Published: March 21, 2011

One of the most common questions regarding post bankruptcy activities, seem to be related to how the bankruptcy is reported on the credit report. In this study in 2004, it was reported that 4 in 5 credit reports contain errors. Even though things have likely gotten better since then (hope hope) I still hear quite often of bankruptcy filers having a number of errors on their reports way after their bankruptcy has been discharged.

One problem is usually that the account is sold and resold over and over to different collection agencies and so the one that gets the notification of the bankruptcy filing may not be the one that actually has the account anymore. Oftentimes you can dispute these online and then the account will be corrected. Otherwise, you can send a letter with copies of the Schedules of the Bankruptcy Petition showing that the account was included in the bankruptcy. Mail it return receipt requested and keep copies of everything that  you send.

So how exactly should the account be reflected on your credit report?

When your bankruptcy is discharged, the creditors that were included should show up on your credit report with a zero balance and a zero amount due. There should be no past due amounts after the date of the bankruptcy and the account should be reported as “Included in Bankruptcy”. This is basically it. You cannot have late payments on an account that was included in bankruptcy after you’ve filed the bankruptcy. If any of your accounts are being reportedly incorrectly you will need to dispute them with the credit bureau and have them corrected ASAP.

Additionally, the debt should not be reported as a charge off, unless it was a charge off before the bankruptcy. If it shows as a charge off after the bankruptcy, you should dispute this also.

Occasionally, the credit bureau will come back with a status of “verified” meaning they checked on it and the creditor says it’s being reported accurately. Then, you will need to send a letter to the creditor referencing your bankruptcy filing. Include the account number that is being reported inaccurately, and why it is inaccurate, and ask that it be removed or reported correctly immediately.  It is helpful to mention that it is illegal to report information incorrectly to the credit bureau. Again, send everything return receipt requested and this should take care of it for you.

Here is a sample letter from FTC.gov (of course insert your own information)

I should mention that I have never had to send a letter for any of my disputes. Disputing online has always cleared up any inaccuracies that have appeared on my credit report.

If you’re in the process of repairing your credit, it is absolutely crucial that you check your credit reports at least yearly, through annualcreditreport.com. Because of the selling and reselling of accounts, bankruptcy filers especially need to keep up with what is going on with their credit reports. It is not surprising for an old account to suddenly pop up and the sooner you dispute the account and take care of it, the less harm that can be done to your credit score because of it. Plus, it helps you keep track of where you’re going.

Good luck!

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