Tips for Emergency Funds From Checkett, Pauly, Bay & Morgan

The COVID-19 pandemic has changed our lives forever. Declaring bankruptcy became a concern for millions of Americans, especially moving into March 2021 when 43,425 bankruptcy filings occurred in that month, the largest single month of new filing activity since the pandemic started. 

An emergency fund is one way you can try to alleviate bankruptcy concerns. Today’s blog from Checkett, Pauly, Bay & Morgan, LLC, explains.

Related Post: What Does Filing for Bankruptcy Do to a Foreclosure?

The Pandemic & Emergency Funds

More than 4 in 10 consumers with emergency funds had to use them during the pandemic, according to Magnify Money. More than half of consumers went further into debt rather than tap into emergency funds because it took so long to build their savings.

How can you be better prepared for financial emergencies in the future?

Tips for Creating Emergency Funds

Set aside at least six months of net income. For example, your take-home income is $3,500 a month. You should set aside $21,000 in case of an emergency. 

Emergencies range from a sudden loss of income due to medical issues and job loss to accidents and a change in life circumstances (like divorce). 

Save your windfalls rather than spend them. When you receive windfalls, such as an income tax refund, bonus from work, or proceeds from a property sale, save them instead of spending them. This builds up your savings faster, and you can earn more interest.

Reduce your budget. Lower your budget as much as possible. Do you buy that coffee on the way to work every day? How about going out to eat? Instead of doing these things, save that money. Not only does your emergency fund grow, but you’ll also be on a better financial footing moving forward.

How Can Emergency Funds Mitigate Chapter 7 Bankruptcy?

An emergency fund does several things when it comes to Chapter 7 bankruptcy. It can give you a chance to find another source of income before bills pile up. It also offers you time to adjust your budget as needed. 

Chapter 7 bankruptcy can be viewed as a last resort after all other options have been exhausted rather than make it your first choice as soon as something happens. A robust emergency fund gives you peace of mind, too.

Related Post: The Main Reasons Why People Declare Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Attorneys at Checkett & Pauly

Talk to the bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC, about some tips to stave off Chapter 7 bankruptcy. Contact our law firm online or call (417) 358-4049 for more information.

What Does Filing for Bankruptcy Do to a Foreclosure?

Mounting debts and the possibility of bankruptcy are not easy. There is a lot of stress, upset, fear, anger, and disappointment when you consider filing for bankruptcy. In today’s blog from Checkett, Pauly, Bay & Morgan, LLC, we talk about how filing for bankruptcy impacts the foreclosure process. 

Related Post: The Exemptions for Chapter 7 Bankruptcy in Missouri

Automatic Stay

Filing for bankruptcy creates an automatic stay on all debt collection. Even if your mortgage lender is scheduled to take your home in 24 hours, if you file for bankruptcy the lender cannot take your home at that time.

Once you file, the court sends a notice to your creditors declaring the bankruptcy filing in court. This means no action can happen on your home until after your bankruptcy is finalized. How long does this process take? There is no specific timeline, but filing for bankruptcy may delay foreclosure on your home by a matter of months. 

How to Prepare for Foreclosure

Foreclosure isn’t the end of your finances. Filing for bankruptcy can give you a fresh start. Alleviating debt collection gives you more money to put towards the essentials, such as a car, a place to live, food, and basic bills. You can still find places to rent. Foreclosure doesn’t prevent you from applying for a lease. And you’ll have more time to put more money towards your next living situation after filing for bankruptcy.

Related Post: Chapter 7 Bankruptcy Myths Explained by Checkett, Pauly, Bay & Morgan, LLC

Chapter 7 Bankruptcy Attorneys at Checkett, Pauly, Bay & Morgan, LLC

We understand that deciding to declare bankruptcy isn’t an easy choice. The experienced Chapter 7 bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC, will handle your case with empathy, professionalism, and world-class service. Contact Checkett, Pauly, Bay & Morgan, LLC, or call (417) 358-4049 for more information on how we handle Chapter 7 bankruptcy.

The Main Reasons Why People Declare Chapter 7 Bankruptcy

There was a lot of financial stress in 2020. The COVID-19 pandemic forced our society to shut down for a time, and government benefits were hard to come by for millions of people. Chapter 7 bankruptcy offered a way for some people to seek relief, even though bankruptcy filings are actually down from 2019, according to the American Bankruptcy Institute. 

Are your bills piling up? Do creditors keep calling you and harassing you every day? Chapter 7 bankruptcy is one option you have. Checkett, Pauly, Bay & Morgan, LLC, understands your situation, and we’ll advise you with personalized, world-class service. In today’s blog, we discuss the main reasons why people declare Chapter 7 bankruptcy.

Related Post: The Exemptions for Chapter 7 Bankruptcy in Missouri

Medical Bills

In 2019, the American Journal of Public Health noted that two-thirds of all bankruptcies were due to medical expenses. Not only were these filings due to high medical costs, debt, and bills, but also because patients weren’t at work when they were undergoing medical treatments or they couldn’t work because they were injured. Chapter 7 bankruptcy offers relief for people who have mounting medical bills.

Job Loss

Job losses in 2020 were in the tens of millions. State and federal unemployment programs, coupled with eviction moratoriums, helped millions of people avoid bankruptcy. Under normal circumstances, a job loss represents another reason why people declare Chapter 7. Unemployment benefits may not be enough to cover your basic expenses. Meanwhile, your debts continue to rise.

Divorce

Divorce or marriage dissolutions cause enormous financial stress on families. Not only do you face sudden income loss from your partner, but you also have to pay for an attorney. You might also be liable for child support payments. Garnishments, spousal support, and child support may cause financial hardship, but Chapter 7 bankruptcy offers a way to get rid of some debts. 

Excess Use of Credit

How much money do you spend on credit cards? Did you take out an installment loan and then you couldn’t pay it back? When you max out credit cards, monthly payments can spiral out of control. Installment loans may quickly rack up interest, especially if they’re unsecured, high-interest loans. You might have stopped paying down your debts because of medical bills, a job loss, or unexpected circumstances due to a natural disaster like a flood, tornado, hurricane, or fire.

Related Post: Chapter 7 Bankruptcy Myths Explained by Checkett, Pauly, Bay & Morgan, LLC

Chapter 7 Bankruptcy Attorneys at Checkett, Pauly, Bay & Morgan, LLC

We understand that deciding to declare bankruptcy isn’t an easy choice. The experienced Chapter 7 bankruptcy attorneys at Checkett, Pauly, Bay & Morgan promise to handle your case with empathy, professionalism, and world-class service. Contact Checkett, Pauly, Bay & Morgan, LLC, or call (417) 358-4049 for more information on Chapter 7 bankruptcy. The first consultation is free.

The Exemptions for Chapter 7 Bankruptcy in Missouri

The bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC, are seeing more bankruptcies due to COVID-19. Missouri has exemptions when you file for Chapter 7 bankruptcy, which may allow you to keep some of your property. Today’s blog from Checkett, Pauly, Bay & Morgan, LLC, explains Missouri’s exemptions for Chapter 7 bankruptcy. 

Related Post: Bankruptcy Attorney FAQs

$15,000 in Equity in Your Home

Equity is the difference between what your home is currently worth and what you owe on your mortgage. For example, if your home is worth $250,000 and you owe $150,000, your equity is $100,000. You may have to give up your home in this case because the equity is more than $15,000. If you have less than $15,000 equity in your home, you may get to keep your principal residence.

$3,000 for a Vehicle

Missouri allows a $3,000 exemption for a vehicle. If your car is worth less than $3,000, you get to keep it under Chapter 7 bankruptcy rules. Equity also comes into play here. If your car is worth $20,000 and you’ve paid only $3,000 on it, the property is exempt from bankruptcy. 

$3,000 for Personal Property

Personal property includes furniture, clothing, books, appliances, tools, and more. Think of how much everything in your house is worth. You get to keep $3,000 of it. Depending on how much you owe in debts, creditors may or may not bring up the issue of personal property during a Chapter 7 bankruptcy proceeding. The attorneys at Checkett, Pauly, Bay & Morgan can help you navigate this exemption.

$150,000 in Life Insurance Benefits

If you purchase life insurance more than six months before you file for Chapter 7 bankruptcy, you get to keep up to $150,000 in life insurance benefits. 

$1,500 for a Wedding Ring and $500 in Jewelry

You get to keep your wedding ring if it’s worth less than $1,500, and up to $500 in other jewelry. Creditors may decide to sell jewelry worth more than that amount to pay down debts.

Public Pensions

In general, pensions from public benefits are completely exempt from Chapter 7 bankruptcy. Veterans’ benefits, unemployment, Social Security, public assistance, and workers’ compensation are all exempt.

Chapter 7 Bankruptcy Exemptions at Checkett, Pauly, Bay & Morgan

We recognize that bankruptcy is a hard choice to make. The experienced bankruptcy attorneys at Checkett, Pauly, Bay & Morgan can discuss your options based on your unique set of circumstances, including exemptions under Missouri law. Contact Checkett, Pauly, Bay & Morgan, LLC, or call (417) 358-4049 for more information. The first consultation is free.

Chapter 7 Bankruptcy Myths Explained by Checkett, Pauly, Bay & Morgan, LLC

Chapter 7 bankruptcy is a tough choice for anyone to make. You want to keep the possessions that you’ve worked so hard to get. But the mounting bills and life circumstances are making it increasingly difficult for you to make ends meet. What do you do? Chapter 7 bankruptcy is one option.

Today’s blog from Checkett, Pauly, Bay & Morgan, LLC, explains some Chapter 7 bankruptcy myths. 

Related Post: Bankruptcy Attorney FAQs

Myth 1: You Will Never Get Credit or Loans Ever Again

At worst, you’ll get limited credit or loan opportunities for seven to 10 years after you file for bankruptcy. But you may actually receive new credit card offers in the mail. These credit cards will be secured, meaning you’ll need to use a bank account to secure the loan. If you have $200 in your savings account, that may be enough for a secured credit card. Account limits may be lower than the actual secured amount.

To rebuild your credit, don’t max out the card every month. Pay off the amount you borrow in full every month to start building your credit over time. Eventually, you’ll get some of your good credit back.

Myth 2: Chapter 7 Bankruptcy Filers Are Completely to Blame for Their Circumstances

Reckless spending has very little to do with Chapter 7 bankruptcy filings. Mounting medical bills, unemployment, the COVID-19 pandemic, and changing economic times are all reasons people file Chapter 7 bankruptcy. 

Many people avoid filing for Chapter 7 bankruptcy protection because they feel guilty or don’t want to admit they made a mistake. This couldn’t be further from the truth. Filing for bankruptcy is a chance to start over and protect your family. Bankruptcy laws are in place for a reason, and this type of filing can help you.

Myth 3: You’ll Lose Everything in Chapter 7 Bankruptcy

Yes, you may have to give up some of your possessions in Chapter 7 bankruptcy. Because everyone’s situation is unique, Checkett, Pauly, Bay & Morgan, LLC, can look at your finances to see if this filing is the right choice for you.

The good news is that you won’t lose everything in Chapter 7 bankruptcy. Missouri lists many exemptions that creditors can’t repossess in bankruptcy. You can keep up to $3,000 in household furnishings, $3,000 for tools of the trade for your job, $1,500 in firearms, and $1,500 for a wedding ring. You can exempt equity up to $3,000 for your vehicle. If your vehicle is worth less than $3,000, you may get to keep it.

You can exempt $15,000 in equity in your principal place of residence. If you have put less than $15,000 in equity into your home, you may get to keep it. Again, the attorneys at Checkett, Pauly, Bay & Morgan, LLC, can examine your financial situation to see what may or may not happen during a Chapter 7 bankruptcy filing.

Chapter 7 Bankruptcy Attorneys at Checkett, Pauly, Bay & Morgan, LLC

The experienced bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC will explain your options based on your unique financial circumstances. Contact Checkett, Pauly, Bay & Morgan, LLC, or call (417) 358-4049 for more information on Chapter 7 bankruptcy. The first consultation is free.

How to Recover Financially After Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy is not an easy decision to make. Most immediately, you worry about your home, your car, where you and your family are going to live, and if you’ll be able to keep or get a job. Sometimes, filing for bankruptcy is a relief because the repeated debt-collection calls will finally stop. 

Then you begin to wonder if your finances will ever recover enough to buy a home or a new car at some point in the future. Today’s blog from Checkett, Pauly, Bay & Morgan, LLC, discusses how your finances can recover from Chapter 7 bankruptcy.

Related Post: Bankruptcy Attorney FAQs

Get a Secured Loan Using Your Savings Account

After Chapter 7 bankruptcy, you can begin to rebuild your credit. Open a savings account and get a secured loan based on the amount of your deposits. Community banks and credit unions often have less-strict rules for getting these kinds of loans. The downside is that you can’t access your savings account funds until you pay off the loan. However, even a loan for a couple hundred dollars can help improve your credit score.

Get a Secured Credit Card

Secured credit cards work on the same principle as secured loans. You pay a deposit, and a credit card company may extend a line of credit to you based on that amount. The downside is that the credit card company often charges high interest rates because your credit score is low. Be sure to pay the entire balance on your credit card by the due date every month, so you won’t have to pay those high interest rates.

Ask Someone to Be an Authorized Credit Card User

After Chapter 7 bankruptcy, ask a family member if you can become an authorized user on that person’s credit card account. Make sure the lender reports all authorized users to credit bureaus, not just the main account holder. Contact the credit card first to confirm this information.

Have Family Co-Sign a Loan

Asking a family member to co-sign a loan is a huge favor to ask. It’s also a relevant way to rebuild your credit if the family member has a good credit score. A co-signer risks his or her own credit by vouching for your ability to make regular payments on the loan. Make absolutely sure you can pay your debts when you ask for someone to co-sign your loan.

Make Payments on Time

It’s vital that you make payments on time. Creditors will look at your recent credit history when deciding whether or not to give you credit, even if you have a Chapter 7 bankruptcy filing on your credit report. Use your credit card responsibly, keep your balance low, and pay off your credit card balance in full every month.

Chapter 7 Bankruptcy Filing With Checkett, Pauly, Bay & Morgan, LLC

The experienced bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC, understand that considering bankruptcy is stressful. We can help alleviate your fears and anxiety about this process. Contact Checkett, Pauly, Bay & Morgan, LLC, or call (417) 358-4049 for more information on what filing for bankruptcy can do to your credit. The first consultation is always free.

Considering Chapter 7 Bankruptcy Due to COVID-19? What You Need to Know

We’re seeing more and more bankruptcy cases in 2020 due to the coronavirus pandemic. As the economy is still in the midst of a recession, we may see filings continue to increase. Our bankruptcy attorneys understand that filing for Chapter 7 bankruptcy is a tough decision, but it may be a prudent choice based on your situation. Read on as we share information you should know about filing for Chapter 7 bankruptcy due to COVID-19.

Related Post: Will My Bankruptcy Affect My Spouse’s Credit?

Being Laid Off

Millions of people were laid off once stay-at-home orders happened and the economy shut down. The nationwide unemployment rate is still near 8 percent, at 7.9% (as of October 2020), and 7 percent in Missouri (compared to half that a year ago). If you’re laid off, there are two things you should do. 

First, talk to your creditors about making payment arrangements. Lenders would prefer you keep the loan rather than discharge it through Chapter 7 bankruptcy. Some lenders will waive several months of late payments if you agree to add the payments to the end of the loan. Talk to your lenders to see if this is an option. This will at least delay Chapter 7 bankruptcy until you can find another job.

Second, file for unemployment as soon as possible. Unemployment benefits are exempt from bankruptcy, meaning you won’t lose them when filing for Chapter 7 protection. You can look for another job while receiving unemployment benefits.

Understand the Means Test

The means test in Missouri pertains to filers who have an income above a certain amount. Chapter 7 bankruptcy filers must be below a threshold to file for this protection. If your income is above the threshold, you must file for Chapter 13 bankruptcy, which is where you reorganize your debts and pay them over the course of five years.

For example, you live in a household with three members. You make $70,000 per year, but you’re having trouble paying all of your debts. The median income for a three-member household is $57,468 for the means test. The means test assesses your average income over the past six months versus your expenses. If you have enough income left over to pay some debts through Chapter 13 bankruptcy, you cannot file for Chapter 7 bankruptcy.

Checkett & Pauly can help you determine whether you pass the means test or not for Chapter 7 protection. 

What Can and Cannot Be Discharged

Under Chapter 7 bankruptcy, most of your debts can be discharged. Debts that cannot be discharged include, but are not limited to:

• Alimony and child support

• Unpaid taxes

• Student loans

• Debts arising from a willful and malicious injury, such as having a judgment against you for a personal injury case

Many types of debt can be discharged with Chapter 7, including medical bills, credit card bills, utility bills, car loans, and mortgages. Unfortunately, you may need to turn over some of these assets to pay for certain debts. Talk to Checkett, Pauly, Bay & Morgan, LLC, about what happens during a Chapter 7 bankruptcy filing, and we’ll advise you as to the best course of action based on your unique situation.

Related Post: Bankruptcy Attorney FAQs

Chapter 7 Bankruptcy at Checkett, Pauly, Bay & Morgan, LLC

Every person’s financial situation is different. The experienced bankruptcy attorneys at Checkett, Pauly, Bay & Morgan can discuss your options based on your unique set of circumstances. Contact Checkett, Pauly, Bay & Morgan, LLC or call (417) 358-4049 for more information. The first consultation is always free.