Henry’s traumatic experience should serve as a reminder to everyone that identity theft is a real financial threat. Millions of people each year are affected in some way by identity theft, and it is a leading cause of consumer debt in the United States.

In fact, Henry’s experience can serve as a cautionary tale to other Americans. Identity theft may be a threat, but it is very preventable.

Thief Targets Credit Cards Belonging to Miss Washington

According to a police report, Henry’s car was stolen from her own driveway two months ago. Inside the car were pageant gowns, her Miss Washington crown and sash, and all of her debit and credit cards.

Thanks to an onboard GPS system, police were able to locate the car, which the thief had parked behind a motel in a nearby Washington town, but the thief was nowhere to be seen, and the items in the car had long since disappeared.

Fortunately, police were able to discover several locations where the sloppy thief used Henry’s debit and credit cards, and were able to identify the man using surveillance video.

The alleged thief, 32-year-old Jayson Broderson Matthai, has been charged with seven different counts of identity theft. In the meantime, Henry has asked Washingtonians to be on the watch for her “one of a kind” crown and sash.

Steps to Take to Prevent Identity Theft

According to Washington prosecutor Mark Lindquist, identity theft is “the nation’s fastest growing crime.” Thanks to the proliferation of virtual shopping and electronic methods of payment, identity theft has grown easier and more lucrative.

To help avoid falling victim to such schemes, credit card users should be careful where they use their plastic. Don’t shop online at sites that are unsecured, don’t let people handle your cards if they will leave your line of sight for a long time, and keep your cards somewhere safer than an unlocked car.

People who already have a high amount of credit card debt should be especially wary about holding onto their cards.

And, if you are victimized by identity theft, call your credit card company as quickly as possible to shut off the card. If you act quickly, the damage can often be minimized.

With this concern in mind, many bankruptcy filers are curious about why Chapter 7 bankruptcy, which sometimes takes just a few months, is usually completed at a more rapid speed than Chapter 13 bankruptcy, which usually takes a few years.

There are a wide range of reasons for this time disparity, but the root of the difference relates to the type of relief each bankruptcy affords.

Chapter 7 Cases Usually go Faster Than Chapter 13 Bankruptcy

Chapter 7 bankruptcy cases are usually completed in a matter of months, but this is a result of the nature of this type of bankruptcy:

• Chapter 7 length. In Chapter 7 bankruptcies, filers may be able to discharge some or all of their debts. For the debts that are not eliminated, the court may liquidate some of the filer’s assets to repay some creditors. This process does not usually take a very long time, which is why most Chapter 7 cases are over in a matter of months, and do not usually extend past a year.
• Chapter 13 cases. In contrast, during Chapter 13 bankruptcy, filers work together with a bankruptcy court to create a consolidated debt plan. This plan includes all of the filers’ debts, even if they are owed to different creditors. The idea behind Chapter 13 is to allow filers with steady incomes to attempt to repay their debts over a more relaxed payment schedule.
• Why Chapter 13 takes longer. Since Chapter 13 filers want as much time as possible to stretch out their payments, bankruptcy courts typically give them between 36 and 60 months to fulfill their payment plans.

Filers should note that the length of a bankruptcy is usually not the most important criteria to consider when choosing between Chapter 7 and Chapter 13.

For more information on your legal options under bankruptcy, and which type of bankruptcy may suit you best, contact a local bankruptcy lawyer today.

Other Time Considerations in Bankruptcy

In addition to the period of time when a person is actively going through bankruptcy, there are other time considerations to keep in mind.

From the time that a filer decides to file for bankruptcy, to the time that bankruptcy actually starts, three to four weeks might pass while a filer fills out initial paperwork.

In addition, after the bankruptcy is formally filed, filers must usually wait for 30 days before they get a creditors hearing, which is an important initial milestone in a bankruptcy proceeding.

In fact, by filing for bankruptcy, consumers may be able to stop the repossession of their car, and eventually catch up on car payments so they can keep their vehicles.

This can be done in one of two ways, by using Chapter 7 bankruptcy to stop a forced sale of your car, or by filing for Chapter 13 bankruptcy to catch up on overdue payments.

Keeping a Car in Chapter 7 Bankruptcy

Chapter 7 bankruptcy offers several different unique forms of relief for consumers who, like tens of thousands of other Americans, have fallen behind on their car payments:

• Automatic stay. By filing for any form of personal bankruptcy, filers automatically reap the benefits of the automatic stay, which is designed to stop car repossession. In addition to this feat, the automatic stay is also designed to help stop home foreclosure and wage garnishment.
• Chapter 7 reaffirmation. Chapter 7 offers several potentially helpful options for filers looking to keep their cars. The first, known as reaffirmation, allows a filer to agree with a creditor to repay his or her car loan without losing the car. In return, the debt is not discharged in bankruptcy, but the creditor gives the debtor more time to make payments.
• Chapter 7 redemption. Another alternative, known as redemption, allows a filer to recover a car from a creditor by making a lump sum payment on the fair market value of the car. So, if a filer owes more on a car than it is worth, this might be a helpful alternative to save a vehicle from creditors.

Of course, these options may not suit everyone. For people who have steady incomes but have fallen behind on car payments, Chapter 13 bankruptcy may offer a more suitable form of relief.

Keeping a Car in Chapter 13 Bankruptcy

If you bought your car within 910 days of filing for Chapter 13 bankruptcy, you must repay your entire loan, but you may receive a healthy break on your interest rate in bankruptcy, depending on the nature of your car loan.

If, however, you bought your car more than 910 days before filing for Chapter 13, you will likely only have to repay the fair market value of the car.

So, if you owe $3,000 in car loans to your lender, but your car is only worth $1,500, you will probably only be held responsible for $1,500 in payments.

According to a recent report from the Philadelphia Inquirer, the legal fees arising from the orchestra’s filing have more than tripled the group’s original estimates, and the filing has already surpassed the planned timetable, which showed the group leaving bankruptcy at the end of 2012.

Still, officials for the orchestra believe the bankruptcy will ultimately prove fruitful, despite the frustrations the group has experienced along the way.

Orchestra Experiences Serious Financial Woes

It should first be noted that the extended bankruptcy filing of the orchestra is not due to incompetence on the part of the bankruptcy court. On the contrary, the orchestra and its various creditors simply can’t come to terms on a mutually agreeable settlement.

After it became the first major U.S. orchestra to file for bankruptcy in April 2011, the Philadelphia Orchestra’s governing board started behaving in what the group’s musicians believed was an unfair manner.

Soon after the bankruptcy filing, the board tried to break its labor contract with unionized employees, who responded that the board was engaging in corporate-style strong-arm tactics that would drastically reduce the quality of the orchestra’s labor force.

According to the musicians, cuts in salary would lead to a mass exodus of employees, which would ultimately reduce the overall quality of one of the world’s most successful orchestras.

In response, however, the board argued that the orchestra had to reduce its overall costs (including salaries and pensions) in order to counterbalance decreased attendance, which had led the orchestra to operate at a loss for several years.

According to an attorney for the orchestra, the group can afford about $6 million in annual operating expenses, which would require serious cuts to salaries or pensions, or both.

Philadelphia Orchestra Eyes Bankruptcy Exit

Despite the angry disagreements between managers and musicians, there are signs of hope for the struggling orchestra.

Sources indicate that the board has, in fact, reached a new labor agreement with the musicians, and it will also secure a deal to pay lower rent at its primary venue, the Kimmel Center.

The orchestra, however, has been unable to reach a pact with its pensioners, which is the final remaining obstacle in the bankruptcy. The orchestra’s retirees, though, have shown no signs that they are willing to agree to a plan any time soon.

The trick, of course, is qualifying for Chapter 7. To determine whether you are eligible for this form of bankruptcy, you only need to take the Chapter 7 means test.

The means test, to some degree, is a quick and simple measure of your income against the median income of your state. But the test also includes other considerations. These will be addressed in more detail below.

The Means Test Determines Chapter 7 Eligibility

In order to file for Chapter 7, consumers must first pass the Chapter 7 means test, which isn’t nearly as foreboding as it sounds:

• Means test basics. In brief, if your monthly income falls below the median income level in your state, you likely qualify for Chapter 7 relief. If your income is above your state’s median, you may still be able to qualify if you have little disposable income.
• Disposable income. After the median evaluation, the means test requires a potential filer to determine how much disposable income he or she has in an average month. The more disposable income held by the potential filer, the less likely he or she is to be eligible for Chapter 7.
• Reason for the test. Because Chapter 7 is such a powerful form of relief, bankruptcy courts like to reserve it for people who need it most. In Chapter 7, some debts, like credit card bills, medical debt, and payday loans, may be discharged entirely. Since this is such a sweeping form of relief, Congress wanted to limit it to people who truly needed it.

Even if you do not qualify for Chapter 7, though, there remains another promising alternative: Chapter 13 bankruptcy.

Alternatives to Chapter 7 Bankruptcy

Chapter 13 bankruptcy is commonly known as the “wage earner’s plan” because it allows filers to continue working while they work to repay their debts over an extended timeline.

In Chapter 13, filers work in tandem with a bankruptcy court to create a consolidated debt payment plan to help appease their creditors.

The typical Chapter 13 case lasts roughly three to five years, but it may allow filers to keep their homes out of foreclosure and recover their financial health.

For people with relatively high incomes who are also struggling under the weight of too many debts, Chapter 13 offers a potentially life-altering alternative to its bankruptcy cousin, Chapter 7.

For example, bankruptcy is governed by both federal and state laws, and the rules and customs of bankruptcy courts are very different from other parts of the judicial system.

These are just a few of the perils of filing bankruptcy by one’s self. Listed below are more reasons why filers should be wary of entering bankruptcy alone.

Risks of Do-it-Yourself Bankruptcy

There are several different reasons why filers may not wish to file bankruptcy by themselves, but some of the most cited reasons include:

• Dangers of bankruptcy petition mills. In your Internet research, you may have stumbled across agencies that offer bankruptcy filers an opportunity to go through bankruptcy by filling out forms offered by the agency. These stock forms, however, are often out of date, and offer little guidance to novice filers who have little idea what is expected of them in bankruptcy court.
• Costly mistakes. If filers make significant errors in their bankruptcy petitions, courts may have little patience for their errors, and simply dismiss the case. Thus, spending money on a bankruptcy attorney may ultimately save time and money, especially if a DIY filer makes a serious mistake.
• Bankruptcy fraud. Bankruptcy fraud is a relatively rare occurrence, but it often leads to the dismissal of a case. Some filers may inadvertently commit fraud by neglecting to mention certain assets or liabilities. Even if done unintentionally, such mistakes could lead to a dismissal of your bankruptcy case, or even some punitive measures.
• Aggressive creditors. While the bankruptcy court offers some protection against creditors, filers must actively exercise many of their rights to keep creditors at arm’s length. If a bankruptcy filer heads to court alone, creditors may take advantage of the opportunity to be more aggressive in their pursuit of unpaid debts. Anecdotally, filers who go to court without an attorney may be more susceptible to challenges to the automatic stay.

These are just a few of the reasons why many observers advice people seeking debt relief to at least consult with an attorney before filing for bankruptcy.

DIY bankruptcy is not impossible, but many sources suggest that it puts a filer at a distinct disadvantage in bankruptcy court. Don’t take a risk by heading into bankruptcy court without first doing your homework.

Sources indicate that Fox Sports, Jamie McCourt, and Major League Baseball all raised formal concerns that the sale of the Dodgers was not in the best interests of the team.

They hope their concerns will be considered by April 13, when the court is scheduled to hold a hearing to approve the team’s sale.

And despite their heated disagreements, experts predict that the concerns raised by these three parties will not be enough to prevent the sale of the team.

For its part, Major League Baseball is concerned about what it deems overly broad and inconsistent language in the Dodgers’ plan to release the league from future liability.

This complaint involves a large amount of legalese, and has been batted about by bankruptcy attorneys, but it basically shows the league’s concerns that it could eventually have to pay for some of the Dodgers’ debts.

The bankruptcy court, however, is more concerned with guiding the team’s owner, Frank McCourt, through the process of selling the team. Sources say that McCourt agreed to draft a sale agreement for the court by April 6.

McCourt has experienced a significant amount of financial strife in the past few years, and also engaged in a bitter divorce with his ex-wife, Jamie McCourt, who has also objected to the terms of the bankruptcy settlement.

Jamie McCourt asked the court to assure her that the $131 million she stands to gain from her divorce settlement will be lifted from the proceeds of the team’s sale immediately after it is completed.

The Dodgers, however, contend that Jamie McCourt should remove her complaint because the money she is owed will be paid personally by Frank McCourt, not by the Los Angeles Dodgers.

And finally, Fox Sports is asking the bankruptcy court to review sale documents related to their efforts to prevent Frank McCourt from marketing his team’s television rights as part of the sale.

If these rights are included in the sale, Fox Sports could stand to lose some money because they would not be able to negotiate with the new team owners for a better television contract.

Still, these complaints will probably not be enough to prevent the seemingly imminent sale of the Dodgers, and a sad chapter in the franchise’s history may soon come to an end.

Nevertheless, every once in a while, filers will choose to file for bankruptcy without an attorney, which sometimes leads to dismissed bankruptcy cases, unsuccessful results, or even inadvertent fraud.

Chapter 13, in particular, offers all sorts of obstacles for amateur filers, including complex negotiations with creditors and obscure courtroom customs.

Hiring a Lawyer for Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a relatively complex process, and there are many reasons why people filing for Chapter 13 often turn towards attorneys for some assistance:

• The stakes. The stakes of Chapter 13 filings are very high, as filers may be able to unload a lot of debt, but only if their cases are handled properly. In Chapter 13, filers create a consolidated debt plan that allows them to repay their debts over an extended period of time. But this payment plan doesn’t simply come out of thin air.
• Chapter 13 payment plan. In Chapter 13, filers work in tandem with a bankruptcy trustee and their creditors to craft a workable repayment plan. Under such circumstances, filers who choose to represent themselves are often at a disadvantage when they try to negotiate with the trustee and the creditors to create a favorable debt plan.
• Filings and other paperwork. Filing for bankruptcy isn’t as simple as filling out a few pre-made forms. On the contrary, filers are often expected to give the court detailed lists of assets, liabilities, and a comprehensive list of their creditors. Sometimes, filers may inadvertently omit information that leads to the dismissal of their case.
• Dismissal. As mentioned above, if filers miss deadlines, forget to make certain filings, or fail to abide by the rules and customs of their local bankruptcy courts, bankruptcy judges may have little tolerance for their inefficient actions and may simply dismiss a case. Typically, judges don’t treat people who represent themselves any differently than they treat filers with attorneys.

In addition to these potential complications, there is also the problem of fraud. If filers fail to provide accurate information to the court, even if their failure is by accident, they may be subject to civil or criminal liabilities.

So, while a few brave people do head to bankruptcy court on their own, there are many reasons why representing one’s self in court may not be the best idea.

The study, which was conducted by the Centers for Disease Control and Prevention, collected data from 52,000 people over the course of six months in 2011, and unearthed the breadth of the medical debt problem in the United States.

The rise in medical debt helps explain why more than one million people filed for Chapter 7 bankruptcy, which is designed to help eliminate medical debt, last year.

Medical Debt Reaches Crisis Level

According to a recent report from the Associated Press, the medical debt problem in America may be reaching a tipping point.

Sources indicate that the latest study from the CDC was the largest such study ever done on the medical debt issue, and it may prove to be a wakeup call for a country that has the highest health care costs in the world.

Not surprisingly, people with lower incomes were three times more likely to have trouble paying off their medical bills over the past year.

Some observers, however, were quick to point out that the high levels of medical debt mirror the amount of debt that consumers had in 2007 at the start of the last recession.

The amount of individuals facing medical debt, they argue has stayed roughly the same for four years.

Nevertheless, this figure was high to begin with. Thus, even if the numbers aren’t rising, they certainly aren’t going down, either.

In addition, many experts believe that many Americans in the past few years have reduced the frequency of their visits to doctors and cut back on prescription and other health care expenses in an effort to save money.

Bankruptcy May Help Eliminate Medical Debt

Americans shouldn’t have to compromise on their health care spending. Unfortunately, that’s what thousands of consumers do every day.

If you are facing high levels of debt, and you fear that you won’t be able to repay your medical expenses, filing for bankruptcy may help you eliminate some or all of your medical debt.

In fact, Chapter 7 is designed to help filers who are looking to discharge their medical bills.

In Chapter 7, filers who pass the means test have an opportunity to shed several different kinds of debt, including medical bills, credit card debt, and pesky payday loans.

Still, it can be unsettling for someone who is already racked with debts to pay for a bankruptcy attorney to help guide them through their proceedings. And with some marginal court costs, bankruptcy may begin to sound too expensive to try.

Many bankruptcy observers, however, caution filers against do-it-yourself bankruptcy, which could end up costing stubborn filers significantly more than if they had sought a bankruptcy attorney’s aid during the process.

Why do You Need a Bankruptcy Attorney?

While it may be tough to stomach at first, most filers decide to hire a bankruptcy attorney to help them go through the bankruptcy filing process. Attorneys may come in handy for a number of different reasons, including:

• Paperwork. Bankruptcy requires the completion of an avalanche of documents, including comprehensive lists of a filer’s debts and assets, a list of creditors, and other key financial information. All this data helps the bankruptcy make an informed decision, but it requires a great deal of legwork on the part of the filer. This process is usually made easier by outside aid.
• Decision-making. There are at least two types of bankruptcy that are designed for individuals. These include Chapter 7 and Chapter 13, both of which have unique eligibility requirements and provide unique forms of relief. This is a very important decision, and many filers prefer to consult with a bankruptcy attorney before opting for either Chapter 7or Chapter 13.
• Ethical advice. Bankruptcy fraud is taken very seriously by courts, and may lead to a dismissed case. Unfortunately, if filers are not familiar with the rules of a particular bankruptcy court, they may inadvertently commit bankruptcy fraud by failing to give the court key information. Bankruptcy lawyers may help filers stay abreast of local rules and customs in bankruptcy court.

So, in the long run, bankruptcy attorneys often provide more than enough aid to justify the relatively minor costs of most lawyers.

Do-it-yourself bankruptcy may sound appealing to some filers, particularly those who are low in cash, but many experts believe that bankruptcy cases should not be left entirely to the filers.

And, from a practical perspective, bankruptcy judges often have little patience for people who decide to represent themselves, and then fail to adequately prepare their case. If a filer cannot help herself, the court is likely to do little to hold her hand through the process.