Hawaii Bankruptcy Lawyer Explains Wage Garnishment and Bankruptcy

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wage garnishment explained by a hawaii bankruptcy lawyerIf one of your creditors has a judgment against you (which means the creditor sued you for nonpayment of a debt, and won), it can garnish your wages. With a wage garnishment (sometimes called a wage attachment), your employer holds back some of your wages and gives them directly to the creditor. Some creditors (like the IRS and AAFEES) get special treatment and can garnish your wages without a court judgment.

If you are served with papers (a “complaint”) you need to give our Honolulu bankruptcy attorneys a call. Oftentimes people aren’t sure what the papers are, so they ignore them and don’t show up in court. Your creditor will then obtain a default judgment allowing the creditor to legally instruct your employer to withhold money from your wages. So whether you can afford it or not, 25% percent of your pay would go to your debt, until it is fully paid off. A garnishment can start a spiral of defaults on other debts. Soon your car and house payments are difficult to make, and on and on.

A Hawaii bankruptcy attorney can help stop a garnishment in its tracks. The moment your case is filed your employer is notified and no further money is taken from your pay. Whether you live in Honolulu County, Maui, Kauai or Hawaii, if you’ve been served or are currently being garnished, call our office to speak to a bankruptcy lawyer and schedule a free consultation at 808-528-4274.

What is the right amount of debt to have? Observations from a Hawaii Bankruptcy Attorney

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The answer is none. Well, I’ll back up and say your reasonable house mortgage makes sense, only because a housing cost is something you will be incurring anyways throughout your life, and you might as well be purchasing an appreciating piece of real property along the way. Other than that, I believe you should never have a car debt, and only have one credit card with a maximum $5,000 credit limit.

If you have more debt than this, then let’s face it, you are living beyond your means.

Don’t feel bad about being in this category. You would be among the vast majority in Hawaii who have co-existed with an over-sized vehicle debt and credit card load. With Hawaii’s expensive cost of living, it’s easy to ease the tensions of monthly economic shortfalls by reaching for that plastic in your wallet. No one could blame you, because everyone does it.
The problem is that without the discipline of saving to buy a used car with cash, or budgeting to meet your monthly needs without borrowing you are not generating wealth. You need savings in life for a lot of things, including children’s college, your health emergencies and most of all for your retirement.

Buying a new car on credit is a very wealth draining event. By the time you pay for all the interest, over about 5 to 7 years, and the car depreciating in full, over about that same period of time, you are left with a worthless asset and a hole in your finances that could have been used to curtail the “just can’t get ahead” complaints that many people quietly mumble for most of their productive lives. Yes, you can say “no” to that glitzy TV commercial that makes that car of your dreams pop off the screen and plop you behind its steering wheel. Buy an old beater and save up the money to purchase a reasonable, but already pre-depreciated, used vehicle. That kind of car won’t cost you a penny in interest, nor go down in value by 1/3 in 3 years.
Most people aren’t aware that the interest cost of a credit card is brutal. That tank of gas on the card which cost you $100 will translate to a $2/ month minimum payment, but will last for 19 years. (Yes, that’s the amortization period on an 18% credit card paying the minimum payment.) Simple math: you will pay about $556 for that tank of gas. We all need tanks of gas when we need them, but can you go without that restaurant visit, that extra Christmas spending, that trip to Disneyland, that flashy new pair of Nike’s?

Most people who are reading this are already searching for a bankruptcy or debt relief attorney, so there’s no need in me chastising you over the debt load that’s already under the bridge. My comments are more geared at the obvious, and that is, once I help you get out of debt, let’s keep it that way. We don’t want you to be on the lifer plan at my office.

We can help you read the writing on the wall. It’s OK to lose the battle, but win the war. Let’s get your wealth generation back on track. Our office performs bankruptcy, debt settlement, and tax resolution services. Obtaining a fresh start is usually, but not always, your best business decision. Give me a call to explain how you can wake up tomorrow with a renewed enthusiasm about your economic future.

Will Bankruptcy Affect My Security Clearance?

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Generally, filing for bankruptcy in Hawaii will not be an automatic bar to obtaining a security clearance. Additionally being financially irresponsible and dragging around bad credit can jeopardize an existing security clearance. So whether your bankruptcy 7 bankruptcy or chapter 13 bankruptcy has an impact on your clearance usually depends on the circumstances that led you to file for bankruptcy in Hawaii in the first place. Security clearance decisions are made on a case to case basis and one of the factors the committee considers is whether you are financially responsible. Inability or unwillingness to satisfy debts is a mark against you. Other factors include:

– Debt cause by irresponsible spending and no evidence an effort has been made to pay
– Record of not meeting financial obligations
– Embezzlement, employee theft, check fraud
– Financial problems caused by drug abuse/alcoholism/gambling
– Failure to file taxes

The word bankruptcy does not even appear in the Guidelines for Determining Eligibility for Access to Classified Information. Why not? Because bankruptcy can be considered a positive effort to get your finances under control. NOT filing for bankruptcy can make you more of a security risk. By filing bankruptcy in hawaii you are using a court approved method of dealing with your debts AND you are showing financial responsibility.

It’s time to call a qualified Hawaii bankruptcy lawyer. Give our office a call at 808 528-4274 for your free consultation.

You Don’t Need to Suffer in Your Retirement Years

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Before you go raiding your retirement accounts to pay off your credit card debt you need to know the consequences. When creditors are calling you, your family, your work – harassing you and threatening lawsuits, it’s really tempting to look at the money sitting in an IRA or 401k plan, as a quick fix.

STOP! There are a couple of reasons this short-term solution may not be such a good idea:

1. An early withdrawal from a 401k can have income tax consequences. Say you are younger than 59 & 1/2, and you take out $50,000.00. This will trigger a 10% penalty for early withdrawal. If you earn $75,000.00/yr., that puts you in the 25% tax bracket. So adding the penalty plus tax rate you are now paying a 35% cost to obtain access to your money, which reduces your $50,000.00 to $32,500.00.

2. You’re trading consumer debt for an IRS debt, and the IRS debt would survive bankruptcy if left unpaid.

3. This is your RETIREMENT. You are putting the quality of your later years at risk. That’s money you will need when you stop working to eat, pay rent and transportation. Some of your expenses, particularly medical, may increase. Many people are under the impressions they will have to give up retirement money if they file bankruptcy. Retirement accounts are protected under the bankruptcy code. This means neither creditors nor trustees can take any of this money from you. So, instead of spending your hard earned and irreplaceable retirement to pay your debts, consider filing bankruptcy instead. You will keep all your retirement savings. You will safeguard the financial lifeline to happiness in your golden years and obtain the freedom and peace of mind that should accompany a successful departure from the workplace.

Don’t do anything without first calling us at (808) 528-4274. Your retirement is only protected when it remains in an IRA, 401k or other retirement account. If you cash it out and deposit the money in your bank account, those funds have lost the special protections bankruptcy affords. We offer a free consultation – just give us a call to arrange a meeting at either of our conveniently located offices.

Chapter 7 and Military Personnel

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We help many military service members in Hawaii, and are familiar with their particular income, expense and debt challenges. There are two favorable treatments that the law provides to service members in allowing them a free pass from being subjected to the famous “means test” that determines a presumption of abuse in filing for Chapter 7 bankruptcy. Congress parceled out these exceptions for Disabled Veterans, Reservists and National Guard members called to active duty or required to perform homeland defense activities from being automatically disqualified from filing Chapter 7 bankruptcy, just because they failed this economic balancing test. This “means test” was incorporated into the bankruptcy code in 2005 as a “means” to determine if the debtor was committing all of his disposable income to repay creditors, or whether a discharge of his/her debts would be a fair remedy in their particular circumstances.

First, if you were a Reservist or National Guard member called up and on active duty or performed a homeland security defense activity for at least 90 days, and these 90 days were after September 11, 2001, then you have until 541 days after your active duty service to receive this special treatment. This pass on what can often be an unfair and superficial test will last until December 18, 2015, unless Congress acts again to extend the deadline.

Second, if you are a disabled veteran whose indebtedness occurred primarily during a period while you were on active duty or a homeland defense activity, then you also are exempt from having to face the gauntlet of the means test.If either of these scenarios applies to you, there still may be other elements in your case that could prevent you from filing Chapter 7, but those factors would have to be evaluated by an experienced attorney who specializes in the bankruptcy arena.

Whether you are/or were in active duty in the past, or don’t otherwise qualify under these provisions, you still can be a candidate for Chapter 13 bankruptcy relief. Chapter 13 is still a very powerful vehicle in restructuring your debts into a low consolidated monthly payment that you can afford.

Former or current military personnel, if you’re buried under a mountain of debt, give us a call today to explore your debt relief options.

Do I have to file bankruptcy with my spouse?

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Like filing taxes, it is your choice whether you file an individual or a joint bankruptcy. There can be advantages and disadvantages. One of the advantages of only one spouse filing is that the bankruptcy will only be reported on that person’s credit report. So the non-filer’s credit won’t be affected. This can be a useful option if one person has all or most of the debt, and the other spouse will need to use their credit rating in the near future to qualify for a car loan or mortgage. The best time for one spouse to file without the other is when all of the debts are in the name of only one spouse. This usually applies to newly married couples, or where one spouse has been running a business that failed.

But if you are both responsible for a significant amount of debt, it is advisable to file jointly. An individual bankruptcy filing by one spouse may not stop collection attempts – letters, lawsuits, garnishments – against the non-filing spouse. If only one of you files, the non-filing spouse will still be liable for his or her separate debts, plus a share of joint debts.

After weighing up the factors, if you to decide to file individually, the petition and schedules do require you to disclose the non-filing spouse’s income. This is because if you share the same household, his or her income is included in the bankruptcy calculations. However, you may also deduct your spouse’s personal expenses, i.e. car payment, monthly credit card payment, etc. This is called the marital adjustment deduction.

A joint petition can save you money and time over filing two individual cases. Our firm charges the same fee for a joint or individual case. A joint bankruptcy is more convenient and efficient, because it allows married couples to complete only one petition, attend mandatory hearings together, and discharge all of their debts through a single bankruptcy.

It’s time for a fresh start. Filing for bankruptcy could be a way to shake off some of the weight holding you down. Call today (808) 528-4274 for a free consultation.

Wage Garnishment in Hawaii

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It’s payday, money’s looking tight and you are looking forward to getting your paycheck. If one of your creditors has gotten a judgment against you for money you owe, and has used that judgment to garnish your wages, you could be in for a shock. Garnishment in Hawaii obligates your employer to withhold a percentage of your pay and send it to your creditor. This continues each pay period, until the debt is paid. If this is happening to you, you should get advice from a Hawaii bankruptcy attorney about how to deal with this.

Although the law limits the percentage a creditor can garnish of your wages, that doesn’t help if you are just managing to balance your bills with your income. Even a small loss of income can make a difference and create a snowball effect that results in your getting deeper into financial trouble. You could fall behind on your mortgage or car payment, risking foreclosure or repossession. Filing for bankruptcy in Hawaii can stop garnishment.

A wage garnishment is a legal procedure where a portion of a person’s earnings are required to be withheld by an employer for the payment of a debt. In general, a creditor in Hawaii may garnish up to 25% of the disposable earnings. With so many households living paycheck to paycheck, just barely keeping their heads above water. When a creditor begins taking money directly out of that paycheck, it becomes difficult to keep everything afloat.

When you file for bankruptcy in Hawaii an automatic stay goes into effect the minute your plan is filed.  From that moment on, during the pendency of your case, creditors are prevented from attempting to collect money from you. They can’t call you, they can’t file lawsuits against you, they can’t use a judgment awarded in court to garnish your wages, and they can’t continue to garnish your wages if they have already started.

Certain types of income are protected from garnishment by creditors. These include Social Security, IRA’s and 401(k)’s. Additionally, garnishments for certain type of debts are issued automatically. For example, all child support orders include an automatic wage withholding order. If you owe back taxes the IRS or State can garnish your wages without court permission.

If you are facing a garnishment you should seek an experienced attorney.  Filing for bankruptcy stops creditors from obtaining judgments, and can void a judgment if one is already in place. For those debts that are not dischargeable in bankruptcy – child support arrears, back taxes – filing can also help by proposing a repayment plan that will spread out the payments in a more manageable way.

Obtaining Credit After Filing for Bankruptcy in Hawaii

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A bankruptcy in Hawaii will (unless through an inadvertent twist of fate) appear on your credit report for seven to ten years. And while you will face an uphill climb to re-establish your credit in the years to come, research tells us that this does not mean the end of your credit life for that span of years. In fact, as a Hawaii bankruptcy attorney, I will assure you it is astounding to discover how easy it is ascend to that summit of good credit after filing bankruptcy.

This is primarily due to the fact that after bankruptcy you are, for the most part, debt free and have fewer, if any, competing obligations for a new creditor’s monthly installment. Another factor is that you can’t re-file bankruptcy for four to eight years after your case completes, meaning that you can’t rid yourself of the new creditor for quite a long stretch. Creditors are often warming up their hands at the prospect of how much interest they will generate and for how long without the risk of their debt being eliminated in a second bankruptcy. That is good for many who file for bankruptcy in Hawaii, but there is an important warning there as well.

Obtaining a new credit card after a bankruptcy is not difficult; in fact, many people who file bankruptcy are surprised to receive a flood of credit card and loan offers after the bankruptcy court enters the discharge.

University of Iowa Law Professor Katherine Porter writes that families who have filed bankruptcy appear to be particularly desirable future borrowers. In her article, The Credit Industry’s Business Model for Post-BK Lending, www.ssrn.com/author = 509479), she comments, “Bankruptcy debtors seem to receive more credit solicitations than the general American population. Industry researchers report that the average American gets six credit offers each month. The average bankrupt receives sixteen, nearly three times the number directed to the non-bankrupt family. A carpenter in his mid-30s warned that ‘[o]nce you filed for bankruptcy, lenders come out of the woodwork. . . . They just really try to get you back in debt again. All these offers that I get for financing—before I filed I bet I could not get a loan. The ironic thing is I’m sure, say within the six months before I filed, they would have laughed at me if I wanted to get a loan. Now they are saying ‘let us give you money.’”

“Some debtors are shocked to discover that the very creditor who told them that filing bankruptcy would ruin their credit is now soliciting them as a customer. ‘I am continually getting offers for credit cards. Even the cards that I listed on my bankruptcy still offer me more cards but the interest rates are higher,’ explained a California woman.”

In conclusion, one should feel relieved that after filing for bankruptcy in Hawaii the credit industry will not shun them for the rest of their lives. Maintaining a credit profile leads to rebuilding your credit, and affords a peace of mind in the event of an unexpected emergency. However, hopefully valuable lessons have been learned throughout the process and credit will not be overused in the future to supplement a lifestyle beyond one’s means.

A Hawaii Bankruptcy Attorney Can Help You Choose The Path To Financial Relief

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A bankruptcy attorney can be your best advocate as you consider some form of financial relief if you’ve fallen behind on your bills or can’t keep up with your mortgage payments. In most cases, a bankruptcy lawyer will first review your financial information in order to establish just how dire the situation is before advising a path to set you back on the path to success and security. There are primarily three different options for resolving overwhelming debt problems, and each one has advantages and drawbacks.

Debt Negotiations And Settlements

In some cases, your financial situation may be quite serious, but can be worked out with a solid payment plan and appropriate negotiations with your creditors. It can help you avoid going to court and the stigma of having such a filing on your credit report for up to seven years, so it’s an option worth considering. A CPA or bankruptcy lawyer experienced in these negotiations can significantly reduce the amount you have to pay back to credit card companies and even get the interest and penalties waved, saving you thousands of dollars. He can also have your monthly payments reduced. To take this option, however, you’ll need to close all of the accounts and stop using credit until you’re debt free.

Tax Resolution

Sometimes your money problems don’t stem from credit cards at all; instead, you may have gotten in over your head with back taxes. This is a particularly common problem for individuals who are self-employed and are burdened with unduly heavy tax responsibilities. The IRS is interested in retrieving their money and can be very aggressive in pursuing you and slapping you with interest and penalties that are financially crippling. A good bankruptcy attorney can negotiate with the IRS, extending them an Offer In Compromise that outlines a more reasonable payment option and illustrates why you may be eligible for a significant, pennies on the dollar settlement. Penalty abatement from the IRS can also reduce what you owe by removing or reducing any interest and penalties, particularly if you are earnestly trying to pay off your back taxes.

Bankruptcy: Two Paths To Resolution

There are two commonly used forms of bankruptcy filed by individuals who are drowning in bills and outstanding loans. Chapters 7 and 13 are the most common. In Chapter 7, an individual can have their assets sold to settle outstanding accounts. A trustee is appointed who will organize the assets and distribute them to creditors. With no limits, Chapter 7 can often get debts discharged with minimal fuss, but does leave a significant mark on your credit report.
Chapter 13 is a less severe way to resolve your financial problems. Rather than liquidating your assets, it simply restructures your debt, allowing you and your bankruptcy lawyer to propose a reduced payment plan that can be achieved in three to five years. To qualify for Chapter 13, you must have reliable employment and there is an upper limit to the amount of debt allowed.

The best way to determine which option is right for you is to consult with a licensed Hawaii bankruptcy lawyer who is skilled in financial negotiations and familiar with all forms of debt relief. Some of these lawyers are also certified public accountants as well, enabling them to negotiate for you from an even stronger position.

Hawaii Bankruptcy Tips: Seven Steps To Debt Resolution

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Woman needing help with Hawaii BankruptcyPeople nowadays are in difficult financial situations due to unemployment, financial mishaps, hospital bills or taxes they simply can’t pay. With a ruined credit, it’s hard to maintain family security. The first step is to actively get started in the bankruptcy process. With our Hawaii bankruptcy lawyer, it’s easy to get on the right track. There are several steps to how to file a bankruptcy that follow a set schedule:

  1. Decide If Bankruptcy is the Right Decision

Before you opt for bankruptcy, make sure you’ve exhausted all other financial avenues and advice. If you’ve reached out to friends or family, and are still well over thousands of dollars in debt, bankruptcy can help.

  1. Talk To a Hawaii Bankruptcy Attorney

Debt Free Hawaii knows the type of filing each client will need, so ask and we’d be happy to help. Chapter 7in Hawaii allows you to discharge your debts without losing your house, but most of your possessions will have to be sold off. The other form is less severe but has limitations. A Debt Free Hawaii attorney can help you choose the best option.

  1. Collect and Analyze Financial Records

Your Hawaii bankruptcy lawyer will review all of your records: financial, medical, vehicle, credit, and more. Be as detailed as possible and try to get all documentation of purchases, debts, and financial records. There is nothing to be embarrassed about; we are here to help you.

  1. Explain your Situation to Creditors

Refer creditors or bill collectors to your Hawaii Bankruptcy Attorney once you’ve retained one. Your attorney will explain to them that you have an automatic stay, and all debts will be uncollected until the case is solved. Debt Free Hawaii will leave you free from hassle of debt collectors.

  1. No More Credit Cards

You need to show the court that you mean well in your bankruptcy efforts. Do not use credit cards during your Hawaii bankruptcy. Once you’ve filed in court, using a credit card can lead to a lawsuit by creditors.

  1. Attend The Creditors’ Meeting

This is where the court will go over all current debts and assets with you and any involved parties. Your Hawaii bankruptcy attorney will attend this meeting with you. Simply answer the questions honestly and give them all the information they request so that they can evaluate the situation properly.

  1. Wait To Hear From Your Attorney

Unless a creditor challenges the proceedings, your debts will be discharged sixty days after the creditors’ meeting. At this point, you are free of the burden of debt and can begin rebuilding a healthy financial lifestyle.

If you feel you are ready to start the Bankruptcy Hawaii process, Contact Debt Free Hawaii today!