As a Virginia Bankruptcy lawyer, I often tell my clients to “change banks.” Why?

If you have been hit with and ignored a warrant in debt,  and the return date is past, you may be about to be garnished.  What checking account did you use when you last paid that debt?  Since they know where it is, that’s the one you can expect will be first garnished.  Time to change.

(Changing your account number is not enough.   A garnishment will hit all the accounts you have at that bank.)

You also need to change banks if have a loan where you bank .   If you are falling behind on your second mortgage–for example–with Bank of America and you save or check with Bank of America, they can dip into your account to pay themselves.   Credit Unions can also pay themselves for credit cards.  Banks can’t.

What bank do I recommend? I like to say that the universe is full of banks.  You want to go to a bank you never used before.  And one you don’t owe money to.

Some people’s credit is so bad they cannot open an account at most banks.   I recommend TD Bank, which has a number of locations in Northern Virginia.   I send TD four or five people a months, with no complaints.  Many people  have told me TD is their all-time favorite.

Woodforest Bank, found in some Northern Virginia Walmarts, will also open an account for most people with really bad credit.

Even if they haven’t done it before, your bank, if you owe them money, can freeze your account and help themselves to what you had there the day the bankruptcy was filed.

Once you are past that, then your account is safe.  Being able to keep your money safe from offsets and garnishments is one important reason people file bankruptcy in Virginia.

A bad credit rating will have many adverse effects on your financial capability. If you have suffered from bankruptcies, late or missed payments, foreclosures, and other negative credit management background, you will eventually find it hard to avail of normal loans and other financial resources. Such also applies to people who have no credit backgrounds.

To address the needs of people with bad credit histories and those who have no credit background, many financial institutions and credit card companies have devised special credit cards that will allow the card holder to repair their credit standing in no time. In the case of Capital One, their prime offer is the Capital One Classic Credit Card.

The Capital One Classic is designed for people who are suffering from a bad credit rating. This allows one to get cash advances, and make purchases without the use of cash. Such can be very effective in repairing your credit rating, provided that you will pay your bills on time and in full.

Unlike other credit cards, there is no introductory offer for the Capital One Classic Credit Card. Instead, the APR will have a variable rate of 2.53% on a monthly basis or 34.94 on an annual rate. The same rate also applies to balance transfers and cash withdrawals. However, if you plan to pay your balance in full every month, you can get a maximum of 56 days for your interest free period. There is also no annual membership fee to talk about.

If you avail of a Capital One Classic, you can purchase anything you want for as long as they will not exceed your given credit limit. You can have a credit limit of at least £100 or £2,500 at most. This, however, will be based on your financial capability at the time of your application. Your credit worthiness will then be gauged according to your monthly income and your existing debts.

If you cannot pay your credit card balance in full, you can opt to pay at least 5% of your total credit card balance. However, if you fail to pay on time, you will have to pay for late payment charges. There are also returned credit card cheque charges and over the limit fees as well as foreign currency conversion charges.

Despite the many charges that can be applied on your balance, what’s good about this card is the fact that you can ultimately avoid all the fees for as long as you do not overspend and you can pay all your balances within the interest free period.

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When a debtor files bankruptcy, they must fill out what is called the Statement of Financial Affairs.  On the Statement of Financial Affairs the debtor must disclose all the income they have earned from employment or the operation of a business.  They must also disclose to the bankruptcy court all income received from any other sources.  Here a few things you need to know about properly disclosing income on your bankruptcy’s Statement of Financial Affairs:

1. The bankruptcy debtor must disclose all income received for the year that they are filing bankruptcy and the previous two years.  For example, if a debtor filed bankruptcy in October 2010, they would need to disclose all income for the years 2008 and 2009.  This can usually be accomplished by providing tax returns, W-2s, paystubs or a profit and loss statement if the debtor is self-employed or owns a business.
2. If a debtor is filing Chapter 13 bankruptcy or Chapter 11 bankruptcy they need to also disclose their spouse’s income.  The disclosure of a spouse’s income when filing Chapter 7 bankruptcy is not required on the Statement of Financial Affairs unless the spouse is also filing bankruptcy. However, since the spouse’s income is already listed on the Means Test, many bankruptcy attorneys also list it on the Statement of Financial Affairs when filing Chapter 7 bankruptcy despite the fact that it is not required.
3. When disclosing income on the Statement of Financial Affairs the debtor must include all income even income that is exempt in bankruptcy such as Social Security and child support payments.  Also, if the debtor is being paid in cash or “under the table” this income should also be included in the bankruptcy filing’s Statement of Financial Affairs.

A Visa student credit card is a great way to start building your credit history. As a student you might be thinking much about your grades, your studies and having fun however, it might be wise for you to think of the things that you may want to buy in the future when you become a professional yourself or build your own home and family. Soon you would want to get your own car, house and other things that you may need after graduation. This card can help you become responsible in handling your money, expenses, wants and build a good credit history.

Visa student credit card offers great opportunities and benefits for students

1. With the use of Visa student credit card you will learn about handling your own finances. You will learn how to be responsible with your money and handle credits which will be very helpful after you graduate when you will already be on your own.

2. Visa student credit card also teaches you on how to handle transactions and pay for the things that you need in a safe and secure way.

3. For security purposes, your parents may set low credit limits. This allows you to learn how to spend your credit wisely and be able to use your it for emergency purposes like new books, gas and other forms of emergency expenses.

4. Companies that issue Visa student credit card may not offer the lowest interest rate but still it remains highly competitive. This allows you to have the minimum finance charges when applying the balance on the next due.

5. There are many Visa cards that offer privileges, bonuses and other sort of rewards that are beneficial to the student using it. It will offer you options that you can certainly use as a student.

Using a Visa student credit card will allow you to learn to be responsible with your expenses and other finances. At the same time it will allow you to enjoy financial flexibility. This will help you as well in building a good credit standing in the future when you are ready to have your own card. With a good credit standing, providers from different companies will offer you great deals and options that will allow you to get the things that you want and pay for it easily and slowly.

Sandra Mendez is a financial consultant who inculcates among consumers the value of proper credit card management. She will be glad to help you for any concerns on Visa

Homestead protection in bankruptcy gets complicated when there are non-resident co-owners of the debtor’s homestead. An example is when parents help an adult child buy a home and insist on placing their names as co-owners of their child’s house.

A caller from south Florida asked me how a Chapter 7 bankruptcy would affect his homestead owned jointly with his parents free and clear.  His parents purchased a house in Florida for their son. The house was titled jointly in the names of the son, who lives there, and the two parents. All three family members have credit card problems and are considering bankruptcy. The son asked me whether his Chapter 7 bankruptcy would affect is parents’ interest in his house. The house qualifies for unlimited homestead protection under the bankruptcy rules.

If the son files Chapter 7 only the son’s partial interest in the house is at issue. The Chapter 7 trustee has no interest or rights relating to what the parents own including the parents’ interest in the house (if any). The son’s ownership of the house would be exempt as homestead because the house is his primary residence.

The result is more complicated if the parents file Chapter 7. The parents’ Chapter 7 trustee may have a claim against the parents’ interest in their son’s house because the parents do not reside in the home as their own homestead.. The trustee could not force the sale of the home as long as the son resided there. The trustee could place a lien on the parents 2/3 interest which would be payable upon the sale or refinance, and the trustee could sell the lien on proceeds to an investor or to the debtor himself.

The parents could argue in their bankruptcy that they have no equitable interest in the house subject to their bankruptcy estate because they intended to transfer all beneficial interest in the house to their son. This position may be viable if the son has been paying all taxes, mortgage payments,  and other expenses and if the son exclusively uses the property. The parents’ filing of a gift tax return or other written evidence of their intent to gift the property to their son would substantiate this position.  It is possible for the parents to have part of the bare legal title without them having any equity interest subject to their own bankruptcy trustee, but that position depends on the facts.

This is another example of why parents should not jointly own assets with their children for estate planning or any other reason.

American Apparel, infamous for its controversial CEO Dov Chamey and its hip, risqué fashions may be facing a possible bankruptcy.  American Apparel announced in a securities filing that it “may not have sufficient liquidity necessary to sustain operations for the next 12 months.”

The retailer is in talks to obtain new financing to shore up its struggling operations, which have been hit by slackening demand for its hipster fashions, as well as an immigration crackdown last year that forced the company to dismiss 1,500 undocumented workers at its factory in Los Angeles.

American Apparel is also reeling because of a hiked up interest rate for a $91 million loan it owes Lion Capital.  The interest rate increased to 17 percent from 15 percent in June, which is making the retailer’s debt expenditures increase significantly and pushing them closer to a possible bankruptcy.  At this point, it isn’t exactly clear how American Apparel would approach restructuring in bankruptcy; but with the retail industry being hit with low sales, tight credit and a changing industry, some are saying that a liquidation in Chapter 7 bankruptcy should not be ruled out as a possibility if the retailer goes down that path. In a Chapter 7 bankruptcy, the company’s assets would be completely liquidated and the proceeds from that liquidation would be distributed to the company’s creditors.  And since the company’s brand name has value that could also be sold off in a Chapter 7 bankruptcy.  In Chapter 11 bankruptcy American Apparel might be forced to shut down unprofitable stores, cut benefits, reduce salaries or make other changes that could reduce the amount of cash it needs to spend each month, a move that could allow the company to exit any future bankruptcy financially stronger.