DJ COMMUNITY

THE 411 ON BANKRUPTCY: THE FINANCIAL PROCESS 50 CENT AND MANY BLACK WOMEN GO THROUGH

THE 411 ON BANKRUPTCY: THE FINANCIAL PROCESS 50 CENT AND MANY BLACK...

August 13, 2015 ‐ By Ann Brown

PNP/WENN.com

50 Cent has been in the news a lot lately, and it’s not over some beef (surprisingly) or even new music for that matter. The media has been covering the hip hop mogul’s bankruptcy trial. Fiddy has been in court claiming his $25 million net worth has been virtually wiped out; thus he can’t pay his debts, including a recent judgement against him for $7 million due to Lastonia Leviston, who won the payment in court after 50 Cent allegedly released a sex tape of her to upset Rick Ross, the father of one of her children.

According to 50 Cent, two separate court-ordered payments (in addition to Leviston, 50 owes an $18 million court-ordered payment over a failed headphones partnership) as well as high living expenses, have forced him into bankruptcy. According to a statement of his financials filed in Connecticut bankruptcy court, the superstar spends a whopping $108,000 per month in expenses, including $72,000 a month to maintain his Connecticut house with 21 bedrooms, 24 bathrooms, and a nightclub and $5,000 monthly for gardening.

Of course, 50 is not the first person — or celebrity — to file for bankruptcy. In fact, more African Americans, especially Black women, are filing bankruptcy and more than their white peers. Research in 2012 showed that “more and more Black women are filing bankruptcy, and defaulting on student loans – which has an overall default rate of about 15 percent now for for-profit colleges, according to the U.S. Dept of Education,” reportedBlack News.

But what does it really mean to file bankruptcy–and should you? “The decision when to file bankruptcy is a very personal one and there are no hard and fast rules about when to file….Each person sees their life differently and the timing is different for each person,” explains Craig Zimmerman of Law Offices of Craig Zimmerman, a bankruptcy attorney based in Southern California. “Many times, people will see you, a bankruptcy attorney, when there is a catastrophic event, such as a foreclosure action, bank levy, divorce, job loss, lawsuit, death of the primary wage earner, or wage garnishment. Those are clearly times when a bankruptcy attorney should be consulted. The truth is that the person should have seen a bankruptcy attorney much sooner.”

There are different types of bankruptcy filings. “There are two chapters of personal bankruptcy. There’s Chapter 7, known as the liquidation chapter of bankruptcy and Chapter 13, which is known as the wage-earner plan. In a Chapter 7 bankruptcy case, a bankruptcy trustee can sell the bankruptcy debtor’s property that is not exempt from being sold. The trustee uses the proceeds of that sale to pay the debtor’s creditors. In a Chapter 13 bankruptcy case, the debtor keeps all of her property, and she pays her debts over the course of three or five years,” says bankruptcy and business law attorney Shena King.

Consult a bankruptcy attorney when you realize that you are not getting ahead financially and you have no savings for retirement, no savings account for emergencies, your credit card balances aren’t decreasing, or you are using credit cards to pay for basic life expenses.

It may sound simple, but it’s quite easy to make mistakes when filing for bankruptcy so one must be careful with the complex process and professional help is advised. “The biggest mistake people make is listening to non-attorneys for advice. There are websites and non-lawyers who make you think that you can do it by yourself. This is usually a recipe for disaster. It costs more to clean up the mess than it does to do it right the first time,” notes Zimmerman. “Other mistakes people make is thinking that the can give away assets before filing or fail to the disclose transfer of assets on their petition. They fail to understand that Chapter 13 might be an option when they need to save a secured asset, like a house, or have back taxes that need to be paid back.”

So when should you file and which option should to file? “A woman should calculate her monthly disposable income by deducting allowed monthly expenses from monthly income. If her monthly disposable income is less than $100, she can file for Chapter 7 bankruptcy. If her monthly disposable income is more than $100, and that amount would not pay at least 25 percent of her debts over the next 60 months, she can file for Chapter 7 bankruptcy. Otherwise, she fails the means test and may need to file for Chapter 13 bankruptcy,” explains King.

Despite the stigma of bankruptcy, Zimmerman advises, “Many fail to realize it is not the choice of last resort. It should be something to think about way earlier on and that it can be used as a tool, like most corporations do, to shed unnecessary and burdensome debt to make yourself stronger financially. There is no stigma to filing bankruptcy. It is not a sign of failure.”

Adds King, “Most people fail to understand that they usually do not lose property they do not want to part with when they file bankruptcy. Yes, in Chapter 7 cases, the bankruptcy trustee can sell a debtor’s nonexempt property, but as quiet as it’s kept, more than 90 percent of all Chapter 7 bankruptcy cases are ‘no-asset’ cases. That means that the debtor has no nonexempt property that that’s worth being sold…In a Chapter 13 bankruptcy case, the debtor does not lose property that she does not want to part with. She can pay her debts over the span of three or five years under a debt repayment plan. The length of the debt repayment plan is determined by the debtor’s income.”

It’s important to note that a Chapter 13 bankruptcy will remain on your credit report for seven years from the date it is filed because a portion of the debt is repaid under the discharge plan. Meanwhile, a Chapter 7 bankruptcy is deleted only after 10 years from the filing date since there is no repayment of any of the debt.

Chapter 7 Bankruptcy Basic Steps

— Ponder the pluses and minuses of filing before deciding to move ahead.

–Seek out professional help. “Find a competent bankruptcy attorney and gather all of the financial documentation needed to file,” says Zimmerman. You can find a bankruptcy attorney at the National Association of Consumer Bankruptcy Attorneys www.nacba.org.

–Head to class. You will have to take the required pre-bankruptcy credit counseling class so the certificate can be filed with the petition.

–Set up the all-important 341(a) meeting which is with an appointed Trustee to find assets to sell or transfers to be undone.

–Go back to school. You will have to take a second required counseling class and make sure that the certificate is filed with the Court.

—-Get discharged. If your bankruptcy filing has been successful the court will issue an order saying that your dischargeable debts are officially discharged. This mean you no longer have a legal obligation to pay that particular debt.