Bankruptcy | Bankruptcy Information

Do I Have to Claim My Auto Loan on a Bankruptcy?

2008-10-21T10:06:00.004-07:00

Are you considering bankruptcy, but you do not want to give up your car? Do you know your options when it comes to your car? You could ask an attorney, but they will charge you for their time. There is a pretty easy answer to the question, "do I have to claim my auto loan on a bankruptcy?"

First, if you need to keep your car, then you do not have to claim it on your bankruptcy. You do not have to wipe out all the debts, but you will probably have to show that you have paid your auto loan on time and can continue to do so. This is not always the easiest thing to do especially if you have not been on time with the car payments.

Second, the judge will be the sole decider in whether or not you have to claim your auto loan. If the judge decides that you need to claim it, then your car will be repossessed and you will have the loan cleared with your bankruptcy. If you get to keep it, then you have to continue to make the payments just like before.

Last, your best bet is to either sell the car and pay off the loan or take out another loan to pay off the car. It is much easier to keep a car that is paid off and your lawyer will be able to argue for you better if it is paid off. This works out best if the car is not worth much because it is not as big of an asset.

A Guide to Filing Bankruptcy

2008-10-21T10:06:00.003-07:00

First of all, you're not alone. Filing bankruptcy is probably one of the most difficult decisions you'll ever make. So, let's make sure you comprehend exactly what filing bankruptcy means and how it will affect your life. The following guide to filing bankruptcy will help you to understand what goes on behind the scenes.

Bankruptcy, as you know, has changed over the last 3 years. In October, 2005 new federal laws made it harder to file Chapter 7 bankruptcy (total liquidation) and instead required you to file Chapter 13 bankruptcy (repay at least partial debt).

When filing bankruptcy you'll probably hire an attorney. Attorneys charge a fee ranging from $1,500 to $2,500, payable up front. Its best if you have all your financial matters organized as this will help the attorney give you advice and, take some of the stress off of you. With today's economy, bankruptcy is commonplace. Most, if not all bankruptcy attorneys are extremely busy, so don't expect explanations or phone calls returned promptly.

Once your list of creditors is known and all required paperwork is done, the attorney will have your bankruptcy petition filed in your county. After the court accepts your petition, there will be a meeting of your creditors, a meeting you must attend. Some, not all, creditors might file an objection to your bankruptcy petition and may bring you to court regarding the balance of your account.

During this process, you are required to receive debt counseling. Also at this time you will be assigned a trustee. The trustee will overlook both the creditors and debtors filings to make sure everything is done properly under the law.

The day you file your Chapter 7 bankruptcy until the day it's done usually takes 3 months, depending on your situation. Chapter 13 bankruptcy means you will be repaying some of your debt; usually a lesser amount with lower interest. So, Chapter 13 bankruptcy can range from 3-5 years to complete.

What should you expect after your bankruptcy is complete? You should know that if you file a Chapter 7 bankruptcy it will reflect on your credit score for 10 years. Chapter 13 bankruptcy demonstrates you're taking some responsibility for your debt therefore your credit score will be affected for 7 years.

Please note: If you file a Chapter 7 bankruptcy you will not be permitted to file bankruptcy again for another 8 years. Also, Chapter 7 bankruptcy does not mean all debt will be discharged. Things like child support, most student loans, and any taxes (federal, state and local) owed will need to be paid by you.

Filing bankruptcy can be a daunting task. Think deeply about all the consequences you'll face, now and in the future. And, in today's world bankruptcy may be the only option. It's not your fault. Most Americans were unaware the economy was crashing. So, this guide to filing bankruptcy should help you to have an idea of what to expect. See if bankruptcy is an option for you. Knowledge is power.

Learn the 6 Types of Bankruptcy Chapters

2008-10-21T10:06:00.002-07:00

Many people don't realize that there are 6 types of bankruptcy chapters. Not all apply to the average individual, but this information may be of interest to you now or sometime in the future.

Under the United States Code, there are actually 6 types of bankruptcy chapters entitled under the Federal Bankruptcy Code. Below you will find each type of bankruptcy and see what each means.

The 6 bankruptcy codes are listed below:

Chapter 7 - most people and/or businesses file chapter 7 for total liquidation of all eligible debts
Chapter 9 - when a municipality files bankruptcy
Chapter 11 - is filed when a business or sometimes an individual who wants to reorganize their debt
Chapter 12 - is for family farmers and family fisherman
Chapter 13 - is for individuals who wish to reorganize their debt with a repayment plan
Chapter 15 - is regarding international cases

The most popular bankruptcy filing is Chapter 7. This allows the individual to liquidate most of their debt. Chapter 7 bankruptcy usually takes 3 months from start to finish. Consumers should know that Chapter 7 bankruptcy will reflect on their credit score for 10 years. Also, once you file Chapter 7 bankruptcy, you will not be permitted to file bankruptcy again for another 8 years. One last point, Chapter 7 bankruptcy does not mean all debt will be discharged. Things like child support, most student loans, and any taxes (federal, state and local) owed will need to be paid by you.

Most people know little about Chapter 9 bankruptcy. Chapter 9 bankruptcy calls for the resolution of municipal debts. Only a handful of municipalities have filed Chapter 9 since its inception in 1937. In 1994, Orange County, California filed a multi-million dollar Chapter 9 because the County Treasurer-Tax Collector misappropriated the county's tax dollars. He left the entire county bankrupt. This case personally affected me as I lived there and worked with the County of Orange at the time.

Chapter 11 bankruptcy is filed when a business or corporation needs to reorganize their debt. The corporation makes a plan to repay their debt in order to stay in business.

Chapter 12 bankruptcy is intended for family farmers and family fisherman who have normal income but high debt. Usually this type of bankruptcy allows these families to suggest a plan to repay all or part of their debt.

Chapter 13 bankruptcy is for individuals who wish to reorganize their debt with a repayment plan. Chapter 13 demonstrates you're taking some responsibility for your debt, therefore your credit score will be affected for 7 years instead of 10 years under Chapter 7.

Chapter 15 is basically a new chapter added in 2005 when Federal Bankruptcy Laws were changed. It involves methods for dealing with cases involving debtor issues for international cases.

As you can see, the 6 types of bankruptcy chapters will not involve most people. Federal Law has taken into account all types of circumstances so most people and corporations have the opportunity to alter and/or relieve their debt problems. If you fall into one of the 6 types of bankruptcy, please consider all you options.

What the New Bankruptcy Laws Mean For You Today

2008-10-21T10:06:00.001-07:00

Over the last few years, bankruptcy laws have seen major change. In the old days, you could simply decide to file bankruptcy on a whim. If things were going semi-bad for you and you wanted to start over, you could do so easily. It didn't really take that long and you got a fresh start pretty soon afterwards.

Today, this is merely a pipe dream. With all of the changes that have come into bankruptcy law recently, people view it as a completely different animal now. What new rules does bankruptcy have and how do they affect you?

For one thing, bankruptcy takes special circumstances in order to file. Being stupid with your credit card and racking up $30,000 worth of debt probably isn't going to qualify anymore. You need something really bad to happen in order to file bankruptcy. We're talking a death of someone significant, an injury, something completely unexpected, etc. You can no longer just wake up one day and decide to file bankruptcy. It takes a seriously legitimate reason.

One of the more significant changes involving bankruptcy laws is the waiting period. If you file bankruptcy, several years must pass before you can file again. In the old days, you could do it much more frequently and you could do it more times. Now, you have to wait a lot longer, depending on which type of bankruptcy it is.

Besides this, only certain types of debt are even considered for bankruptcy. In previous years, you could basically wipe your whole slate clean. It was a total annihilation of your debt. Now, there are several types of debts that will not be erased. Even if you file bankruptcy, you'll probably be liable to repay certain debts. This is no longer a clean slate device as it once was, except in extreme cases.

Another vast difference in new bankruptcy laws is that you must be approved by a bankruptcy judge before you can even file. This means that you have to get all of your most compelling evidence gathered up and go before a judge. Then, depending on the judge's discretion, they will decide whether or not you can file for bankruptcy. This means that you can no longer decide on your own whether or not you want to file. Someone else has to physically approve it before it can go through. If they think that your circumstances aren't bad enough or could have been avoided, you are still going to be on the hook for your debt.

Before you decide to try and file bankruptcy, you are strongly encouraged to have an attorney go over bankruptcy laws with you. They can look at all of the facts of your case and help you decide whether or not you should move forward. Without the help of a trained professional, you could waste a lot of time and money working on a lost cause. When in doubt, the best thing you can do is seek the advice of a bankruptcy lawyer. They have extensive experience in the laws that you'll need to review.

Your Options When Seeking Bankruptcy Advice

2008-10-21T10:06:00.000-07:00

Bankruptcy advice varies, depending on who you ask. A credit card debt reduction company might say that it's better to just stick it out, settle your debts and establish a monthly payment schedule, even if it takes you five years to finish it! Needless to say, many of the debtors set up on such plans drop out and file for bankruptcy anyway.

If you were to ask a lawyer, then they might say that bankruptcy is the only option for you, while asking for more than $250 just to file. Many people find they can't come up with the lump sum to go through with it and feel they are beyond all hope.

Bankruptcy advice has gotten more liberal over the years due to changing laws. To avoid scores of debtors flooding onto the streets with no property and nothing left to live for, the laws have changed to allow debtors to keep certain property, despite filing for bankruptcy. The debtor may keep up to $2,500 in cash, $2,400 in auto equity and unlimited 401k funds.

Additionally, by law, employers cannot fire an employee who files for bankruptcy, although potential employers can choose not to hire a new employee based on that factor. Often with a filing, debtors will need to attend credit restoration and debt management courses.

When you're seeking advice about bankruptcy, be sure to double-check what can and can't be discharged. For instance, you'll still have to pay off Uncle Sam if you owe taxes for the past three years. However, if you have personal income taxes over 3 years old, then you can discharge them through bankruptcy. Fiduciary taxes cannot be discharged, nor can most student loans and liens. If you owe child support or alimony, you will still have to pay up.

If you don't list debts on your bankruptcy petition, then they will not be covered. If you have debts from drunk driving or other "willful and malicious" harm, you'll still have to pay your dues. However, there are many things that can be removed when you file for bankruptcy, such as all unsecured credit card debt, wage garnishments, utility termination, fraudulent credit claims and foreclosure.

After you receive bankruptcy advice, there are a few things to consider before you file. First, be sure you can't negotiate with your creditors, reduce your balances with a settlement letter or arrange a monthly payment plan. Generally speaking, if you can only afford minimum monthly payments on your bills and cannot pay off all your balances in five years, then you should file for bankruptcy and then focus on credit restoration services.

The Best Day of the Month to File Bankruptcy

2008-09-26T06:32:00.004-07:00

Thinking of filing bankruptcy? Before you do, pull out your calendar and the phone number for your bank. The day you choose to file could save you (or cost you) thousands of dollars.

Here's why: the assets that you own on the day you file are the only assets that are considered in your case. That means they're the only ones that creditors may be able to get to. Some assets pretty much retain the same value during the course of a month, like your car or your home furniture, for example. But the money in your checking account tends to fluctuate day to day. Right after you deposit your paycheck, your account has a higher balance. For a brief moment, it looks like you're flush, right? Then comes time to pay all the bills. You start writing checks for rent, electric, cable, groceries, gas, health insurance, and all your other regular expenses. Pretty soon those checks clear and your account is back to that minimum balance again.

That's the day you want to file your bankruptcy - when all your bills for the month have been paid, and your account balance is at its lowest point. It doesn't matter if you're going to deposit your next paycheck the day after filing bankruptcy: It is the balance in your account on that day that you file that counts as your asset. And not all assets are exempt. Research your state's particular wage exemption laws, or consult with an experienced bankruptcy attorney in the state where you'll be filing your petition. The type and amount of wages in a bank account which are exempt from creditor attachment varies from state to state.

No matter which state you live in, it's always a good idea to file your bankruptcy when your bank account is at its lowest balance. And here's one last thing to keep in mind: just because you wrote those checks doesn't mean your account balance reflects it. So don't go by what's written in your checkbook register - go online or call your bank to get an exact account balance before you file your bankruptcy petition. This simple little strategy can save you thousands of dollars that might otherwise go to your creditors in bankruptcy.

When is Filing Bankruptcy Your Best Option?

2008-09-26T06:32:00.003-07:00

Filing bankruptcy is not a decision to be made lightly, as it is likely to affect your ability to obtain a mortgage, a car loan, or a new unsecured credit card for quite some time into the future. In this day and age, your credit report will very likely be pulled when applying for a new job, an apartment lease, and car insurance.

The process of filing bankruptcy should not be an exciting process that you look forward to, but instead should be viewed as your last resort option. It may indeed be your best and perhaps only option, but it should only be considered when you have exhausted all other options after a thorough investigation into what other options are possible and available to you.

While bankruptcy may alleviate much of the financial stress you may be feeling due to your mountain of bills, which seems to get higher every day, it may not be the total answer for you. Yes, bankruptcy will stop the creditor harassment calls since after you have filed, your creditors are no longer allowed to call you or hound you, and that will almost certainly provide a certain amount of relief. Having your bills under control will also provide a great amount of relief, but to what end? You still have the long road back to getting your finances under control.

Many institutions understand the fact that the majority of people who are filing bankruptcy these days are not doing so because of their own financial mismanagement or trying to live a champagne lifestyle on a beer budget. They understand that most of the consumers who file do so due to unexpected circumstances that they have no control over, such as high medical bills, a job layoff, a messy divorce, or similar things. So they may cut you a bit of slack if you are trying to get a loan, a credit card, finance a car, or whatever when they see that you have filed for bankruptcy in recent years. But that still tells them that you are a higher risk and they will therefore set repayment plans and interest rates accordingly because you naturally now fall into a higher risk category for the funds or credit they are going to give you.

But even so, if you decide that bankruptcy is your best option, make sure you know what you are doing. With the recent sweeping changes of the bankruptcy laws, this is no longer a do-it-yourself process as it used to be in years past. In fact, you must be approved to file by the judge, and there is no guarantee that just because you want to file that you will be allowed to do so.

You also need to decide and be approved for the chapter of bankruptcy that you want to file. With Chapter 7, most debts are able to be discharged. Note the word "most", since there are some types of debts that cannot be discharged by bankruptcy. But you may only be approved to file Chapter 13 which is like a "reorganization". This means that your debts are reorganized, not wiped out or discharged, to make it affordable for you to repay them. But the key point here is that with Chapter 13, the debts are not wiped out, you still have them and need to repay them.

The best advice that can be given is to encourage you to get together with a qualified bankruptcy lawyer who understands the laws of your state and can help you understand what your options are and how the paperwork needs to be completed in what steps if you decide to move forward. Most people filing bankruptcy have found that they save themselves an order of magnitude more time, money, and assets by using a qualified attorney than what they pay out in legal fees. This is not the time for you to make yet another mistake, so consider your options carefully.

Bankruptcy - Raise Your Credit Score After a Bankruptcy

2008-09-26T06:32:00.002-07:00

Having a Bankruptcy is one of the most devastating things that you can experience. You may ask after I have this Bankruptcy will I be able to raise my credit score. There are things that you can do after you have a Bankruptcy that can help your credit score and financial situation. You need to get a copy of your credit report so that you know exactly what your credit score is. Next you want to look through the report to see if you have any items that should not be on your report.

When you are trying to get rid of negative items on your credit report you need to dispute all those items because it is up to the credit agency to verify if the item in question is accurate or not. If they can not verify it within a 30 day period then they must delete it. Remember that you have the advantage when it comes to your credit score and improving it.

Also it is very important that with any credit cards that you currently have pay them on time and do not be late. this will help improve your credit score very quickly. The benefits of paying your bills on time are that you will have a lower interest rate as well as higher credit score.

You also want to make sure that your credit cards are not maxed out and you make an effort to pay down the balances on your credit cards. The higher the balances the lower your credit score will be.

Remember that even if you have had a Bankruptcy you still can overcome it and raise your credit score if you follow the steps necessary to do so.

What a Good Bankruptcy Attorney Will Do For You

2008-09-26T06:32:00.001-07:00

What is all of the talk about bankruptcy these days? Quite simply, it is the section of the federal law that will allow a person who is in an extreme amount of debt to get a "fresh start". It will reduce the amount of debt that is required to be paid back as well as extend the time period in which the debt must be repaid. Will you need a bankruptcy attorney to help you sort through all of this? The answer is a resounding YES and let me explain why.

The bankruptcy laws are often referred to by their chapter number in the Bankruptcy Code. Debtors may file under five different chapters; three of them are for individuals: Chapter 7, which refers to Liquidation, Chapter 11, which refers to Reorganization, and Chapter 13, which refers to Reorganization.

The laws have really changed in recent years as far as bankruptcy goes, and you are now required to sit through a course before you will even know if bankruptcy is the way you should and even can proceed. That's right, it is no longer YOUR choice about declaring bankruptcy; the judge must approve it. This will help to determine whether you can have your debts erased through Chapter 7 of the bankruptcy laws or whether you have to enter a type of repayment plan through Chapter 13. It is better to acquire the services of a bankruptcy attorney before deciding to blindly strike off on your own. When consulting with your bankruptcy attorney, he or she will make sure that you file all of the necessary forms to discharge the debt.

That is just one of the reasons you want a good and qualified bankruptcy attorney because if you make a mistake on those forms, your case may get thrown out and you are right back to where you started. Or you may mistakenly present yourself on the forms so that you only get approved for Reorganization instead of Liquidation, which means you still have all your debts.

There are a numerous ways that the new bankruptcy laws will have their effects on debtors:

* A strict financial means test must be taken that will not allow many debtors to file under Chapter 7.

* Debtors have to receive a briefing from a credit counseling agency that has been approved for this. The debtor must do this at least 6 months before filing a bankruptcy case.

* Debtors must also take a class that has been approved on debt management techniques before receiving their bankruptcy discharge. Yes, these two steps are mandatory, even though the majority of people who file do not do so because of financial mismanagement.

* It is now easier for a court to be able to dismiss a bankruptcy case altogether or convert a Chapter 7 case to a Chapter 13 case

* It is now permitted for a court to impose sanctions on lawyers or on debtors for filing a Chapter 7 case that either had been dismissed or was converted to a Chapter 13 case.

How can a Bankruptcy Attorney Solve Credit Problems?

Bankruptcy attorneys are lawyers that specialize in bankruptcy law. They provide legal means for an individual or a business to either wipe out debts or resolve them.

Bankruptcy attorneys explain to their clients the primary purposes and applications as to how the bankruptcy laws now specifically apply to them in their unique situation. They may give such pertinent information to their clients as to under what chapter they may file, what bills are allowed to be eliminated, the length of time that payments can be extended, the possessions that are allowed to be kept, and all of the other details concerning bankruptcy.

A bankruptcy attorney will properly present your case for Chapter 7, which involves liquidation and debtor rehabilitation, or Chapter 13 which is reorganization, which is probably not what you had in mind when you decided to file. This involves a court-approved plan of reorganization as well as payment of the debt over a certain time period using future earnings.

If you are on the fence as to whether you should hire a bankruptcy attorney, you are strongly advised to you do so. There are many stories, including a couple who had the misfortune of having to apply for bankruptcy and they thought they could file online. It turns out that they filled in the paperwork in the wrong way and consequently the debts that the wife had were left intact as they only filed singly and not jointly. Don't make that same mistake. You will be out attorney fees in the short run, but you will more than make it up when your debts are discharged.

Top Reasons You Need to See a Bankruptcy Lawyer

2008-09-26T06:32:00.000-07:00

Often times, people believe they can file bankruptcy without the assistance and guidance of a bankruptcy lawyer. However, with all of the new laws in place, this couldn't be further from the truth. Lawyers versed in the laws of bankruptcy, are more important now, than ever before.

Bankruptcy laws vary from state to state. A bankruptcy lawyer can help guide you through the laws and make the most of your bankruptcy claim. In many instances, a lawyer can help save a great deal of your assets from being liquidated.

There are two main types of bankruptcy, Chapter 7 and Chapter 13. A bankruptcy lawyer can sit down with you and help to determine with chapter best fits your financial situation and which one you will qualify for. With Chapter 7, you will need to liquidate all of your non-exempt assets in order to pay off your debts. With Chapter 13 bankruptcy, your lawyer will work with you and a court appointed trustee to develop a repayment plan. Both bankruptcies vary in the way they are handled as well as the impact they will have on your overall credit. The lawyer you choose will also be able to inform you of what debts you can and cannot claim under your bankruptcy case.

But one very important benefit that a bankruptcy lawyer brings to the table for you is that he or she will analyze your particular financial situation and make recommendations, letting you know what options you have and which is your best option, and WHY that is your best option. At this point in time, you are probably very emotional about your financial situation and cannot look at it objectively to determine which course of action is best for you. You really need a good bankruptcy lawyer to use their years of experience and legal knowledge to make recommendations. In fact, they may even suggest a bankruptcy alternative and recommend that you do not even file!

There is a great deal of paperwork involved in bankruptcy. A lawyer will know what paperwork you must fill out as well as when it should be submitted. If you hire a lawyer who handles bankruptcy cases, he or she will act a go between you and the courts.

You will want to make sure that you hire a local lawyer to help you with your bankruptcy case. Since the laws vary from state to state, you will want a lawyer who is well versed in the bankruptcy laws of your local state.

As well, you will want to choose a reputable lawyer to work with. If you feel comfortable doing so, you can ask your family and friends for recommendations. Someone who has dealt directly with bankruptcy will be able to give you a personal view on a lawyer that works best for you. However, if you do not feel comfortable asking a family member or friend for a recommendation, you can check with the Better Business Bureau to see if any complaints have been filed against a particular lawyer you are considering.

No matter what your reason for filing bankruptcy, you will want to make sure that you hire a reputable lawyer that can guide you through the entire process. With all of the new bankruptcy laws in place, it is nearly impossible to file bankruptcy without the assistance and guidance of a bankruptcy lawyer. The right lawyer will help put you on the right path to clearing up your financial troubles.

One more point worth noting. You got to the financial place you are now due to errors or due to any variety of different circumstances. This is not the time to be making more mistakes by trying to do this yourself. Most people who have filed in the past can attest to the fact that they saved more in time, money, and personal assets by using a good bankruptcy lawyer than what it cost them in legal fees.

Rebuilding Credit After Bankruptcy - Going Bankrupt is Not the End of the World

2008-09-07T07:58:00.003-07:00

When an individual or organization is unable to pay off their dues on financial grounds, they are declared bankrupt. Creditors try to salvage a portion of what the debtor owes them by filing a petition of bankruptcy. However, there are numerous individuals and organizations declaring bankruptcy and leave their creditors with no options whatsoever. Once they have been declared bankrupt, their credit history is the worst affected and have little chance of getting loans in the future. You need to rebuild your credit history. However, rebuilding credit after bankruptcy is not very tough.

Once individuals clear all their dues after becoming bankrupt, they can reapply for credit. There is a popular belief that once a person becomes bankrupt, the person can no longer avail any credit. However, it is incorrect. If all the bills are paid on a regular basis without faltering after bankruptcy, rebuilding credit after bankruptcy is a possibility.

While rebuilding credit after bankruptcy, one should try to avoid creating more debts, as it might spell trouble in the future. It is also suggested that they should not take any loan from finance organizations. If bankrupt individuals have finance companies shown in their credit reports, it considerably lowers their FICO credit-scores, which is not desired at all.

There are other things too that bankrupt individuals should do to be successful in rebuilding credit after bankruptcy. They include:

Opening savings accounts creates positive signs.
It is also suggested that opening credit cards after bankruptcy gives an opportunity to bounce back in your credit history. You need to buy goods on credit for a whole month and make repayments of the credit in cash within the due date.
If there are any debts that the person had before bankruptcy and are reaffirmed, then extreme care should be taken to pay them off in a timely manner.

Bankruptcy Types - What Are the Different Chapters and What Do They Mean

2008-09-07T07:58:00.002-07:00

To begin let us take a look at the Chapters that deal with an individual. Chapter 7 and chapter 13 are the two Chapters of Bankruptcy that are dealing with individuals.available for individual consumers.

Chapter 7 involves the debtor liquidating or transferring ownership of non exempt assets to their creditors in order to pay their debts. Depending on where you live and what you own will depend on what is exempt.

The reason that you would file Chapter 7 is to discharge or dismiss your debts. However, it is important that you follow procedures closely. If you are found to have committed certain kinds of improper conduct the court may deny your discharge and, if it does, the filed bankruptcy petition will be denied.

Chapter 9 is a bit different. It involves bankruptcies for cities and towns. Therefor is not for wuite the same purpose. Cities and towns have much higher levels of debts so their guidelines deal accordingly.

Chapter 12 deals with the special cases of businesses that are vital to the community and have been in a family for a long time. Specificity family farmers and family fisherman.

Chapter 11, often referred to as reorganization, is used mainly by commercial businesses. An individual may also file chapter 11 however it is a time consuming expensive and complex procedure so they usually opt for other chapters available to them.

Chapter 13, also known as the wage-earner bankruptcy,proceedings require you to propose a repayment plan to pay back your debts. Typically you are given an average 3-5 years to complete this repayment. The plan is based on income assets expenses and debts.

Usually the discharge of debts such as fines, penalties imposed for violating the law such as court fees and restitution, student loans, child support alimony, property settlement, fraudulent debts, personal injury or death, or recent income tax debts, in general, are not allowed.

The Current Bankruptcy Situation

2008-09-07T07:58:00.001-07:00

For borrowers suffering the many humiliations large and small of debts increasing beyond their control, there are actually several different forms of debt relief available to average consumers. What may surprise most Americans, actually, is the extent to which bankruptcy will no longer be considered among the debt relief alternatives that seasoned financial advisors recommend to most clients. Three years ago, while the economy was still relatively robust and the media was distracted by Iraq war coverage, the congress slipped in a few seemingly minor alterations to the United States bankruptcy code that went on to weaken tremendously the protection available. Unfortunately, at this present time, with debt loads, inflation and unemployment spiraling even as property values fall across the nation, consumers are only now beginning to understand that the Chapter 7 debt elimination program they had always assumed to be a final outlet for unpayable burdens may no longer exist.

The full meaning of this legislation would take far too long to fully explain, but, suffice to say, court trustees must now strictly follow Internal Revenue Service guidelines before rendering any decision on the feasibility of Chapter 7 protection. Worse yet, even for those few borrowers whose incomes are sufficiently low for Chapter 7 to be a practical consideration, those that somehow manage to successfully declare for the debt elimination program will find that virtually all assets (including, by the viewpoint of the Internal Revenue Service, the computer you are reading this article on, the table that supports that computer, the rug underneath said table, and so on) are now subject to potential seizure for auction so as to immediately repay their creditors. Every consumer that fails to meet the new and comically harsh standards for Chapter 7 bankruptcy protection will instead be passed toward the Chapter 13 debt re-structuring program. This is, indeed, a form of debt relief, but, as with anything controlled utterly by governmental regulations that ignore the day to day needs of private citizens, it is debt relief of absolutely the ugliest and most damaging sort.

After a bankruptcy notice appears on the credit report, borrowers will at least never need to worry about debt relief again. After the recording of a Chapter 13, even though essentially all bills will be paid by the filer and rather more quickly than would be pleasant, said borrowers will never again have the opportunity to be offered credit accounts for many, many years. Even used car salesmen will back away, shaking their heads.

To put it plainly, Chapter 13 has all the deprivations and forced budgeting of the harshest debt settlement programs alongside the credit shattering repercussions of debt elimination bankruptcy. The program does, in the loosest possible sense, offer some relief to debtors utterly without any other hope. There will always be a final outlet. Still, Chapter 13 should not even be talked about in the same breath as debt consolidation or debt settlement. It simply has no possible advantage or benefits compared to the other debt relief alternatives. Compared to robbing a liquor store or selling one's organs, Chapter 13 protection may come out on top as a sound lifestyle choice, but only just.

A Brief Background on Bankruptcy

2008-09-07T07:58:00.000-07:00

A lot of people think that the US financial system has changed rapidly during the last 50 years- and by a lot of measures it has. But, just like in the Roman days, people still go bankrupt when they can't pay their debts. In fact, some people credit the Romans for being the originators of the term "bankruptcy"- it supposedly originated to describe tradesmen who's boards were broken as punishment for bad debts...

If you've read any of the personal finance books released during the last few years, like "Maxed Out" by James D. Scurlock, you've probably read that many people's debt loads have increased substantially during the last few years. And if you take a quick glance at any popular newspaper today, you may find stories documenting the rise in personal debt levels in the U.S. With record home ownership rates and, up until recently, new cars seemingly everywhere you look, it's not surprising to read that some household's non mortgage debt levels now exceed $100,000.

In the U.S., some consumers start considering their bankruptcy options when it doesn't look like paying back their debts will be realistic and they need a fresh start to deal with their financial predicaments. These consumers are most likely thinking of filing for Chapter 7 bankruptcy. Chapter 7 bankruptcy is sometimes referred to as "regular" or "ordinary" bankruptcy. People who file for Chapter 7 bankruptcy can occasionally discharge some of their debts when the process completes. This is in comparison to Chapter 13 bankruptcies in which the focus is more on having debtors design debt repayment plans. Most bankruptcies filed in 2008 are still Chapter 7, AKA "regular," bankruptcies.

Some consumers file for bankruptcy protection in the hopes of stopping harassing phone calls & collection efforts from creditors. Consumers look forward to cleaning up their debts and starting over. However, people who file for bankruptcy can find that their credit scores have been affected by the bankruptcy.

They may encounter difficulty in rebuilding solid credit scores in the future.

In fact, some banks specialize in credit cards for people who have prior bankruptcies on their records. What sort of terms they offer can vary tremendously. However, some people with bankruptcies on their records may be able to rebuild their scores back to the point where they can start qualifying for regular credit cards again.

Online, there seems to be a lot of people looking for bankruptcy & debt related information. People seem to search for bankruptcy related terms thousands of times each day. According my keyword research, people seem to search for the specific term "debt consolidation" more than 3000 times daily. And "chapter 7 bankruptcy" gets more than 400 searches in Google alone every day. That is a fairly exact term to receive that many searches everyday!

In fact, some bankruptcy professionals have seen large increases in their businesses recently. This uptake in business is reflected in the latest stats that show bankruptcy filings increasing by more than 30% in some states from the first half of 2007 to the first half of 2008.

Overall, filing for bankruptcy is a decision that is up individual debtors. Is it right for everyone? Probably not. But bankruptcy is an option that more consumers seem to be considering today...

Bouncing Back From Bankruptcy

2008-09-07T07:57:00.000-07:00

Bankruptcy can be an extremely devastating experience. It can affect individuals both emotionally and psychologically. However, it also can be a great relief for individuals who have struggled to be pay their bills and who have been constantly fielding phone calls from bill collectors. It is important to note that bankruptcy is not the end of one's financial life, although it will have a big impact on it. Bankruptcy will stay on your credit report for a period of 7 to 10 years. Most experts suggest that within two to three years, an individual can begin to receive loans with rates almost as good as they could before they begin to get into financial trouble if they take steps to rebuild their financial reputation . In order for this to occur, individuals have to make sure that they figure out the root of their initial financial problems, take inventory of their income and outgoing bills, budget, consider going to a cash based system, track their expenditures and pay their bills on time.

Individual have to figure out why they got into financial trouble. Was it a case of attempting to keep up with the Joneses? Did someone get sick and lose their job? Is there a problem with impulse control? Once the determining factors are uncovered, an individual can begin to make efforts and changes so that they don't get into trouble again. This may include getting psychological or financial counseling. It may also require someone in the household looking for a new or extra job. Safeguards and accountability measures will also need to be put in place.

Next, individual needs to find out how much money is coming into the household and how much has to go out to pay the bills. This will provide individuals with the information that they need to create a budget.

Some financial experts suggest that people go on a cash based system. Individuals that have debit card or credit cards tend to overspend even when you don't have the money. This is because many banks offer overdraft protection and while individuals are assessed a fine for their overdrawing their accounts, the purchase is still covered. As a result, people tend to spend more than they normally would. In contrast, if an individual uses cash, they can only spend what they have in their pocket. Therefore, this is a great way to handle extra money set aside for groceries, gas or the extras.

Tracking one's expenditures is also very important. A lot of times people get in trouble because they don't know what they or their spouse have spent. When it is time to pay the bills, there's no money available.

Paying ones bills on time will be very important in rebuilding credit. After a bankruptcy, your past debt is wiped clean and you get the chance to rebuild your credit. Therefore, you need to make sure that you pay all your bills on time, every time. Work with businesses that report your payments to the credit agencies. This will ensure that on-time payments will be recorded by the credit agencies. This will benefit you greatly both in the present and future.

Bankruptcy is Not the End to a Healthy Credit Life

2008-09-03T19:39:00.003-07:00

Only file for bankruptcy as a absolute last alternative. Almost always you can settle your accounts for a fraction of the original amount owed. You can always most certainly deal with the creditors, before filing. Some creditors actually view a recent bankruptcy as a good potential client. Once a debtor emerges from a Chapter 7 Bankruptcy, he is virtually debt free. It's not just high interest rate consumer finance companies who are actively extending credit to bankrupt consumers.

One of the most important things to consider before filing bankruptcy is convert non exempt assets into exempt assets at least 90 days before filing. There are certain assets that are not protected from liquidation.

Bankruptcy can be a very expensive and time consuming process for everyone involved. Most creditors know that they are in a no win situation and usually have no choice but to take the loss, only to win from insurance companies.

Debts not discharged with a bankruptcy filing. Alimony and child support payments. Federal and state and local taxes (less than three years old for federal income tax). Student loans will never be discharged by bankruptcy because that too is owned by the Government. Criminal fines and debts for willful malice.

The two forms of Bankruptcy filing for the average consumer is a Chapter 7 total debt elimination and Chapter 13 the wage earner. Chapter 7 Bankruptcy is the complete elimination of all the debts and assets of the consumer. In all Chapter 7 Bankruptcy all assets are forfeited in order to try to satisfy all outstanding debts needless to say there is never enough assets to cover the debts (if there were, there would be no need to go bankrupt.

Bankruptcy and Consumers - Are the Bills Due?

2008-09-03T19:39:00.002-07:00

People experience financial difficulties all the time. Job losses, medical bills, divorces, plunging home values & general overspending on purchases can drive consumers into debt to maintain their lifestyles. Debt levels can become so large that they are difficult to manage & full repayment may not be entirely realistic. The rise in consumer debt levels has gotten a lot of attention recently - all of these purchases have to be paid for sometime.

Apparently, many people were using the credit afforded them by the credit card companies to fund their purchases. And while it may not be something that they want to do, people are sometimes forced to consider filing for bankruptcy when they run out of other options....

For some people, budgeting is a skill that was never fully learned in the first place. After all, did your high school teach a basic course in budgeting? If it's like most high schools, probably not. The credit boom of the last 20 years allowed people to buy new cars, big houses, and expensive college degrees.

Plasma TVs, home furnishings, and every other type of consumer item that high tech manufacturing and cheap foreign labor yielded was seemingly bought by the truckload. Case in point: Ever been in a Best Buy on a Saturday? Given the number of people buying things, you'd think they they are giving stuff away...

But, many consumers eventually need to face their financial situations when it doesn't look like it will be realistic to think they'll be able to service their debt loads. Regardless of whether their past purchases were necessary or not, principal amounts & fees can rapidly add up for people who didn't plan ahead accordingly or who experience job losses. And high levels of unexpected debt can result from extended hospital stays or prolonged illnesses.

Furthermore, the combination of these factors can add up too fast for some consumers...

So, how does bankruptcy play into all of this? When debt levels skyrocket & debts become unmanageable, some people start considering filing for bankruptcy.

After all, it takes money to buy things. And that money spent turns into debt if it's not paid off.

Bankruptcy was, in the past, used as a quick & easy way for many consumers to get a fresh start- debts were discharged and the world continued. However, in 2005, Congress passed the The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA for short) to deal with perceived abuses of the bankruptcy system. Apparently, this act was meant to expand the pool of consumers who file for Chapter 13 bankruptcy instead of Chapter 7.

Chapter 13 bankruptcies generally focus on getting the individual to reorganize their finances by designing debt repayment plans. This is in contrast to regular, Chapter 7, bankruptcy where the focus is more on the debtor being given a "fresh start" by discharging certain unsecured debts.

The question really is, did the consumers filing for bankruptcy these days spend too much during the credit expansion of the last 20 years? Will more of them turn to filing for bankruptcy because of the debts resulting from their purchases? Furthermore, have the full effects of declining home values in some markets & adjustable rate mortgage resets fully run their course?

The US may yet to have seen the last of these effects as we end the decade...

With 2008 expected to yield more than 1 million bankruptcies in the U.S. It seems likely that more consumers will be dealing with questions this year and in years to come if trends continue.

Rebuilding Credit After Bankruptcy - Going Bankrupt is Not the End of the World

2008-09-03T19:39:00.001-07:00

There are other things too that bankrupt individuals should do to be successful in rebuilding credit after bankruptcy. They include:

Opening savings accounts creates positive signs.
It is also suggested that opening credit cards after bankruptcy gives an opportunity to bounce back in your credit history. You need to buy goods on credit for a whole month and make repayments of the credit in cash within the due date.
If there are any debts that the person had before bankruptcy and are reaffirmed, then extreme care should be taken to pay them off in a timely manner.

Bankruptcy Types - What Are the Different Chapters and What Do They Mean

2008-09-03T19:39:00.000-07:00

Chapter 12 deals with the special cases of businesses that are vital to the community and have been in a family for a long time. Specificity family farmers and family fisherman.

The Current Bankruptcy Situation

2008-09-03T19:38:00.000-07:00

Is Debt Consolidation a Better Option Than Bankruptcy?

2008-08-25T08:30:00.002-07:00

There are many people in United States who look to file bankruptcy in order to get rid of some debts, which they are not able to pay off. They think that bankruptcy is one of the best method to get rid off debts being unaware regarding the adverse credit rating it may result in. As Bankruptcy usually results in low credit rating in the market, there is another option to get rid off existing debts, it is called Debt Consolidation.

There are many debt consolidation companies who negotiate with lenders on behalf of the debtors. Debt consolidation companies provides the option to debtors to consolidate all the existing debts into single loan amount and pay it off at reasonable or reduced interest rate without charging any sort of late fees and additional fees.

Some people think that Debt Consolidation Company is a loan company, which pay off their existing loan amount. These debt consolidation companies handle the loan on their behalf and deal with the associated lenders in order to get some concessions on the existing loan amount from the creditors, which provide great sign of relief to the debtors.

Debt consolidation companies helps in combining all the exiting debts in to single loan amount and provides a breathing gap to debtors to pay off the loan amount within stipulated period of time at lower interest rate as compared to what they are paying right now.

The monthly mortgage payments need to be made to the debt consolidation company every month on consistent basis, which will take the debtors away from financial crises. Any kind of default payments from borrowers side can make the things more worse as debt consolidation companies will not make monthly payments to the creditors from their side.

The Lending Rates have been cut to 3% , Give Debt Consolidation a chance before filling for bankruptcy.

Reliable Bankruptcy Information - Have it on Hand When You Need it Most

2008-08-25T08:30:00.001-07:00

It is usually wrong bankruptcy information, but some people actually believe that declaring bankruptcy will efficiently shove their debt under a carpet. Bankruptcy is not a situation anyone would want to be in, neither is it a condition to be taken lightly. Bankruptcy should only be filed when there are no other possible solutions, and this strictly means none at all. Also, having bankruptcy, or bankruptcy fraud, on your record is definitely not going to look good to future banks and creditors.

The best way to find out if you ought to file for bankruptcy or not is to hire a bankruptcy lawyer. A bankruptcy lawyer will be able to thoroughly assess your debt, credit report and all financial statements, This will help them determine whether you should file for bankruptcy or look at other options first. Under the new laws, you may not even qualify to file! So whether or not you qualify for bankruptcy, you would still need a lawyer's services and advice. Also consider that most people have found that they will save much more than the lawyer's fees in terms of what they save or what options they find as alternatives.

A qualified bankruptcy attorney will give you the best information available on bankruptcy and solve a lot of problems in the process. Many people believe that this is not the time to hire a bankruptcy lawyer and actually opt to handle bankruptcy on their own - this has been standard practice in the past, but that doesn't mean it's the best way to go. Especially with all the vast number of changes in bankruptcy law in recent years, using a qualified lawyer who is very familiar with the bankruptcy laws and especially the variations in your state, is definitely the most prudent way to go.

Actually, a lawyer can yield bigger savings than you think when filing for bankruptcy. Dealing with a huge debt, complicated assets issues and all related bankruptcy information may take some time to figure out, meaning you'll be in debt longer, possibly even incurring newer, larger debt. A bankruptcy lawyer will figure all that out really fast and have you financially back on your feet in no time. In the end, hiring a lawyer will actually save you more money than if you tried to make it on your own.

Do be aware that this is only valid if you get a good, reputable lawyer. You may choose a lawyer for their cheap rates, but that could mean they're not going to be of much help, or that they have "hidden" fees that come up and surprise you later on.

A good lawyer will offer alternate options, especially if you are not in dire straits with your debt as yet. These will include debt consolidation and credit counseling, which includes finding an agency that will make realistic payment arrangements on your behalf. Lawyers will also find several ways in which you can settle your debts, like taking out a new loan to pay off the existing debts. As this may be quite risky, having a bankruptcy lawyer work you through it will better guarantee its success.

A good bankruptcy lawyer will also advise you how to avoid bankruptcy for the future, which may be the best bankruptcy information available. This will include planning for the future, whether it's as simple as a personal guided route or the extensive planning of a company's financial structure and business plan.

Bankruptcy - The Good Vs the Bad - Is Bankruptcy a Good Decision For Me?

2008-08-25T08:29:00.002-07:00

When you are faced with a possible bankruptcy, you are faced with a terribly hard decision. Which can you handle better, the overwhelming stress of dealing with such debts or the fact of knowing you did not make it. How else can you possibly get out of this financial mess you find yourself in without ruining your good name or credit? Well, if your credit was that good, would you really be considering bankruptcy?

How ever you personally answer that complex question, a bit of advice is to seek out a non profit credit counseling service for help. They are professionals trained to help make these decisions with you. You are not in it alone but must seek out the help. They will not come find you.

It is true if you are looking to put your financial burdens behind you and receive a fresh start,then bankruptcy may be the right decision for you. However, the credit counselors that deal with creditors may be able to negotiate on your behalf and avoid the bankruptcy all together at least for the meantime.

Depending on your age, you may still have ample time to start over and re-establish the valuable credit you presently lack. If you do proceed with the bankruptcy, collection, foreclosure and repossession actions currently against you will cease once you file the petition. If the bankruptcy is approved, your assets that were in foreclosure will now be included in the bankruptcy and you will be allowed to make monthly payments. Bankruptcy is a good option for you if you don't have many assets which will have to be surrendered. Most states allow you to keep your primary residence, your car and other essential assets to earn a living.

If you are like many people, you may do all you can to avoid filing because it's difficult to deal with bankruptcy as it may make you feel like a failure. Your name will be in the court record and could may published in the newspaper.

You can only file for bankruptcy once every six years, so you will not have bankruptcy as a potential "escape hatch." Your credit history will be ruined for up to the next 10 years which will make it difficult to get credit. This is to protect your potential creditors from being taken by having the excuse of filing bankruptcy to get out of your debts.

The debts that you owe will be dealt with for the most part by the trustee. However there are some debts that no matter what you do will not be wiped away. The non-exempt assets you have will be sold to pay for as much as your debts as possible. Some of your home furnishings will be exempt but you could be forced to sell sentimental items. You credit cards will be deactivated and it will be increasingly difficult to be approved again for at least the next three years. Depending on your individual circumstances, bankruptcy could be a good way to get out from your debt, but there will be future consequences.

Removal of a 2nd Mortgage Through Chapter 13 Bankruptcy

2008-08-25T08:29:00.001-07:00

Chapter 13 Bankruptcy offers an important, and often unknown, option to consumers who have residential real estate mortgages. Namely, removing a junior lien holder or "2nd" from your debt. Since the value of real estate has decreased, a common complaint I hear is, "I cannot believe I am paying more than my house is actually worth."

If you purchased a home in the past three to four years and financed with 80/20 mortgages, or if you refinanced your home and took out a second mortgage, chances are you can completely remove that second mortgage and other junior liens from your home.

Imagine...file a chapter 13 Bankruptcy to eliminate all your credit card debt, reduce your car payments, cure the back payments on your first mortgage and now, entirely remove your second mortgage.

In addition, if your house value bounces back, that equity is yours to keep.

It is important to realize that the removal of a 2nd mortgage is available in a Chapter 13 bankruptcy only. The ideal candidate for this process has a 2nd mortgage on a home that is no longer appraised at or above the amount of the 1st mortgage. It is necessary to obtain comps for the property and an appraisal to establish your the fair market value of the home.

If the fair market value works, a motion to get court approval will need to be filed. The mortgage company may oppose this motion. This will then require an evidentiary hearing and perhaps an adversary complaint. If the court decides that the fair market value of the home is below what is owed on the first mortgage, the second mortgage is "stripped" from the home and the debt associated with the second mortgage is made an unsecured debt (essentially being treated like credit card debt). Typically, in a Chapter 13 bankruptcy, a small percentage of the unsecured debt is paid, if at all.

Once the motion is approved, you will need to make all plan payments (over a 3 to 5 year period) and obtain your discharge. Once the debts are discharged, the second mortgage is completely gone.

Understanding Bankruptcy in Business

2008-08-25T08:28:00.000-07:00

When a business files bankruptcy it can be for one of two reasons. One, they actually mean to liquidate and close their doors or two, they are buying themselves more time with their creditors to be able to pay off existing debts.

This second types leads us to the first question of a business bankruptcy. Is the said business worth saving? A second question is can it be done?

Depending on the financial problems a company is having they could qualify for one of four Chapters of Bankruptcy. These are; Chapter 7, Chapter 11, Chapter 12, and Chapter 13. The causes of the financial troubles your business is having will ultimately determine which of these chapters you should file under.

Of these four possible Chapters of Bankruptcy, two of them are so limited for businesses let us start there. Chapters 12 and 13.

Chapter 12 Bankruptcy petitions are reserved for individuals or businesses that meet the definition of a Family Farmer or Family Fisherman as determined by the US Bankruptcy Courts.

Chapter 13 is only for small proprietary business owners. Therefore, most companies will have to file either a Chapter 7 or Chapter 11 Bankruptcy Petition.

Before you proceed in choosing the bankruptcy your business is going to file you need to know for your self;

1. Can the business succeed?
2. Can your business turn a profit if given ample time?
3. Given ample time and lower payments can you pay your existing debts while avoiding accumulation of new debts.

Protecting Debtors From Failure to Hire - Promote Or Termination After Filing Bankruptcy

2008-08-14T23:43:00.001-07:00

The stigma of filing bankruptcy has stopped many debtors who rightfully and probably necessarily need to file bankruptcy. The truth of the matter is that filing bankruptcy is a right granted to all Americans by Congress and as such, is a protected right. As a protected right, it is illegal to discriminate against debtors as employees pursuant to both Massachusetts law, MGL 151B, and Federal Law (Civil Rights Act and Bankruptcy Code).

More specifically, 11 U.S.C.A § 525(b) provides, "No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt".

There has been several cases directly on-point with the forgoing. In one case, a Police department rule rendering a city policeman subject to dismissal for the filing of a petition in bankruptcy was unconstitutional under U.S.C.A.Const. Art. 6, cl. 2, since the rule, while intended to insure a reliable and respectable police force, had the effect of prohibiting a policeman burdened with staggering debts from obtaining "a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt", an effect in direct contravention of the stated purpose of this title. Rutledge v. City of Shreveport, W.D.La.1975, 387 F.Supp. 1277.

Chapter 13 debtor, a former chief appraiser for a county tax appraisal district, was fired from her job in violation of the Bankruptcy Code's anti discrimination provision where it was apparent from the totality of the circumstances that appraisal district's board of directors determined that debtor would be discharged because they were embarrassed that she had filed bankruptcy and that it had become public knowledge. In re McKibben, Bkrtcy.E.D.Tex.1999, 233 B.R. 378.

Pursuant to Federal and state law, it is also a violation of law to either refuse or fail to promote or hire an employee based upon their status as a bankruptcy filer. In one case, an employer's failure to offer participation to debtor in commission advancement program after debtor had filed for bankruptcy, when all other account specialists were offered participation, violated antidiscrimination provision of Bankruptcy Code, where determining reason for failing to offer participation to debtor was fact of his bankruptcy. In re Vaughter, bkrtcy.W.D.Tex.1989, 109 B.R. 229.

The forgoing article was drafted by Goldstein and Clegg, LLC, an Employment and Bankruptcy Law Firm.

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