The phone rings yet again. You look at the caller ID, and it’s another one of your creditors. You don’t answer the phone because you don’t have any money to pay them back. If this scenario sounds familiar, you may be considering bankruptcy. But exactly what does going bankrupt mean for your financial situation? Continue reading to find out. Bankruptcy may not be as bad as you thought, and there may even be ways to avoid it altogether.
Last year, over a million people filed for bankruptcy, according to the Congressional Budget Office, and the trend indicates that the numbers will keep going up. Some people blame the ailing economy and its resulting impact (less cash flow, loss of jobs, and so on).
Others point to the current low income rates, and the ease with which consumers today can obtain credit from lenders who cater to people’s falling credit scores. However, going bankrupt is not the cut-and-dried system it used to be, and many are falling victim to lawyers and unscrupulous organizations who offer bankruptcy advice for a small fee. Here’s some information on what and what not to believe when it comes to filing bankruptcy.
All debts are wiped out in Chapter 7 bankruptcy:
Certain types of debt cannot be erased, including student loans and alimony or child support payments.
You’ll lose everything you have:
While state laws vary, certain assets are protected, such as your house, your car, your clothing, and retirement plans.
You’ll never get credit again:
This myth is rapidly being debunked, as getting credit after going bankrupt becomes steadily easier. While you may not be able to get credit from an average lender, depending on your situation, you probably will be able to go through sub-prime lenders at very high interest rates.
It’s really complicated to file for bankruptcy:
Not really. Technically, all you have to do is fill out the paperwork, and you don’t need a lawyer — although it is recommended.
You can only file for bankruptcy once:
You can file Chapter 7 every six years, and you can file for Chapter 13 more often than that, but you can only have one case open at a time. However, this is definitely not recommended, since even one bankruptcy filing puts a black mark on your credit report.
There are two options under which individuals may file bankruptcy:
Chapter 7: You ask the court to wipe out your debts. However, in exchange you give up your property. As mentioned above, some debts are exempt, as are some types of property.
Chapter 13: You work with the court to set up a plan to pay back your debts and you have three to five years to do so. You get to keep your property and your creditors usually have to accept less than the full amount for repayment
Avoid credit agencies or lawyers who say filing for Chapter 13 is not really filing for bankruptcy. And if you decide to go with a bankruptcy lawyer, do your homework on the lawyer. Some lawyers have failed to show up in court, causing clients to lose their property and go through more headache.
Your bankruptcy filing will stay on your credit report for 10 years, as opposed to everything else, which goes away after 7 years. If you managed to keep your house, making mortgage payments on time will improve your credit rating.
If you don’t have a credit card, try a secured credit card, where you put down a deposit and receive a credit limit of a certain amount, then you pay the bill within the average 30 days. The focus needs to be on rebuilding your credit and proving to your creditors that you’re responsible and have learned from your past mistakes.
I think every person has, at one time, fantasized about filing for bankruptcy. It’s only natural when surrounded and hounded by oversized debt every day of our lives. And so, ingenuously, we daydream about the sudden splintering of obligations into invisible iota—something that can only occur when we file for bankruptcy.
The harsh reality of this lackadaisical fantasy is that, to file for bankruptcy, consumers must endure scores of processes and procedures, hire the legal services of an attorney, fill out mounds of paperwork, and sacrifice the entirety of their personal assets—to be liquidated into cash, which will, in turn, be dispersed to your various creditors. In short: bankruptcy is no hobo’s paradise.
However, sometimes debtors have no remaining possibilities other than to file for bankruptcy. In this case, a number of steps should be quickly and fully completed. The first of these steps is that consumers should, before petitioning the United States Bankruptcy Court for leniency, understand the alternatives to bankruptcy and the advantages to exhausting debt consolidation and credit counseling services beforehand.
Debt consolidation, not-for-profit companies exist (through the sponsoring of various credit card corporations) to provide debtors faced with seemingly insurmountable debt an opportunity to wipe the slate clean without filing for bankruptcy. By negotiating a one-time, lump-sum settlement, these credit counseling services can completely slash interest portions and, often, eliminate up to 50-70% of the principal. Creditors get very little if debtors wind up in bankruptcy court, so these corporations allow some degree of flexibility in payment if a debtor seems likely to turn to bankruptcy court.
The chief advantages of utilizing debt consolidation services over bankruptcy proceedings are: one, credit stains from bankruptcy last 10 years, while over poor performances are effaced after 7; and two, bankruptcy will strip away all personal possessions for dissemination to creditor, debt consolidation can sometimes avoid this sentimentally painful experience.
But, if you’ve exhausted the services of debt consolidation groups and still find yourself in financial hot water, contact an attorney to decide whether to declare bankruptcy. A large (strike that, colossal) amount of paperwork that holds a tenuous grip on your future needs to be completed and sent, in an appropriate manner and time. For this, you’ll need the aid and expertise of a bona fide attorney.
The trouble is not all debt is forgivable when you file for bankruptcy. For instance, student loans will not be dismissed after bankruptcy proceedings (meaning you will still have to repay the same amount). Alimony and child support are two other forms of debt that cannot be legally erased. Debt incurred through willfully malicious behavior also falls under this caveat—along with unpaid taxes. In short, unless you’re a pro at these types of things, you’ll need the advice of a well-trained lawyer.
Finding a good bankruptcy lawyer can, of course, be tricky. But, remember: The majority of initial consultations and meetings are free, so, if you are uncomfortable with a particular attorney, or just don’t get along with him or her, move on to greener pastures—even if it ends up costing you more green, it’s worth the peace of mind. And if you find the lawyers fees to be a little too rich for your blood, at least this time, when you find yourself in debt again, you’ll know how to file for bankruptcy yourself. That’ll teach ‘em.
While some people see filing for chapter 7 bankruptcy as a degrading end to a good career and a monetarily secure lifestyle, filing for bankruptcy can actually be the first step on the path to starting again and getting your finances back on track. Filing for bankruptcy is a long process, but it is absolutely necessary for some individuals and businesses that simply cannot handle their debt.
If you’re considering filing for a chapter 7 bankruptcy, you’re not alone. Although it’s better to not get into debt in the first place, filing for bankruptcy is sometimes the only way to relieve yourself of debts you have no hope of ever repaying, although your creditors may not appreciate it.
Once you have filed, your creditors, by law, must stop calling or trying to collect money from you in any way. When you file for bankruptcy, you are allowed to keep some of your assets, depending on the state in which you live. Assets such as real estate, cars, and electronics that are not exempt by the state will become the property of your bankruptcy trustee.
There are many reasons people file for chapter 7. The most common reason is simply overwhelming debt. Often this is caused by irresponsible money management, but it is also commonly caused by high medical expenses, legal expenses, or unemployment
Filing for a chapter 7 bankruptcy should usually be done with the assistance of a lawyer, due to the complex nature of the paperwork you must deal with, and the amount of legislation surrounding the issue. There are two ways to become bankrupt. You can either file a petition for bankruptcy yourself or, in rare cases, a creditor can request that a court order you to file for bankruptcy.
The first step to filing for bankruptcy is to file your bankruptcy request with the court. Once the request has been filed with the court, a temporary order will go out to all of your creditors to stop garnishing your wages, pursuing legal actions, or trying to collect on their debt in any way. If the court has approved your application for bankruptcy and all your creditors have been notified, then a meeting is arranged in court between you and your creditors.
Although your creditors may or may not attend the meeting, you are required to answer, under oath, questions about your assets, your debts, your credit, and your available insurance. This meeting is presided over by your bankruptcy trustee who will also liquidate all your non-exempt assets.
The purpose of this meeting is to establish that you have notified the court of all of your assets and debts and that you understand the implications of filing for bankruptcy. If your creditors attend the meeting, they are also allowed to ask questions of you. Once you have gone through the proper procedure, your bankruptcy trustee then sells your non-exempt assets in order to pay off your creditors. Finally, once your assets have been liquidated, the creditors write off all your debts.
Although filing for chapter 7 can be difficult, it does not mean that your life is over. Although the bankruptcy does remain on your credit for ten years, in actuality this does not differ much from other credit blemishes, which stay on your credit for a full seven years. And you are almost certain to be able to get some form of credit again shortly, although perhaps not at the interest rate you would like. But hopefully you’ve learned from your financial mistakes, and plan to pay off the full balance of any credit cards every month in the future, in which case the high rates won’t become an issue.
Businesses who want to reorganize the scheduled payment of their debts to try to get back on their feet generally file for a Chapter 11 bankruptcy, where the management still plays an important role in the company under the supervision of the bankruptcy court.
Chapter 11 bankruptcy is most commonly filed by businesses. Under this plan, businesses are able to restructure their company’s debt and even the company itself sometimes. The current management will continue to run all of the day-to-day operations, but the bankruptcy court has to approve all significant business decisions. This kind of bankruptcy allows a business to restructure its debt and get out from under certain contracts.
Most companies choose this type of bankruptcy because they can still run their business while the bankruptcy process is taking place. Many times, the company can successfully figure out a plan where they return to profitability after the bankruptcy.
A company can also file for bankruptcy under Chapter 7. A business may choose this option if it intends to stop all operations and just go completely out of business. Its assets will then be liquidated by the bankruptcy court to pay off the debt.
When a company files for Chapter 11 bankruptcy, and if the company is successful in reorganizing, you may be able to exchange your old stocks or bonds for ones in the new company. Your new stocks or bonds will probably be worth less than the original ones, but under Chapter 7 bankruptcy, the stock of the company is generally worthless. Investors should be very cautious when buying common stock from companies under Chapter 11 bankruptcy because it is risky and may lead to financial loss.
When a company files this type of bankruptcy, the U.S. Trustee (the bankruptcy arm of the Justice Department) appoints one or more committees to represent the interest of creditors and stockholders and works with the company management to develop a plan to reorganize finances and try to get out of debt.
The plan must then be accepted by the creditors, bondholders, stockholders, and the court. However, the court can confirm the plan on its own and disregard the creditors’ or stockholders’ votes to reject the plan if the court finds the plan to be reasonable.
If you have stock or bonds in a company that is undergoing this type of bankruptcy, you should get your information about the bankruptcy from the company itself. You may be asked to vote on the plan or reorganization, but sometimes stockholders don’t get to participate in the vote. You should be aware that you may receive only a partial return on your investments, or may receive no return at all.
Since a Chapter 11 bankruptcy allows the company a chance to reorganize debts and get back on its feet, it is generally the type of bankruptcy most companies file for. Both Chapter 7 and 11 bankruptcies hurt shareholders, but Chapter 7 means that the company is liquidating completely. Avoiding bankruptcy completely is, of course, the best course for a company or individual to take, but if a business must enter into bankruptcy, the best option is to choose one that allows the management to keep some control of their company and attempt to put it back on its feet.
The majority of people filing for a chapter 13 bankruptcy are not the wealthy trying to cheat the system. Statistics show that the average person filing for bankruptcy earns a modest $22,000 per year. There are many who have suffered a significant period of unemployment before filing. Single mothers trying to pay the bills compose the largest portion of bankruptcy filers. So what are the implications of chapter 13 bankruptcy for these people?
Any person can file for chapter 13 bankruptcy. They agree to pay back some of their debt through selling an asset. This option depends on the circumstances, and each case should be discussed with an attorney. In order to file this type of bankruptcy, the debtor must have a regular source of income.
Of course, the definition of “regular source of income” is somewhat loose and does not have to mean a regular job. It could include a home business, pension income, disability, welfare, or unemployment benefits. It also includes child support benefits, or spousal income.
In order to be allowed to file this type of bankruptcy, a debtor must have no more than $250,000 dollars in unsecured debt (this is credit card debt, hospital bills, etc…), and there typically can not be more than $750,000 dollars in secured debts (car loans and mortgages). Now that we have the basics on bankruptcy here are a few significant things to remember:
Chapter 13 can stop a house from foreclosing, and help you to make up all the missed mortgage payments and keep the house. Another benefit of paying off taxes through your bankruptcy repayment plan is to stop the interest from accruing on the tax debt.
When you file your bankruptcy papers with the court, creditors are no longer allowed to call you. An automatic stay goes into effect. This prevents your creditors from demanding what you owe them. For a set amount of time, creditors cannot legally take your wages, empty your bank account, go after your car, house, or other property, or cut off your utility service or welfare benefits.
Chapter 13 is often used to buy time. An example of this is when you are behind on your mortgage payments and your home is going to be foreclosed on. By filing bankruptcy papers, you can try to sell the house before the foreclosure.
There is a good amount of discipline involved in successfully completing this type of bankruptcy. For the duration of your case, typically three to five years, you have to live under a strict budget. The court will not allow you to spend money on anything non-essential.
The majority of debtors will not complete their repayment plans. Many who file believe they will complete their plan. Around 35 percent of people who file for Chapter 13 will complete their plan. There are some who will drop out early in the process and never submit their repayment plan to the court. By being realistic with your budget, you should be able to make the payments and complete your plan.
Often the courts will have the payments deducted from your wages during your case.
Bankruptcies can remain on your credit file for up to ten years from the day you file, but most of the time the length averages to about seven years. The longest any other credit problem can remain on your record is seven years.
Once the case is over there are steps to take for improving your credit. There are many useful programs established by bankruptcy courts. When you pay off around 75 percent or more of your debt, you can attend money management seminars and apply for credit from certain local creditors.
After filing a Chapter 7, it’s quite a task to redeem yourself in the eyes of creditors. It’s also quite easy to fall into debt once again when using credit cards to re-establish credit! Avoid this trap by applying only for secured credit cards after bankruptcy.
The decision to file Chapter 7, or to declare bankruptcy, isn’t an easy one. A bankruptcy severely damages one’s credit rating for years, and it also carries a certain stigma that many people would rather avoid. However, the option is based on a principle of forgiveness that literally saves lives.
Rather than spend a lifetime in a self-made financial prison (or in a literal debtor’s prison), serious debtors can wipe their slates clean in exchange for several years of monetary inconvenience.
For example, obtaining a loan (particularly for a mortgage), is difficult enough for the average consumer. For one who has recently declared a bankruptcy, it’s absolutely impossible. While obtaining credit cards after bankruptcy is becoming easier and easier, more major endeavors like car or home loans remain completely off limits to the bankrupt—and for good reason.
Lenders would be egregiously irresponsible to hand a substantial amount of money over to someone who’s proven him or herself unable to manage and pay off debts. Thus, it becomes necessary for that person to redeem him or herself in the eyes of potential creditors by taking advantage of the few avenues that are open at this point. What are those avenues?
As noted, obtaining credit cards after bankruptcy is not impossible—and they are a boon to those who must slowly and painstakingly rebuild their credit. Who offers credit cards after bankruptcy? Plenty of creditors take advantage of the plight of the newly bankrupt, offering what can become either a road to credit redemption or a path leading right back to unmanageable debt. The road forks when the consumer must choose between secured and unsecured credit cards.
Unsecured credit cards after bankruptcy are much like those offered to new college students who have no credit to speak of. They have extremely low credit lines—usually less than $300, and extremely high interest rates and finance charges. Thus, though they don’t allow a lot of initial spending, they can still quickly lead one back into the black.
Secured credit cards, on the other hand, are a much safer, saner option for the recently bankrupt. They work a bit like debit cards in that, in order to activate a new account, a consumer must deposit a sum of money into that account. This sum represents the consumer’s credit line.
What’s the point? This is the sort of question that might be asked from a less credit-savvy standpoint, and a standpoint that may well lead its holder into piles of debt. Ideally, credit should not be used as a blank check or as a stand-in for actual means. It is, theoretically, in place in case of emergencies, medical or otherwise (which can mean unforeseen and untold expenses). Secondly, it is there as an assurance to lenders, who take great risks by fronting thousands of dollars to would-be homeowners, for example.
A secured credit card, while likely unable to cover life’s emergencies, affords one the opportunity to show responsible credit card use—that is, minimal use that does not result in high, rotating balances. It offers the chance, then, to rebuild credit to the point where normal credit lines and loans are once again obtainable. Additionally, secured credit cards after bankruptcy provide consumers with the means to purchase utility services such as gas and electricity. (Not only is this usually a necessity, it’s another way to help re-establish one’s credit standing.)
Secured credit cards offer the advantages of credit and simultaneously keep the consumer from falling into its traps. If you’ve recently filed for bankruptcy, think about the path you’d like to take. Old habits die hard, and with the opportunity to live above your means, you just may end up under the pile you thought you’d dug yourself out of. Without that opportunity, however, old habits and thinking patterns must and will change for the better. So will your credit standing.
Credit counseling is a smart solution to poor spending habits. Taking time to evaluate your spending habits and set healthy goals for yourself will help you to make the most of your money. Here are some tips to get you started.
Here are some of the best steps to keep tabs on your finances. A financial planner can provide credit counseling. When getting started, you should consider the following:
Having a budget is one of the best ways to get a handle on your spending and make sure your money is accounted for. If you keep track of your spending, you will be happier in the long run. The best credit counseling is to see where your money is going. Having a budget is also a way to see how much you’re saving. Creating a budget with help you get a grip on your spending habits.
Three steps to follow when creating a personal budget:
Computer programs like Quicken or Microsoft Money have the capabilities to generate a budget for you. You can also download your bank account information into your software program to figure out your expenses. These tools are great if you cannot afford a financial planner.
Drawbacks:One drawback to monitoring your spending by computer is that it encourages overzealous attention to detail. Determine which aspects of your expenses need to be focused on such as rent, bills, and loan payments. Once you’ve determined your priorities, concentrate on those particular categories and worry less about other aspects of your spending.
It’s easy to get cash and spend it fast and then wonder where it all went. Some people think of cash as free money because they don’t record what they spend. Part of your credit counseling may involve keeping your receipts to examine where your money is being spent. Also, you can keep a record of expenditures by entering the information into your checkbook or computer. You can also limit your visits to the ATM machine.
All credit counseling seminars and financial planners will tell you that spending more than what you have is a dangerous practice. Controlling your spending helps you to avoid large amounts of debt. If your income does not cover all your costs, you should consider what expenses are expendable. Try comparison shopping or taking advantage of coupons or sales to cut down on costs.
Getting a bankruptcy loan, sometimes known as a consolidation loan, can be a wise alternative to filing for bankruptcy. It can save people from dealing with the black mark of bankruptcy on their credit for a full ten years. Bankruptcy is not the best option for everyone, and getting a consolidation loan, if possible, is nearly always preferable.
Sometimes filing bankruptcy is the answer, sometimes it’s not. Bankruptcies can relieve a family of a lot of debt. Sometimes, however a bankruptcy cannot be filed, either because the individual or family in question has filed bankruptcy previously, or because the request to file is turned down by the court for another reason.
Bankruptcy & Loans Alternative found at NationalDebtRelief.com offer helpful information concerning bankruptcy and consolidation as an alternative. They list some of the things that are not allowed to be discharged:
If your debt consists mostly, or even substantially, of any of these items, don’t file. Consider a bankruptcy loan for consolidation.
Remember, filing for bankruptcy has a big downside. A bankruptcy remains on your credit for up to ten years, while the worst credit error other than bankruptcy can only remain on your record for up to seven. Your credit record is the single most important factor in determining what credit you can obtain, and what the interest rate on that credit will be. If you file a bankruptcy, kiss any chances of purchasing a home or car in the near future good bye
“So if I can’t eliminate my debt,” you may be asking, “what can I do?” Reduce your monthly debt payments by up to 50% by consolidating your bills into one monthly payment with a lower interest rate, through a bankruptcy loan. If any of your debt is in the form of credit card bills, your rate is almost certainly over 10% and possibly over 20%.
You’ll be surprised how quickly that pile of debt shrinks when the interest rate is significantly lowered. Get out of debt, and do so in a timely manner. Remember, the sooner you pay it off, that’s that much less time spent paying interest into your creditors’ pockets. You have better things to do with your money.
Here’s a little information on Chapter 7 bankruptcy and Chapter 13 bankruptcy provided by 1 Bankruptcy & Loans Alternative:
As mentioned earlier, you can’t dismiss back taxes, student loans, alimony, or child support
Standards are going to be raised to meet those chapter 7 requirements
The bankruptcy will stay on your credit file for a long time (an average of 7 years)
Expect creditor meetings and going into a court room
Your finances will be controlled by a Trustee
Those attorney’s fees, court fees, and filing fees will have to be paid up front
This credit stain will remain on your report for up to 10 years
Knowing all of this, do you still want to file for bankruptcy? Perhaps despite all of this, bankruptcy is still the option for you. If not, look into getting a bankruptcy loan for consolidation. Could it hurt? Bankruptcy could.
You might think that applying for a loan is a hassle, involving too much paperwork. Filing a bankruptcy requires much more paperwork, and the process is so complex that you’re usually advised to seek the aid of a lawyer. You may believe that your credit is already too bad to find a good loan. But creditors all over are lowering their standards, as more individuals slide into credit problems. And if you think your credit is bad now, imagine what it would be like after a bankruptcy. Hopefully you can get a bankruptcy loan and avoid the trouble that comes along with filing.
Is it possible to obtain credit after bankruptcy? Can you ever achieve a decent credit rating again? Can you buy a home, or use a credit card? These are just a few of the many questions you may be asking yourself if you have recently gone through a bankruptcy. We’ll do our best to answer your questions, and provide you with practical advice on beginning the long process of rebuilding credit.
Bankruptcy damages your credit. Everyone knows that. But, according to the Moran Law Group, “Those considering bankruptcy frequently worry that they will never get credit after a bankruptcy, or that it will be 10 years before they can get credit. Neither is true.” So what exactly is your credit like after bankruptcy?
Credit after bankruptcy is not as bad as many people believe. Since individuals that end up declaring bankruptcy usually have many late payments before bankruptcy, their credit after they file for bankruptcy is often better than it was before. Objectively, someone who has just declared bankruptcy and had all their debts discharged, is a much lower credit risk than someone who is behind on some payments and has defaulted on others.
Of course. In fact, you can achieve perfect credit in the distant future, since a bankruptcy is taken off your credit after ten years. Many people make a big deal about the fact that it remains on your credit for so long, but any negative record that is added to your credit report may remain on your record for seven years, so the ten that a bankruptcy lasts isn’t really that much longer, and you no longer have your outstanding payments. Obtain credit cautiously, and make your payments regularly and on time to avoid these problems.
Yes. Today’s competitive lending environment ensures that just about anyone can obtain loans and credit cards, even with poor credit after bankruptcy. In fact, you may be able to keep one of the cards you had before bankruptcy, if you didn’t have unmet payments on it at the time of bankruptcy.
You are under no obligation to notify them of your bankruptcy, although they may find out on their own. You will probably, however, find that it’s not hard to obtain credit after bankruptcy, and that the credit card companies are soliciting your business just like always, although probably not at the rates you would like.
Of course, if you don’t carry a balance the rate won’t matter (and in order to avoid getting right back into debt, you should pay your balance in full every month). Making your credit card payments regularly is one of the best ways to repair your credit.
You can certainly buy a home — the main problem will be getting a reasonable interest rate after your bankruptcy. However, if you wait for a couple of years after the bankruptcy, your rate may not be affected all that much. Studies show that consumers are able to qualify for a loan on the same terms as if they had not filed bankruptcy a mere 18-24 months after a bankruptcy discharge.
You can also improve your ability to get a good mortgage by convincing someone with good credit to co-sign on the loan with you. Only do this if you are certain you will be able to repay the loan. You don’t want to ruin a friend or family member’s credit along with your own.
You can dispute any inaccurate information that appears on your credit report. The credit reporting agency will investigate, and make any needed changes within thirty days. You may even want to contact a credit counseling service. Many of these are non-profit organizations provided by your state. They can help you repair your credit, and more importantly, help you repair the behaviors that damaged your credit in the first place.
Since bankruptcies do stay on your credit report for ten years, the best strategy, of course, is to avoid bankruptcy entirely. Credit counseling agencies can help you with that, if declaring bankruptcy is something you’ve been considering. But if you’ve already declared bankruptcy, your situation is by no means as hopeless as you probably believe. You can still obtain credit, and your credit after bankruptcy is far from irreparable.
It doesn’t really make much sense that a person who is filing for bankruptcy is expected to pay at least a $1,000 fee (many bankruptcy lawyers require this amount for services).
Believe it or not, there are ways to file for bankruptcy without having to use bankruptcy lawyers, and without muddling hopelessly through the paperwork. All you need are the right tools.
How can a person filing for bankruptcy possibly afford hefty fees charged by bankruptcy lawyers, especially when they don’t yet know whether their bankruptcy will be approved? If you want to get through bankruptcy court without extra fees, consider doing it yourself.
First of all, you might want to know that the law does not require you to hire a bankruptcy lawyer. In fact, most personal bankruptcy cases are routine and can easily be handled without bankruptcy lawyers; more severe cases may require them.
There are several things you need to understand before you go to bankruptcy court alone. You will have a lot of organizing to do. The courts will send you general information about the process, so as long as you read all the fine print carefully, you should be fine.
There are several procedures that are generally left to bankruptcy lawyers to handle prior to filing, depending on which chapter you are filing for. One example is the handling of your creditors. They inform them of your pending bankruptcy. This should be easy for you to do though, since you have probably gotten used to handling them by now. If you quail at the thought of contacting your creditors, compare the annoyance of contacting them against the annoyance of paying a lawyer a $1000 fee.
You will also need to provide the court with a detailed list composed of each creditor’s name and address, the account number and the current balance of the debt, because it is now up to you to get your bankruptcy notices to each one. Creditors who do not receive this because of an incorrect address or account number may not be included in the bankruptcy, thus you will still owe them money.
You must then list all of these creditors on your bankruptcy petition, even those whose debt you plan to reaffirm; you cannot pick and choose against whom you file bankruptcy. If you fail to list a creditor, it is your responsibility to add the creditor to your bankruptcy schedule. If a creditor finds your name on the bankruptcy database before you provided them with notice of your bankruptcy, they can close your account for not including them.
This is just the tip of the iceberg; there are plenty of other tasks and procedures that bankruptcy lawyers normally deal with during and after you file for bankruptcy. But if you cannot, or refuse to pay for a lawyer, there are resources available online (after all, what isn’t available online) that can help you prepare your bankruptcy on your own.
Prices for do-it-yourself bankruptcy software run anywhere from $50-$200, but either way, it’s cheaper than what most specialists charge. What’s great about bankruptcy programs like these is that it makes sure that you enter only the information that is needed for your case; when you are done entering your bills and other financial information, the software automatically performs all the calculations and alerts you if anything is out of place.
If you feel a little wary of compiling bankruptcy documents online because of security concerns, consider purchasing a bankruptcy kit. These include forms that are purchased and downloaded online for you to print and fill out at home.
Most of these include informational guides to help you determine which chapter to file for, a preplanning guide, tips on what and what not to do before, during and after your bankruptcy, an appendix listing federal exemptions and property exemption statutes in your state, and bankruptcy forms and schedules complete with instructions.
While these tools will definitely make things easier for you, keep in mind that many of these websites still recommend that you have a lawyer or specialists prepare these documents for you.
Maintaining a healthy credit record can be a difficult, yet serious task. What you purchase or invest in can improve or damage your credit record. If your record falls into the latter category, going on to bankruptcy court may be the answer for you.
The average consumer was hailed savior of America ’s economic slump that was experienced soon after Sept. 11, 2001, as people everywhere were encouraged to put money back into the economy. Now, as the economy is improving, many of those people are now dealing with the consequences of their over-zealous shopping. Americans are becoming more concerned about their financial fate now more than ever, and with good reason. There are a couple of choices when it comes to clearing your name of unwanted debt: debt consolidation services, or filing for bankruptcy and going through court.
Debt consolidation is a smart choice for those whose level of unsecured debt is feasibly reducible. A debt consolidation program is designed to combine your outstanding bills into one affordable monthly payment that can eventually lower your bills by as much as 60 percent. This not only does away with pointless minimum payments, but it also gets the creditors off your back. No more nasty phone calls!
Bankruptcy court, on the other hand, has its own advantages and disadvantages when compared to debt consolidation. For those over their heads in debt, bankruptcy may be the only way out because of its ability to actually eliminate debt rather than just reduce it. This legal process allows individuals who are unable to pay their bills and other debts to have some or all of their debts dismissed or sorted out. This may be necessary for individuals who are unemployed, or for people who are drowning in excessive medical bills or consumer debt.
The repercussions for bankruptcies are not light, however, and going to bankruptcy court is anything but fun. First, you must file a petition for the court. A trustee, or a person who will be taking care of your case and your creditors, is then appointed to you. Creditors are prevented from seizing your assets and your bank accounts. Most of all, bankruptcy can remain on one’s credit report for up to ten years. During that time, yards of red tape strictly regulate what you are allowed to purchase. Likely your expenses will be regulated to the bare necessities, preventing you from making investments such as a home or a car.
There are two types of bankruptcies to choose from: Chapter 7, commonly known as “straight bankruptcy,” and Chapter 13, or “reorganization bankruptcy.” The more common of the two is Chapter 7 because its purpose is to liquidate all debts, by both using the debtors existing assets and by discharging those debts that cannot be paid even after assets have been considered. Don’t be fooled, though — even in Chapter 7, some items can be non-dischargeable and must be paid off by the debtor. These include child support, student loans, and taxes.
There are different types of assets and debts. Exempt assets are those the debtor is allowing to keep after the bankruptcy court proceeding. Equities in a person’s home or vehicle, some clothing, and a small amount of other personal items are considered exempt property. Everything else is considered non-exempt and will be collected and sold. A secured debt is when the creditor holds a part of some of the debtor’s property until the debt is paid. Secured debts will get paid off before non-secured debts, which will be the last to be paid.
When a debtor wants to pay off his or her debts within a period of three to five years, he or she will file for Chapter 13. This proceeding is good for those who have a fixed income and are able to put aside some of their money towards paying towards their debts over a period of time. However, one must still go through similar court proceedings, which include declaration of one’s assets and liabilities, a confirmation test that compares the amount creditors will get back and makes sure that the creditor would get at least the same amount if the debtor was filing for Chapter 7. The debtor may also give up some of his or her secured property to the creditor as part of the plan if he or she has fallen behind on payments.
There are other important differences between Chapter 7 and Chapter 13 bankruptcy. Contact an attorney with experience in the practice of bankruptcy court law to determine which type is best for you.
Did you know that the first bankruptcy laws were repealed three times before finally being accepted at the turn of the 20 th century? Here is more bankruptcy information to help those needing financial help.
The first official laws regarding bankruptcy were passed under Henry VIII in 1542. During this time, becoming bankrupt meant being labeled a criminal and being subjected to criminal punishment. Today the repercussions of bankruptcy are not nearly as harsh. Every day hundreds of people face serious financial dilemmas and seek bankruptcy information in an effort to get out of considerable amounts of debt. But it has taken over a century for this legal procedure to gain acceptance among American society.
After the first bankruptcy laws were repealed in 1803, 1843 and 1878, the Bankruptcy Act of 1898 was finally passed. It gave companies in distress the option of being protected from creditors. This and other acts helped many companies through the Great Depression. Still, these early laws were rigid and pertained primarily to businesses. In 1978, another bankruptcy reform law was passed that made it easier for both businesses and individuals to acquire bankruptcy information and to file for bankruptcy.
During the eighties and nineties, other bankruptcy reforms relieved bankruptcy lawyers of some power, due to the fact that the Supreme Court believed these judges’ powers overlapped the powers of certain branches of government. This reform also gave family farms the option to file for bankruptcy as well. Since then, there have been more use for examiners and mediators in bankruptcy court cases and provisions have been implemented to ensure proper proceedings. In 1997, an extensive review of bankruptcy reform was completed by the National Bankruptcy Review to assess its effectiveness. Today, bankruptcy has been transformed from a form of criminal punishment into a user-friendly financial tool used by many individuals and businesses, particularly since Sept.11, 2001 when many people were faced with tremendous financial loss.
This is not to say that bankruptcy is a get out of jail free card. Bankruptcy is a last-resort option for those who are drowning in debt.
For more bankruptcy information to explain the pros and cons behind filing for bankruptcy, do some research on the Internet or in your community. The type of bankruptcy information you obtain will depend on where you get it from. Try finding a neutral source such as a consumer guide or a law school library. As most of us know, bankruptcy law consists of developing a plan that allows you, the debtor, to resolve your debts through the supervised division of your assets among your creditors. Certain bankruptcy proceedings can allow you to stay in business and use generated revenue to resolve your debts. Bankruptcy laws can also discharge certain debtors from financial obligations after their assets are distributed, even if their debts have not been paid in full.
Because filing for bankruptcy is known for being hopelessly complex and confusing to the average person, it is recommended that you consult a bankruptcy lawyer for bankruptcy information to make sure you are doing everything correctly.
Before you invest in a bankruptcy lawyer, however, there are many useful websites that can help you by providing useful, preliminary bankruptcy information. Online bankruptcy libraries offer articles, books, state-by-state bankruptcy laws, recent bankruptcy court decisions and much more related to bankruptcy proceedings.