Bankruptcy Questions Answered

Cornie Herring asked:


Bankruptcy has become a chosen route for more than 1.8 millions Americans to get a debt relief from their overwhelming debt problem, according to the reports found. However, filing for bankruptcy should be avoided seeing it drawbacks that may cause bad impact on your credit history. You should not choose to file a bankruptcy just get a debt relief before you explore other alternative options. There might be a solution to your debt problem other than bankruptcy filing.

Drawbacks of Bankruptcy
Why do you need to avoid bankruptcy? If you have read some of debt relief guides, you will find that most of these guides don’t offer bankruptcy as the solution for debt relief. This is because its drawbacks follow you for years. A bankruptcy filing will be remarked in your credit report for 10 years. During this time, you may find hard to obtain loans, mortgages, and credit cards. If you really need a credit during the 10-year period, you may need to go for secured loans which may be more expensive to acquire. Even you are offered with an unsecured loan, you need to pay much higher interest rate than those offered to people with clean credit history; this is to compensate the risk faced by the lenders.

Obtaining attractive low interest-rate unsecured credit card may be impossible because most credit card companies reject applicants who have filed a bankruptcy. You may only be able to get secured credit card which the credit limit depends on the amount you deposited to secure the card. Moreover, secured credit card normally has higher annual fee and the issuer may charge an application fee.

In filing a bankruptcy, all your assets may need to be liquidized for debt payment. However, under the Federal law, some of your assets needed to support you and your dependents can be exempted. Such exemptions may include a portion of your IRA account and other retirement accounts which are subjected in case by case basis. Basically, you will lose most of your asset if you choose bankruptcy as your debt relief solution.

Alternatives to Bankruptcy

Since bankruptcy should be avoided, then what are the alternative options to resolve your debt problem? There are a few options to go for in getting a solution to resolve your debt problem. If you are out of your mind and do not know what can be done other than bankruptcy filing, then try to approach a credit counseling agency and get them to propose to you a few potential debt relief options that tailors to your financial situation.

Alternatively, you can also try to negotiate a payment plan with your creditors. Besides that, you can also get helps from professional debt-negotiation company to perform the negotiation on behalf of you. Most creditors would prefer to get some of the money you owe them rather than get nothing if you file a bankruptcy to erase the entire debt. So, your creditors may accept what you may offer to them through the negotiation process.

Summary

Bankruptcy filing is an extreme option that may seriously impact your future credit worthiness. You should avoid this option by exploring other alternatives for a better debt relief solution.



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Roilee Mandeville asked:


There are many consumers who are aware of their legal option to use bankruptcy as a means of eliminating their debts. However, majority of them are uncertain of the costs involved on how to declare bankruptcy. This is because there is confusion about the different ways to do it. To many, they thought there is only one way of doing it. In this article, I will answer some of the most frequently asked questions about filing consumer bankruptcy.

Q: What is the easiest method to file bankruptcy?
A: Hiring a bankruptcy lawyer is the most convenient way to file bankruptcy. The lawyer will handle all the intricacies and complexities of the bankruptcy procedure. Whether you are planning to file Chapter 7 or Chapter 13, a good lawyer can guide you to the proper course of action. Unfortunately, this method is also the most expensive. You need to be able to screen legal professionals to your advantage if you want to get the best deal. Most attorneys these days offer a free initial consultation that you can take advantage of.

Q: I’m short on money, is there a fixed cost solution?

A: If you are planning to file Chapter 7 then you are in luck! Bankruptcy preparation services will be happy to take your case. What they will do is to ask you to complete an ‘intake form.’ They will evaluate and prepare the bankruptcy petition for you. Some of the service providers have full-time lawyers to evaluate your case while others don’t have any legal professionals at all. After getting the paperwork done, you are the one to represent yourself in the bankruptcy court. This makes half of the solution a do-it-yourself. Always consult your local bankruptcy court to confirm that your state allows for such services to prepare your documents.

Q: I can’t afford a lawyer, is there a cheaper solution?

A: The new bankruptcy law doesn’t require you to hire a lawyer. You can file bankruptcy yourself as long as you can show ‘due diligence’ to the court. This method of personal bankruptcy filing is called ‘pro se’ or self-help method. There’s a great deal of learning curve in educating yourself with the latest procedures in bankruptcy laws. You can make this difficult task easier by buying an up-to-date bankruptcy book. You can also use a bankruptcy kit with completed samples as your guide. It’s important to make sure that you are using the latest version of any bankruptcy software that you are planning to buy. From time to time the Federal Bankruptcy Court updates the official forms.



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Legal Helpers asked:


In bankruptcy, the attorney assigned to the case is responsible for making sure all information provided by their client is accurate. They usually do this before filing any and all paperwork. However, they often miss something and simply take their client’s word for the truth. Once the case is filed, a bankruptcy trustee will go over all information supplied by the client, looking for inaccuracies or reasons to believe fraud may be involved.

The role of the trustee in bankruptcy is to protect creditors are treated fairly and to be sure all non-exempt assets are sold for the highest price. The money raised is then distributed to the creditors in accordance with their claims and the trustee in bankruptcy helps make this happen. They go to creditor meetings and can discharge debt if fraud is found on the creditor’s end.

With a Chapter 13 bankruptcy filing things are different. The trustee’s job is more administrative. This is because there are no assets to liquidate. They make sure the court approves the new payment plan. The trustee will often accept payments from the client. They then distribute them to the creditors, according to the court approved payment plan.

Many people use bankruptcy because they need to be relieved from the financial burdens that they are unable to take care of now or in the future. Unfortunately, too many people may have taken advantage of the bankruptcy system, and in May of 2004, the Bankruptcy Legislation Amendment Bill was passed. This bill was designed to stop those that were using the bankruptcy system as a quick way out of paying their taxes, although they were financially able to pay them. There may have been very few people that were taking advantage of the ability to not pay their taxes; however, the ones that are taking advantage have had debts that were a considerable amount of money. Since the bill was unfair to those that were in actual financial debt, there was an amendment in December of 2005.

This amendment allowed for those that truly needed to be relieved of their burdens to conduct a means test, which would evaluate them to see if they were in true need of filing bankruptcy. This includes taking a debt counseling course, in which the filer must pay for themselves. If after completing these requirements you were considered unable to file for the Chapter 7 bankruptcy, you still have the option of filing for Chapter 13 bankruptcy. Filing for Chapter 13 is more difficult, but can be a necessity if you are in desperate need of relief. With these new laws in effect, those that need help can still receive it, while those that are using it for avoidance, can no longer do so.

Filing for bankruptcy can be quite frightening. When filing for bankruptcy there are many rules you must follow exactly in order. If you don’t, you won’t correctly file your bankruptcy. In addition, you should completely understand each of the separate types of bankruptcy you can file, before your file. If you’ve had no experience with bankruptcy you may find yourself overwhelmed with the tasks of filling out the right paperwork. If your bankruptcy papers are not filed in the proper manner, you can end up with a bigger problem than you started with.

If you want to ensure you are doing everything the right way, you may want to consult with a bankruptcy attorney. The easiest way to contact a good bankruptcy attorney is to get in touch with a bankruptcy firm. A bankruptcy firm is actually a group that employs lawyers who specialize in the process of bankruptcy.

When you’re dealing with something as sensitive as filing bankruptcy, you want to be sure you’re doing it right. A bankruptcy firm can help you know what type of bankruptcy you qualify for and the proper steps you need to take to complete the process. In addition, the attorney can help prepare you if you need to go to court and can often help you protect some of your most precious assets (like your home and car). Overall, it is a prime idea to contact a bankruptcy firm before filing for bankruptcy.



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Jon Arnold asked:


Bankruptcy is not something that you do on the spur of the moment, but rather it should be a well thought out plan that you only implement when you have exhausted all other possibilities. While bankruptcy may provide a way out of your current financial situation, you need to consider and be aware that the ramifications of filing bankruptcy are going to haunt you for the next 7 to 10 years. Many people who file bankruptcy are doing so to make things better “now” but they are not looking years down the road, and when they do and wish they had considered other options, it is then too late.

If you are on the very edge of filing bankruptcy and need a way out, there are multiple other options that may be available to you. If you feel like you’re hopelessly buried in debt and you have very few assets, filing for bankruptcy may not be the answer to ending your financial problems. Though it sounds like an easy and attractive solution for one’s financial problems, bankruptcy should be the last option any individual should resort to.

Throughout the process of filing for bankruptcy, it is a good idea to have a lawyer represent you through all formal bankruptcy proceedings. Unless you yourself are very familiar with bankruptcy law, especially the variations of the law within your state, it is more than just a good idea to have a bankruptcy lawyer represent you; it is almost a necessity so that you don’t accidentally get yourself into worse trouble than you are right now. From start to finish, the process of filing for bankruptcy is much different than it has been in decades past, and a good bankruptcy attorney knows those pitfalls and can navigate around them.

Before taking the big step and filing for bankruptcy, you will need to do some reading, especially so that you can explain to your bankruptcy attorney the reason for considering bankruptcy. You may need to consider filing bankruptcy if your expenses are increasing because of divorce, job loss, or medical bills, while your income is decreasing because of the same reason. There are various good reasons for filing bankruptcy, but there are also many BAD reasons for filing bankruptcy, based on the ease with which one could do that in years past, but most of those loopholes have been closed, and it is not nearly as easy today to file a non-painful bankruptcy case.

If you have decided there is no alternative to filing bankruptcy, you may be asking yourself, “how do I find a good bankruptcy lawyer? If you have exhausted all other resources and still feel bankruptcy is your only viable option you can learn more about filing bankruptcy or buy do it yourself bankruptcy forms. If you’re unemployed, on public assistance, have little or no money in a bank account, don’t own an automobile, or rent or live with others, filing for bankruptcy may do little to improve your financial situation. The bankruptcy judge is going to want to see a plan of how you plan to change your current situation so that you are not back in the same position in another few years, so be sure that you discuss a financial plan with your bankruptcy lawyer.



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David Siegel asked:


Have you seen the price of gas lately? Have you gone to your local grocery store and checked out the prices for basic food items? Have you been out to eat in the past six months? If you are paying any attention at all, you will have noticed a significant increase.

The primary indicator that most folks notice is that of gas prices. The price of gas has nearly doubled in the last five years with a sharp increase during the most recent twelve months. Since gas prices are rising, that means the cost of all kinds of shipping has increased. This will lead to higher prices in all products that are shipped. Even service businesses will need to raise fees to cover the additional transportation expenses. What this all leads to is increased bankruptcy filings.

When cash money is tight, folks rely on their credit cards to finance normal living expenses. When the credit line becomes exhausted and minimum payments cannot be paid, the balances skyrocket. This is due to late fees, over limit fees and excessive interest rate adjustments. The inability to catch-up eventually leads to collector calls, future lawsuits, judgments and garnishments. When this eventually occurs, many will be force to turn to bankruptcy relief.

Chapter 7 bankruptcy is the most common form of bankruptcy relief. It basically provides relief for an honest debtor who has mostly unsecured debt and does not have significant assets. Often times, the person will choose to maintain a house or car while declaring bankruptcy. To do so, the person will have to continue to make timely payments on those items.

There are several debts that are not eliminated in a Chapter 7 bankruptcy case. Those include, but are not limited to student loans, parking tickets, recent taxes, child support, spousal support and debts incurred through fraud. However, in most cases, the majority of the debt is eliminated. Importantly, the credit card debt is eliminated. An exception would be if the debtor utilized the credit cards too close to the bankruptcy filing and in contemplation of bankruptcy filing. In those cases, the creditor can file an adversarial complaint, seeking to hold the debtor liable for the recent credit card charges.

When prices for normal living expenses become excessive, the natural result will be an increase in bankruptcy filings. People need to be very aware of how much they are spending each month. It may take a reduction in spending just to maintain the status quo under the current economic conditions.



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Legal Helpers asked:


In the United States, federal bankruptcy was designed by congress as a relief measure to persons or organizations who are financially distressed. In other words, in the face of insolvency, an individual or organization can find relief against their debt obligations in federal bankruptcy.

Chapter 7 of the federal bankruptcy code provides for the appointment of a trustee for the liquidation of assets of the debtor for orderly distribution to the creditors. When a debtor’s assets are being liquidated, federal bankruptcy code requires that this should be subject to certain exemptions.

Federal bankruptcy exemptions determine how much property a debtor can keep when they file for Chapter 7 bankruptcy and also the category of items. One of the schedules in a debtor’s petition under the federal bankruptcy code is the schedule of exempt property. In essence, Federal bankruptcy law provides that creditors cannot claim certain properties of a debtor.

In the same manner, the debtor cannot be discharged of some debts. In some states, state exemptions are different from federal exemptions (in the United States). Although each state is permitted by law to adopt its own exemption law, certain states allow Federal bankruptcy exemptions and so a debtor may choose to abide by the federal list of exemptions or by that of their home state. But overall, the state decides which exemption is upheld in a bankruptcy court within that jurisdiction. This underscores congress goal to offer protection to financially distressed individuals or organizations. Married couples may double all exemptions under federal bankruptcy code.

Bankruptcy is something that could happen to anyone. Even big organizations do lose their shirts. Since bankruptcy is something that could actually happen to anybody, our laws provide safety nets for people, municipalities and business entities that have financial difficulties. Chapter 12 Bankruptcy deals with family farmer or fisher folks, Chapter 11 Bankruptcy deals with business reorganization, Chapter 9 talks about municipalities while Chapter 15 focus on ancillary and cross-border cases. Although there are many types of bankruptcy, only two of these types of bankruptcies actually concerns individuals like you. Chapter 7 and Chapter 13 Bankruptcy tell you how you van dissolve you piles of debts.

According to a study in 2007, on the rate of federal bankruptcy and state bankruptcy, businesses are embracing proceedings under state laws rather than federal bankruptcy laws because proceedings under the former is faster, less expensive and more private.

In view of this, the debtor should endeavor to compare Federal bankruptcy exemptions with their states exemptions using the guidance of a solicitor when filling their bankruptcy forms.

Filing Fees For Bankruptcy

Filing for bankruptcy entails some expenses. Just because you are broke that does not mean that you are exempt from court filing fees. However, the good news is that filing fees for individuals are very much lower compared to those filing fees imposed on businesses. For instance, where businesses filing under Chapter 11 Bankruptcy are required to filing fee in the amount of $ 1,039, individuals who are filing bankruptcy under Chapter are only required to pay $299 while those who are filing under Chapter 13 gets to pay $274. Family farmers and fisher folks also get to pay lower fees compared to big companies. Under Chapter 12 Bankruptcy these people are only required to pay $239. Sounds complicated? Not really. If you have experts to guide you through bankruptcy filing and the proceedings that will follow thereafter, you will get through the whole thing without a snag.

No matter the route you choose, guidance and information is very essential. Bear in mind that bankruptcy is not a panacea to financial indiscretion but an opportunity to start afresh and making use of the lessons learnt pre-bankruptcy.



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Cornie Herring asked:


Are you in this situation? You are facing a serious and overwhelming debt issues and you are considering of filing a bankruptcy to get an instant release from the stressful debt problem. While the process of making up your decision, you keep asking yourself to look for other option that you can go for besides the bankruptcy filing. Is there an alternative to bankruptcy?

Have you explored all your options? In fact, there are many factors to consider in deciding whether bankruptcy is an appropriate option. You might need to consult an attorney before you decide to go for this option. The rule of thumb, bankruptcy must always be your last option when you really can’t find other better option to get you out of debt.

You may trapped into your overwhelming debt issues and the depressed situation makes you unaware of other potential debt solutions and thinking that bankruptcy filing is only way to get rid of debt. Sometimes a few advices are all you need to get your finance in order, or putting a proper debt management plan can save you from your debt problem. Hence, get help from a professional such as consumer credit counseling service might help you to avoid the need to go for the bankruptcy option.

Consumer credit counseling is non-profit service that is designed to help people who have money problems. It offers free service about how to get out of debt and how you use your credit wisely. Based on your financial situation, a counselor that assigned to handle your case will help you to explore all your available options that may help you to resolve your debt issues. In most case, you may be proposed to sign up a debt management plan, in which a small monthly contribution is needed.

Although enrolling into a debt management plan is optional in consumer credit counseling service, sometimes you find it a helpful to follow the plan and recover your financial to a better situation so that you won’t drag into the last option of bankruptcy filing.

If you decide to take up a debt management plan, you normally will go through a full assessment of your financial situation. You need to let the counselor know in details your regular income, expenditure, how much you owe, who are your creditors and other relevant information about your personal circumstances. And based on information you provided, a debt management plan will be proposed to you by the counselor. Under the debt management plan, you will consolidate all your debt payment into one payment that pay to your debt management account, it will then be distributed pro data to your creditors. Your plan will be reviewed at a regular basis it meets your circumstances.

By go through a consumer credit counseling process, you get to know what other options available for you to resolve your debt issue instead of bankruptcy filing. The consequences of bankruptcy follow you for 7 to 10, any other option that may help to resolve your debt issue would be a better option than bankruptcy filing. Hence, you must go through a consume credit counseling before you comes to the conclusion that bankruptcy is an appropriate option.



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Anderslhage asked:

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Jared Myers asked:


Chapter 11 bankruptcy has also been termed “Re-organization bankruptcy”. It’s the most familiar type of insolvency in the United States. It is typically used in large organizations or businesses dealing with financial crisis. But it is also utilized by partnerships, individuals and corporations.

Advantages

Remember, Chapter 11 Bankruptcy is reorganization, not liquidation. In some situations, filing for Chapter 11 bankruptcy allows a business to go on operating throughout bankruptcy proceedings. What this means is that under hard circumstances, you now have time to reorganize under the bankruptcy court’s supervision. This chapter has no limits on the amount of debt, where as Chapter 13 does.

How it works

Chapter 11 bankruptcy is commonly used by businesses as a way to restructure their debt without forfeiting their bussiness. To do this, the debtor files a petition which includes a list of assets and liabilities, and a detailed statement of financial affairs. And several of the bussiness’s assets are sold off to remunerate past due creditors. The debtor must then come up with a course of action and get it sanctioned by the creditors.

Notice: If the enterprise walks into the courthouse unprepared, then the results may be that the judge deeds over the business to the biggest people you owe.

Limitations & Drawbacks

Chapter 11 bankruptcy is easily the most high-priced corporate option in terms of legal costs and attorneys fees. Just to file a Chapter 11 Bankruptcy you must surrender a filing fee of $830.00–plus a quarterly administrative fee to the Court. It is not commonly used by individual consumers because it can be far more complicated and high-priced to pursue.

Chapter 11 Bankruptcy is almost certainly the most flexible of all the chapters, and at the same time the most difficult to generalize. Chapter 11 bankruptcy is a time consuming and expensive chapter, therefore it is only appropriate for individuals whose circumstances make Chapter 7 or Chapter 13 inapplicable or inappropriate. Fewer than one percent of all bankruptcy filings are Chapter 11s.

Comparison with Chapters 13 & 7

Chapter 11 bankruptcy is a viable option when a business has sufficient prospects to continue operating. Businesses are commonly allowed to continue to operate while in Chapter 11 bankruptcy, though they must do so under the supervision of the bankruptcy court.

Chapter 11 Bankruptcy is unique, because the debtor will commonly operate as his or her own trustee. This concept is called a “debtor in possession”. Businesses that file Chapter 11 bankruptcy are commonly are allowed to operate under the supervision of the bankruptcy court. In Chapter 7 bankruptcy a business sells off all its assets and eventually ceases operation.

Other Options

Chapter 11 Bankruptcy is not the only option available to a business - reorganization is permitted under Chapter 13, too. Often times, a sole proprietor may file for personal bankruptcy, which grants reorganization of the business without the cost of pursuing a Chapter 11.

Want more chapter 11 bankruptcy information? Visit our website.



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