Bankruptcy Questions Answered

Jon Arnold asked:


There are several different types of bankruptcy. The one people most commonly think of is chapter 7 bankruptcy. It can be confusing to know which of the types of bankruptcy is appropriate in your situation. Here is some information on chapter 7 bankruptcy and whether it is right for you.

Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. It will rid you of your outstanding debts, but the court may force you to liquidate some of your assets in order to satisfy your creditors. Chapter 7 bankruptcy will cost you about $299 between filing fees and paperwork, and will take between four and six months to be completed.

Chapter 7 bankruptcy typically only requires one visit to the courts. Most of the time you will be ordered to take a credit counseling course that is endorsed by the United States Trustee. Be aware that the laws concerning bankruptcy and the various types vary from state to state, so make sure you and your bankruptcy attorney are very familiar with the way bankruptcy law works in your state.
Not everyone is able to file for chapter 7 bankruptcy. If you have had a bankruptcy discharged in the last six to eight years, you may not be eligible to file a chapter 7 bankruptcy. The courts will also review whether you might be eligible to file a chapter 13 instead. This is a repayment plan instead of completely canceling the debt. This is based on things like your income, debt load, and expenses.

New rules dictate exactly what guidelines should be used when determining whether someone has enough income to repay their debts or not. If you are a disabled veteran and your debts were racked up during active duty or your financial burdens were due to a business loss, you are more likely to be able to file a chapter 7 bankruptcy.

Chapter 13 bankruptcy differs from chapter 7 bankruptcy quite a bit. Chapter 13 is a reorganization plan for people who want to pay off their debts over a period of three to five years. Usually the people who choose this option are ones who have assets that are not exempt under chapter 7 bankruptcy rules. People who choose chapter 13 must have enough income to cover their living expenses and enough left over to pay on their debts.

Chapter 11 bankruptcy is used primarily by large businesses to reorganize their debts and pay their creditors. The debtor must come up with a plan and get it approved by the creditors. If they cannot get it approved, they can try to force it through the courts anyway. However, the success rate of this type of bankruptcy can be as low as 10%. This is not a bankruptcy option for consumers.

Chapter 7 bankruptcy is most appropriate for those individuals who have overwhelming amounts of debt and do not have sufficient income to repay those debts. You can keep some assets, but some possessions may need to be sold to help pay back your debt. Once you file the papers, the courts will decide whether you are eligible for a chapter 7 bankruptcy or if a chapter 13 is feasible. It is a fairly quick process and will help end collections harassments.



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Thomas Heath asked:


At first glance, bankruptcy may appear to be an easy way out of debt problems, but is it the only answer? What is the real cost of bankruptcy? Before considering bankruptcy, there are a multitude of factors that must be considered, many of which are best explained by a specialist debt management company.
The process of going bankrupt is actually quite simple:

• Complete declaration forms available from your local county court.

• Provide details of all assets you own and all debts you owe.

• Pay the associated court fee and administration deposit.

Bankruptcy can be a same-day service! But should you consider it at all?

Following the above steps, you will be issued with a Bankruptcy Order. You will then need to meet the Official Receiver in your area. Their role is to review your circumstances and ensure you meet the conditions of the bankruptcy. This will involve discussing your debts. Once the bankruptcy takes effect, you will be unable to acquire any other kind of debt solution, such as debt management, a consolidation loan, or an IVA.

The duration of bankruptcy usually lasts one year. In 2004 this was reduced from three years. Once you are discharged from your bankruptcy you are able to start again debt free.

Sounds easy doesn’t it? Many people think it is an easy option for those in serious debt. However, the negative, long lasting consequences of bankruptcy need to be taken into account as they can have a lasting impact on your life.

You and Your Home

The trustee associated with your bankruptcy has three years to deal with your home or any property you own. During these three years the trustee can:

• Put your property up for sale.

• Have a charging order issued. This means that any money generated by the property, through rent or sale, will got to the trustee.

• Arrange terms for you to buy the trustee’s interest in the property. These terms can be arranged with those with whom you share ownership of the property.

Your bankruptcy terms usually last one year. However you are at risk of further action, in terms of your assets, for a further two years. Many people forget that after the expiration of their bankruptcy order, their home, or their share of it, remains in the hands of the trustee.

At worst this can mean your house is sold regardless of your bankruptcy status. The consequences of this can be devastating for your family. As mentioned above, this can also be the case if you own a share in a property.

Bankruptcy Restriction Order (BRO)

A BRO is an extension of a Bankruptcy Order that can be imposed on the debtor at the end of the bankruptcy terms, which is usually one year. A BRO is issued if the Official Receiver deems that the debtor has been irresponsible during the terms of their bankruptcy.

Examples of irresponsible behaviour could be:

• Gaining more debt during their bankruptcy period.

• Gaining more debt with the intention of applying for bankruptcy.

• Selling assets and giving the money to family members.

Consequences of a BRO

• You cannot be a director of a company.

• Creditors must be made aware of your bankruptcy status if you apply for credit for more than £500.

• If you are trading you have to inform those you trade with about your bankruptcy status and the name you traded under when declared bankrupt.

• These restrictions can last between 2 and 15 years.

Bankruptcy can be seen as an easy solution to debt problems, but many problems can result. Whether or not bankruptcy is right for you depends largely on your own unique circumstances. Sure you seek advice from a debt management professional before you go ahead.



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MIKE SELVON asked:


Because of a number of problems that can arise, many people find themselves in a financial situation where their debt load is so heavy, there seems to be no way for them to repay all that they owe. Filing for bankruptcy may be their only hope for rectifying their financial condition and gaining a fresh start.

Certainly, filing a claim form when being broke is a step that is considered to be the last resort and one that is never taken lightly. When people are in a deep mire of debt and they do not have sufficient income to be able to make even the minimum payments, there are other steps that they can take before taking the drastic step. There is credit counseling available when people are overwhelmed with debt and sometimes they even take on an additional job to help make the payments.

Unfortunately, there are many instances in which these approaches are simply not enough and people are left with the last alternative and find themselves in need of legal bankruptcy relief. Even though there are significant negative ramifications when people file bankrupt, at the same time it is a legal step that does indeed provide relief from creditors and provides them with an opportunity to wipe their financial slate clean and new start anew.
One should never decide about filing for bankruptcy until they have had an opportunity to consult with a bankruptcy lawyer, or a credit counseling service at the very least. Many people try to save on the lawyer expense by attempting to do a self bankruptcy, but if anything is overlooked, they can find themselves in a bigger mess than before, since it can be thrown out of court if not properly handled. This is why it is so strongly urged that people should pay for the proper help with being broke, so they can rest assured it will be done correctly.

Filing for legal relief is a matter of Federal law, which governs the entire process and it is the Federal courts where the claim form and all paperwork is filed. Under United States Federal bankruptcy law, there are three types of it that can be filed.

You can file a Chapter 7, a Chapter 11 or a Chapter 13 bankruptcy. Each type of filing has different requirements and this is where it is very helpful to secure professional help with being broke, so that you will be sure you are filing for the right type.

After filing, your creditors must stop making any attempts at collecting on debts that are included in the bankruptcy filing. Also, they cannot pursue any type of legal action or lawsuits against you once they have been notified that you have filed a claim form. When the bankruptcy in complete and has been discharged, the debts have essentially be rendered null and void and your creditors have no power to make collection demands on you.

Filing for bankruptcy will definitely leave telltale negative marks on your credit report for many years to come. Due to this fact, it is advisable to avoid hunting for a job or renting new living quarters once the process has started. Therefore, it is best to have secure employment and housing first, if at all possible.

Once the bankruptcy has been completed and is discharged, then you can start the process of restoring your credit record. Eventually, even though it will remain on your credit report for ten years, you will be able to have a good credit score once again. In many instances, people have better credit scores within a couple years after the bankruptcy than they ever did before, because they became better money managers.



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Mark Cella asked:


The New Bankruptcy Laws - Truth about the unconstitutional new BK law changes. On April 20, 2005, George Bush signed the new “Bankruptcy Abuse and Consumer Protection Act” into law.

Bankruptcy Abuse? Do you know anyone personally who has abused the Bankruptcy laws, and are consumers really protected? Or, should this new bankruptcy bill be called the “Abuse the Consumer and Protect the Fraudulent Banks Act”?

We’ll soon see…

In order to understand these unfair new bankruptcy laws, and to help you see that you must avoid bankruptcy, lets cover the original purpose of the BK laws.

According to U.S. Bankruptcy Courts, the primary purpose of the old bankruptcy Chapter 7, bankruptcy Chapter 11 and bankruptcy Chapter 13 laws were: 1) to give an honest debtor a “fresh start” in life by relieving the debtor of most debts, and 2) to repay banks and creditors in an orderly manner to the extent that the debtor has property available for payment.

Apparently the primary purpose of the new credit card bank BK laws is: 1) to repay banks and creditors in an orderly manner to the extent that the debtor has property available for payment.

However, with the new BK laws, giving an honest debtor a “fresh start” in life by relieving the debtor of most debts has been done away with.

The finance companies and credit card banks all blame the necessity of the bankruptcy changes on the .003% of abusers of the old bankruptcy laws.

Sponsors of the bill claim that most bankruptcy personal cases involve irresponsible spenders who have shopped or gambled their money away and now do not wish to pay their creditors so the new BK legislation, will eliminate “filing bankruptcy for convenience”.

There is NOTHING further from the truth then these claims alleged by the credit card banks and finance companies. And, as you dig deeper into these pages, you’ll see who’s really abusing who in America’s credit, finance and banking game.

They claim that bankruptcy costs the credit card banks billions of dollars each year and that those costs are passed on to customers in the form of higher interest rates.

That of course would be true if the credit card banks were actually lending any of their own money, or their customer’s deposited money. For more details, read our page a history of money and banking secrets that banks don’t want published.

And, by making bankruptcy filings harder for those with financial trouble, legislators say that more people will pay their bills, the credit card companies will save billions of dollars, and the resulting savings will be passed on to consumers in the form of lower interest rates.

We’ve never ever heard of a credit card company lowering interest rates voluntarily, and we know they never will.

New Bankruptcy Law Highlights

The key highlights of the credit card banks new bankruptcy laws are:

The new bankruptcy laws apply a means test for people filing bankruptcy. If a debtor has at least $100 per month left over after an IRS determined monthly expense plan, (can you picture that?) the debtor will be forced to file Chapter 13 and pay for five years.

Just imagine life after bankruptcy now.

They will not be able to file Chapter 7 of the Federal bankruptcy code, which would have eliminated all of their unsecured debt.

There are no provisions in the bankruptcy law for debt problems caused by job loss, illness or other traumatic events, despite studies that show that these are the cause of most bankruptcy cases.

Can you say Debt Slave?

With these new, credit card BK laws, attorneys are now responsible for the accuracy of paperwork filed by their clients. So in other words, your attorney must now search your dresser drawers for those hidden family heirlooms.

This will no doubt result in fewer bankruptcy attorneys, with the remaining ones raising their fees in order to cover this additional liability.

With the new bankruptcy laws most consumers are now completely unprotected from losing a job or having medical problems. They can no longer start over by filing for bankruptcy Chapter 7.

They will have less affordable help from capable BK attorneys due to the new bankruptcy law liability stipulation.

Giving an honest debtor a “fresh start” in life by relieving the debtor of most debts has been done away with completely thanks to the new bankruptcy laws.

However an amazing discovery has been made that you cannot miss learning about. Now that you must avoid bk as there is no PROTECTION for consumers provided by the new Bankruptcy Abuse and Consumer Protection Act if filing bankruptcy under the new bankruptcy laws.



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Roilee Mandeville asked:


How can you start with your bankruptcy? If you want to declare yourself bankrupt you have to start the bankruptcy process by filing the official bankruptcy forms. You need to know the various methods on how to file for bankruptcy. Your goal is to get the most inexpensive bankruptcy solution and save big money on legal expenses. This article will give you an overview of the different process of filing for bankruptcy. This article is not a substitute for legal counsel, and it is not intended to give you specific legal advice on your financial situation.

The Safest Method

This is the simplest and safest way to file personal bankruptcy — retain a bankruptcy attorney full-time. The attorney will help you through the entire bankruptcy process. It is the lawyer’s job to evaluate, prepare and file your papers. During the creditors meeting your attorney will address all the tough issues that may arise. The only negative in using this method is that it costs more. You must find a way on how to screen cheap bankruptcy attorneys in good order for you to get the best possible deal if you want to use this method.

The Hybrid Method

This method is the most followed technique in filing for bankruptcy. The hybrid method normally works best in filing Chapter 7. The key factor here is to hire the services of a lawyer or law firm to prepare your case. You need to pay the service provider with a flat fee. Once they file your papers you are on your own. You can save huge amount on legal fees because part of the solution is a do-it-yourself work. You should look for a bankruptcy preparation service that will also give you a short training on how to handle the do-it-yourself portion as part of the package.

The Cheapest Method

This method is a full self-help solution or “pro-se” filing. You need to educate yourself with the complexity of the bankruptcy laws. You can download the official bankruptcy forms free but it is usually easier to do this method if you buy an up-to-date bankruptcy kit or a good bankruptcy book. If you try to ask instructions from your local court clerks they will say they can’t help you. They will not give you advice on how to fill up the forms because that would be “practicing the law” — a task reserved only for licensed bankruptcy lawyers.

What to Do Next?

Now that you know the different ways of filing personal bankruptcy, which method are you going to use? The new bankruptcy law does not require you to have a lawyer, but it is in your best interest to seek the advice of an experienced bankruptcy lawyer. If you choose to file bankruptcy without the help of a lawyer, you will need to have to show a lot of patience and diligence. Keep in mind and remember that when it comes to filing bankruptcy, you either liquidate your assets or you protect them.



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