Thursday, August 20th, 2009
Usha Pradhan asked: Bankruptcy means an official declaration of economic failure or mutilation of ability of a person or company to pay their creditors. A bankruptcy petition may be filed against a debtor. Sometimes creditors file this kind of “involuntary bankruptcy” petition to recover their due payment.
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Bankruptcy means an official declaration of economic failure or mutilation of ability of a person or company to pay their creditors. A bankruptcy petition may be filed against a debtor. Sometimes creditors file this kind of “involuntary bankruptcy” petition to recover their due payment. In most of the cases, however, the debtor, individual or organization, initiates the economic collapse, known as the “voluntary bankruptcy”.
Know More 1: The word bankruptcy shares its root with the ancient Latin bancus (a bench, table or bank) and ruptus (broken).
Therefore, in other words, bankruptcy is a legal filing that relieves a person of responsibility for all or some of their debts because they are unable to pay. Credit history or credit report, as you wish to call it, is nothing but, the record of past borrowing and repaying of an individual or company. This record, as you understand, includes information about late payments and bankruptcy as well.
Fact 1: Bankruptcy is submitted to the jurisdiction of the bankruptcy court
Bankruptcy allows the unfortunate debtor an honest and “fresh start” in financial life by relieving most debts. It also allows creditors to restore some portions of what they owe.
Records say that consumers who have effectively cleaned their credit report denied a bankruptcy or judgment, second and even a third time, and finally they got it cleared. So never get discouraged! Your patience and resolution could be the two important keys in repairing a damaged credit report.
Fact 2: Bankruptcy case begins by legally filing a petition containing defaulter’s economic information.
How well is this going to work for you depend on how patiently you try …
However, you must know that certain items are easier to remove than others.
Fact 3: A married couple may file a joint petition.
Here is a list of easier Items to dispute and get removed Stuff older than 2 years:
* Discharged bankruptcy
* Charge-offs
* Inquiries
* Repossessions
* Late payments
* Accounts that were late but now paid off
Fact 4: Liquidation and Reorganization are two common forms of bankruptcy.
Do you know why it is so? It is simple! When you challenge an older account or item presently charged off, the creditor is not too bothered with the account any more. Even they may fail to find the required information to bear out the dispute.
Know More 2: Some scholars still believe that the term bankruptcy is originated from the Italian banco rotto meaning broken bank.
And a list of more difficult items to dispute:
* Accounts currently due
* Recent bankruptcy
* Judgments
* IRS or State Tax Liens
* Current collection accounts
Fact 5: liquidation bankruptcy is a kind of bankruptcy in which the defaulter’s non-exempt (means legally unprotected) asset/possessions/properties are distributed to suit creditor claiming.
These are the items which you can say are trickier as creditors keep track of these in their current files and expect you to pay them. This is the reason why it will be easier for them to verify the information and keep the item on your credit file. However, it is always good to try.
Fact 6: In reorganization bankruptcy the defaulter rearranges/redistributes possessions and unpaid amounts.
Important: It is completely legal for you to contest items on your credit file even though you know they are correct. When you do so, you are only trying to see if your creditors have maintained proper account to verify the dispute. Your pretext could be a very bad memory that makes you forget that the negative accounts on your credit file are really yours … and in case they are unable to verify your dispute, it must be removed from your file, this is what the law says!!
Know More 3: In the years 1557, 1560, 1575 and 1596 four state bankruptcy cases were declared by Philip II of Spain. Thus historically, Spain, the sovereign nation, held the first place to declare bankruptcy.
Removing Negative Credit
First, identify the negative items that you want removed.
Secondly, after you review your updated credit file and getting most or all the negative items removed, you may go for building a positive credit profile. Positive information will always overshadow the residual negative items that may still remain in your file.
Fact 7: The law of United States offers a single chapter on liquidation bankruptcy (chapter 7); all other chapters are provided only for reorganization bankruptcy (chapter 9, chapter 11, chapter 12 and chapter 13.)
Thirdly, as you know already, if the dispute is sent in from anyone other than you, it raises all sorts of Red Flags. As they themselves make so many mistakes they believe you are working alone and trying to fix a real lawful mistake.
If there is a negative item, such as a bankruptcy, charge off or collection account, just write it that this is NOT your account and you want it removed immediately.
Fourthly, if in case the creditor is able to supply you with the written proof you asked for, propose to settle the debt for 10 cents on the dollar if you have the money. Thus, if you owe $1,000, offer $100 to the creditor. If they refuse, tell them that you will file Bankruptcy and they will get nothing. This will certainly open them up to negotiating with you.
“Bankruptcy is a legal proceeding in which you put your money in your pants pocket and give your coat to your creditors.” ~ Joey Adams
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Wednesday, August 19th, 2009
Larence Hubert asked: Preparing to file bankruptcy will require you getting your documentation and statements showing proof of income and expenses together. The bankruptcy judge will require this information before making his or her decision of which debts will be discharged. He’ll also use the information to see what type of bankruptcy you’ll be most qualified for and benefited from.
The paperwork will include required pay stubs which will show the amount of income you gross per month. You’ll also be required to prove your monthly expenses, including rent, utilities and grocery costs. Your statements showing credit card expenses, loans, taxes and unpaid medical bills will also be part of your paperwork to gather. The judge will then look over your income. Most often your assets and debts will be compared against your state’s median income. Some states have tougher standards for comparison than others. The comparison results will determine what type of bankruptcy you’ll qualify for.
Each state has its own list of specific assets that are eligible for exemption. It’s best to consult with a bankruptcy attorney when trying to figure out what you own that will qualify for exemption. Taking assistance from a bankruptcy attorney is a good move, so you can ensure you’re doing everything you can to conclude your bankruptcy on the most positive note possible.
United States bankruptcy courts are the bankruptcy judges in active and regular service in each district. They hold the power to handle bankruptcy matters. There are ninety four federal judicial districts in the United States and each of them handles bankruptcy petitions. Bankruptcy petition can be described as Debtor’s petition or Creditor’s petition depending on who files the petition as can be implied.
Bankruptcy petitions cannot be filed in any court. The petition must be filed in a court with jurisdiction. In the United States, bankruptcy cases have to be filed in Bankruptcy courts which are usually the (Federal) courts with jurisdiction to handle such matters. Notwithstanding, district courts also have subject matter jurisdiction over bankruptcy matters and may refer petitions to the bankruptcy court at any point by order.
Bankruptcy laws are designed to protect financially distressed individuals or organizations and also to make provision for liquidation of any non-exempt assets for orderly distribution to creditors.
In the United States, judges who preside over bankruptcy matters, otherwise referred to as “bankruptcy judges” are appointed for a fourteen year term by the US court of appeal. They constitute a unit in the applicable district court in each judicial district.
A United States Bankruptcy Judge is the court official empowered to make decisions on bankruptcy issues in United States bankruptcy courts. He determines the eligibility of the debtor for the form of petition filed and also if the debtor should be discharged of his debt obligations.
Typically, a debtor who files for Chapter 7 bankruptcy has limited or no involvement with the bankruptcy judge and may not see him unless an objection is raised on the petition.
A typical United States Bankruptcy court will administer the federal bankruptcy law in order to meet congress goal for enacting the law which is to give debtors a “fresh start” while also protecting creditors from unfair exploitation.
If you are filing for bankruptcy, your attorney knows the courts with jurisdiction to handle your case. So you need not worry. If however, you are filing your application yourself, endeavor to research the appropriate bankruptcy court in your district before filling your forms. Online database are available for your use in case you are not sure.
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Wednesday, August 19th, 2009
Jon Arnold asked:
If you are considering bankruptcy, you need to be aware of the recent drastic changes in the bankruptcy laws. It used to be that a person could file bankruptcy almost on a whim, simply to get out from under a huge burden of financial obligations. Then that person would start over, and a couple years later file bankruptcy again. This type of scenario is no longer possible for the most part due to the new bankruptcy law.
The bankruptcy laws still vary from state to state but much of the common foundation within the bankruptcy law is still there in all states. The variations and changes that are state specific are, for the most part, fairly minor points. In addition, one of the effects of the new laws are that if you are going to file bankruptcy, you must do it in the state in which you are a resident, and you cannot go to another state to file bankruptcy just because they may have more lenient laws in some areas.
With the new bankruptcy laws, the person who is considering filing must go through a process known as a means test. The means test can be very complex and the results of that test could mean the difference between filing bankruptcy and even not be allowed to file bankruptcy.
What this means to you is that the court looks at your financial situation with a very fine tooth comb. The court can determine that you do not need to file bankruptcy based on your level of income and that you can indeed pay your financial obligations, which still being able to maintain your reasonable and necessary living expenses. This is where things really get sticky, because while a consumer may consider “reasonable and necessary” to be that beach front condo in Miami, it is highly unlikely that the court would agree with your definition of “reasonable and necessary”.
Another change in the bankruptcy laws is that the consumer who plans to file bankruptcy is now required in almost all states to attend credit counseling sessions. To a certain extent, this does not make sense since the underlying reason that a consumer may be considering bankruptcy would not be financial mismanagement, but could be host of other financial difficulties, like a job layoff, extensive medical debts, an ugly divorce case, and other things that are totally unrelated to financial mismanagement, and in fact, the consumer may be the sharpest person in the world in terms of finances. But that person still needs to attend the credit counseling sessions, this is mandatory.
Because of the many changes in the bankruptcy law, consumers who may have wanted to file under Chapter 7 bankruptcy may now need to file under Chapter 13 or even Chapter 11 bankruptcy. Much of this determines how much of your personal assets can be retained, or perhaps sold out to satisfy your debtors.
One thing that has become clear with the new bankruptcy laws is that bankruptcy is no longer a “do it yourself” process. One mistake in filling out the mountain of forms can cause your bankruptcy application to be dismissed. You should work with a good bankruptcy lawyer who understands the bankruptcy law and also the variations in your state so that you can file correctly with the least amount of personal damage.
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Saturday, August 15th, 2009
JCLawGroup asked: JC Law Group specializes in helping individuals and families in the Bay Area with filing for Bankruptcy and debt relief. Their areas of practice focus on Chapter 7 and Chapter 13 bankruptcy. If you are burdened by debt and want to explore filing bankruptcy as an option for relief, they can help you very well.
Filing for bankruptcy is not a reflection on you as a person. Perhaps you owe more on your home than what it is worth and you are struggling to make the payments, you are going through a life changing experience such as a serious illness, loss of employment, divorce or death in the family. You do not have to go on living with the constant calls from the creditors or mounting debts. Bankruptcy laws allow people who are overwhelmed by debt to get a fresh start easily.
According to the American Bankruptcy Institute “household debt is at a record high relative to disposable income.” The Administrative Office of the U.S. Courts reported that the number of filings for the year ended March 31, 2003 “exceeded 1.6 million for the first time in any 12 month period,” a 15.1 percent increase from the previous year.
There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 Bankruptcy and Chapter 13 are legal proceedings that are available to a person to cope with the financial crisis. Personal bankruptcy must be filed in a federal bankruptcy court. You will have to pay about $160.00 in court fees. Attorney fees will be additional.
Chapter 7 of bankruptcy involves the liquidation of all your assets that are not exempt from the bankruptcy settlement. Exempt property can include automobiles, some household furnishings, and property needed for work-related use; for example if you were a mechanic the tools you use to perform your work would be exempt from the bankruptcy settlement. Exemption amounts vary from state to state.
A Chapter 13 bankruptcy allows you to keep property, like a mortgaged house or car, as long as you have a steady income. Chapter 13 bankruptcy is a court-ordered and approved repayment plan to your creditors. This allows you to use your future income to pay back your debts over a 3-to-5 year period without surrendering any property. Once you complete the payments under the plan, your debts are discharged by the court.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, utility shut-offs, and debt collection activities. Both provide exemptions that allow people to keep certain assets, although exemption amounts vary.
The sweeping changes to the laws in 2005 made filing bankruptcy more complex, and often inaccessible to most people, particularly those with low incomes. Attorney’s fees increased due to the added complexity of bankruptcy cases; court fees have gone up; there are new credit counseling and debtor education requirements that cost money.
However, consider this when contemplating bankruptcy. If you have $40,000 in unsecured debt at about 20 percent interest, the cost of the interest alone is $8,000 per year. Divided by 12 that is about $667 per month. For less than the cost of 4 months of interest payments, you can pay for a Chapter 7 bankruptcy and be done with it once and for all.
For more information on Bankruptcy San Francisco Call us at 415.963.4004 to schedule a free consultation with a San Francisco bankruptcy lawyer.
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Friday, August 14th, 2009
The author is a member of the Firm's Government Contracts & Regulated Industries Practice Group. For additional articles and postings concerning this and related topics, please refer to Sheppard Mullin's Government Contracts Blog, which can be found at www.governmentcontractslawblog.com.
I. INTRODUCTION
Without a doubt, the False Claims Act ("FCA") has been dramatically changed in the last few months. As will be discussed in more detail herein, it certainly appears that the FCA has been retooled so that the playing field is now stacked in favor of the government and qui tam plaintiffs. There is also every indication that lenders who have federally insured mortgages, redevelopment funding, or other financial support from the government, are at risk of being sued for false claims unless they take certain precautions to educate and protect themselves.
In fact, it is a good idea for all companies who receive government funding (e.g., defense contractors, health care providers, academic institutions) to look closely at their internal compliance programs, and modify them to reflect the recent changes in the FCA. This article is intended to offer some specific suggestions, and also encourage companies to have their programs amended, and implemented by legal counsel who are receptive to flexible billing arrangements including flat fee schedules.
II. MANY OF THE HURDLES TO LITIGATING FALSE CLAIMS ACTIONS HAVE BEEN REMOVED
The following are some of the more significant changes to the FCA:
(1) There is essentially no time bar for the government to intervene in the private party ("relator") action – the government can easily have its complaint relate back to the timely filing of the relator action.
(2) The government can now essentially "deputize" private parties and local governments to aid in the pursuit of these actions, by sharing documents and testimony that the government has obtained through Civil Investigative Demands ("CIDs"). The FCA now expressly authorizes the sharing of information obtained under a CID with "any qui tam relator," with federal, state or local government agencies, and with other interested persons (i.e., courts, consultants, auditors, experts, arbitrators) if it is done in connection with an investigation, case or proceeding. Thus, it is even more important now to involve legal counsel early on in negotiating the parameters of the CID, and coordinating the company's response.
(3) The universe of potential relators has been expanded dramatically, and can include contractors and agents, all of whom appreciate the considerable financial windfall that relators recover in qui tam actions with treble damage awards. Since the 1986 amendments, qui tam plaintiffs have accounted for more than half of the over $21.5 billion recovered under the FCA, with the plaintiffs recovering anywhere from 15-30% of the government's recovery. Thus, companies need to worry not only about disgruntled and terminated employees who may recast themselves as possible "whistleblowers," but also contractors with whom relations have become strained for any reason. The FCA anti-retaliation provision now applies to contractors and agents in addition to employees.
(4) Subcontractors or others who submit a bill for payment to a recipient of government funds can now be held liable under the FCA, even if their bill is not submitted to the government directly. The definition of "claim" in the FCA has been expanded to include these indirect claims, so long as the funds involved are used on behalf of the government or in furtherance of a government program or interest. For example, in the context of federally insured mortgages, the government support is provided based on a private entity certifying that the borrower has complied with a variety of criteria underlying the loan agreements, any of which could form the basis of a false claims action, even if the certifying entity is not submitting a claim to the government.
(5) In amending the FCA, Congress specifically rejected several court decisions that made it more difficult for plaintiffs to establish liability. For example, the Allison Engine requirement that a claim or statement must be designed "to get" false claims paid or approved has been relaxed considerably, with the FCA amendments:
These amendments to Section 3729 clarify that the False Claims Act was intended to extend to any false or fraudulent claim for government money or property, whether or not the claim is presented to a government official or employee, whether or not the U.S. Government has physical custody of the money, and whether or not the defendant specifically intended to defraud the U.S. government. With this change, the additional elements read into the statute by the Supreme Court and the D.C. Circuit decisions are vitiated, and Allison Engine and Totten would be overturned by this legislative action.
February 5, 2009, Statement of Sen. Patrick Leahy, Chairman, Senate Judiciary Committee, Introduction of Fraud Enforcement and Recovery Act of 2009. Thus, the specific intent element that the United States Supreme Court imposed in Allison Engine, to keep FCA enforcement from becoming effectively "boundless," has been removed. To establish FCA liability now, the plaintiff only needs to prove that the false statement was "material" to the government's decision to pay a false claim. "Material" is defined loosely as "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property."
In addition, there are further amendments moving through Congress that would also increase the number of FCA plaintiffs. Most significantly, the "public disclosure" defense to qui tam suits would be greatly weakened by eliminating the FCA defendant's right to move to dismiss a relator complaint based on the public disclosure bar. Further, the bills would redefine what constitutes "public disclosure" to make it more narrow, and also allow a court to dismiss a qui tam action only if the "allegations relating to all essential elements of liability of the action or claim are based exclusively on the public disclosure of allegations or transactions…." When viewed in the context of the vast amount of public information that is available through the Internet, the elimination of this defense for defendants could exponentially increase the number of private plaintiff suits. Given the speed with which the recent amendments were approved by Congress and signed by the President, there should be little doubt that further amendments in favor of qui tam plaintiffs are just a matter of time.
III. THE GOVERNMENT IS TARGETING THE MORTGAGE LENDING BUSINESS, AND USING THE FCA TO DO IT
These changes also come with considerable bite behind them with the government approving substantial spending budgets for enforcement purposes. The bill authorized $155 million a year for hiring fraud prosecutors and investigators at the Justice Department for fiscal years 2010 and 2011, with the expectation that the FBI can double the number of its mortgage fraud task forces nationwide – from 26 to more than 50.
Finally, if there is any remaining doubt that the FCA is a powerful tool that the government is using to prosecute mortgage fraud, then the following remarks are worth considering, in addition to the cases that the government has been litigating in the last year. In introducing the Anti-Fraud Legislation that included the amendments to the FCA, Senator Patrick Leahy said, "The federal government has spent hundreds of billions of dollars to stabilize our banking system, and Congress will soon spend even more to restart our economic recovery. But to date, we have paid far too little attention to investigating and prosecuting the mortgage and corporate frauds that has so dramatically contributed to this economic collapse." Similarly, President Barack H. Obama in signing the bill stated: "This bill nearly doubles the FBI's mortgage and financial fraud program, allowing it to better target fraud in hard-hit areas. That's why it provides the resources necessary for other law enforcement and federal agencies, from the Department of Justice to the SEC to the Secret Service, to pursue these criminals, bring them to justice, and protect hardworking Americans affected most by these crimes."
Recent cases are a good indication of the mortgage industry practices that are coming under scrutiny. In June 2009, Beazer Homes USA Inc. agreed to pay $5 million to the United States, plus contingent payments of up to $48 million dollars to be shared with victimized private homeowners, to resolve allegations that Beazer Mortgage Company was involved in fraudulent mortgage origination activities with federally insured mortgages. Beazer allegedly induced unqualified home buyers to enter into Federal Housing Administration ("FHA") insured mortgages, and, then, when the buyers defaulted, the FHA was wrongfully required to pay on the mortgage insurance claims.
Similarly, mortgage lenders who offer HUD-insured mortgages are becoming the subject of false claims actions. In this scenario, the HUD approved lender can "directly endorse" a mortgage for low and middle-income buyers under certain conditions, but can be held liable if the lender submitted unqualified loans to the HUD for insurance endorsement, without disclosing that the loans did not satisfy FHA guidelines. (Nat'l City Mortgage, June 2, 2008, $4.6 million settlement; and RBC Mortgage, November 25, 2008, $10.71 million settlement).
Presently pending in the United States District Court in Los Angeles, California is an action against mortgage lender Capmark Finance, Case No. CV 09-04104 RSWL (JCx), in which, the government is seeking to recover damages and penalties under the FCA arising from Capmark's submission of allegedly false documents and claims to HUD's multifamily mortgage insurance program. Specifically, the complaint alleges that Capmark engaged in fraudulent conduct to obtain HUD mortgage insurance in connection with two loans made by Capmark that financed the borrowers' acquisition of two existing residential nursing home facilities. When the loans defaulted, HUD sustained losses by having to pay $25.9 million dollars in mortgage insurance claims. In the Department of Justice press release for the Capmark case, the Department of Justice representative stated, "Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake. We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy." Thus, all loans at risk of default that are covered by government mortgage insurance are ripe for possible false claims actions.
IV. IT IS A PRUDENT BUSINESS PRACTICE FOR COMPANIES, INCLUDING THE MORTGAGE LENDING SECTOR, TO PROTECT THEMSELVES THROUGH EFFECTIVE COMPLIANCE PROGRAMS AND REGULAR INTERNAL AUDITS
There are a number of reasons why it is in a company's best interest to have a current and effective compliance program in place. Early discovery of possible FCA violations can create opportunities for voluntary disclosure, provide a basis for resolving the problems through a negotiated settlement, and shorten the damages time period by identifying problems early on. In light of the recent amendments to the FCA, compliance programs should be updated along the following lines, with additional modifications tailored to the particular needs of the company:
(1) Schedule internal audits of all agreements that involve federal funds that may be at risk, including, without limitation, federally insured loans to at risk borrowers.
(2) Establish an alert system for identifying agreements where the payments are overdue, and there is a risk that the contract will be breached, or the property foreclosed in the case of a mortgage loan.
(3) Establish an audit system of agreements involving subcontractors with whom the company has either terminated the relationship, or the relationship has become strained, in order to ensure that the underlying agreements were handled properly and, therefore, there is no basis for a qui tam complaint by a subcontractor or, alternatively, any problems can be identified and addressed.
(4) Evaluate the advantages and disadvantages of having a hotline system for contractors and agents to report FCA concerns, now that they are included in the class of possible qui tam plaintiffs.
(5) Remind all company departments that prompt notice to management upon receipt of any subpoena or government inquiry is essential. Now that the documents and testimony produced in response to a CID can be shared more broadly, it is even more critical that companies work with legal counsel in complying with these requests.
For further information concerning our Government Contracts Practice, contact our Practice Group Leaders, Bryan Daly in Los Angeles at (213) 617-5466 and Anne Perry in Washington, D.C. at (202) 218-6875.
Authored by:
Michelle Sherman
(213) 617-5405
msherman@sheppardmullin.com
and
Peter Morris
(213) 617-5414
pmorris@sheppardmullin.com
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Wednesday, August 12th, 2009
Lesley Lyon asked: Bankruptcy law provides for a plan that allows a debtor who is unable to pay his creditors to resolve his debts through the division of his assets among his creditors. This also allows the interest of all creditors to be treated with equality. Certain bankruptcy laws allow a debtor to continue his business and use the revenue generated to pay off the debts. An additional aim of bankruptcy law is to allow certain debtors to liberate themselves of the financial obligations they have accumulated after the division of their assets. Bankruptcy law includes comprehensive access to civil litigation, credit, consumer law and commercial transactions.
Bankruptcy cases are either voluntary or involuntary. Voluntary bankruptcy cases involve debtors petitioning the bankruptcy courts. In involuntary bankruptcy, creditors rather than the debtors file the petition. Voluntary bankruptcy cases are majority whereas involuntary cases are rare except occasionally in business settings to force a company into bankruptcy so that creditors can enforce their rights.
Bankruptcy law prohibits some filers with higher income from using chapter 7. To file for chapter 7 current monthly incomes against median income is measured. If it is less than or equal to median income, chapter 7 can be filed. If it is more, the ‘means’ test must be passed to file for chapter 7 which is the requirement of the new bankruptcy law.
The purpose of the ‘means’ test is to find out certain allowed expenses and debt payments are subtracted from the current monthly income. f the balance is below a certain amount chapter 7 can be filed.
Bankruptcy law can be broadly classified as follows:
Co-operative bankruptcy is filing of chapter 7 or chapter 11 by co-operations and partnerships in which the trustee appointed by the court sells the assets and distributes the proceeds to the creditors. The trustee’s commission, priority debts and debts to unsecured creditors are paid on a pro rata basis.
In chapter 7, the debtor’s business operations cease once the case is filed. On the other hand in chapter 11 the business typically remains in operation and the debtor is given the same right as a trustee.
Personal bankruptcy is commenced by an individual filing chapter 7, 11, 12or 13. The debtor is allowed to exempt certain property (household furniture, jewellery, clothing, pensions, insurance policies and other assets) from liquidation by the trustee. Exemptions vary from State to State. The automatic stay takes effect immediately upon the filing, which prohibits collecting money, or taking property from the debtors. It usually remains in effect through out the case.
In chapter 7 bankruptcies, the debtor files a petition with the court with detailed financial information about his assets, debts and income. These papers are executed under penalty of perjury, the duration being three to four months. Chapter 11 bankruptcies are a reorganization procedure used by business partnership and co-operations. In this case, the debtor will act on his own as a trustee and is called a debtor ‘in possession.’
As a general proposition, bankruptcy laws state that older income taxes (more than three years old) can be wiped out in bankruptcy, but not the new incomes taxes. Prior to filing bankruptcy, the debtor should have his own particular tax situation assessed. As a general rule, debtors filing bankruptcy continue to complete their own returns and pay their own post-bankruptcy taxes.
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Wednesday, August 12th, 2009
Cornie Herring asked: Debt relief related industries are in a rapid growth rate showing that more and more people are looking for debt free solutions to get them out of debt. The fact shows 40% of American households are holding at least ten thousands of debt and many of them are at overwhelming level that urgently need a solution for relief. The bad news is many of debtors are getting out of debt with the worst option: bankruptcy filing. If you are in a serious debt trouble, you want to avoid bankruptcy with your best effort. Then, what are the alternative options available for you other than bankruptcy?
Before finding a debt solution that can pull you out of debt, you must first understand your debt situation. Don’t ignore your debt problem and let your debt continue to snowballing from month to month, you will be very surprise when your debt is piling up to the level that is out of your expectation if you keep ignoring them. The earlier you face your debt problem, the more chances your will resolve it with the best option.
The first thing your need to do it is “Get to know your debt”. Although it very scaring to look at all your credit card bills and loan balances that are over due and need immediate payment, you must take out all these statements and do a summary on what you owe and the overdue amount that need immediate attention. If you are too stressful to calculate all your debt, you may get help from your family members, spouse or friends to help you. If you are considering of getting help from professional counselor to analysis your debt situation, then you may contact a consumer credit counseling agency. Most of credit consumer credit counseling services are free. Their purpose is to help and educate anyone who needs help in handling their debt issue. A counselor will be assigned to handle your case and he will help you to analysis your debt situation before propose to you a debt solution.
Once you know your total debt. You next action is to think of the best solution to settle your debt and this is the hardest part. The immediate action that you can do is carefully thinks of what are the ways to cash out in the shortest period of time. You may perform garage sell or sell your home items at eBay or at your local newspaper free ads column to cash out as much cash as possible. If you have more than one car at home, you may want to reduce to one and sell the rest to cash out the money or reduce your monthly auto loan installment.
The next thing to do is reduce as much as possible your monthly expenses so that you don’t add more debt to your current balance and able to squeeze more money out to be allocated for debt payment. You should create a budget plan so that you know where your money goes and what expenses can be cut to reduce your monthly spending. With that you know how much money left each month that you can dump into your debt payment.
After knowing how much money you can cash out and the amount of money that you can allocate for monthly debt payment, it’s time to negotiate with your lenders for a settlement with discount. Many lenders are willing to reduce the amount you owe as long as you can settle your debt in one settlement. You probably can save 20% to 30% if you have enough cash for settlement. If you have not enough money for one time settlement, lenders may accept to waive the interest as long as you promise to pay an agreed amount each month. Try to negotiate with your lenders to come to an agreement that benefits both parties. If you feel that you are not confident enough to perform the negotiation with your lenders, then you can get help a debt settlement company to do the negotiation on your behalf. But, be aware that there will be fee involved. In most case, lenders do not want you to file a bankruptcy because they won’t really benefit from it. If the negotiate terms are acceptable by lenders, you can be avoided from filing a bankruptcy while working your way out of debt.
Summary
The bottom line is bankruptcy may not be the ultimate option. There are other options available which should be better that bankrupt filing. What you need to do is understand your debt situation, get help from professional if needed to explore the available options and work out with your lenders to get yourself relief from overwhelming debt problem.
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Sunday, August 9th, 2009
Roy Barker asked: In the 21st century, many men and women find themselves struggling to keep their heads above water financially. With ever mounting debt, these people oftentimes need to seek relief by filing for bankruptcy. Perhaps you are such a person who is fighting to make ends meet. As a result, you may be wondering how to file for bankruptcy.
The first step in learning how to file for bankruptcy is to make a comprehensive list of all of your creditors and outstanding debts. When you are working to determine how to file for bankruptcy, you need to appreciate that if you to proceed with a bankruptcy case, you must be sure that all of your debts are disclosed and listed in a bankruptcy petition.
The next step in filing for bankruptcy is to determine exactly what assets you have available to you. Your assets include your recurring income from your job, your home and major items of personal property that you might own (including such items as motor vehicles).
The third step you need to undertake when it comes to seeking bankruptcy relief is to contact all three major credit bureaus. When all is said and done, the three major credit bureaus may have the best record of all of your outstanding debt. By obtaining your credit reports from the three major credit bureaus, you will be able to cross reference your list of debt to make certain that you have all accounts covered and listed.
The forth factor that needs to be considered on the road to filing for bankruptcy, is to determine whether you will seek professional assistance in the pursuit of a bankruptcy case. Some people do elect to file for bankruptcy on their own without the aid and assistance of a lawyer. However, in most instances, it probably is in your best interest to seek the professional assistance of a lawyer in order to properly pursue a bankruptcy case. Therefore, unless you have a very simple bankruptcy on the horizon and unless you actually have some definite, practical legal experience, you should seek out the assistance of a lawyer to aid you in pursuing your case.
In working towards fully understanding how to file for bankruptcy, if you do make the decision to hire a lawyer, you will need to begin an organized search to find the best attorney to meet your needs. Keep in mind that in this day and age there are lawyers that specialize specifically in the area of consumer bankruptcies. As a result, you most likely will want to narrow your search to those specific attorneys who do have experience in dealing with bankruptcy cases. In the long run, you will be best served by engaging the services of a lawyer who has dedicated his or her career to bankruptcy law.
Once you narrow down the list of attorneys you are considering, the next phase in considering bankruptcy is to obtain references in regard to each of these attorneys’ prior performance. References will provide you with specific information on how a particular lawyer handles his or her business and on how successful he or she has been in the pursuit of prior bankruptcy cases. Your local bar association can provide you with the names of lawyers that specialize in the practice of bankruptcy law.
The final step in considering bankruptcy is to actually engage the services of an attorney. At this juncture, you attorney will prepare a bankruptcy petition on your behalf that will be filed in the bankruptcy court. With the filing, your creditors will have to suspend seeking debt collection from you during the period in which the bankruptcy case is pending.
By following the steps outlined in this article, you will be able to take serious action in order to get your financial house in order. Of course, bankruptcy really is an option of last resort when it comes to dealing with impossible debt. Therefore, you need to make sure you have exhausted any alternative options before you actually begin the course of pursuing a bankruptcy case.
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Friday, August 7th, 2009
Legal Helpers asked: Bankruptcy in its legal sense is the inability of an individual or organization to meet their financial obligations to their creditors. The individual or organization is not able to pay for cash transactions and are also unable to pay owed money. Bankruptcy may be declared to relieve a debtor of most or all of his debt and begin on a clean slate or to allow a debtor repay his creditors in a manner as would be most convenient for both parties depending on the ability of the debtor.
No matter if you are a struggling business or you are suffering from piles of personal debt, there is a solution for debt relief through bankruptcy. Bankruptcy is not a split second decision for debt relief but instead it is the last resort choice for financial freedom. You have to keep in mind that as there is a good and bad to every area in life the same philosophy goes for bankruptcy.
Positive Effects Of Bankruptcy
· Unsecured debts are discharged
· Foreclosure is stopped
· Repossession is stopped
· End Garnishments
· Utility shut off can cease
Negative Effects Of Bankruptcy
· Difficulty acquiring credit
· Hassle when buying a home
· Concerns with life insurance availability
· Job hire discrimination
With bankruptcy comes a stigma that might last an entire lifetime and one after-effect and fear that plagues most people who may have been declared bankrupt at some point. This stigma is the difficulty in securing credit facilities during their period of bankruptcy or in the future although technically, after two years, such an individual is able to start afresh and build a new credit record.
Other Debt Concerns
You may or may not be aware that some debts are unable to be discharged. Such debts can include child support, alimony, fines, taxes and student loans. Asset exemptions vary between each state and between which bankruptcy chapter is filed. An example of this is when filing chapter 7, the majority of the debtor’s assets are sold in order to pay of debt to creditors. Chapter 13 however allows the debtor to maintain possession of certain assets such as a vehicle or home.
Credit Scars
There is also hope of a successful financial future after bankruptcy. Credit can be rebuilt over time as a previous debtor makes bill payments on time and does not spend outside of ones means. Taking the time to set up a bill payment system and a personal budget is one key to maintaining the path towards financial health. Performing such steps will help creditors to see that you are in the progress of rebuilding your credit though your credit report will continue to show proof of your bankruptcy. Chapter 7 appears for ten years and chapter 13 appears on your credit report for seven years.
However, all hope is not lost. Being bankrupt is actually not the end of the road like most people would imagine. Even if you have been declared bankrupt (involuntary bankruptcy) or if you have declared yourself bankrupt (voluntary bankruptcy) before, you can still live a normal life after your bankruptcy period.
Many people do not know that you can actually get a bankruptcy loan during or after your bankruptcy. This is a lot easier if you are in chapter 13 bankruptcy. To improve your financial security, get some relief with repayment of your debts or even to quickly restore your credit rating, you can get bankruptcy loan and there are experts who can help you in situations like this. So you know you are not alone. You can get bankruptcy loan to refinance your bankruptcy and pay your trustees. Getting a bankruptcy loan can help a genuinely bankrupt individual recover quicker than you expect.
The End Result
In the end of filing a bankruptcy claim you will receive a new beginning to make wiser financial decisions for a more sound credit history. We are provided with a second chance through bankruptcy to learn from our mistakes and to become more responsible spenders.
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