Bankruptcy Questions Answered

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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Sadhana Dhanyal asked:


The word bankruptcy gives rise to an image of utter helplessness. This is primarily due to the fact the there are many mis-conceptions associated with it. Often, people resort to it without even understanding its full meaning. The decision to file for bankruptcy must be based in facts. This is possible only when a person seeks expert advice.

People with multiple debt problems juggling with payments often consider bankruptcy. They feel it can offer some respite from the debt problems. If a bad credit score is attached with multiple debts, the situation can get worse. Such borrowers can make use of bankruptcy bad credit mortgage loan. Accessing these loans is not that difficult. Bankruptcy mortgage loan experts can guide any person to get a suitable loan.

One can use the loan for either buying a new house, refinancing, home improvement purpose, payoff credit cards, etc. There are many lenders in the loan market who offer such loans. One can choose from the most competitive programs. A borrower can easily get rid of credit cards, missed payments, mortgage lates and high interest mortgages.
A bankruptcy information lawyer can guide a person considering bankruptcy make a right decision. As is said earlier, the decision to file for bankruptcy must be base on facts, one should consider other alternatives if available on way to bankruptcy.

One can easily resolve debt problems by seeking their service. Following some simple steps will ensure one gets rid of all the debt problems in a short period of time. There are many debt elimination services that one can make use of. One can hop back to normalcy without filing for bankruptcy, IVA or borrowing more money that will have a person drowned in debt.

A bankruptcy lawyer can let you know the pros and cons of filing for bankruptcy. The prime purpose of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts. A person considering filing for bankruptcy can benefit form the service of these lawyers.

What does Chapter 7 Bankruptcy say?

A Chapter 7 bankruptcy wipes out a borrower’s debts usually within four months. The debtor has no assets that he or she would lose as a consequence of filing for bankruptcy. Chapter 7 bankruptcy gives a person a relatively quick “fresh start”. One can begin life afresh.

Chapter 13 bankruptcy

Chapter 13 bankruptcy, on the other hand is meant for people who want to pay off part of their debts over a period of three to five years. Visit our FAQ’s, which give information on most of your questions. Also visit our Audio Clips, which provide information on many of the most common concerns about debt. If your questions are still not answered we have an “Ask our Bankruptcy Lawyers” feature so you can ask one of our bankruptcy lawyers in your area a question. Filing Chapter 13 Bankruptcy can prove to be helpful if a debtor has a regular income, and thus can afford to request for such adjustments or reductions.



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justin narin asked:


Student Loans Aren’t Discharged by Bankruptcy

That’s the bad news. Due to bankruptcy reforms in 1998 and 2005, it’s almost impossible for the average person to discharge federal or private student loans through bankruptcy. You may be able to get help with your payments through a bankruptcy filing, but there are better options for repaying your student loans.

The Student Loan Bankruptcy Exception

As with all rules there is one exception: you can discharge a student loan in bankruptcy due to undue hardship. Undue hardship is defined as the permanent physical inability to work. You must prove in bankruptcy court that:
You’re physically unable to work You’re likely to be unable to work for most of the loan term You’ve made a good faith effort to repay the debt Paying it would prevent you, your spouse, and your dependents from maintaining a “minimal” standard of living.

If you believe you qualify under these guidelines, see an experienced bankruptcy lawyer for help filing an adversary proceeding as part of your bankruptcy case.

How Bankruptcy Can Help with Student Loans

Although your student loan can’t be discharged in bankruptcy, a bankruptcy court may be able to ease an overwhelming debt burden. Some courts may discharge a portion of your student loans, but this is rare and varies by court.

In most cases, the judge will incorporate your student loans into your debt repayment plan under Chapter 13 bankruptcy. Any balance remaining after the payment plan ends will still be due, but your other debts should be paid off by then.

What to Do if You’re Heading Toward Bankruptcy

If your total debts have reached an unsustainable level and you feel you must file for bankruptcy, don’t simply stop paying your student loans. Not only are student loans not dischargeable in bankruptcy, but also the federal government has the right to assess stiff penalties, seize tax refunds and other government assistance money, and garnish your wages.

Lenders want to help you avoid default. Contact them for help applying for a deferral, forbearance, or extended repayment plan before the situation gets worse than it already is.

Solutions for Student Loans You Don’t Owe

If a lender is demanding payment for a student loan you don’t think you owe, it’s best to resolve the situation before you wind up in bankruptcy court.

The most typical situation is a miscalculation of the actual loan balance, especially if the loan has changed lenders multiple times. If you think the lender is requesting more than you owe or hasn’t properly credited payments, write to them with your evidence. If the issue is not resolved, then a court can intervene to determine the amount you actually owe. A bankruptcy judge may also do this as part of a bankruptcy proceeding.

Your debt may be cancelled if a few situations apply:

Situation 1: Your school closed before you completed your education and you couldn’t complete it elsewhere. You don’t qualify if you voluntarily withdrew before the school closed. You may be entitled to a loan reduction if you voluntarily withdrew and the school improperly withheld any remaining student loan funds.

Situation 2: Your school or another party signed the promissory note in your name without your approval or the school falsely certified you as eligible for a student loan when you were not.

Situation 3: You were forced to withdraw due to a disability that developed while you were in school, or that certifiably worsened after you accepted the loan.

For all three situations, it’s best to contact the lender or the federal student loan program for assistance in resolving your unowed debts. Although a bankruptcy court can sort it out for you, other solutions are simpler and better for your financial future.

Student Loan Cancellation Programs

Several federal and state agencies offer programs to help you cancel or reduce all or a portion of your student loan debt without filing for bankruptcy. Most programs involve teaching, nursing, or military service.

In most cases, bankruptcy won’t erase your student loans. Although bankruptcy is still a viable solution for desperate financial situations, it’s best for your future financial well being to avoid it. Contact your lenders as soon as a problem develops in order to avoid worse financial repercussions.

Source:  http://www.bills.com/student-loan-bankruptcy/



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Reethi Rai asked:


Bankruptcy is the last resort for any debtor wherein he/she legally declares the inability to pay back the debt owed. In most cases bankruptcy is initiated by the debtor or the organization. However creditors can also request bankruptcy in an effort to get back what they are owed. After filing bankruptcy you can choose the life you want to live – you can either re-build your finances or plummet deeper into the abyss.

Follow The Checklist below and You’re Going to Emerge Unscathed Even after Bankruptcy

• Restrict or if possible STOP using credit cards

• If required get a secured bankruptcy credit card an pay your dues regularly

• Wait for two years before availing mortgage or even bankruptcy car loan to get the best interest rates

• Get copies off your credit reports and ensure that your accounts are listed as discharged

Bankruptcy Loan – Getting a Loan after Bankruptcy

Availing small and easily repayable bankruptcy loan – be it bankruptcy home loan or even bankruptcy car loan, will help you not just deal with your financial obligations but it will also help you rebuild your credit rating. A small bankruptcy personal loan is the ideal solution to repair your credit status. However there are some facts about bankruptcy loans that you must be aware of.

Firstly, bankruptcy loans are recommended only for people who have declared themselves bankrupt and only after their case has been discharged, their creditors have been paid. You have to wait for at least 2 years for your bankruptcy home loan or bankruptcy car loan application to be approved without unnecessary delay. Generally lenders perceive bankrupts as threats and don’t particularly want to risk lending to a recently discharged bankrupt. If you have chosen Chapter 7 Bankruptcy you must wait for 2 years to apply for a loan and in case of Chapter 13 Bankruptcy you need to first pay the full amount to your creditors before applying for a loan.

Can You Get A Credit Card After Bankruptcy?

You owned a home and hardly ever defaulted on your monthly payments. Your credit report sparkled. But unfortunate health circumstances forced you out of your job and you had to file for bankruptcy…Today you are looking for bankruptcy credit card without being charged outrageous interest rates. So what are you’re choices? You can choose between secured credit card for bankruptcy and unsecured credit card after bankruptcy.

Secured bankruptcy credit card is secured by a savings account you establish with your creditor. This savings account works as collateral for your credit limit. If you default on your payment your creditor will take money from the savings account. If you’re looking for a risk free credit card after bankruptcy – unsecured bankruptcy credit card is the option for you as it does not require any collateral.

Many people think about filing bankruptcy but the fear of life after bankruptcy hold them back. The information offered in this article aims to enlighten you on what you can expect when you have filed for bankruptcy.

For more information and help log onto Bankruptcy



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Devora Witts asked:


Filing for bankruptcy can be a very stressful process. Not only does it mean that you are up to your neck deep in debt, but also that you have no means of repaying it, at least any time soon. After the bankruptcy is discharged, you will be debt free, but it will have left a huge stain on your credit report that will stay there for at least 10 years. It does not sound good, now does it?

The main concern people have after going through bankruptcy is whether they will be able to get finance in the near future or not. This is not an easy question at all, as some other things have to be taken into consideration, such as monthly income, possession of assets to pledge as security, etc. As a general rule, it will be hard to obtain finance after bankruptcy, but it is completely feasible. There are no reasons to believe you will not be eligible for a loan.

When It Comes To Mortgage Loans…

You are thinking of buying a property, a home of your own. It does sound wonderful, you cannot wait to be able to see your kids running around the spacious back yard after a succulent barbecue. But there is only one issue… your bankruptcy file has just been discharged. As unlikely as this will appear, you will still be able to obtain the finance you need provided that you meet some requirements.

Mortgage Loan After Bankruptcy Requirements For Approval

This is no exact science, some lender might or might not follow the same rules. I will mention here the most common qualification requirements for anyone who is thinking of applying for a mortgage loan after going through bankruptcy.

1) A couple of years of good credit history.

This is not a must, but some lenders might feel more reassured and more willing to finance your dream if they see that after filing, you began making timely payments on all your bills. This will certainly prove that you have left behind the rough patch that led to you filing for bankruptcy and are ready for a new and fresh start.

2) A steady job and salary.

This is definitely the most important of requirements and the only one which is also a must. The other ones might be negotiable, but not this one. It shows the lender that you have high repyment capabilities, which is essential as this is a high-risk lending procedure.

3) Down Payment.

Most lenders, if not all, require a down payment, at least a small one. Not many lenders are willing to provide 100% finance on a property, but if you are lucky you might be able to find one who will. It is a matter of thorough research and tons of patience, but if your dream house is your ultimate goal, I am sure you are going to do everything in your power to get a good deal on the mortgage loan.

It is not impossible to get a mortgage loan after going through bankruptcy, you just need to let some healing time go by, one year in the least. I hope you all the best, and may you find the right lender and the perfect home loan.



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