Bankruptcy Questions Answered

Mike Freemen asked:


While no one likes to think about the subject of bankruptcy, the fact is that more and more people these days are finding themselves contemplating filing bankruptcy. It is not hard to understand why bankruptcy filings are on the rise. The levels of debt are rising faster than are incomes, and more and more people are finding themselves at a loss and wondering what to do.
While bankruptcy can seem like the best way to get off to a clean start, it is important to thoroughly consider all other options before taking the serious step of filing bankruptcy. For one thing, a bankruptcy filing will follow you for years, and it may be difficult for those who have filed bankruptcy to obtain loans, lines of credit or mortgages until the bankruptcy is off their record.

Another reason to seriously consider alternatives to bankruptcy is the fact that the bankruptcy laws have recently changed. The bankruptcy filing system, and the rules associated with filing bankruptcy, have recently undergone a total overhaul, and this means that many debtors will be required to pay back a larger percentage of what they owe when filing bankruptcy.

The rules associated with bankruptcy are largely determined by the annual income of the bankruptcy filer. Those debtors whose incomes are higher than the average for their state may find themselves required to pay back more of the money they owe in a bankruptcy filing, so it is important for those in such a situation to consult with a qualified bankruptcy attorney before making a move.

Of course for many people filing bankruptcy is unavoidable, and for many people this last resort is truly a fresh start and a new lease on life. The key is to thoroughly research the bankruptcy laws for your state, and to thoroughly understand the rules that may apply to your situation. The bankruptcy laws vary quite a bit from state to state. In some states bankruptcy filers can keep a great deal of personal property and real estate, while in other states they are entitled to keep next to nothing. It is important to know where you stand before filing bankruptcy.

The purpose of these new bankruptcy laws, of course, is to cut down on past abuses of the system, and there is no doubt that these abuses have occurred from time to time. For honest people in debt, however, these laws may have some serious impacts. It is important for every consumer to become educated in just what these law changes will ultimately mean.



Bankruptcy Questions

Cornie Herring asked:


Many bankruptcy filers are wondering whether they are entitled to keep one or several credit cards for emergencies backup. In general, you may not because your credit cards will be cancelled regardless, since you file the bankruptcy. The credit card issuers tend to punish their card holders for filling any kind of bankruptcy; in most cases, the credit cards of bankruptcy filers will be terminated once they file for a bankruptcy. But there are some exemptions where terms and conditions will be applied to enable the bankruptcy filers to continue holding their credit cards.

There are some exceptions applicable only to chapter 7 bankruptcy filers. Some credit card’s issuers will allow you to keep your credit card but with a sized down credit limit, and in return you need to repay them for some of your debts. In fact, some companies will automatically send you or your attorney a proposed reaffirmation agreement, a contract between you and your creditor that you will pay all or a portion of the money owed, despite the bankruptcy filing, in exchange for a minimal amount of new credit.

Beside the sized down credit limit, a chapter 7 bankruptcy filers may allow to keep their credit cards by some of their card issuers but the interest rate will be revised to a higher than the normal interest rate. But, if you can always pay your credit balance in full each month, you will never incur a finance charge, and the high interest rate won’t hurt you.

Other than chapter 7 bankruptcy filers, all credit cards must be given up at the filling of bankruptcy. However, there are credit card holders who have maintained their credit cards at zero balance for a long period of time do not report their credit cards during the filing. This action can be considered illegal since in effect your preference on one creditor (your credit card issuer) over other creditors, because repayment ordination is a trustee job.
If you are not eligible to file under chapter 7 or even you are filling under chapter 7 but you didn’t manage to get approval from your credit card issuers to keep your credit cards, the best thing is report all your credit cards and give them up. In most cases, your need to wait until the bankruptcy filing has cleared and then work with a debt management consultant to rebuilt your credit step by step. Of course, in the months and years after the bankruptcy filling, you may not be eligible for top-tier or even middle-tier credit cards.

But with some efforts and fiscal strategy such pay your monthly credit balance in full and on schedule will help you to rebuilt your good credit record and you can begin to erase the stigma of the bankruptcy; and eventually put you back in the realm of good to high credit score.

In Summary

In most cases, bankruptcy filers need to give up their credit cards. But, there are exceptions for bankruptcy filers in chapter 7, the debtors who file their bankruptcy under chapter 7 may allow to keep their credit cards with some terms and conditions.

Cornie Herring is the Author from http://www.studykiosk.com/CreditBasics. “StudyKiosk-Credit Basics” is an informational website on credit basics, debt consolidation and bankruptcy. To see recommended bankruptcy attorneys, visit: Recommended Bankruptcy Attorneys



Bankruptcy Questions