Bankruptcy Questions Answered

Jon Arnold asked:


Financial difficulties can occur in anyone’s life. When you think financial difficulties are more than you can handle, don’t let bankruptcy become your first thought. Bankruptcy should be considered as a last resort, not just the first thing that pops into your head when the going gets tough. Instead, consider these options.

One of the first steps in avoiding bankruptcy is to make budget. If you have laid out a plan for your incoming money, you will be less likely to spend it on unnecessary items. You will therefore make the money last longer and work harder for you. Setting up a budget is crucial to help regain control over your finances. If you already have a budget setup, review it ruthlessly and start cutting wherever and whatever you can so you can return to profitability.

Another option to bankruptcy is to consider exactly what your debt is. Perhaps you have purchased a home that is more than you can afford or maybe you have too much vehicle debt. If either of these is true, you may need to consider downsizing. If you are paying out more than 40% of your income on a house loan, it is definitely time to consider selling your house and buying a less expensive one. The same applies to vehicles — maybe this is not the time to be making payments on a Lexus when payments or paying off a late-model Toyota or Chevy makes more financial sense to keep more money in your pocket and your creditor’s pockets each month.
Not only do you need to consider what type of debt you have, you also need to consider what items you can sell to increase your savings. Often, selling items you no longer use can help with the month to month struggles you might be experiencing. Maybe you have a lot of old books or CD’s laying around that you no longer use. Selling off a few unwanted items can help free you from some financial burdens.

We have all heard this time and time again. But, if you are having financial hardship, cut up your credit cards. Under no circumstances should you use a credit card, not even the one you have set aside for “emergencies”. It is possible that you truly only use your credit card for emergencies. But in a time of financial difficulties, your view of what constitutes an emergency could change. Without access to a credit card, the need to fix the air conditioner on your car doesn’t seem so dire.

Even though you need to cut up your credit cards and not use them anymore, you still need to find a way to pay for them. Begin by moving all of your credit card debt to the card with the lowest interest rate. If all of your credit cards carry a high interest rate, try negotiating with the companies to see if they can lower your rate. Very frequently, credit card companies are willing to work with you by lowering your interest rate and even allowing you to skip a payment, because they know that if you do end up declaring bankruptcy, it is very likely that they will only see pennies on the dollar.

Another option to avoid bankruptcy is to increase your income. Although this may seem very obvious to some, it is often overlooked. Cutting back on your expenses may not be enough. Therefore, working overtime or getting a second job may be the only viable option. Try delivering pizzas, mowing lawns or painting houses. If you are good with computers, there is frequentlyh a need in most areas for someone who will fix computers or even do in-home teaching of computer basics to novices. Any extra money you can bring in each month can go straight towards your current debt.

When drowning in debt, bankruptcy doesn’t have to be your only alternative. There are many viable options that should be looked into. So, before filing bankruptcy, be sure to exhaust all other options. Remember, a bankruptcy filing stays on your credit report for 7 years and is as visible as a sore thumb when you apply for new credit, even when things return to a positive cash flow situation, so you definitely want to only consider bankruptcy as a LAST resort when all other options have not worked out.



Bankruptcy Questions

TotalBankruptcy asked:

Bankruptcy doesn’t necessarily ruin credit. You may actually look better to a creditor after getting rid of old debt. Learn more about credit after bankruptcy.

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TopekaBankruptcy asked:

This video explains what it means to reaffirm your debt in chapter 7 bankruptcy. When you file for chapter 7 bankruptcy, your personal liability for your qualified debt is eliminated. But liens on your property remain. By way of example, let’s assume you borrowed money to buy a car. After you file for chapter 7 bankruptcy, you are no longer liable to make the payments. But your lender can repossess your car if you fail to stay current on your payments (because it has a lien on your car). So what can you do? One option you have is that you can reaffirm your loan. Basically, it means that you petition the bankruptcy court to, once again, make you personally liable for your loan. In other words, you are asking the judge to put you back on the hook for your loan. So why would you want to do this? In most cases, you do not. Reaffirming debt is risky and does not benefit you in most cases. For instance, let’s say you reaffirm a loan and you cannot make payments on it six months after you file for bankruptcy. Your creditor will be able to sue you for payments, charge you late fees, and possibly repossess your property. That will have a negative impact on your attempts to re-establish your credit rating. Not only that, but it does not make a lot of sense to ask to be made liable for a loan that you otherwise would be free from. Chapter 7 bankruptcy gives you a great chance to live a debt free life style. You do not want to start on the wrong foot by taking on debt. But there are …

TA Honey asked:


Knee deep in debt and looking for a way out? Well, you will easily find people willing to help you but the catch is “debt consolidation services” come for a fee! There are many dealers in market without requisite skill sets or qualification who may take advantage of a tight situation. You would find here some handy information on dealing with debt.

For addressing immediate insolvency concerns in UK refer to 1986 Insolvency Act. Bankruptcy can be an option when dealing with overwhelming debt you can not possibly meet under any circumstances. Bankruptcy is a way of making a fresh start, the assets are shared fairly among the creditors.

An individual can be declared bankrupt by usually three sources. An individual can voluntarily declare insolvency. A creditor who had extended an amount of more than 750 pounds can declare the individual bankrupt, given the circumstance. Bound by IVA too an individual can be declared bankrupt. Refusing to acknowledge the proceedings or the bankruptcy petition can also lead to declaration of bankruptcy.

The consequences of bankruptcy can be that you lose ownership of all your assets. Whatever assets you own will be divided fairly amongst the creditors. Moreover one declared insolvent will have to seek permission of the creditor. There will be certain restrictions on a person declared insolvent, such person is barred from the responsibility of Justice of Peace, member of parliament, as Chartered Accountant or Lawyer and cannot act as a director of a company. you may be publicly examined by the court. Also such a person can not indulge in trade under any other name without informing the creditors.

Bankruptcy does indeed bring you peace of mind if nothing else. It will also ensure creditors that full investigation of debtor’s affairs has been carried out, that nothing including the debt consolidation loan have failed. Though it leaves a mark on the credit history it does release you to make a fresh start.



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Ken Black asked:


When debts begin to pile up around you and you cannot make your regular monthly repayments on time or even at all, you may be faced with a very stressful situation. To make things worse, you will be denied credit from other lenders because you are unable to pay the credit you already have. If that is not bad enough, you will also have rude, irate and threatening letters and phone calls from your creditors, demanding that you pay them what is owed.

As these problems escalate, so do your bills. The problem with many consumer debts or unsecured credit is the interest rates are so high that, even if you are keeping up with your minimal monthly payments, chances are that you will never pay off your debts anyway. If the interest was not bad enough, once you begin to fall behind in your repayments or you borrow above the limit on your credit cards, you are likely to end up paying a whole host of other additional fees, such as late payment and over the limit penalties.

When faced with these situations, you need debt relief or ways to get your debt under control to place yourself in a position where you are able to get rid of your debts once and for all. Before exploring debt relief options, keep in mind that it did not take you a matter of days or weeks to get into debt, so you could hardly expect that debt relief will work for you in a matter of days or weeks either. Any option that you use to get out of debt will take time, patients and careful planning of your finances to make it effective.

What To Do First:

There are many different ways to get debt relief. Before you begin, you will need to sit down and make a list of all of your debts, then make a note of each creditor, their name, telephone and what their interest rates are. You will also need to work out your incoming money and where that money goes each week. Set yourself up with a budget and stick to it, while you are looking for options that will suit your circumstances better and help you get some debt relief.

See which of your debts are attracting the highest interest rates and target them. They are the biggest strain on you, so the sooner that you pay them off, the closer you will be to getting some debt relief. Pay the minimum on all of your other debts, except for the debt at the top of your list and pay as much on that one as you possibly can.

Next, you will need to call each of your creditors and explain to them your situation. Be honest with them. Where possible, ask them if you could pay your debt in full for less money or if they would lower your interest rates while you are paying your debts off. Ask your creditors how you can work together to get your debts paid off. You may be surprised at how willing they are to help you repay your debts.

If you do not feel confortable talking to your creditors, or if you are not having much luck with them, you may want to consider using a credit counseling service to help you get some debt relief. A credit councilor will work with you and your creditors to lower the interest you are paying and make your monthly repayments more manageable.

Additionally, a credit counseling service will teach you how to budget. Some credit counseling agencies give their customers the option to pay money to them each month and have their debts paid on time by the credit counseling company.

What Are Your Options?

The most common way that people often think of dealing with way too many bills, is to go bankrupt. By going bankrupt, you are likely to still end up with some of your debts needing to be repaid, as well as severely damaging your credit report, which will hamper your chances of getting credit in the future. Even if you do get credit after a bankruptcy, you will have to pay huge amounts of interest, which will put you back in the same situation you are already in. So even though bankruptcy may seem like an option, use it as your very last alternative and even then use caution.

One of the best ways to get some financial assistance would have to be debt consolidation. Basically, a debt consolidation loan will pay for all of the debts that you already owe and roll them over to one, usually with lower interest rates and lower monthly repayments. There are loans available from lending institutions that do not require you to have collateral. The interest rates will be higher than a secured loan, although they will be much less than the interest rates being paid to other credit companies or on credit cards.

If you currently own your own home, you may also want to consider the possibilities of a home refinance, also referred to as a home equity loan, which can be used for a variety of reasons, including repaying your debts. By refinancing, you may be able to get a lower interest rate on your home, as well as pay off your debts. If you take the refinanced loan out over a longer term, your repayments will be lower each month, giving you instant debt relief.

While debt relief is important to get out of the debt you are already in, it is also important to make sure to educate yourself in how to budget your money carefully and manage it better in the future. You want to avoid getting into a continuous cycle of getting in and out of debt.



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Jay S. Fleischman, Esq. asked:


The cost of bankruptcy is one of the most immediate concerns for people who are considering it - after all, how can you pay to have an attorney handle a bankruptcy filing when you don’t have the money to pay your bills? Since collectors have probably been hounding you for months and getting every penny they can out of you, it’s understandable that the cost of bankruptcy would be a major worry.

There are a number of factors that determine what you will pay in attorney’s fees for filing bankruptcy - the prevailing rates and number of bankruptcy attorneys in your area, the complexity of your situation, and the type of bankruptcy you will be filing. Also, some attorneys charge a flat fee, while others quote fees on a case by case basis.

While cost is certainly a major concern for you right now, it’s not always the best idea to just hire the cheapest bankruptcy attorney you can find. ”You get what you pay for” is a maxim that certainly applies here. If you run into unforeseen complications with your filing, you want to be sure that your attorney will have the experience and expertise to keep things on track. A seasoned attorney probably won’t be the cheapest around, but he or she will be there to answer questions, deal with complications, and make sure that you end up free and clear of your debt.

Some attorneys allow clients to pay their fees in  installments - if you can’t come up with the entire fee, this might be a good way to get the bankruptcy process started. Just keep in mind that paying in installments might delay your filing. Some states also have programs that provide volunteer attorneys to handle your bankruptcy case at no cost.

Once you choose an attorney, make sure you get a statement of your fees in writing - this way, you will know the exact cost of your bankruptcy filing.

For many people, the cost of bankruptcy seems like a huge obstacle. However, if a creditor offered to wipe out all your debt for just a few hundred dollars, you’d likely jump on the chance. Essentially, bankruptcy offers the same opportunity.



Bankruptcy Questions

Jon Arnold asked:


Is there a bright side to bankruptcy? Yes there is, although bankruptcy should still be considered your option of last resort, and the bankruptcy option only employed after you have thoroughly investigated all other options and alternatives. There are many downsides to filing bankruptcy, not the least of which is that this will become a huge red flag on your credit report for the next seven to ten years.

But sometimes bankruptcy is the best option in a given situation and if that is the case, you need to understand that there are bright sides to bankruptcy. Keep in mind that, especially with the new bankruptcy laws, one cannot file for bankruptcy on a whim, nor can it be done if you have already declared bankruptcy in recent years. The bankruptcy court needs to APPROVE your bankruptcy before things can move forward, and that approval is not nearly as automatic as it once was. Yes, after looking in your particular financial situation in a great amount of detail, the court may actually decide that you are not eligible to file bankruptcy, and you have to seek another option out of your financial difficulties.

One of the bright sides of bankruptcy, if you are approved to be able to file, is that the harassing phone calls from your creditors come to a screeching halt. But here is where it gets tricky because you also have some responsibilities here. After you have filed your bankruptcy petition and it is approved by the bankruptcy court, knowledge of this fact is not known to your creditors automatically. So the next time they call after your bankruptcy has been approved, keep track of the information. Write down the date and time of the call, which creditor it is, the name of the collections agency, and the name of the individual calling. Let them know that you have filed bankruptcy. By federal law, that stops calls from that creditor.

The reason for keeping a notebook handy where you record this information is so that if a creditor calls again who has already been told that you have filed bankruptcy, again write down the name, phone number, name of the person and name of the creditor as well as date and time of the call. With that information in hand, you can inform the creditor that they are now in violation of federal law. The ball is now in your court. There have been cases where a creditor continued to call after being informed that you had declared bankruptcy, and as a result, the consumer filed a countersuit against that creditor for their continued calls, and the debt from that creditor was wiped clean!

Another bright side to bankruptcy is your potential ability to start over with a clean slate and no financial obligations. Getting new credit is going to be difficult and you will have to spend time getting things like a personal loan, car loan, or even a mortgage, but it can be done. But since your credit report will show your bankruptcy filing clearly, be aware that it will be a longer row to hoe than it previously was.

If you file bankruptcy under the Chapter 7 regulations, you will need to demonstrate and prove that you are unable to pay even a portion of your outstanding debts. If this can be proven to the court’s satisfaction, your slate will be wiped clean.

The decision to file bankruptcy is not an easy one to make, and again, you are encouraged to examine all your options and alternatives. But if bankruptcy is your most viable option, make sure you understand the bankruptcy laws and have a bankruptcy attorney who understands them, because you don’t want to risk making a bad situation worse.



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John Doe asked:


I filed over 2 and a half years ago and was discharged little over 2 years ago. My question is how long after I am discharged do I have the right to include someone in on my bankruptcy? Because 2 months after I was discharged one creditor that wasnt on my bankruptcy but I was deliquent at the time of the discharge is now reporting negative info to the credit companies.

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Smith Bryan asked:


Houses and other property can be sold while someone is in bankruptcy, but there are specific rules that must be followed when you do it. You must get court approval before the property is sold. Until a final decree has been issued in a bankruptcy filing, the property will be tied up. The final decree may not have been issued even though the bankruptcy debtor has received a bankruptcy discharge. Permission from the bankruptcy court must be sought even if the secured lender, usually a mortgage company, has filed a motion for relief from the automatic stay. If relief from the automatic stay was granted by the bankruptcy court it means that the creditor can force its rights under the state law, but the property is still controlled by the bankruptcy laws for all other people, including the debtor.

In most cases, a bankruptcy will usually delay any foreclosure process. This is because when a bankruptcy case is filed, a restraining order is entered under 11 USC 362 called the automatic stay, which prevents any further debt collection efforts against debtors or their property. So if someone is facing foreclosure, a bankruptcy will immediately freeze the process. This may be permanent, as in most Chapter 13 cases, or it may be temporary, as in most Chapter 7 cases. The reason most Chapter 7 restraining orders are not permanent is due to the fact most Chapter 7 cases are over within four months time, and or, the lender will file a motion for “relief of the automatic stay” which will remove the restraining order against that lender on the property.

The typical foreclosure is four months. Add to this the 2 to 4 months of being in default before the process is started, and most people generally will not be foreclosed on in under eight months. After foreclosure, the lenders still needs to evict the debtor, which may take another month or it so if you add a bankruptcy to the nine-month foreclosure process, it’s not surprising to see debtors in their homes for a year or more from when they last stopped paying. Moreover, since the bankruptcy has erased the personal liability of the debtor, there is no recourse the lender  has against the borrower even if the foreclosure results in less than full payment on the loan. Additionally  since some states have  the one action rule, even post bankruptcy claims arising from staying in the property without paying will not result in any liability to the debtor.

When a person is in bankruptcy, the lender’s choice is to non- judicially foreclose and forever give up their claim for money damages against the debtor, or, to judicially foreclose in a court of law and obtain a deficiency judgment against the borrower. Virtually all foreclosures are non-judicial foreclosures since the judicial foreclosure is very time-consuming, and even when the lender prevails, the debtor still has a one-year right of redemption, whereby the borrower can come back within one year, tender the amount due, and get their property back.

So if you are surrendering your house in Chapter 7, you can pretty much expect to stay there for at least six months to a year from your last mortgage payment. This monthly savings truly gives debtors a bankruptcy fresh start.

Read more about how to file chapter 7 bankruptcy yourself. Visit www.diy4law.com for more details.



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Peter Gitundu asked:


Most people today are going to court to seek protection from the harassment of creditors once they have been unable to pay their debts. There are mainly two chapters under which bankrupt people can file a petition. The liquidation chapter has some of the debtors property sold in order to pay off outstanding debts. There are several facts that the debtor must equip himself with when such a situation occurs.

In Personal bankruptcy filing, one can protect their personal property from being taken over by the creditors. One risks being sued by the creditors and loosing all they have if they do not file a financial distress petition in court. This move will protect the consumer property especially if the property cannot cover the debt once sold. The court must evaluate property such as an automobile and house, if they will not be worth the net debt then the debtor will be allowed to retain such property.

Many people live in fear that once they file a personal insolvency petition, creditors may continue to harass them. The truth is that immediately the court has received the petition, it stops the creditors from any collective action against the debtor. The court appoints an attorney who is to answer to any creditors. There will be no more communication between the creditor and the debtor once the petition has been filed.

Debtors should be advised that personal bankruptcy could be the only option left when all has been done to no avail. It is important for anyone willing to go this way to get advice from the appropriate persons to allow them make informed decisions.



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