Bankruptcy Questions Answered

Joseph Kenny asked:


A lot of people are running into financial difficulty these days - especially with a lot of major corporations going through layoffs and buyouts. What this means is that a lot of people find themselves suddenly unemployed and it may take some time to get another good paying job. When financial difficulties come, and they stay around for awhile, the thought of declaring bankruptcy will come into some people’s minds - especially when the debt starts getting out of hand, with no light at the end of the tunnel. Here are some thoughts about bankruptcy that will help you to make that important decision of “Should I, or shouldn’t I?”

What Declaring Bankruptcy Means

Declaring bankruptcy is basically an indication that you are not able to pay the debts that you have legally incurred. For this reason, and the legal examination of your bills and the way you handle your finances, as well as the humiliation involved, makes it a rather stressful process. It means that you will have to seek credit counseling, too.

Because so many people are attempting to get out of their debts, for one reason or another, Congress has passed an Act, which was signed by President Bush in 2005, to place certain limitations on declaring bankruptcy and who can do it. This Act, called the “Bankruptcy Abuse and Consumer Protection Act,” seeks to make it more difficult to declare bankruptcy and to help the creditor to receive a higher degree of compensation. This Act called for higher bankruptcy filing fees, credit counseling, and making it more difficult to file under Chapter 7, making it necessary for more people to file under Chapter 13 bankruptcy. Many other details are also covered in the Act that place further limitations on bankruptcy.
Two Types of Bankruptcy

Filing under a Chapter 13 bankruptcy means that there is a “reorganization” of your finances, and it does mean that you do repay much of your existing debt. You are required to make a plan that enables you to pay back a lot of your existing debt in the next three to five years. This means the sale of some of your properties (or all of them) in order to satisfy the debt. It is the bankruptcy Trustee who will make the decision as to what needs to be sold - not you.

Filing under a Chapter 7 bankruptcy means, once again, that the various assets that you do currently possess will need to be listed, by requiring you to take a “means test,” and then a decision will be made as to what you can keep and what you cannot. Everything will fall under an “exempt” or a “non-exempt clause.” You keep the “exempt” items, and lose the rest. The “non-exempt” items will either be sold, or you will be required to pay them back. Some things that are not exempt are child support and education costs.

The cost for declaring bankruptcy can run up to about $1,500 for personal bankruptcy. This includes the filing charges, and the lawyer’s fees. The fees, however, are dependent upon how much of an income you have, and it will vary from one state to another. The process of obtaining a legal declaration of bankruptcy, assuming everything is in order, can take up to six months.

After The Declaration Of Bankruptcy

Once you have obtained a legal declaration of bankruptcy, all of your creditors know where they stand. For some, the debts are discharged, and others have received what will be paid to them, or they know what will soon be coming to them. However, it also means that your credit rates have been destroyed, and it will take years to fully repair it. The bankruptcy is placed on your credit rating and will remain there for the next ten years.

What Other Options Are There?

If you are now in a position where you need to consider bankruptcy, then there are some other options that may yet be available to you.

1. Get Credit Counseling

By this, it means work through a debt negotiation company who will take your case to the various creditors in an attempt to work out some kind of a deal. This could be a good step in the right direction because creditors know that if you declare bankruptcy, then they may not get anything. Oftentimes, they will work with you.

2. Renegotiate Your Loans

Once again, by talking with your creditors, you may be able to renegotiate for better loan terms. This could give you a greater leeway financially that could provide just enough of an edge to enable you to get through it with having to declare bankruptcy.



Bankruptcy Questions

Albert Alexander asked:


Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due.

Bankruptcy is not something I recommend any more than I would recommend divorce. Along with a divorce, bankruptcy is listed in the top 5 life-altering negative events that we can go through, along with severe illness, disability, and loss of a loved one. In its simplest form, bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors.
Chapter 7 bankruptcy provides for the discharge, or elimination of, unsecured debts in order to start financial recovery. Chapter 13 bankruptcy provides a repayment plan for secured debts, such as a home mortgage. There are pros and cons to each of the consumer bankruptcy options as well as personal financial circumstances that may limit your options.

Because it completely rids you of your unsecured debt, Chapter 7 bankruptcy is the easiest way to come out of debt. Since all your debt is, in essence, wiped clean in a Chapter 7 filing, people have started abusing it. In a bankruptcy case under chapter 7, you file a petition asking the court to completely discharge your debts. Chapter 7 relief is available only once in any eight year period. Chapter 7 bankruptcy, which is sometimes referred to as total bankruptcy, stays on your credit report for 10 years.

Chapter 13 bankruptcy, more like a payment plan, stays on your credit report for seven years. Chapter 13 bankruptcy is the most common type of “reorganization” bankruptcy for consumers: You get to keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debt. The specific amounts of your repayment are determined by the courts.

Although bankruptcy can help with your financial situation, it does not help in every circumstance. Debts that are not eligible to be discharged include child support payments, some taxes, and student loans. Debts that can be discharged include personal loans, credit card debts, and medical bills.

Filing bankruptcy is a very serious move, and you must consider your options in comparison to your financial future. Filing bankruptcy involves a series of steps that you must be aware of. Filing bankruptcy is a major decision, with many benefits, including its ability to stop foreclosure, wage garnishment and creditor harassment. Filing can provide borrowers with clean financial slates either by discharging debt so that the one no longer is liable for its repayment, or by instituting a realistic repayment plan under the discretion of the bankruptcy court.

Filing for bankruptcy may be one of the most difficult decisions a person can make. There will always be those who file bankruptcy because of irresponsible financial behavior while others have simply fallen into unfortunate circumstances. For many who are forced to consider bankruptcy, the actual decision to file is usually the hardest part. Even with the negative implications of filing bankruptcy, most who have filed will agree that the psychological relief is a huge strain removed from their lives. Filing for bankruptcy is not the end of the world.

Bankruptcy is not a substitute for financial responsibility. Bankruptcy is not a quick fix for all credit problems. Bankruptcy is designed as a legal option to help resolve such a crisis, and act as a financial life preserver for those drowning in debt. Bankruptcy is the process by which you are legally allowed to get rid of your debt. Filing bankruptcy should only be used as a last resort effort to help people crawl out of a credit hole and get back on their feet.



Add a link here 1

Steve asked:


In the past years, people who were in some deep financial difficulties could aid their problems with the use of a credit card. Now however, it is more difficult to do that. With the rise of job losses being reported almost every day in the news and with the credit card tightened and shrunk, we can see why bankruptcy filing today has risen tremendously.

The financial crisis in the United States can be the main cause of this problem and the future of the economy still unstable and even harder to predict, it may be such a wise thing to start bankruptcy filing today.

People that go to credit counseling agencies to seek help are in worse shape than ever financially. Not even the credit counseling agencies could do anything to help them.  So as early as today, if you are experiencing some difficulties financially and cannot find the means to pay your debt, try to consider filing bankruptcy before you really find yourself in a really bad shape.

You can start bankruptcy filing today through the internet.  There are many sites on the net that you can choose from but you have to keep in mind that no information on any sites is intended to replace legal advice of a professional bankruptcy lawyer.  You can save some money by filing bankruptcy online.
There are two types of bankruptcy that you can either file.  The most common is the chapter 7 type of bankruptcy which can be done without a bankruptcy lawyer for simple cases that can save you some money.  The other second type of bankruptcy is chapter 13, which is a repayment plan or reorganization.

Chapter 7 is a straight or liquidation type of bankruptcy which means that the properties of a debtor are liquidated to cover his debts.  This type of bankruptcy is a simple type that can discharge the debts of the debtor.  Chapter 13, on the other hand, provides a legally agreed repayment plan that a debtor has to qualify.  The debts are not completely discharged and the debtor is obliged to pay his debt, although the time period will be longer but still reasonable for the creditors.

If you already have decided to file bankruptcy by yourself, you will need to file a petition to the bankruptcy court.  There are ways that you can file bankruptcy depending on the way you want things done.   The easy way is to hire a bankruptcy lawyer and pay him to do all the work for you.  The job of the bankruptcy lawyer is to guide you through the process, represent you in credit meetings and provide advice for your financial problems.  This can sound so easy but the fee for hiring a bankruptcy lawyer can be very expensive.  The cheapest process is to do it all by yourself.  That can save you a lot of money which you can really use later.  This way can be a little difficult if you cannot understand the basic of the bankruptcy law and how the system works.

My advice to most people who want to file bankruptcy is to do it both ways.  Hire a petition preparer or a bankruptcy lawyer to prepare your papers.  This can save you a lot of trouble, and the flat fee you pay them is usually worth the taking.  After all your papers are done, you can do all the rest by yourself.  This is the most affordable and efficient way you can ever file bankruptcy today.  For more information on how to file bankruptcy affordably, visit the link below.



Add a link here 1