Bankruptcy Questions Answered

Greg Smith asked:


Most people don’t understand bankruptcy until they are faced with it. Even then, a lot of people still don’t understand what is really happening. In the most general terms, bankruptcy allows a person having financial difficulties to wipe out his or her debt and start fresh. People file bankruptcy for numerous reasons: divorce, unemployment, death in the family, lawsuits, illness, medical bills, foreclosures and credit card debt.

Bankruptcy allows the creditor to receive a fair share of the money that the debtor can pay back, while giving the debtor a fresh start. There are two types of bankruptcy to fulfill this need: Chapter 7 and Chapter 13.

Under a Chapter 7 bankruptcy, all unsecured debts are wiped out. These debts include medical bills, legal fees, utilities, deficiency balances and credit card debt. The debtor may lose property to the court that will be sold in order to pay creditors. There are certain debts that will remain. By law, they cannot be discharged through Chapter 7. These debts include alimony, child support, taxes, certain student loans and debts from fraud, larceny and fines.
Chapter 13 bankruptcy helps people with regular incomes that wish to pay their debts but are unable to do so at the current time. With court supervision, a repayment plan is established between the debtor and his creditors that will pay the debts under an extended period of time.

In 2005, a new law was established — the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. So many consumers were abusing bankruptcy. You may have heard of people simply filing for bankruptcy repeatedly. Some simply had their debts discharged and went out and bought until they were in the same situation again. Other consumers needed protection from unethical lenders. This law makes it more difficult for consumers to file for bankruptcy.

Before a bankruptcy can be filed, the debtor must enroll in a credit counseling session. Before the bankruptcy is complete, the debtor must complete a financial management seminar. The consumer will learn to budget, manage money, use credit wisely and the basics of consumer information. These classes aren’t always free, some come with a mandatory fee.

Means testing will also apply to bankruptcy filings. The means test is an effort to force more debtors into Chapter 13. Any debtor who is able to repay 25% of what they owe, or $10,000, to his or her creditors will not be allowed to file for Chapter 7 bankruptcy. Basically, if the debtor is proven to be able to pay back a significant portion of his debts in the next five years, then he should be required to.

Financial advisors will tell you that bankruptcy should be your absolute last option. It will ruin your credit history. It isn’t easy to be granted bankruptcy and it isn’t easy to get over it. You should consider every available option before you decide to file bankruptcy. Often, you can go ahead and attend a consumer financial management class. Learn how to get out of debt and avoid bankruptcy.



Bankruptcy Questions

ebet sanders asked:


The myth of bankruptcy and redemption simply that the bankruptcy stopping ransom. Closer examination shows that it may not be quite true. Bankruptcy is a serious action taken to a tent redemption, which will have long-term consequences.

In particular, chapter 13 bankruptcy allows the person filing for work-one of the repayment plan, which extends over 36 to 60 months. The sum payments based on income from the “Claimant”, and he can essentially eliminate some debt. But this duty, not only exemption from matters that are not entirely collateral, such as cars or homes.

What happens is the applicant petition the court to recognize its Chapter 13 filing. It should not be taken, but if it is accepted, the court shall appoint a guardian, who determine the timetable for repayment. The petition should not be accepted if the applicant has filed more recently, or if its assets are not. If accepted, the Governor of starting its work in determining how the money from the landlord would be distributed to its creditors. Once the filing was made, the petitioner (homeowners) already has been unable to sell any of its assets without the permission of a guardian. If you want to stop your redemption by filing bankruptcy, you will temporarily lose their ability to sell their homes without the approval of Trustees.
If you find a buyer, the sale will enable the trustee, but only if he could be convinced, the price at fair market value (FMV). He needs to be assessed, because homeowners can sell their assets below market value prior to their registration. He is a trustee of the responsibility to make sure that does not happen, checking bank statements and the state archives back six months, and sometimes longer. If such a sale has taken place, the trustee may have to deal cancelled and selling reversed. That would be very inconvenient and expensive for new housing and the applicant.

Creditors know that many homeowners will file bankruptcy, as lawyers’ advertising so much, and homeowners do not understand the legal process. Where creditor receives notification that the bankruptcy was filed by the homeowners, they immediately instruct their lawyer to apply to the courts for his release from the bankruptcy filing. A special hearing will be scheduled, so there may be several a day in your delay without leaving his home. however, when the court hears petitions for the release of creditor homes, the court will approve it. landlord has now face bankruptcy, and his house will be on track to be sold.

The more the result of the release of the home is that the housing will have on its bankruptcy credit report for ten years instead of seven years for redemption. In fact, bankruptcy is a public registry for 20 years and will remain on each credit report, in accordance with the “Public Records” for up to 20 years. Before bankruptcy is a very short-term fix with long-term consequences. Consult a lawyer as soon as you think, bankruptcy may be an option for more information.

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Bankruptcy Questions

MIKE SELVON asked:


Chapter 7 bankruptcy is the type of discharge that most people associate with the idea of bankruptcy. Chapter 7 is also the option that most people commonly choose because it offers a fresh financial start without the obligation to repay the debts that the debtor has incurred.

Although there are several other options that debtors can choose to deal with their financial troubles, Chapter 7 bankruptcy is ideal for people who have no way to repay the huge amount even with a repayment plan. However, according to the law, bankruptcy involves a variety of options and guidelines to help people make an informed financial decision.

Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a “means test,” which is a comparison of the person’s monthly income to that of the state’s median income.

Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one’s petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.

The new bankruptcy code guidelines are designed to discourage abuse of the system. If an investigation finds abuse, the court can cancel the bankruptcy or require the debtor to repay their creditors through other means.

Suspected abuse includes multiple bankruptcy filings or trying to get debts discharged immediately after an expensive shopping spree. In the end, the court and its officials make the final decision regarding a Chapter 7 bankruptcy before debtors are granted relief.

Chapter 7 bankruptcy is not the only bankruptcy alternative for a debtor. Other bankruptcy options, such as Chapter 13 bankruptcy, allow the debtor to repay the debts in a 3-5 year repayment plan set up by the bankruptcy courts.

The court’s trustee assesses the debtor’s income and debts and decides on a plan in which the money is taken directly out of the debtor’s income for the purposes of paying the creditors. This option is often settled out of court with the creditors and is often used as a means for debtors to save their home from foreclosure.

Before filing for Chapter 7 bankruptcy, the best thing you can do is to talk to an attorney. Maybe you can avoid bankruptcy. Bankruptcy attorneys are familiar with the entire process and can advise you as to your best options before rushing into such a drastic measure.

If the attorney feels that you should file, they will also tell you which chapter of bankruptcy is the most advantageous to your particular case. Whether you decide to file or not though, focusing your efforts on changing your behavior is best so you do not end up in this situation again.



Bankruptcy Questions

Jon Arnold asked:


Sometimes situations arise when you can no longer pay your bills. Although you may have the best intentions of paying off your debt, you simply may not have the means to make this happen. When you can no longer pay your bills, you may need to consider filing bankruptcy. Hopefully you will have considered your alternatives but sometimes bankruptcy is the most viable option. The question then becomes which type of bankruptcy will best suite your financial needs, Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Your current situation will help you to decide which bankruptcy route is best for you.

A majority of consumers choose to go with Chapter 7 bankruptcy. There are a variety of differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy does not require you to make a plan of repayment. When you file for Chapter 7 bankruptcy, your debt is not immediately wiped out. Instead, a bankruptcy trustee will sell off your non-exempt assets in order to pay off your debts. It is important that you understand with Chapter 7 bankruptcy, you could potentially lose any property that you currently own.

However, with Chapter 13, you are not required to liquidate your assets in order to repay your creditors. Instead, you make a repayment plan to pay a portion or all of your unsecured debt back. This is done through the court system and payments can be made over a 36 to 60 month period. The amount you repay your creditors must be equal to or greater than what they would receive should you have liquidated your assets, as with Chapter 7 bankruptcy. If you follow through with your repayment plan, then your remaining unsecured debt will then be discharged.

If you have lost your job or have no means of repaying your debt, then you should probably consider filing for Chapter 7 bankruptcy. However, if you are still able to meet some of your monthly obligations, but cannot pay off your entire debt, then you may want to consider filing for Chapter 13 bankruptcy.

It is important that you have a full understanding of the lasting impact of filing for bankruptcy. Whether you are filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, there are financial consequences. Chapter 7 bankruptcy will have a steeper impact on your financial situation. By filing Chapter 7 bankruptcy you are telling creditors that you cannot be trusted to pay off your debts. Therefore, you will have a hard time finding creditors to lend you money in the future. This will be extremely important if you are ever in the need for a new car, mortgage or even a simple credit card.

Chapter 13 has less of an impact on your overall credit rating. Since you are still paying off your debt, just in a restructured form or at a lower interest rate, creditors see you as less of a financial risk, than someone who has wiped out there entire debt through Chapter 7.

Be aware that there are certain types of debt that cannot be discharged with either chapter of bankruptcy, so make sure you have a thorough understanding of bankruptcy law, especially with the major recent changes to the laws.

There are both pros and cons to filing either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Before committing to either one, you should sit down with a financial adviser and go over your obligations and options completely. Weighing out the pros and cons of both types of bankruptcy and basing your decision on your current situation, you will be able to easily decide which bankruptcy route you should go with.



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Peter Gitundu asked:


There is a choice on what to keep when one has filed for bankruptcy in the United States. This is commonly referred to as the exemption scheme in which an individual chooses the items or assets they choose to keep. These range from clothes to homesteads. This is only applicable under the liquidation chapter and the debtor can choose the exemption scheme only when they have submitted a list of all the available assets together with an approximate value. Once this is done, through guidance, the debtor can choose what to keep or not.

Bankruptcy does not provide for the clearing of secured debts such as mortgages, alimony, child care or outstanding tax on a property. Under this law, reaffirmation is allowed. The debtor must reaffirm the asset in question only after he, under oath is questioned about his financial affairs in the presence of creditors and other involved parties.

Insolvency allows an individual, partnership or cooperation to file a petition under chapter 13. This is through making a payment plan towards the creditors within three to five years. Many of the people who file a petition under this law usually have those debts that chapter seven cannot wipe away. These could be mortgages on homes they would love to keep due to sentimental reason. They could also be child support and alimony or large amounts paid towards student loans.

In the case of bankruptcy, the debtor will require a stable amount of money after monthly expenses such as food, transport and other expenses have been deducted. Once the petition is filed together with a repayment plan, a trustee goes through it for flexibility and sends it to creditors to have it approved. If approved one can keep the assets.



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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.



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Jon Arnold asked:


There are several different types of bankruptcy. The one people most commonly think of is chapter 7 bankruptcy. It can be confusing to know which of the types of bankruptcy is appropriate in your situation. Here is some information on chapter 7 bankruptcy and whether it is right for you.

Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. It will rid you of your outstanding debts, but the court may force you to liquidate some of your assets in order to satisfy your creditors. Chapter 7 bankruptcy will cost you about $299 between filing fees and paperwork, and will take between four and six months to be completed.

Chapter 7 bankruptcy typically only requires one visit to the courts. Most of the time you will be ordered to take a credit counseling course that is endorsed by the United States Trustee. Be aware that the laws concerning bankruptcy and the various types vary from state to state, so make sure you and your bankruptcy attorney are very familiar with the way bankruptcy law works in your state.

Not everyone is able to file for chapter 7 bankruptcy. If you have had a bankruptcy discharged in the last six to eight years, you may not be eligible to file a chapter 7 bankruptcy. The courts will also review whether you might be eligible to file a chapter 13 instead. This is a repayment plan instead of completely canceling the debt. This is based on things like your income, debt load, and expenses.

New rules dictate exactly what guidelines should be used when determining whether someone has enough income to repay their debts or not. If you are a disabled veteran and your debts were racked up during active duty or your financial burdens were due to a business loss, you are more likely to be able to file a chapter 7 bankruptcy.

Chapter 13 bankruptcy differs from chapter 7 bankruptcy quite a bit. Chapter 13 is a reorganization plan for people who want to pay off their debts over a period of three to five years. Usually the people who choose this option are ones who have assets that are not exempt under chapter 7 bankruptcy rules. People who choose chapter 13 must have enough income to cover their living expenses and enough left over to pay on their debts.

Chapter 11 bankruptcy is used primarily by large businesses to reorganize their debts and pay their creditors. The debtor must come up with a plan and get it approved by the creditors. If they cannot get it approved, they can try to force it through the courts anyway. However, the success rate of this type of bankruptcy can be as low as 10%. This is not a bankruptcy option for consumers.

Chapter 7 bankruptcy is most appropriate for those individuals who have overwhelming amounts of debt and do not have sufficient income to repay those debts. You can keep some assets, but some possessions may need to be sold to help pay back your debt. Once you file the papers, the courts will decide whether you are eligible for a chapter 7 bankruptcy or if a chapter 13 is feasible. It is a fairly quick process and will help end collections harassments.



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Rick Hendershot asked:


Chapter 13 Bankruptcy is a legal process that differs from traditional debt consolidation in many important ways. If you are trying to decide between these two processes, this article will help you make your decision.

While a Chapter 13 bankruptcy is actually a type of debt consolidation, it differs from traditional debt consolidation in certain important legal aspects. The most glaring and important difference is the power it wields. Backing up Chapter 13 bankruptcy is the Federal Bankruptcy Code, which can be a huge advantage when you are needing relief from debt.

Chapter 13 Protects You Immediately

An automatic stay will lock into place as soon as you file a Chapter 13 bankruptcy. It’s in the form of a Bankruptcy Court injunction which effectively stops most recovery efforts that have been launched against you. Garnishments, repossessions, foreclosures, creditor harassment and license suspensions will cease. Your creditors will be forced to stop all such actions because this injunction has the legal chops to back it up. In reality it’s a court order that mere debt consolidation services cannot provide.

Chapter 13 Covers Most Debt

In Chapter 13 bankruptcy, such specific debts as tax debt, child support arrears, car payments, and mortagage arrears can be rolled into one monthly payment. This is good news because the majority of traditional debt consolidation services allow only specific debts in the settlement plan. Wouldn’t you rather have protection from every one of your creditors?

Chapter 13 Severely Reduces The Total Debt

With the power of a Federal judge ordering your creditors to stick to the repayment plan, you may be allowed to pay as little a 10% of any unsecured debts. Of course there are certain qualifications you must meet. If you can meet these qualifications the other 90% will be eliminated. You’ll be able to pay off your debts much more quickly because of the severe reduction in principal owed. This is something that traditional debt consolidation plans cannot do. They can only ask the creditor to lower the interest rates and reduce the balances owing.

Chapter 13 Bankruptcies Don’t Drag On

You’ll only have to wait between 3 and 5 years for Chapter 13 bankruptcy to conclude, at which time all dischargeable debts are eliminated. Conversely, a more traditional consolidation could drag on indefinitely while you struggle with balances that remain high and continue to accumulate additional interest and finance charges.

Chapter 13 Takes No Late Fees or Interest

With Chapter 13 bankruptcy, the payments you make towards your unsecured debt will usually be put against the principal, thus drastically shortening the amount of time it will take you to repay that debt. In fact, debts that exist before filing bankruptcy will not accrue late fees, and in most cases will be repaid free of interest, unlike the usual debt consolidation process.

Chapter 13 Attorneys Work For You

Unlike a debt consolidator, your Chapter 13 attorney will vigorously represent only your best interests. He has a legal and ethical obligation to do so, and must comply with his obligations as regulated by state law. Many times debt consolidation companies are privately run, and may, in fact, be sponsored by the creditor themselves. With a Chapter 13 attorney on your side, you have the unique opportunity of having your rights backed up under strict legal requirements.

Chapter 13 Protects Your Property

You won’t be required to post any collateral in order to proceed with Chapter 13 bankruptcy if you cannot afford the proposed monthly payments. Many home equity loans and traditional debt consolidation companies force you to risk losing your home and your property.

Chapter 13 Takes Care of Your Important Debts First

Most of your secured loans will be paid off first at the conclusion of a Chapter 13 bankruptcy plan. This includes such things as mortgage and automobile payment defaults. Unsecured debt payments such as credit cards and medical bills are taken care of after secured and other important claims have been paid. You will probably incur penalty charges under a normal debt consolidation company in return for delaying payments to unsecured creditors. These companies also give preferential consideration to home finance companies and car payments, which leaves little for the remaining claims. The bigger the balance owing, the bigger the penalty charges.

Chapter 13 Requires the Creditor to File A Proof OF Claim

Under Chapter 13 bankruptcy all unfiled claims are eliminated if the creditor fails to file a proof of claim with the Bankruptcy Court. It happens fairly frequently that a creditor may be listed in the Chapter 13 bankruptcy file, but forget to do the proper paperwork, thus effectively eliminating themselves from the consolidation. If you complete the terms of your Chapter 13 repayment plan, such claims are ruled invalid, and you never have to pay them back.



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