How Much Do You Pay Your Unsecured Creditors in Chapter 13 Bankruptcy?

The majority of people who file chapter 13 bankruptcy do not do so because they want to devise an orderly way to pay their unsecured creditors as much as possible. Usually most people file chapter 13 because: (1) they are ineligible to file chapter 7 by virtue of having filed and received a chapter 7 discharge within the previous 8 years (2) they are ineligible to file chapter 7 by virtue of having flunked the chapter 7 means test (3) they are significantly in arrears on secured collateral they would like to retain (think a house or car) or (4) they have too much equity in certain collateral, which they would possibly otherwise have to surrender in a chapter 7, so they retain it by filing chapter 13.

While some chapter 13 filers do have almost exclusively unsecured debt and wish to pay it off entirely, the majority of chapter 13 filers primarily file under that chapter because of one of the circumstances mentioned above. Because they file for those reasons, the treatment of their unsecured creditors is usually not their first concern. However, it is important to note what unsecured creditors receive in a chapter 13 distribution.

The golden rule of unsecured creditors in a chapter 13 is they cannot be treated worse than they would have been treated in a chapter 7. While the vast majority of chapter 7 cases are "no asset" cases and unsecured creditors receive 0%, there are some chapter 7 cases where unsecured creditors receive a distribution from the trustee.

This is the scenario described in number 4 above. The debtor essentially has to choose between filing a chapter 7 and surrendering assets to the trustee or keeping the assets and filing a chapter 13 to pay it off. The over exempt amount the debtor keeps must be paid to the debtors unsecured creditors in a chapter 13, because that's what the unsecured creditors would have received in a chapter 7 liquidation.

For example, let's say a debtor owns a $25,000 car free and clear. In Georgia, the debtor could protect $3,500 in equity in that vehicle, plus whatever amount of wildcard the debtor had left, let's say $1,500 in this example. The debtor therefore has $20,000 in unprotected equity in the car. In a chapter 7, the trustee could liquidate this car to pay creditors that amount. Therefore, if the debtor wishes to keep the car in a chapter 13, the debtor must pay at least this amount to the unsecured creditor pool in the chapter 13. Note that this calculation was based on Georgia exemption law, and if you use another state's exemption amount or the federal exemption amounts, it will vary.

The calculation above is more commonly described as a "liquidation analysis," because it is based on what amount your unsecured creditors would get in a chapter 7 liquidation. The other method of determining what amount your unsecured creditors could get in a chapter 13 is to figure out what your disposable monthly income is under the chapter 13 means test.

The means test is used to determine if, and if so, how much, a debtor has to pay the unsecured creditor pool on a monthly basis. The debtor must pay the greater of that amount or the amount under the debtor's liquidation analysis.

So if the debtor's liquidation analysis was as described above and showed the debtor having to pay $20,000 to the unsecured creditor pool, the debtor would have to pay that even if it wished to retain that vehicle even if the debtor had no disposable income to pay its unsecured creditors. Conversely, if the debtor was in a 60 month plan and had $500 per month in disposable income, the means test disposable income calculation of $30,000 ($500 per month multiplied by 60 months) would be the amount the debtor must pay the unsecured creditor pool, since it exceeded the $20,000 in the liquidation analysis.

As one can imagine, there is a possibility that the debtor cannot fund the amount necessary to pay the unsecured creditor pool in the liquidation analysis considering the debtor also have to pay off other debts (priority creditors, secured creditors and living expenses). In such a scenario, the debtors plan will most likely not be confirmed, because it is not feasible that the debtor can make all the necessary payments.

Bankruptcy - A Difficult Phase To Deal With

The subprime crisis which led to the economic slowdown about two years back has left in its wake a lot of serious problems for many people. Prior to the crisis, people could take loans even if they did not qualify for it and banks as well as financial institutions were only too happy to lend to them. This resulted in many people taking undue advantage of the situation and leveraging themselves beyond reasonable means of repayment. It led to many individuals borrowing to buy houses, expensive cars and other such capital items.

The problems started when the value of the houses started dropping and there were no takers for them. People who had borrowed now found themselves saddled with an asset that had no takers and by this time the financial institutions too found themselves unable to recover any repayment from individuals. This led to the collapse of some of the most well known financial institutions. People lost their jobs and many of the houses were forcibly repossessed. As for cars, they were anyways depreciating assets and people wanting to sell them still did not find others interested in buying them.

With many companies laying off staff or ordering pay cuts, the spectre of bankruptcy loomed large in many households and they had to declare themselves as bankrupt in order to buy time from creditors. The bankruptcy procedure is such that the affected person makes an appeal to the court through which he expresses his inability to meet his debt obligations despite his best attempts. Doing this, such individuals can avoid any penal action from the creditors and unfortunately bankruptcy filing is at its peak. People are seeing no other option but to file under many new rules.

This condition is a difficult one in anybody's life and it is a serious blow to his self-esteem. Fortunately, it need not be a long one and you can make a fresh start to slowly claw back and take the responsibility of paying back the due amount. The period of bankruptcy is a temporary reprieve and should be utilised by the affected individual to introspect and come up with some plan to tide over the situation. It is an opportunity for the debtor to make a fresh start.

Bankruptcy can be voluntary as well as involuntary. In the case of the latter, the creditors request that the debtor be declared bankrupt so that they can explore other options of collecting their money.

It is the duty of the debtor to cooperate with the creditors during the period of bankruptcy even if he or she does not agree with all the claims made by the creditors. Not doing so will further dent the reputation and can only lead to problems in the future.

Important Changes To Bankruptcy Laws

Filing for bankruptcy has always been a tedious process and many people find it overwhelming. Part of the reason for this is that people just don't know enough about the process. Over the years there have been several changes to the bankruptcy laws that can greatly affect a person's financial situation. These law changes came about in order to better protect those seeking bankruptcy protection as well as prevent abuse of the system.

Changes To Qualification Standards

In the past, qualifying for bankruptcy was, in a sense, unregulated. People were able to qualify for Chapter 7 debt elimination if it was determined that their debt burden was too large in comparison to the amount of income earned. With such loose guidelines for qualification, many people who could have afforded to repay some of their debts, were able to have their debts erased without any cost to them. Ultimately, paying off debts is the responsibility of the borrower and needing help versus a complete bailout are two completely different issues.

In 2005, the bankruptcy law changes set forth new regulations for how a filer qualifies for Chapter 7 versus a Chapter 13 repayment plan. Filers now must pass a "means test", which determines if the filers income is less than the median income in their state of residence. If the income is less than the median income of the state, the filer may file for Chapter 7; whereas, if the income is greater than the median income of the state, the filer can only qualify for Chapter 13 bankruptcy. The idea is to weed out those that have some ability to repay their debts, no matter how small a monthly payment.

Changes To Requirements

The bankruptcy process is highly structured and requires numerous steps of compliance on the part of the filer. Changes to the law now require that anyone filing for bankruptcy protection attend and complete a debtor education course. The course is a government-approved financial management program designed to teach filers about budgeting, smart money management, debt relief plans and how to use credit wisely. The idea is to provide filers the tools necessary to regain control over their finances to prevent the need for bankruptcy in the future.

Changes To The Benefits

Bankruptcy offers many benefits other than debt relief such as protection from creditors, evictions and legal actions for child support or divorce. An automatic stay is an order that prohibits creditors from contacting a filer once they have filed for bankruptcy. In the past, everyone was automatically protected under this order once they filed their petition. The new laws have restricted the automatic stay protection to that of credit collections only. Filing no longer stops evictions or legal actions for child support or divorce.

A qualified bankruptcy attorney can review the financial situation of anyone considering filing and advise them on the best way to proceed. Bankruptcy isn't always the best answer for everyone and the changes in the laws could affect the outcome of a case.

Can I File Bankruptcy For Free? Tips on Filing Bankruptcy

How to file bankruptcy for free is the very first question that comes into the minds of consumers who are ready to file a bankruptcy because of low credits, finances and assets. A consumer need to remain updated on bankruptcy information prior to filing bankruptcy online or offline. Moreover, you also need to know here that when you file for the bankruptcy for free, it is actually not a free filing. In fact, a customer, who is filing, you need to fill the forms, documents etc. which itself incurs costs. Generally, a customer filing the bankruptcy under Chapter 7 will pay under $200, and likewise a customer who is filing under the chapter 13 will have to pay under $300. The amounts remitted under the respective chapters will not include attorney's fees, legal or any professional financial advice.

If you are thorough with the bankruptcy information, then filing it online will become easy for you. If you are ardently looking for filing the bankruptcy for free, the best possible way to do it is to consult any credit counseling agency, or a legal office or any financial management group. The appropriate financial or legal agency will help you in offering free analysis of your financial conditions and filing bankruptcy online. It is this very evaluation and counseling that will help you to smoothly file a bankruptcy application in case you are under great fiscal problem. If you are looking for cheap and easy way to file the bankruptcy application, it would be a good idea about filing online on your own without hiring bankruptcy attorney. But in such a case, it becomes naturally evident here that you are aware of the prevailing laws of the state from where you are applying.

Keep in your mind that only updated bankruptcy information will help you save your money when you are filing for the bankruptcy. Of course, you also have the alternatives from filing a bankruptcy and some of the prominent ones include debt consolidations, debt negotiations deals, etc.

Further, when filing bankruptcy online, it also becomes necessary that you have good understanding of bankruptcy laws as these laws affect you based on your financial, marital and parental rank. Remember, there are many alternatives available in lieu of bankruptcy, and you can always secure the alternatives for getting away from bankruptcy. Are you ready for filing the bankruptcy now?

What Is The Difference Between The US Trustee and A Bankruptcy Trustee?

In the event that you are considering consumer bankruptcy, you have perhaps heard the word 'trustee' put to use more than once, also in more than one way. When it comes to bankruptcy Chapters 7, 13 and 12, a trustee shall be designated for your bankruptcy proceeding; meanwhile, there is also a United States Trustee's agency responsible for protecting the integrity of the current bankruptcy program, and examining falsified bankruptcy petitions. In what ways are they different, and how do they work together for a common end goal?

The role of a trustee changes among the bankruptcy cases filed under Chapters 13 and 7. The latter, which is also known as liquidation, demands the trustee to sell the debtor's significant belongings and move the earnings to debt collectors with a purpose to pay off the unresolved amounts. With Chapter 13, a trustee just will have to collect the funds from a person and hand it to the collectors according to the first repayment routine.

A trustee will be there at the creditor's meeting, or Section 341 conference. While in this meeting, you will respond to questions based on the information of your own case. Your creditors are asked to attend this meeting, and if they have any issues with your repayment schedule, they can report a formal grievance. On the other hand, this discussion is generally completed in a short while and it's the duty of your trustee to help with any disagreements that may come up. Failure to work with your assigned trustee or reply to their questions genuinely, is likely to cause a person's Chapter 7 or Chapter 13 request being refused.

Closely tied to the trustee is the U.S. Trustee's Office. Although its sole objective is to deter bankruptcy fraud, it is distinct from the Bankruptcy Court and is in actuality a component of the Department of Justice. The work of the Trustee's Office will be to carefully review all bankruptcies being prepared, to coach and coordinate all current trustees, and above all, recognizing and analyzing all bankruptcy filings that appear suspect and might indeed be an attempt at bankruptcy fraud. Although the Trustee is not always directly a part of any bankruptcy case, it might start a motion to get a release terminated or a whole bankruptcy rejected. The Trustee's Office is also where a debtor could report any problems concerning a trustee with whom they're working, and even while they cannot dispense legal services, you can call up the Trustee's Office to know the present position of their consumer bankruptcy request or even provide a tip relating to particular bankruptcy fraud.

Credit Card Debt Bankruptcy Help - How To Avoid Bankruptcy And Get Out Of Credit Card Debt

There are more American consumers on the verge of credit card debt bankruptcy than ever before. Filing for bankruptcy however should always be your last option to get out of credit card debt. There are better options out there. Here we take a look into one of those options known as debt settlement.

Debt settlement or debt negotiation services are intended for consumers and small businesses that are struggling to pay their credit card bills or other unsecured debts such as medical bills. The fact is that some people simply cannot afford to pay their credit bills and when forced with paying the mortgage or the credit cards, the former will almost always prevail.

Credit card debt settlement programs negotiate the actual balance on your credit cards or other unsecured debt bills. Unlike other debt relief programs that negotiate the interest rates and require full repayment, settlement programs negotiate the actual balance and the amount that is settled is not required to be paid back.

When you file for bankruptcy your credit score will be negatively effected for at least 7 years after the filing is complete. Considering the average bankruptcy case takes around three years this means that your credit will be negatively effected for around 10 years on average when you file bankruptcy.

New bankruptcy laws that were passed in 2005 make filing bankruptcy much more difficult to qualify for and far less advantageous for consumers. Ch. 7 bankruptcy which is considered the "fresh start" bankruptcy is nearly impossible to qualify for. You are much more likely to qualify for Ch. 13 which is similar to debt settlement with one major difference. You credit score will be hurt worse with bankruptcy.

Avoid Bankruptcy, Keep Your Credit Records Clean

You cannot expect to be extended preferential credit terms if you have something as adverse as a bankruptcy filing on your credit report. Chances are, your credit score is right through the ground, shunning your chances at ever being able to take advantage of good credit products. The reality though is that you would have the need for such credit products. And when you do have the need for them, you want to have access to them.

So, at all costs, it would be wise to avoid bankruptcy altogether and keep your credit records clean. At the onset of a potential filing for bankruptcy, you will find that you do have other options available to you. You just have to pick the right one that will best placate your creditor and possibly prevent him from reporting you as a delinquent borrower. Professional advice is necessary when it comes to these financial issues. You do not want to go haphazardly into any one particular solution that might not be prudent for your particular situation. You can consult with credit correction companies if you want to preserve your credit record. They would be able to give you advice on how to avoid a potential declaration of you being bankrupt from being reported and included in your credit record.

There are a lot of these professional credit correction companies around. They go by different names: credit repair agencies, credit mediators, and credit correction professionals. The work they do involves helping consumers ensure that only fair and accurate information are in their credit reports. While individuals themselves can undertake to file a dispute on credit information that is untrue with any credit reporting agency including Experian, Equifax, and TransUnion, it is a whole lot more effective to hire professionals in sweeping your credit record on file for any inconsistencies or erroneous reporting that could cause your credit score to drop a few points or maybe even hundreds of points as in the case of a bankruptcy filing. Many people have simply chosen to sit back and suffer the consequences of having a low credit score, albeit not due to their own wrongdoing. This often means years and years of not being eligible to get into any credit agreement. Finding the right credit repair company would help you fast-track your recovery through more effective and prudent credit restoration initiatives.

Bankruptcy Alternatives - How To Qualify For A Credit Card Debt Bailout

As debt settlement rank first among the most reliable bankruptcy alternatives,today many Americans search for ways to qualify for a credit card debt bailouts. If you are interested here are some tips for you to get through this deal with out much trouble!

If you already have more than $10k in credit card debt, you are through! If you do not have that much, still you have the potential to get rid of your debt while saving a considerable sum in your hand. You only need to ignore the credit card monthly payment for the next few months and your debt will soon reach the target of $10k.

Once you fulfill the minimum criteria relevant to this, you need to contact the nest and the most reliable settlement company for your deal. You can browse the Internet in search of a suitable company and it is recommended to go through a debt relief network if you do not have a sound knowledge in the subject. The debt relief networks are always ready to provide you with contacts of legal settlement companies who are in their affiliation.

You can even ask for your friends and relations prior experiences with regard to settlement deals and get their recommendations in selecting a settlement company. Online discussion and forum groups will also be handful in the selection of the settlement company for your deal.

Once you are settled with the best settlement company, you can discuss about your financial break down with your settlement partners and will help you providing the best settlement program. Then they will convince you creditors and to get the best settlement deal for you. Usually settlement companies succeed in attaining bailouts of more than 50% and the debtors only need to pay the rest of the amount in easy installments. Thus if you really needs to qualify for a credit card debt bailout, this is the right method!

Credit Debt Bankruptcy - The Best Alternative To Filing For Credit Card Debt Bankruptcy

There are more American consumers on the verge of credit debt bankruptcy than ever before. After one of the worst recessions since the Great Depression, consumers and small businesses are stuck with massive credit card balances. Before filing bankruptcy however it would behoove you to look into your debt relief options.

If you cannot afford to pay back your credit card bills there are really only two options. The best alternative to filing for credit card debt bankruptcy is debt settlement. Debt settlement programs negotiate the balance on credit card debt can typically are able to eliminate 40-60% of the overall balance. While every case is different, consumers will get at least 35% of there balance removed using a settlement program. If the settlement company is unable to eliminate at least 35% of your balance then you will not have to pay a single penny. New federal laws that were passed on October 27th 2010 enforce this. Debt relief programs cannot collect upfront fees anymore. Therefore debt settlement should definitely be at least attempted before filing for credit debt bankruptcy.

Filing for credit debt bankruptcy will negatively effect your credit rating for at least 7 years after the process is complete. With the average bankruptcy case taking 3 years to complete, this means that your credit will be negatively effected for 10 years on average. Compare this to a settlement program which can typically repair credit scores after 3 years. Considering the new federal laws, consumers and small businesses on the verge of credit debt bankruptcy should at least give a settlement program a shot. Remember, if they don't settle your debt, you don't pay a penny.

A Bankruptcy Attorney Will Help Meeting The Trustee For The First Time

Filing Bankruptcy And Meeting The Trustee For The First Time

Many Americans are coming to grips with the fact that filing bankruptcy might be their only way out of the extreme debt they have acquired over the last few years. There is much information on the Internet about bankruptcy filing, with some of it being true and even more falling under the category of myths and legends. There have been these scare tactics put on the web about what happens when a debtor has to file bankruptcy. Some of the information is a little bit of truth mixed with a bunch of misinformation that is probably coming from the credit industry. The credit industry doesn't want debtors to know that if they file bankruptcy, especially under Chapter 7, it will wipe out all unsecured debt. Filing bankruptcy puts the power back in the debtor's hands and takes it away from the creditors.

Much of the misinformation found online regard the meeting of creditors or 341 meeting and dealing with the bankruptcy trustee. After an individual files for bankruptcy they will be required to attend the meeting of creditors about 4 to 6 weeks after they file. Although, this puts extreme fear in most debtors, it is really not that big of deal. In a bankruptcy filing if the debtor is honest, they should have no problem getting a discharge. Sometimes, it might cost the debtor the liquidation of some non-exempt assets to give the proceeds to the creditors. Depending on which state the debtor lives in, bankruptcy exemption laws vary. That's why it's important to have a bankruptcy attorney working in your interest to protect the maximum amount of assets. This is one of the main functions of the bankruptcy trustee when a debtor is filing Chapter 7 bankruptcy.

When the debtor is filing bankruptcy, from beginning to end, it's important for the debtor to be totally honest and work with the bankruptcy attorney, giving them all necessary information so the bankruptcy petition can be completed. At the time of the meeting of creditors, the debtor will get to meet the bankruptcy trustee. It's common for people to fear the trustee prior to the meeting. There is a presumption of many debtors that the bankruptcy trustee wants to roll up to your house in a big box truck and seize all your property to give to the creditors. Well, I'm here to tell you that this is far from the truth. In a Chapter 7 bankruptcy, the trustee has the obligation to notify all the creditors of the pending bankruptcy filing. Next, they are responsible to collect any nonexempt property and liquidate it to divide the proceeds amongst the creditors. They also are responsible to provide all information about the debtors bankruptcy case. The main thing that the debtor needs to remember is the bankruptcy trustee has no beef with the debtor, unless they are dishonest with them. As long as the debtor is forthcoming with truthful information about their income and property, they should have no problem getting a bankruptcy discharge.

Having a bankruptcy attorney to help you through the process, it will alleviate a lot of the fears and misinformation that is on the Internet. When the petition is properly prepared by the bankruptcy attorney, the trustee will usually only ask the debtor about five or six basic questions about the filing. All in all, the 341 meeting and introduction to the bankruptcy trustee is no big thing.

Bankruptcy Alternatives - The Best Debt Relief Tactics To Avoid Bankruptcy

Bankruptcy alternatives should be considered in order to avoid bankruptcy. There was a time that people considered bankruptcy to be the best debt relief option. But now the situation is changed and the credit card debt relief has become a wider area to be discussed.

Bankruptcy is a method which you can get rid of the debt by not paying it back, but in return you will loose your asserts. Obviously, the credit card companies are not ready bare the loss by accepting the mere fact that you are bankrupted. They also have to survive in the field an there for they have to regain their money some how.

But you can avoid losing your asserts by going for another effective debt relief method such as debt settlement. Debt settlement is proven to be the best and the most effective debt settlement method of the time which you can easily eliminate your debt without your asserts being involved.

There are debt settlement companies who can successfully get this job done. They have the capability and the power to discuss with the creditors and reduce your debt up to a certain extent. But since there are plenty of such companies, they have a competition with each other and try to satisfy the consumers.

A proven and reputed company has the capability of reducing your debt by 50-070percebt of the original amount of the debt. This proves to be a huge relief for a debtor who is sunk in debts being unable to pay them off. Once can make arrangements to pay the reduced amount through installments and this will be decided by the credit card company considering your debt and the income as well.

But you have to make sure that you go for a legitimate company to get your job done. Other wise if you get caught to a fake company your situation will be made worse as they have neither capability nor power to eliminate a debt.

Bankruptcy Warning Signs

In this economy, millions of Americans are experiencing severe financial hardship. Fortunately, the federal government supports bankruptcy, and it is available for those hardworking citizens who truly need it. Bankruptcy is the light at the end of a very dark tunnel for many, and when there is nowhere else to turn, bankruptcy might be the most viable option available to you when you are swimming in a sea of debt.

Before people file for bankruptcy, they typically experience a variety of symptoms or signs. These signs are extremely common; however, when they happen to you, they can be extremely stressful to say the least.

Essentially, when people have more expenses or bills that they can afford to pay, they have a problem. When there is more money going out, than there is going in, problems are bound to arise; it's just a matter of when. It might take a couple of months, or a year to see the full effects of spending more than one makes, but eventually the bills will catch up to you.

Overspending is not necessarily a symptom of buying more than you need, or spending money on frivolous items. In many cases people have no choice but to use their credit cards for basic everyday necessities such as gasoline or groceries.

For most bankruptcy filers, they were driven to filing for bankruptcy after some major life-changing event. Whether that event was a divorce, a medical emergency, a death in the family, or a sudden layoff, these types of events typically lead to a financial downfall. As time goes by, the bills continue to pile up, whether you have a job or not, they don't pay themselves.

When the money runs out, people will usually turn to their credit cards first. When their credit cards are maxed out, they might withdraw money from their 401K or take out a home equity line of credit. However, these days a lot of people don't have the option of taking out a second mortgage or a home equity line of credit; therefore, their options for paying back debt are severely limited.

Still, taking a second mortgage or a home equity line of credit is only a band-aid that simply covers up the real problem. They are only temporary solutions, especially if you are out of a job or working only minimum hours, and even they need to be paid back eventually.Are you paying just your minimum payments on your credit cards? Or, are you making late payments on your credit cards and being hit by exorbitant late fees and interest rates? These are early signs that you may need to consider filing for bankruptcy.

Another common warning sign would be phone calls and/or letters from bill collectors and creditors. When people are typically 30 days past due on their credit card payment, their car payment or their mortgage, the phone calls and collection letters start rolling in. Bill collectors aren't always the friendliest of folks and the relentless calls to your home or work can become a great source of stress in your life.

Borrowing money is an early warning sign. Borrowing money from Peter to pay Paul is one shuffle that many borrowers become entangled with. A debtor might borrow money from their friend or their boss to pay their landlord, or they might take a cash advance from one credit card to pay another. This is a dangerous game to play because in essence, the debt is only piling up and increasing as time goes by.

Out of control debt can wreak havoc on your personal life, it can create a substantial amount of stress and it can affect your marital relationship. For people in these types of situations, they should always speak with a qualified bankruptcy attorney. A lawyer will be able to give them priceless insight into the bankruptcy process and how it might be able to help them. There is no reason why anybody should have to continue living in a situation where they have insurmountable debts hanging over their head. If you would like more information about your bankruptcy options, contact a seasoned San Antonio bankruptcy lawyer without delay so you can start taking your life back.

The Bankruptcy Process

Filing for bankruptcy is a big decision, one that is not agreed upon easily. For many people, the bankruptcy process can be overwhelming and even intimidating.

Filing does not have to be a chore, after all, the process is meant to be helpful not hurtful. The biggest problem that most people face is not knowing what to expect and how the process works. Becoming an informed consumer is the best tool you can have when you are fighting a debt battle.

Filing The Paperwork

The first step in the bankruptcy process is filing the petition. The petition is a detailed list of your financial standing and includes information about your income, assets, debts and bank accounts. The petition is also the most crucial document to any bankruptcy case. If there is any information missing or inaccurate on the petition the case may be dismissed, leaving you without the protection bankruptcy offers.

When filing the petition, it is of utmost importance that you have listed all the details about your current financial standing as well as any assets that may have been sold prior to filing. Since the paperwork required during the initial stages of the process contain numerous details, it is best to seek counsel from a bankruptcy attorney. They can help ensure all of your information is complete and accurate before you file the documents with the court. An attorney can act as your representative and help mediate any communication between you and the court.

Credit Counseling

Laws require that anyone filing for bankruptcy attend and complete a credit counseling course. The course is also known as a debtor education course and teaches you about budgeting, money management, other debt relief options and how to use credit wisely. The course is usually around 90 minutes long and can be completed in person or online.

When looking for a credit counseling course, it is important that you ensure that the company offering the course is an approved agency. There are many credit counseling companies that operate under false pretenses and may say they offer the course you need, but are not licensed to do so. An attorney can provide you with resources for finding an approved credit counseling agency. You can also find a list of approved agencies on The United States Department Of Trustees website.

Meeting Of Creditors

After the paperwork has been filed a 341 Meeting Of Creditors will be held. This meeting is conducted to provide a forum for anyone involved in the bankruptcy to ask questions or dispute information. Your creditors are allowed to attend the meeting and ask questions about the details listed in the filing. However, creditors do not always attend the meeting, which waives their right to dispute information in the future. The Trustee will be in attendance and it is their job to be a mediator between you and the creditors if any payments or assets are to be given.

Court Decision

Once the Meeting Of Creditors has been completed, any assets have been liquidated and everyone in attendance is in agreement, the bankruptcy court will make its ruling. In a Chapter 7 case, the court may either (a) discharge the debts, relieving you of liability to the debts or (b) dismiss the case, returning your debt liabilities to your responsibility. A case may be dismissed for many reasons including failure to comply with the requirements or fraud. In some cases, you may be able to re-file after your case has been dismissed. In a Chapter 13 case, the court may either (a) discharge the debts after you have satisfied the debt repayment plan or (b) dismiss the case, returning your debt liabilities to your responsibility.

Avoiding Common Mistakes Of Debt Repayment

When it comes to repaying your debts there are two things you should know (1) your debts are your responsibility and should always be repaid to the best of your ability and (2) not all debt repayment options are created equal. In fact, there are many common mistakes people make when repaying their debts.

Not Negotiating

Many people assume that they have little recourse when it comes to negotiating their debts. What you may not know is that, as a debtor, you maintain the right to negotiate your debts with your creditor at any time. However, you may not always be able to secure an agreement between yourself and the creditor.

In any case, if you are experiencing financial trouble you have the right to contact your creditor and attempt to negotiate a debt repayment plan. Many creditors are willing lower your monthly payment, lower the interest rate on the account or settle for less than is owed. Before you file for bankruptcy or end up in a debt settlement companies office, try contacting your creditor directly to discuss your repayment options.

Using Third Party Companies

Debt collection companies make a living off of your debts. They are hired by your creditors to collect on the money you owe. They often act as middle men that handle the collection and disbursement of money for the accounts. However, remember that you are not required to repay your debts through a debt collection company and are free to repay your debts to your creditor directly at any time.

Although many debt collection companies are professional and act legitimately, not all can be trusted. Therefore, if you choose to repay your debts through the debt collection company be sure that (a) they were hired by your creditor and do represent them, (b) do not charge you any fees and get paid by the creditor directly and (c) are willing to provide you with documentation from your creditor that your debts have been satisfied.

Paying With Automatic Debit, Cash or Money Order

Many people make the mistake of paying their debts by (a) providing their personal banking information to a third party company or (b) funds that are difficult to trace and document. Never give a debt collection agency access to your personal banking information or debit card number. Instead, repay your debts using the secure online bill pay system set up by your creditor.

Paying off your debts in cash or money order can create many problems down the road. There is no receipt of these transactions, which makes tracing the payments difficult. If the creditor disputes they ever received the money, you will have little ability to prove the money was paid in good faith. Using a personal check to pay your debts provides you with a traceable and documented payment that can be used if any information is disputed down the line.

Before Bankruptcy To-Dos

Filing for bankruptcy is not always as easy as one would think. In fact, there are several reasons why filing for bankruptcy may not be the best option for your financial situation. In some cases, filing for bankruptcy may need to be delayed in order to maximize the benefits it offers. In either case, there are a few things you should do before filing for bankruptcy.

Contact Creditors

Before proceeding with bankruptcy, it is a good idea to contact your creditors directly to discuss your debts. In many cases, creditors may be willing to negotiate a repayment plan that suits your budget. They may require proof of your financial hardship and your ability to maintain a negotiated plan. You can maximize your chances of successfully negotiating a repayment plan by writing a letter of hardship to your creditor. Don't be afraid of being honest about your situation and give them enough details to paint a picture of why you cannot afford to maintain your current debt payments.

Get A Game Plan

If your creditors are unwilling to provide you with a repayment plan that you can afford, or you simply cannot afford to maintain your debt payments, you may consider filing for bankruptcy. However, the most important step is contacting a bankruptcy attorney. Your attorney can review your financial situation and help you outline a debt elimination plan that works for you. You will need to provide details about your financial standing including your income and accounts, a list of your assets and a list of your debts. Honesty is key and withholding information about debts or assets could lead to bankruptcy fraud and severe consequences.

Quit Using Credit

Before you file for bankruptcy you need to be sure you have not accumulated any more debt. There are rules about how much debt can be acquired prior to filing for bankruptcy. In general, do not take on any more debt within 90 days prior to filing your case. Now is the time to start living on cash and stretching each dollar to its fullest potential.

Get Counseled

One of the requirements of filing for bankruptcy is to attend a debtor education or credit counseling course. This course covers topics of how to set a budget, smart money management and how to use credit wisely. Before your case can be discharged, you will be required to attend this 90 minute course. Therefore, you can get a head start on the process by taking this course before you even file your petition.

Getting out of debt is a big task for many people, but it doesn't have to be impossible. Although bankruptcy offers asset protection and debt elimination, remember that your debts are ultimately your responsibility. Don't take a passive role in finding debt relief, take action and become an active part of the process.

How To Avoid Bankruptcy - The Top 3 Debt Relief Programs

How to avoid bankruptcy and why should we avoid bankruptcy? Bankruptcy is a method which is been practiced among the community since some time in order to get rid of their liabilities. Once a person is unable to pay them off, they can declare that they are bankrupted thus unable to pay off the debt.

This declaration should be done through the courts. You should file a case to get the approval from the court that you are bankrupted. For this, you have to go through a lot of formalities and it will take a considerable time as well.

Once after you are declared to be bankrupted, the credit card company is compelled to eliminate your debt but they are not ready to accept a huge loss. There fore they have the right to interfere in your asserts and replace the debt with them. Why do you have to take such a risk when you have other better options?

What are they? The top 3 debt relief methods which I am going to discuss today are; debt settlement, debt consolidation and stimulus money.

Debt settlement is proven to be the best among all the debt relief methods. Thorough this way you have the chance to eliminate your debt without paying back in full. A debt settlement company can make this dream come true by reducing your debt. They can discuss with the creditors and make a reduction on your debt which at the same time you can pay it by installments.

Then debt consolidation is another debt settlement option which is mostly applied for huge or multiple debts. Through this method, one can get a huge reduction on their huge or multiple debts by consolidation all the debts together. This can save you a large amount of money which could have been wasted on eliminating them separately.

Then stimulus money is a option which is presented by the federal government which you can get an amount of money from the state to eliminate your debt. They will release the money to the credit card companies and they are convinced to reduce that amount from the debtor.

New Bankruptcy Laws, Take Professional Assistance for Filing a Case

The Bankruptcy Regulations have gone for just a makeover and continues to be modified recently with a lot more stringent protocols relating to the essentials of filing bankruptcy cases. The new bankruptcy rules tension about the relevance of specialist guidance from the instance of submitting a bankruptcy case because it can dispel a number of the most typical errors that are produced by debtors although trying to discharge money owed.

You will find two chapters in Bankruptcy regulations which might offer a shield of safety towards the debtors - Chapter seven and Chapter thirteen. Every single chapter includes a diverse set of demands. For Chapter seven, the debtor who files for bankruptcy has to adapt to some cash flow specifications. The law mentions that he needs to earn lower than what a spouse and children of same measurement earns in a median scale from the state.

If his salary exceeds this median cash flow, he may well qualify on certain specific grounds. Given that this chapter includes liquidation of asset(s), the filer of bankruptcy need to take legal counseling from a professional who can study the fiscal scenario that he is in and advise the most effective selection for him.

The Bankruptcy Laws and regulations also put a hold on the rights from the lenders to pressurize or harass the debtor to get a payback, as quickly as a case is filed. The court tends to make the last conclusion with regards to the status of your money owed and which demands to become paid spine and which can be completely discharged. The newest bankruptcy laws sustain that the belongings which fall below the non-exempt category might be liquidated by the bank or the mortgage loan firm to pay for again the loan companies in line.

This helps make expert intervention all the a lot more vital as submitting underneath Chapter 7 without suitable knowledge can in fact liquidate assets, if the debtor has some. A certified bankruptcy lawyer, if appointed, can give informed advice towards the debtor in such a instance and file his circumstance below Chapter 13 which extends far more time to him to repay spine the money owed.

In instance he has acquired a daily earnings, he can use his wages to pay for back the funds by way of a periodic payment scheme. This may right away enable him to obtain an automatic stay on possibilities of adverse developments like foreclosure of house or repossession.

The newest bankruptcy rules have been introduced into effect considering 2005. Since it isn't too old, understanding them inside out isn't an easy task for any regular individual. The function of a professional attorney becomes essential right here as he's updated on all current developments and may manual you effectively with due regard to your greatest curiosity.

Bankruptcy Is The Best Way To Stop Foreclosure

Over the last few years, all you have to do is turn on the news and hear about the housing crisis. The foreclosure rate continues to rise and experts say there is no end in sight. Homeowners in this situation have only a few things they can do to stop foreclosure. When a debtor defaults on their loan payment, the lender will step in and repossess property. A homeowner needs to take steps to stop foreclosure efforts by the lender before the property is sold at auction. Mortgage companies and banks are not in the real estate business, buying and selling property, they expect to be paid what they're promised. The way a bank makes money is charging interest on a loan secured by the property. If the debtor defaults on the loan the bank has a right to foreclose on the property and resell it to get their money back. Banks don't want to foreclose on homeowners because the loss affects their bottom line.

For someone who is dead set against filing bankruptcy, there are only a few options to stop a foreclosure. The first way would be to try and get a loan modification. The only problem with this is the foreclosure proceeding continues on as the debtor applies for the loan mod not knowing if they are going to get it. Recently, a news agency reported that only 10% of all loan modifications went through. That is not very good odds to risk your family home on. If you can't get a loan, the only other way to stop a foreclosure outside of bankruptcy is to sell the property. When you can't afford the mortgage, most professionals will say, sell it. In today's market there is a problem with this idea, many people are upside down on their homes, owing more than it's worth. Added to that, many have seconds and lines of credit against the property also. The problem is you will have to sell the property for less than you owe on it. If you can't afford to make your payments, you obviously don't have the money to make up the negative difference. To sell the property, you will have to get the bank to agree to a short sale, or in other words accept a lower total amount than what is owed on the property. Most people think that going this route, because the bank agreed to it, will just wipe out their mortgage. In actuality, the short sale will affect your credit similar to that of a foreclosure or bankruptcy filing. Most lenders also will send you a 1099 on the difference between what was owed and what the bank accepted. This will add a tax bill to your troubles.

Every day on the news, you hear about thousands of people choosing to walk from their homes because they owe more on them than they're worth. Most states allow the lender, if they choose, to get a judgment against the debtor for the loss they suffered because the house was sold at a reduced amount. This amount can include the interest, the late fees, auction costs, court costs and legal fees. You could see how this amount can run up in the high thousands easily. The deficiency will allow the lender to get a judgment and attach any future wages, while trashing your credit. This is why filing bankruptcy is the best way to stop foreclosure. In a Chapter 7 bankruptcy any judgment or deficiency would be included and would be wiped out in the discharge. If you want to keep the property, a Chapter 13 bankruptcy will allow you to get caught up on the arrears and in many cases eliminate seconds and lines of credit against the property. A Chapter 13 will allow you to have your bankruptcy attorney negotiate the debt, allowing you to pay it over a 3 to 5 year payment plan. This is why bankruptcy is king when it comes to foreclosure. The automatic stay of the bankruptcy will also stop any collection efforts upon filing. This gives the debtor a chance to regroup and decide whether it's feasible to keep their house or let it go. Whatever you decide, it's a good idea to get a consultation from a bankruptcy attorney to see if bankruptcy will work for you.

Bankruptcy Loan Facts: What to Know Before You Search

Anyone who has ever gone through a bankruptcy knows how stressful and depressing the process can be. No one ever wants to be in the position of filing bankruptcy and even once the court proceedings are over there is lingering doubt. As you emerge from a bankrupt state and begin to consider your options in rebuilding your finances, it is easy to feel hopeless and out of luck. Who would ever lend to someone with a bankruptcy on their credit report?

The good news is that there are many reputable lenders that you can find online that do just that every day. Bankruptcy loans are specialized lending packages designed to give you the help you need to purchase anything from a new home to an automobile, even start a small business even after you have declared bankruptcy.

Starting Qualifications

While bankruptcy loans are specifically designed to help those who have gone through the process of declaring and filing bankruptcy, there are a few basic qualifications that you will need to meet before you are eligible for a bankruptcy loan.

First, you must wait. Because of the stigma attached to bankruptcy, no lender in his right mind will offer you a loan immediately after you complete the process. In general, if you have filed Chapter 7 bankruptcy, you need to wait for 2 full years following the discharge of your case and the payments made to your creditors before you apply for a bankruptcy loan. In the case of Chapter 13 bankruptcy, you will need to wait until you have completely paid all the creditors that remain following the agreements made in bankruptcy court.

Between Now and Then

If you have recently filed for bankruptcy, then it is not likely that you will be able to find a loan right away. However, there are steps that you can take in the interim to ensure that you can get the loan you need when the time comes.

The most important of these steps is to protect the credit score you still have. This means that you need to be diligent in your repayment of all bills and credit cards from here on out. Even one late payment can be a black mark on your already mottled record. By being careful to spend within your means and maintain sterling credit from this point forward you are one step closer to getting the bankruptcy loan you need in the future.

Getting the Help You Need

Once you are ready to take out a bankruptcy loan, the internet is your best resource. Not only can you find many helpful tips for your life after bankruptcy, but you can also connect with lenders from all over who will compete for your business. The internet lending market is saturated with lenders these days which makes finding the right loan for you easier than ever.

It is plain to see that there are many options available for obtaining a loan after you file for bankruptcy. As long as you take care to protect your credit and meet the minimum qualifications required by the lender, the loan that you need to purchase a new home, automobile or start a business is within reach.

Effective Tips For Choosing A Right Bankruptcy Attorney

Nowadays we hear lots of people losing their jobs as unemployment is increasing a lot. We can never say that we will not face the situation as the unexpected happens. We should be ready with the solutions for the life's most unexpected and complex financial problems.

In case if you are unable to come out of your financial problems, then you can consider bankruptcy filing. But, you should be aware of how to choose a bankruptcy attorney. Choosing an experienced bankruptcy lawyer will make a big difference to your financial situation. Consult the attorney before making a decision as it will impact your financial situation. Search the internet and come to a decision by reviewing all the recommended lists of your state's bankruptcy lawyers.

Bankruptcy laws exist to give a solution to the person who is overburdened with debt and want to start freshly. These laws change frequently, in order to get most out of these constantly changing laws, a debtor needs a smart and experienced lawyer who deals entirely with bankruptcy. If you are in financial hardship and have a need of bankruptcy attorney, below are few things to take into account while choosing.

Gather a list of bankruptcy attorneys: Call the local bar association, talk with your friends and neighbors who have already taken the help of bankruptcy attorneys for reference, browse the internet to find attorneys in your area. After collecting a list of bankruptcy attorneys, depending on what type of attorney you need - consumer, commercial, business or personal, choose the best bankruptcy attorney. Call the attorneys personally and talk to them, this will help you to narrow down your choices and helps you in choosing the best attorney.

Consult the attorneys personally: Bankruptcy attorneys provide free consultation for first time, if the attorney charges the fee move on to the next attorney in the list, speak with attorney personally and find out how much experience he has and number of cases they have handled successfully. The bankruptcy attorneys should be able to provide detailed information about the bankruptcy from the scratch. If they don't provide the information confidently for the questions you ask and look unclear, move on to the next attorney.

Find out the amount you have to pay: Ask the attorney about the amount you have to pay fully from beginning to end. Depending on where you live and the type of debt you are in, the bankruptcy attorney will charge you $1,000 to $3,500. While choosing the bankruptcy attorney don't always choose the cheapest one. Find out which attorney is more qualified and who has good experience. Some bankruptcy attorneys will ask you to pay the fee fully in advance before filing the case. Talk to the attorneys in advance and come to a conclusion.

Options with the attorneys: Discuss all your options with the attorneys, make sure that the attorney you choose is ready to work for you, there are several attorneys who file your case without having interest to take up the case for quick fee. You can find out easily whether the attorney you chose is really interested to take up the case by interviewing the attorney.

Ratings and reviews: Check out the ratings and reviews about the attorney from your friends and internet.

Surely all the above steps will help you to find out good bankruptcy attorney; as a result you will hopefully get out of your debts.

Discover A Way Out Of Bankruptcy

Persons choose to elude from fiscal intricacies through filing for bankruptcy. Other than diminished social dishonor attached to bankruptcy, the growing number of cases is ascribed to the fact that more people are in debt these days. Contrary to in the past, the number of wealth-stricken individuals in Reseda have particularly increased in the coming of years. While some have recuperated from monetary burdens, there are those that are still in struggle to have their debts paid back.

Recovering from the stress of financial problems is indeed possible but is not at all simple. The pursuit to financial freedom begins with a personal realization of where you are and where you want to be when it comes to dealing with your finances. Debt-to-income ratio indicates the connection of the ability a shopper has to make a purchase with respect the range of finances he has at hand. Unrestrained spending of money that one does not really own is often the culprit of debt problems.

Unwarranted expenditures could be equally harmful as debt problems. Needless expenses appears to be endurable if they are done sparsely. Ultimately, all these dollar spent will mount up into thousands, just enough to have been apportioned to personal bank savings or other forms of investment.

It would also be very irresolvable for an indebted individual to redeem secure financial standing if he would never learn the art of cutting back expenditures. Little savings can go a long way; it does not only help you enhance your bank savings, it also teaches you the value of restraint when it comes to your finances. Your priorities when it comes to managing your money is a crucial element to deliberate right from the start, and it is the safest means to keep you from going bankrupt.

When all your efforts to avert bankruptcy have failed, asking for the expertise of a bankruptcy attorney is the next ideal choice. They could either be assigned or hired by federal court to assist you through the legal proceedings.

A bankruptcy attorney is sanctioned to elucidate bankruptcy applications, procedures and laws to those who want to file for a bankruptcy case. By means of a bankruptcy attorney's support, individuals and companies can be lightened from indebtedness and enjoy a fresh financial beginning. For West Hills locales who would want to start life afresh, skill of a West Hills bankruptcy attorney could be the best source.

Home Loan After Bankruptcy Discharge

After the bankruptcy you might feel depressed of bad credit and filing, you might feel scared of starting new loans. Even though you have a record of bankruptcy in your credit report, there is chance to make a new beginning. The good news nowadays is even having bankruptcy on your credit report, you can buy a home. There are several different loan programs available for home owners and buyers even with past bankruptcy. There are mortgage companies who will be willing to give home loans for those people even after bankruptcy filing. Hard competition among the lending companies makes them give special home loan packages for those who filed bankruptcy in the past.

The banks will check your credit history and score when you apply for home loan. Loan consultant will provide you the best rate and terms possible for your home loans. Creating good credit after bankruptcy is very much essential, so that you can get your home loans easily. Pay bills on time, use a secured credit card and check your credit report.

Mortgage companies need some form of assurance that the borrower is on the safe side after the bankruptcy. Many mortgage companies while lending concentrate on three things

a) On time bill payments for 2 years at a stretch.

b) Down payment

c) Steady income.

Lenders give the loans for the people, who have filed bankruptcy not merely by taking chance, they take your home property as security for your loan where there is not much risk involved. Some lenders consider on time bill payments for 2 years at a stretch and good credit report, whereas some lenders grant home loans just one day after the discharge.

Coming to down payment, you have to pay at least three to five percent of down payment to get approval. You can borrow this money from anyone and disclose this information to the lender before taking the loan, not disclosing the information will be counted as defrauding the lender. There is another alternative program called Nehemiah or neighborhood gold assistant program. This down payment assistance program will help you to get the loan even if you don't have enough cash to pay.

Once the home loan is granted from the mortgage company, you have to do monthly payments for your home loan. There is chance to reconstruct your credit history. Live a disciplined life, work hard and do not waste time and money for your lifestyle, because this is another chance to gain a home and reputation.

Before approaching a lender, check out your credit reports, based on your credit score. If your credit score is less than 650 points you may not be able to get the home loan through a regular lender, indeed you have to visit the sub-prime lender. If your score is above 700 then you are in a good position and you can visit a regular lender.

The way the economy is nowadays you might feel you cannot get the home loans because of your bankruptcy filing. But this is not completely true; you can succeed in getting a home loan two years after filing bankruptcy by following the steps above. There are various organizations and assistance programs which help you in financing, just make sure that you pay your credit bills on time as much as possible.

Declaring Personal Bankruptcy Can Be Avoided With Five Simple Yet Effective Financial Principles

Declaring personal bankruptcy can be avoided with some advance planning even if disaster strikes.

Everyone hits a difficult time financially at some stage or another in life. Right now in 2010 with the global economic downturn, there are even more people than usual struggling financially. The bad economy has hit even financially stable people very hard in many cases, and thousands of people that were probably getting ahead just fine are now in a huge financial mess where declaring personal bankruptcy is staring them right in the face.

How can you prevent this from happening to you?

Right now, I think the key to financial stability is to proceed with caution, and only expose yourself to limited, controlled and well evaluated financial risk. Prudence should be the word of the day.

Regardless of whether the economy is strong or not, there are some fundamental common sense rules that should always be followed so that you hopefully never land up out of financial control and declaring bankruptcy. You should be making sure in today's recession that you apply these rules even more rigorously than you would have, perhaps five years ago.

Never live beyond your own comfortable affordability level, regardless of what access you have to credit. Credit that you can't pay back is the enemy! Understand that an intelligent borrowing strategy can definitely be part of the bigger picture. But never buy liabilities with borrowed money. So throw away all those credit cards and pay off your loans that you may have taken out to buy things that lose value. Consumer goods usually don't grow in value, and you can never make your money back on them. Yes, this includes cars!

Don't misunderstand the difference between an asset and a liability. Some people think a motor car is an asset, when it is actually a liability, since it loses its worth from the moment it is driven out the sales room until it lands up as scrap somewhere. 

Learn about the compounding effect of interest payments. You can use the principles of compounding very effectively if you are clever about it. By the same token, if you don't apply common sense you can spiral out of control into deep debt as a result of the exact same principle of compound interest. 

Be very careful when borrowing money that is backed by collateral (such as mortgage bonds). You must be absolutely sure that you have a long term AND a short term strategy in place as to how you are going to service the debt repayments. If you don't tread warily here, you could end up with debt you can't afford, losing your collateral (often your home) in the process. 

Leave enough liquid cash available to be able to cover your basic needs and sit out a financial crisis for at least six months (and in this economy even up to nine months). I know this is a tall order, but if you do this, you will one day be eternally thankful you did. It gives you enough time to make a drastic and rapid plan if you land up without an income to service your debts.

I know that these bankruptcy avoidance principles sound rather conservative and not a lot of fun, but honestly, you really won't find it difficult to achieve this level of financial security if you start small but chip away at it diligently. Don't expect to achieve stability overnight, but start applying the principles little by little. Eliminate debt slowly. Stop buying on credit where you can. Downsize. Live a little. Don't become an economic slave. Avoid declaring personal bankruptcy!

Good Luck!

How To Go Bankrupt And Keep Your Home

The personal bankruptcy process can be one of the most effective ways for debtors to eliminate large portions of debt, though the process itself also brings with it some significant consequences. Filing bankruptcy can be both stressful and time-consuming and it can also cost a fair amount of money. Perhaps the most significant consequence is the fact that filing a bankruptcy claim can place your valuable assets at risk. Because of this, many debtors avoid the process altogether, fearing that their home and other assets will be taken away from them. Fortunately, it is possible to file bankruptcy and retain these valuable assets. The following article will show you how to go bankrupt and keep your home in the process.

When it comes to filing a bankruptcy claim there are really only two options - you can file under Chapter 7 or under Chapter 13. Although Chapter 7 is the most popular option, the problem is that it can place your assets at risk. Also known as "liquidation bankruptcy," Chapter 7 uses your assets to pay back your creditors through the liquidation process. While Chapter 7 can certainly help you to eliminate large portions of debt, it does so at a significant cost.

If you aren't interested in placing your assets and home at risk then I would strongly suggest that you consider filing under Chapter 13. Commonly referred to as "reorganization bankruptcy," Chapter 13 allows wage earning individuals a chance to repay their creditors through a structured repayment plan over a period of 3-5 years. A debtor can also hang onto their home through Chapter 13 if they continue to make on-time payments throughout the process.

For more Chapter 13 bankruptcy information consider browsing the United States Courts website. Alternatively, you can set up a free initial consultation with a reputable attorney in your area. Initial consultations are a great way to learn more about the process and they can also be a good way to get to know a particular attorney.

The Economy and Filing For Bankruptcy

In March of 2010, it was recorded that 6900 bankruptcies were being filed on a daily basis. Yes, you read that correctly. Nearly 7,000 people per day were filing for bankruptcy in the United States. Sadly, there has been nothing in the current economic climate that would indicate that the number of bankruptcy filings has declined. As any bankruptcy attorney will note, more and more people are seeking bankruptcy protection.

This leads to a very obvious question: Why is it that bankruptcies have hit record highs over the past few years? It is really not much of a secret as to the reason why. The truth of the matter is that the weak economy has been the driving factor behind the great expansion of bankruptcy filings.

On the most basic of levels, when the economy is weak, people are not able to make very much in terms of their income. Actually, a decline in one's income can be the least of one's worries as there can be even further problems which can derive from a weak economy.

Consider the following scenarios:

- Imagine being in a well paying job for several years only to be released. Now, you can do little more than collect unemployment compensation which may be in the neighborhood of 1/3 of your previous earnings.

- You could own a small business that sees a massive decline in revenue which leads to a 75% decline in income.

- A small business could see an even greater decline in income that causes the business to run at a $2,000 a month loss. That is -$24,000 per year and likely would lead to the business closing down.

Remember, when your income is down to a very low level, you will end up needing to go in debt to cover your living expenses which could be enormous. For example, someone suffering from a decline in income could end up falling behind on mortgage payments, pile up credit card debt, or be unable to cover medical expenses. This is to say nothing of not being able to pay state and federal taxes.

The weak economy also makes it extremely difficult for you to be able to generate the revenues needed to get out of such a bad financial bind. The truth of the matter is that a bad economy creates all manner of ripple effects that prevent the ability for someone having a difficult time staying on top of his/her finances to actually be able to do so. At some point, debt piles up to such a high degree that visiting a local bankruptcy attorney might be the only way out of such a tough scenario.

Difficult economies come with a sense of mystery. That is to say, you never can tell when they are able to be reversed. Because of this, it is extremely difficult to navigate out of a bad economy. Those unable to effectively deal with their debts due to the unfortunate issue of the impact of the economy may wish to look towards filing bankruptcy. This may prove to be the only beneficial means of dealing with a tough financial situation.

The To-Dos Before Filing For Bankruptcy

When you are in debt and are having trouble making ends meet, it can seem like there is no end in sight. The decision to file for bankruptcy is not an easy one. The process is full of requirements and steps that must be completed in order to complete the case successfully.

Although bankruptcy can provide the debt relief you need, many people simply don't know enough about the process before the file the petition. The worst mistake people make in filing for bankruptcy is not preparing or planning ahead of time.

Get Organized

There are many documents that are required in a bankruptcy filing, the first is the petition. The petition is a detailed account of your debts, assets, accounts and financial standing. In other words, everything you currently own, earn in wages, owe others or bought is reviewed in detail by the court.

The paperwork involved in a case can be overwhelming, but having these documents organized and reviewed by an attorney before you file can greatly improve your case. In general the court will want to see the following documentation:

Proof of employment or income, such as your paycheck stubs from the 12 months Checking and savings account bank statements from the last 12 months Statements from your retirement or investment accounts from the last 12 to 36 months Tax returns from the previous 2-5 years Statements from all of the creditors you owe money to, or your debt bills Statements or loan information from secured assets, such as your mortgage or car

Be sure to have a bankruptcy attorney review the information before filing the petition, as any missing or inaccurate information can lead to having your case delayed or dismissed by the court.

Watch Your Finances

A common mistake people make when pursuing bankruptcy is not managing their finances appropriately before filing the petition. In some cases people may attempt to accumulate more debt prior to filing for bankruptcy, essentially obtaining items without having to repay the debts. In other cases, people may transfer assets such as money or property to friends or family members, with the intent of getting these items back after the bankruptcy process has been completed. These actions are likely to be considered fraudulent and the case may be dismissed.

The bankruptcy process is meant to be a tool to provide people experiencing financial trouble eliminate or reorganize their debts. Anyone that intentionally manipulates the system could find themselves facing legal action. Actions that could be deemed fraudulent are:

Withholding information about your assets or debts, this includes leaving out assets or debts in attempt to conceal their presence Transferring assets to friends or family members prior to filing for bankruptcy, this includes giving away money or property Purchasing $550 or more on a credit card within 90 days of filing for bankruptcy Taking a cash advance of $825 or more from a credit card within 70 days of filing for bankruptcy

In order to get the most out of a bankruptcy case, always prepare your documents and finances ahead of time. Be honest and open with the court about your entire financial situation and be willing to share any information that is requested.

New Credit Debt Settlement Laws - How New Laws Make Debt Settlement A Better Option Than Bankruptcy

New credit debt settlement laws have made debt settlement programs a much better option than filing bankruptcy. The new federal laws provide much more protection for consumers seeking debt relief. Now if the debt settlement company can't negotiate a successful settlement deal and eliminate your balance by at least 35% you won't have to pay a penny.

Getting out of credit card debt is never easy and unfortunately there were many shady debt relief companies that took advantage of desperate Americans simply looking for help with the credit cards. These companies have prospered since the new bankruptcy laws were passed in 2005 making bankruptcy for less appealing. While many debt settlement companies were legitimate and did things the right way, many more were shady and deceptive. Well, it's safe to say that all those shady businesses have been put out of business with these new laws.

Only the legitimate companies are left. The companies that have a proven track record and are comfortable collecting there fee on the back end when the debt actually settles, will stay stay in business. They know the settlement process does work when done correctly by the right company. In 2009 alone over $1 billion in unsecured debt was settled via debt negotiation companies.

If you are over $10,000 in unsecured debt and are experiencing a legitimate financial hardship then a settlement program might make financial sense especially considering these new laws. Remember they can't successfully negotiate a successful deal and eliminate at least 35% of your unsecured debt then you shouldn't have to pay a single penny.

Bankruptcy Has Seven Disadvantages

Two types of bankruptcy exist: Chapter 7 and Chapter 13. Chapter 7 means that all your assets are taken and sold. Afterward, you will own absolutely nothing. However, you will have no more bills. Chapter 13 means that your payments are regulated by the court to pay off your lenders, for up to five years. But, you are allowed to keep some assets such as a car or a home. For this, your paycheck and/or other income is usually garnered.

How does it hurt my credit?

Once you have filed for bankruptcy relief and it is approved by the courts, the blemish, one of the worst, can appear on your credit report for up to 10 years. From that time on you will have trouble obtaining credit and when you do get credit it will have very high interest rates and very stiff repayment terms.

How will I get a new credit card?

After bankruptcy, the best bet for getting a credit card will be to arrange for a secured credit card with a bank or a credit union. You will deposit an amount of cash with that institution and that will be your spending limit. Meanwhile, you will have to pay for your purchases on the secured credit card on a timely basis and you will bear a rather high interest rate. It may be hard, but this will ultimately help your credit scores even after bankruptcy.

Does bankruptcy cost money?

First off, being bankrupt, you do not have much money anyway. To proceed through bankruptcy, you need the benefit of an attorney. This can cost $1,000 or more. You will also be liable for filing fees and other money that will be needed.

Is bankruptcy really a shame?

Embarrassment is a large part of bankruptcy. It will seem like the whole world knows about your profligacy and lack of responsibility. The bankruptcy court and your lawyer will know everything about your personal life and your wild spending habits. If you have just had bad luck, they will know that you were not smart enough to save money for a rainy day.

How can bankruptcy affect me personally?

Many marriages and friendships have been lost during the proceedings to bankruptcy and at the bankruptcy itself. Getting time off to go to bankruptcy court can be humiliating. Just the onus of being labeled a Bankrupt Person by friends and family is very hurtful. Bankruptcy can mean a lowering of your own self-esteem and may lead to clinical depression.

How will it affect me right after I file?

After bankruptcy, you will be basically penniless. You will be making your own lunch. You will be having top ramen for dinner. You will not be able to purchase the smallest pleasure. Friends often become distant.

Is the number seven unlucky?

As you can see, seven is not a lucky number for people who seek bankruptcy relief. Though you may be relieved of bills and the burdens they require, you will have other burdens to bear. Though it is not the end of your life, it is something to be avoided. Your focus should be on reestablishing your credit worthiness, long-term savings, emergency savings, and forgetting about a wild, spending-on-credit lifestyle.