Credit Card Bankruptcy - What You Need To Know About Different Types Of Bankruptcy

Do you finding yourself in a situation where the amount of debt you owe continues to grow every day and you are unable to get things under control? You may begin considering credit card bankruptcy to help clear away your current debts and start out with a clean slate. You have the legal right to claim bankruptcy, but it is in your best interest that you use professional services to keep things organized, answer your questions and in the end get the most debt erased, freeing you from the burden and giving you back control.

If you have made the decision to proceed with a bankruptcy, I am sure that you have at least a few questions about what is going to happen and how certain things will be handled.

First, there are two forms of bankruptcy. Chapter 7 and chapter 13. While there is a lot of legal information concerning the two types, they can be easily broken down.

In a Chapter 7, all assets that have not considered exempt will be auctioned off to pay for your debts. The remaining balances will be erased except with certain types of debt.

With Chapter 13, you will get to keep your assets, but you will have to make monthly payments for between 10% and 100% of the total debt, but for no longer then 5 years.

401K.

If you have a 401k policy with your place of work and are worried that they will take the money you have saved to pay back your creditors, relax. In almost every case, a 401K is considered an exempt asset. There may be situations where a portion of the money may be taken to pay back your debt, but most times a 401K is safe in credit card bankruptcy.

Car or vehicle

One common misconception that many people have is that their vehicle will not be considered an exempt asset. The process is complicated, but the court will take into consideration the blue book value of your vehicle and compare it to a value each state has. If it is less, then you will likely be able to keep your car.

Collection calls and other harassment.

Anyone who owes money has likely run into these. Constant calls made to your home and even to your place of work in an attempt to "collect" money you owe. If it goes on for long enough it can seriously affect your life. Once you have filed for credit card bankruptcy you are 100% protected by something called automatic stay. This means no more calls, no more mail. If they continue calling, you actually have a legal right to sue them.

The one thing you should never mess around with is getting yourself bankruptcy help. With the right help you will be able to get out from under crippling debt and get back on track with your life.

The Cost of Bankruptcy

Bankruptcy comes tagged with different costs that every debtor should be aware of. Apart from being the right path to follow when looking to have a new financial start, it can also be very costly; hence the need to make all considerations before deciding to claim bankruptcy. Take your time to evaluate all the costs to ensure that the solution is the best among all possible solutions available for your situation.

Bankruptcy calls for the representation of a lawyer whom you have to pay to offer services to you. There are also the filing fees for opening the file for your case. Nowadays credit counseling has been introduced which is supposed to prepare you for the process and advise you further on the different ways of keeping debts at bay. If you need to make changes to your case, you will be required to pay amendment fees among other fees coming along the way as the case proceeds.

The various fees should be your starting point for considering whether you should go on with the process or not. Apart from the charges, your credit report will be ruined and you will be in the list of bad credit. This could make it very difficult for you to get any financial funding in future. Although there are different institutions that are willing to give loans to people with bad credit history, the process can be tedious and it can be hard to find a creditor who trusts you. In return you will end up paying higher interest rates compared to other people if you are lucky enough to get a financier.

When looking to get insurance with your dented credit report, you will end up with higher premiums compared to what a person with good history will get. This is a cost you have to pay for your bankruptcy. Another thing that comes tagged with bankruptcy is the probability of your having to part with all your assets which could include your car and house among others in order to pay your creditors. Apart from dragging you down, this can be quiet embarrassing and could even have an effect on you psychologically.

If possible, it is better to avoid all cases and situations that could lead to bankruptcy. You will have more to gain than lose when your financial reports remain clean.

All About Bankruptcy Claim

A bankruptcy claim involves the declaration of a person or business that he/it is unable to settle outstanding debts to creditors thereby seeking the intervention of the court on the repayments. This is a clever way for debtors to begin building on their financial woes without getting harassed over them as they get better terms to deal with creditors.

When thinking of going for the claim, it is important to evaluate your current situation to be sure that you indeed need to make the declaration. This is because the affair can turn out to be a bit costly and you are not too sure what the results will be. The court has the right to reject your file depending on how your current situation appears to it. It could end up claiming that you are in a position to repay all your debts and ordering that you do so, turning against you. It is therefore very important to be sure of the step before taking it.

To make a bankruptcy claim work to your advantage, it is important to seek the services of a good bankruptcy lawyer. The lawyer should be familiar with the proceedings of the claim and should be in a position to advice you on what to expect from the court after evaluating your financial status. You should make a point of going to a lawyer with whom you are comfortable and whose rates are not too high since you will be required to pay other fees such as the court fees.

In the presentation of your claim file, the lawyer will be required to include a list of your liabilities and assets. The court can then instruct that the assets be sold to enhance your debt repayments even though they maybe incompletely paid if the asset value falls short of your debts. If there is a shortfall, you will be issued with a repayment plan that you are supposed to follow to completely pay all debts.

Bankruptcy laws are meant to provide debtors with a fresh start financially if well handled. This is a way of rebuilding on your bad credit history. It is only advisable that after managing your debts, you avoid things that incur debts on your side. The best way to avoid such situations is to live within your means keeping debts at bay.

Filing Chapter 7 Bankruptcy - What Debts Can Yo Get Rid Of?

For a growing number of Americans, the overwhelming stress of financial issues they are having is requiring them to claim bankruptcy to actually free themselves from their previous burden and start off with a clean slate. During this process, it is very important that to go ahead and use the professional services of a bankruptcy lawyer. With the knowledge they have along with expertise, they can make a very confusing and stressful time for anyone a little easier to handle. But even with the help of a bankruptcy layer there are certain debts that any form of bankruptcy is unable to clear away for you when filing chapter 7 bankruptcy.

You need to be aware of what they are before you start your search for professional bankruptcy help. These debts include:

#1 Unpaid taxes. This is one form of debt that your attorney may be able to work with, but if the taxes you owe are more than 3 years old they are not going to be able to get that debt removed.

#2 Unpaid child support and alimony. Any unpaid child support or alimony that you owe will not be allowed to be wiped out according to the bankruptcy laws. This includes future divisions of assets you own.

#3 Criminal fines or lawyer fees. Fines, attorney fees or any other money you owe for taking care of your legal fees will not be covered by filing chapter 7 bankruptcy.

#4 Student loans. These debts will not be covered by a bankruptcy. If it is proven that paying the student loans back will excessive hardship to you or your dependents, then it may be cleared away.

There are two cases when the debt you owe will in no circumstances be taken care of with a bankruptcy.

#1 Any debts not reported on the original petition for a bankruptcy. You need to make sure that all of your debts, big or small are written down in black in white so that there are absolutely no questions. This also brings up a situation where you are claiming for chapter 7 bankruptcy and after you are approved and all your debt has been cleared you receive a rather large bill from your local hospital or other bill. This means you are still responsible to pay for it, even it the services were rendered before your bankruptcy.

#2 Any fraudulent charges or dishonest activity in any way will not be covered by your bankruptcy and in many cases may even threaten your bankruptcy case with the courts.

To make sure you fully understand what is going on with your bankruptcy as well as improve your chances of being accepted, you need to get proper bankruptcy help. There are services that can give you professional financial advice on the best way for you to continue. Take advantage of that great resource and get out from debt for good.

Bankruptcy on Student Loans

Most people get through with education with the help of loans especially when looking to get further education, say like at the university level. In the long run, it could prove to be difficult to pay up the student loan offered to you. When faced with such a situation, it is common for most people to seek bankruptcy claim as a way of shielding themselves from the possible outcomes.

However, it is important to know that student loans are not dischargeable even in the cases of bankruptcy. Student loans with government backing or nonprofit organizations backing have to be paid back in full whether you are in a position to do so or not. This therefore rules out a bankruptcy claim as a solution to your student loan problems.

The only way you can have your claim accepted is if you are in a position to prove extreme difficulty in paying up the loan which is hard to do. To do so, you might be required to prove that you are unable to keep up with the set payment schedule for your loan, that in future you have no hope of paying up the loan meaning that the current financial situation is definitely permanent. You also have to prove that you have done your best in trying to pay up but have failed.

Proving the above is what proves to be difficult for most people, therefore making it irrelevant to even try out a bankruptcy case on your student loan. It is virtually impossible to prove that your current financial position is permanent since even though you could be unemployed, it does not necessarily mean that you will not find great opportunities in the future. This makes it better for you to forget the possibility of having a bankruptcy claim work to your advantage since it is certain that it will not.

To get your student loan discharged, you can turn to other available solutions that could be of help in your situation. There are credit agencies that specialize in advising people faced with bankruptcy on the various options available for them to get off their financial woes. It is likely that you will find something that will work to your advantage in the counseling session bringing you relief.

What Happens to My Car When I File Bankruptcy?

A debtor's vehicle is affected by bankruptcy in different ways depending on whether the vehicle was leased or purchased and which bankruptcy chapter was filed. If the vehicle was leased then the debtor has to choose whether to assume or reject the lease. Assumption of a lease obligates the debtor to continue making payments to the lessor under the contract terms and in return the debtor gets to continue driving the vehicle. Rejecting a lease means that the contract is no longer binding on the debtor but they must return the vehicle to the lessor. Leased vehicles are affected the same way in both Chapter 7 and Chapter 13 bankruptcy cases.

Vehicles that were purchased by the debtor and are collateral for loans are treated differently depending on the bankruptcy chapter the debtor filed. In Chapter 7 cases the debtor must decide whether to surrender the vehicle and discharge the debt, reaffirm the debt which allows the debtor to keep the vehicle but also binds them to a new contractual obligation which survives the bankruptcy discharge, or to redeem the vehicle which means to pay the lender an amount equal to the value of the vehicle in exchange for full satisfaction of the lender's claim.

In Chapter 13 bankruptcy cases the debtor may continue to make payments directly to the lender under the original contract terms or include repayment of the secured loan in their Chapter 13 plan. Including repayment of the claim in the plan sometimes has advantages, such as the ability to reduce the payoff to an amount equal to the value of the collateral, reduce the interest rate, and increase the amount of time to pay off the claim which may reduce the monthly payment. However, there are some risks involved in including a secured claim in a Chapter 13 plan. In the plan the creditor may not receive as much each month as they would have under the contract. If the bankruptcy fails for some reason the debtor may have to come up with a large sum of money to bring the claim current under the original contract or risk losing the vehicle to repossession. Each option has different procedural and legal requirements and should be discussed carefully with a bankruptcy attorney.

Getting a Car Loan in Bankruptcy

Declaration of bankruptcy does not necessarily mean that you have to suffer financially before you get yourself back up. After bankruptcy, there is still a chance for you to rebuild your life. Even though you could have lost most of your assets such as your car and house to resettle debts, you can still get yourself up by getting funding from financial institutions that do not mind your credit scores much.

When planning to get a car loan after bankruptcy, you should be cautious since this means that you are again taking up loans which could have been the thing that led to your situation in the first place. However, it is almost impossible that you will have enough money to start all over again meaning you will need the loan anyway. The end of bankruptcy should be viewed as a second chance of improving your financial and credit ratings getting you back into the good books of creditors.

It is important to have your credit report in order when you apply for a car loan. Almost every financier you approach will have the need to look at your credit report and you should therefore have everything in order. Instead of concentrating on the fact that you were bankrupt, a willing creditor will try to justify the reason behind your situation as the basis of giving you a loan.

A car loan should be more inclined in your favor even though the financier will be the one to benefit in the long run. For instance, ensure that the repayment method and the required monthly installments are fine with you depending on the current situation. If you are not comfortable with the terms, always try to negotiate or have another car loan scheme that suits you better. The duration of repayment period determines the monthly installments you need to make.

Be very careful with lenders as most of them work with commissions and will therefore go out of their way to get you to take up the car loan. It is important to read and understand all the details regarding the loan to make sure that you do not miss something that could cost you in the future. Even though the interest rates for the loan are expected to be high because of your history, you should be cautious with rates that are too high and unreasonable.

How to File for Bankruptcy

In today's world, a good number of people are finding themselves immersed in financial woes. This is especially the case with people who cannot live within their means and end up taking loans or misusing their credits. In the long run it becomes very difficult to keep your finances in check and you could end up with more than one creditor which is very risky.

The most probable thing to happen in such a situation is to have your creditors file a petition against you or you can choose to declare yourself bankrupt when you are absolutely sure that you cannot keep up with your debts and need the intervention of the court. Although the process of filing for bankruptcy could prove to be a bit tedious, it is a good way of shielding yourself from creditors who could end up harassing you over the debts.

Most people choose to personally file for bankruptcy instead of waiting till the creditors do it on their behalf. The first step for filing for bankruptcy is to find an attorney who is reputable to help you get through with the process getting the fairest judgment. You can easily find a good attorney through the internet or gather all the information you may require from friends and family who know good bankruptcy attorneys.

Once you settle on an attorney whom you think is worthy and experienced enough to get you through with your case, you are supposed to get all your financial reports and papers in order. The papers should include bank statements, bills and paychecks among other important financial documents. The attorney then analyzes the reports and chooses the right path for you before representing your case in a court of law.

In the same manner, you are supposed to come up with a list of all your liabilities and assets with the supervision of your attorney. The list is then presented in court together with the rest of your paperwork to help the court determine your case. You are supposed to be very honest in your reports; otherwise you could end up in jail for lying under oath. Your attorney should be aware of your every financial detail to help him or her plead your case, thereby getting you better terms.

After the court's analysis, the final decision will be reached which could involve the selling of your assets to offset your debts or a repayment plan making it easy for you to settle your debts over a certain period of time.

Types Of Debt In A Bankruptcy Filing

Bankruptcy is not something that everyone wants to do, but there are times when your credit card debt and mortgage payments get behind and it becomes a decision whether or not to file bankruptcy. With the US financial meltdown and job loss at record numbers, it seems inevitable that many people are being forced into filing chapter 7. This fortunately is not the end of the road for these individuals. Consumers should take a lesson from their financial mistakes and fight on for a better tomorrow by eliminating their credit card debt. With the new law in place it's a little bit harder to file Chapter 7 bankruptcy. Now, under the 2005 Bankruptcy code everyone must take a means test. This test requires your income to be at or under the median income of your state. For most people filing bankruptcy is the last and only resort.

The minute you file bankruptcy the court orders an automatic stay and it immediately stops all actions against your property by a creditor or collection agency and it also will temporarily stop any lawsuit or foreclosure filed against you. Essentially, when you file bankruptcy, anyone who you owe money to must prove to a bankruptcy court that you do in fact owe them the money. The bankruptcy trustee, who is assigned to you, will then decide based on your assets and current income who and what bills get paid with remaining unexempted assets. The Automatic Stay can be a powerful tool if you're being evicted, foreclosed on, behind on your utility bills and being threatened to be shut off, late on your car payment and numerous other reasons. You can see how this would help you buy time when you are in financial distress.

In a bankruptcy filing, there are two types of debts, secured and then unsecured. In a nutshell, secured debts have collateral and unsecured debts don't. Mortgages and car loans are two most common types of secured debts. Creditors take extra steps to reduce the risk of the loan by taking collateral for the loan, a lien on a house, car or other property. For these loans, there are two components: first, a promise to pay the debt and secondly, a right to sell the property if the promise is not kept. This right to the property survives bankruptcy discharge. If someone is in default of the loan, the right to sell the property is triggered. Bankruptcy law varies so it is very important that you seek the advice of a bankruptcy attorney to know if filing for bankruptcy will be a default in your state. If someone does not keep the loan current, the creditor's only remedy may be to foreclose or repossess the property. In fact that may be the only way that a creditor can get title to the property so that they can sell it.

Debts owed on most credit cards, like Visa or MasterCard, are almost always unsecured. That means that they will simply be discharged in a bankruptcy filing. It doesn't matter if you use the card for household goods, business expenses, or even travel. Of course, if you use a credit card within 90 days of filing for bankruptcy or at a time when you know you were going to have to file bankruptcy, you might find that such use is considered fraudulent and therefore not dischargeable. Typical types of secured cards are those from electronic stores like Best Buy. Electronic companies tend to securitize your use of the card with high-cost purchases, such as a computer. That can mean that when you file Chapter 7 bankruptcy you might have to give back the computer or keep making the payments. Often, however, the store can't produce the necessary documentation to prove the items being secured and you will get to keep the property anyway and discharge the debt.

What To Look For When Choosing A Bankruptcy Attorney

If you are able to read simple instructions, filing for personal bankruptcy is something that you can do yourself if you so choose. But, because many people are intimidated by legalese and the court system in general, many find it easier on their nerves to simply hire a bankruptcy attorney.

Most people also feel that with a bankruptcy attorney at their side there is much less chance of them making an egregious error of some sort. When looking for an attorney, however, you shouldn't simply go through the phone book or Internet and select one at random. There are a few traits to look for that will give you the best financial outcome for your money.

The first thing that is important to look for is an attorney who specializes in bankruptcy law. In addition, you want one who has practiced it in the state where you are filing.

While it is true that just about any attorney can actually handle the filings of your bankruptcy papers, a lawyer who specializes in bankruptcies will be able to advise you as well. And advice is what you are really paying for. An experienced attorney will be familiar with the various quirks in the law for your state. And, more importantly, he will also be able to advise you as to whether you should file for bankruptcy at all. Many times, depending on your exact financial state, you may have better options than bankruptcy.

You also want to look for certain credentials. While not having them, should not rule an attorney out, having them should be a point in their favor. If he has been certified in bankruptcy law, that is a point in his favor. It is good, also, if he belongs to and is active in professional attorney associations in your state.

How many bankruptcy cases has he actually handled? The more the better. You don't want to be the person that he is practicing on to get his experience. You want experience, but you want the right experience. Many of the large law firms deal in bankruptcies, but their specialty is business bankruptcies which can be quite different from personal bankruptcies. You want one who has real life experiences in personal bankruptcies.

You also want to get references from him of people he has represented in bankruptcy cases. And you want to actually call these people to get feedback.

When choosing an attorney, don't just interview one attorney or firm. Try at least three. Set up your interviews, ask the questions that you need, and choose the one that you feel most comfortable representing you.

Bankruptcy and Your Credit Report

Bankruptcy is a situation most people dread to find themselves in although a majority of people out there are finding themselves in the mess of financial woes. The increase in cases of bankrupt individuals and companies is linked to the recent recession in the world economy which led to people over stretching their budget or misusing their credit allowances. Those who are not bankrupt will find that they do not have any savings to their name.

Bankruptcy is very sensitive and could end up ruining your credit report. The bad credit report could remain with you for up to ten years after the filing of your case. This greatly lowers your credit rating and scores making it hard for you to get any form of funding when you most need it to rebuild your life.

It is important to understand that there are things that are not dischargeable even in your bankrupt position. Such things include child support, taxes and student loans; hence the great need to make the payments as soon as you can. This is because a delay in meeting your obligations could continue to dent your credit report when the credit bureaus get to know about it.

You should be prepared to find it hard to do things you could easily do earlier when you have a ruined credit report due to bankruptcy. For instance, if you manage to get a loan to help rebuild your life, you could end up paying higher interest rates compared to other people with good credit scores. The same case applies when you are trying to get insurance as your premiums could be much higher as institutions feel the need to be cautious with you because of your bad credit history.

However, being bankrupt should not be viewed as the end of life but the chance to have a fresh start and correct past mistakes. There is no reason why you should shy off from asking for loans even with your low credit scores as there are institutions out there that are willing to offer you what you need. With the proper credit counseling, you will have all options of rebuilding your credit report laid out to you, making it easy for you to mend your loopholes.

Bankruptcy Credit Counseling

Economic recession has left lots of people struggling with finances with most having no savings at all. The worst hit group of people is that which has found itself in total bankruptcy. The situation can be quite challenging apart from being embarrassing which is why credit counseling was introduced.

Bankruptcy credit counseling was designed with the intention of helping debtors come to terms with their current financial state without feeling too tortured about it. The program offers solutions to all kinds of debt problems giving relief to individuals or companies suffering from the situation. A certified counselor will discuss with you the different options available for you to deal with your situation helping you choose the one that is tailored to suit your needs as well as financial goals.

There are certified counseling agencies meant to work in close contact with you for helping you out with your problems. There is a great need to ensure that the agency you go for is indeed credited if you are to find solutions in reestablishing yourself financially after you pay up your outstanding debts and loans. The very first thing to do is to find a credited agency that is approved by the court. There are courts which will offer you a list of all approved agencies and counselors to make your work easier when tracking them.

In case you do not get such listing, make a point of confirming with the court that the agency you settle for is approved and whether the counselor you are working with is approved as well. Remember that you will be discussing your most intimate financial matters with your counselor making it very important to ensure that you are absolutely comfortable with him or her from the very first time.

Credit counseling will teach you all the financial skills available to help you avoid such mistakes in the future. You need to understand where you went wrong first before you can start all over following the right path, thereby avoiding mistakes. After the counseling, you will be in a position to decide whether claiming bankruptcy is the best thing for you to do or choose among the other solutions that are available for you.

Facts About Bankruptcy in Australia

To file bankruptcy in Australia is to legally declare that you are unable to pay your debts. This article reviews some facts about bankruptcy in Australia and explores the impacts of bankruptcy.

1. Voluntary bankruptcy

In Australia you may choose to declare bankruptcy or your creditors may petition to have you declared bankrupt. To file for bankruptcy in Australia you are not required to have a minimum amount of debt. The first step is to complete a Debtor's Petition and Statement of Affairs. These forms are sent to the Insolvency and Trustee Service Australia (ITSA). This agency processes all bankruptcy cases in Australia. On this form you must fully disclose all your personal bankruptcy information, including all private and commercial debt. If you fail to do this you may face penalties up to and including imprisonment.

2. What happens to my debts when I become bankrupt?

Once you are declared bankrupt you no longer have to pay the provable debts on your bankruptcy petition. This means that you do not have to repay unsecured debt such as credit cards and personal loans. However, if you owe secured debt such as a mortgage, the creditor may force you to sell the item securing the debt and then pay the money to them. There are many debts not discharged by bankruptcy, these include:

• Fines

• Debt from fraud

• Maintenance payments

• Child support

• Dept. of Social Security debts

• Higher Education Contribution Scheme debts occurring before bankruptcy

• Student Supplement Loans

3. Who handles my bankruptcy?

The ITSA or a Private Trustee will be appointed to oversee your bankruptcy. ITSA or the Private Trustee will sell your divisible assets and require you to contribute regular portions of your income. A review of your financial history will be conducted for any assets not declared in your bankruptcy petition.

4. What happens to my assets?

Upon filing bankruptcy your divisible assets are any possessions with a sale value. This generally includes such assets as cars, antiques, land, stocks and others. Filing for bankruptcy in Australia requires that you relinquish control over the vast majority of your assets.

5. What happens to my house?

If you have interest of any kind in a home that interest reverts to the Trustee's control. This may result in your house being sold and the proceeds being divided among your creditors.

6. What happens to my car?

The Trustee will determine if you may retain ownership of your car. As a general rule you will be permitted to keep a car if it is your primary transportation and is not valued over a prescribed amount.

7. What happens to my job?

Filing bankruptcy is not grounds for losing your job. In fact your employer is not informed of your personal bankruptcy information unless they are also a creditor of yours.

8. How long will I remain bankrupt?

If you file for bankruptcy in Australia you will remain bankrupt for three years from the date the Statement of Affairs was filed. The Trustee of your bankruptcy may extend this time to five or eight years if you do not complete your prescribed duties.

9. What are my obligations during bankruptcy?

After filing for bankruptcy in Australia you must let the Trustee know of any name or address change. You must also request written permission to travel, and you may have to give your passport to the Trustee. If you do not comply fully with the Trustee's requests you risk having your bankruptcy extended by two to five years.

10. Can my bankruptcy be annulled during the three years of bankruptcy?

In accordance with the Bankruptcy Act of 1966 you may offer composition or make an arrangement to settle debts with your creditors. The money offered must be previously exempt according to your personal bankruptcy information. The Trustee will hold a meeting of your creditors. If 75% or more in value and a majority in number of your creditors ratify the offer your bankruptcy is annulled.

The information in this article is correct as at the date of writing and should be relied upon as a guide only. Always seek professional advice before taking any further action.

Chapter 7 Bankruptcy: The Lessons I Learned, and Applying Them to Life

In 2011 I filed for Chapter 7 Bankruptcy in Colorado. It was a decision I made after I spent some thinking time on the situation at hand.

I had accrued more than $45,000 in credit card debt, and I had a mortgage, one baby with another on the way, and a wife who was mothering our babies as her full-time profession. I accrued this debt in a matter of months.

The debt I built up was from paying fees in tuition and traveling to some great seminars that taught me business and life skills. I went to a 'free' three-day seminar in March of 2011, and I filed bankruptcy in August 2011. The business offering the 'free' seminar "got me."

In retrospect, I would not have changed any of my decisions, as I am so thankful for the lessons I learned. There are four of them to share here.

Lesson Number One of Chapter 7 Bankruptcy-Get Help

When contemplating this route for your financial moves, get some great consultation. I talked with bankers, lawyers, family members, friends, spiritual coaches, entrepreneurs, and sometimes strangers to learn all I could about the subject and experience. I took notes and studied terms from online sources as well. Gathering information is crucial.

Once I understood the process, I hired a lawyer. Now, for someone who is filing bankruptcy, money is tight-or at least it can be. However, when hiring a lawyer one must pay the fees for the best lawyer around. I chose a lawyer based on a few points: his ability to communicate, his recommendations during a consultation, and his proximity and knowledge to my state's complicated bankruptcy laws. Each state is unique. You will want to make sure your lawyer is easy to communicate with because you may have a question or two. I had many.

The lesson here is that we all need help at times. I struck out in March to address my "problems" on my own. I had little communication with my wife and I was unable to identify what my true problem was. I did not have help because I did not ask. Once I hit this scary place in my life, I began to ask, and people came from all walks of life to support me in my time of need.

We must ask for help and, conversely, we must help others in their life journeys. I now help people every chance I get. I am constantly asking myself, "How can I help you?" And many times I will leave a conversation by stating, "Please let me know if I can do anything for you."

Lesson Number Two of Chapter 7 Bankruptcy: See Reality

One main reason I found myself making the decision to file for bankruptcy was that I did not look at my reality. I had one baby, one on the way, and I was earning about $35,000 from a local non-profit organization. At the time, I had a fledgling LLC company and had dreams of bringing this thing into life and prosperity. I wanted to be a millionaire, and I was not seeing reality for what it was.

I had recently purchased a home and therefore had a huge amount of credit limit built up. (A side note: in order to put this into perspective, a 'huge' amount of credit for me at this time was $45,000, and I used it all, plus some. I earned $35,000 in salary while raising two babies and paying a mortgage that was 25% of my monthly income. It is all relative, and for me it was indeed huge.) I began using my credit, and after an initial purchase of $15,000 I never held back. My reality had shifted.

I kept on this path, and at each seminar I would use my credit card to purchase something new. At one seminar I purchased more than $25,000 of trainings and I was not forthcoming about this exchange to my wife. She was in the dark most of the time because I was not in my reality. I was afraid to talk about what I was doing-because I was afraid of my actions.

I had not identified my problem clearly and I thought it would be addressed by purchasing and attending trainings that were far away from my home and family. Then I began to purchase huge ticket items that I thought would give me some sort of quick return.

I was looking for a "quick" fix. And I learned that the only place success comes before work is in the dictionary.

It was not until I was forced into looking at reality by an individual, my family, and my own impending credit crisis that I began to wake up. I then realized I already had everything I needed. It was a true "Acres of Diamonds" moment. "Acres of Diamonds" is a fable of an individual setting out into the world to seek diamonds. He travels far and wide to realize at the end of his life that there always were acres of diamonds in his back yard.

What was my problem? I was playing life like a boy and not stepping up to my responsibilities in life-I had no money saved and I was not upholding my commitments to self or to those around me.

We must stop and think about our situations to see our realities. Asking ourselves "What do I not see?" and "What assumptions am I making that give me the reality I see?" are incredibly powerful. We can also use mentors and friends to tell us what we do not see. The great ones will tell us honestly-like an individual I worked with in August 2011. He would not let me slide an inch from seeing the reality I had created for myself and my family.

Lesson Number Three of Chapter 7 Bankruptcy: When You Fail, Fail Hard

There is nothing pretty about seeing our true realities and taking accountability for them. Like the alcoholic that finally sees the destruction left behind his cloud of fury and for the first time realizes the definition of humility, we must begin to clean up after ourselves.

When I chose to file Chapter 7, I knew I had hit the bottom of my reality distortion. I could not pull off what I had dreamed of and it was time to collect myself and begin rebuilding.

When you fail, fail hard. What I mean by this is own every piece of your failure and express this to everyone you need to. It is with other people that we rebuild and we are rebuilding trust. The quickest way to rebuild trust is to use humility.

I used humility with my wife, my boss, my family, and my friends. I came to people and told them what I had done and where I was now. My wife said she was leaving with the kids (our baby was due any day now). I was devastated at first and then I got it. I had to accept this in order to find true humility. I had to accept that I was not anything I thought I was. I had to let go of my attachments to my life.

Letting go of attachments is powerful in life. It gives us true humility, a word rooted in "humus," or dirt. We must remember we were all born once and we will all die to this physical realm of life. When we realize this, we are already naked and we have nothing to lose.

My wife never left. And, in fact, our relationship is closer and tighter than ever before. Because I failed hard, and found humility, I rebuilt my relationships with everyone that my tornado had touched. Most importantly, I rebuilt trust with myself-this is the first and most important relationship to rebuild. We rebuild all trust by upholding commitments-big and small.

Lesson Number Four of Chapter 7 Bankruptcy: Live Again

Chapter 7 bankruptcy is a process. It took me five months to have my case closed even though I was quick to deliver anything that was requested of me. Throughout this time I was rebuilding my financial house, along with my relationships. I did not wait.

Failure is only failure if we do not learn from the experience. We cannot beat ourselves up for making mistakes-this is a form of self-hate. We must look forward, re-gauge our goals, and live again.

There is no experience too harsh and painful to not live again when we find true humility.

The lessons I learned from filing Chapter 7 I now use daily in my life. I spend time getting clear on my true problems, whether at work or home, by asking the hard questions. I then set out to find help and I am always offering to help others. I have reminders in my life to remain humble. For example, I wrote my own eulogy as if it was from my first born child's perspective. This is a powerful exercise as it uses your imagination to create the vision of your excellence. I read this weekly if not daily. Every day, most importantly, I remember to live.

Surprise! It is all new again.

The Importance of the Means Test When Filing For Bankruptcy

When filing for bankruptcy, you first have to figure out what type of bankruptcy you are going to file. And, in order to file under the most advantageous terms for yourself, you first have to know which types of bankruptcy filings you are eligible for.

This has become a bit complex since the passage of the new bankruptcy law five years ago. So, most times the process of determining whether you are eligible to file under the most advantageous plan is figuring out if you meet the means test for the state in which you are applying. If you fail this test, you will have to file under one of the more restrictive bankruptcy plan. If you do meet the test, however, you will be granted the opportunity to file under the more advantageous bankruptcy plan.

But, the problem with this test are twofold. One is that each state has its own rules. Therefore, it is impossible to simple compute you current net income and determine if you meet the needs test. Because it will be different for each state. In some states it is a simple figure. In others, you have to take other income variables into account. In addition, the test is calculated based on a six months average. So, if your work is seasonal, and you are just coming off a period of time where you have earned more money than at other times of the year, you may not pass the means test. Whereas, if you were to wait another six months, you might easily pass the means test.

The second thing that affects your ability to meet the means test is the expenses that are allowed. These are also different among the states. For example, in some states certain business expenses are allowed to be deducted from your income while in other states those deductions will not be allowed.

The goal for most people is to be able to meet the means test so that they are eligible for a Chapter 7 bankruptcy, the type generally considered most favorable for consumers.

To determine if you meet the means test for your state, it is best to consult a bankruptcy lawyer that specializes in your area. However, if you can't afford a lawyer, some websites have the ability to calculate the means test for all states. It is worth noting, however, that not all of the results from the various calculators will match. So the most reliable source of information remains the bankruptcy attorney.

Important Dates to Consider Before Filing Bankruptcy

Filing bankruptcy is painful enough for most debtors. The last thing you want to do on top of that is to make a mistake in your filing that leads to even more heartache, especially the kind of mistake that can be easily avoided. That is why after you make the decision to file the case, you have to make another important decision - when to file the case.

While there are certain things not to do before filing your case, even if you have done some of these things, they can often be corrected by picking the correct filing date.

Generally speaking, the debtor should avoid filing if he/she has:

* Charged on a credit card or received a cash advance in the last 90 days

* Paid off an unsecured debt exceeding $600 in the last 90 days

* Paid off a debt to a family member in the past year

* Given a sizable gift to someone in the past year

* Transferred an asset for less than equivalent value in the previous two years (or even longer, if your state law anti-fraud statute reach back is longer)

* Just purchased a vehicle

The debtor might also wish to avoid filing in certain other circumstances, depending on the facts of the case. Some scenarios the debtor might not want to file in include:

* About to receive an inheritance.

* About to receive a tax refund

* Received a sizable bonus in the previous six months which inflates the debtor's income on the "means test".

* In the middle of working out a home loan modification

While filing after having done some of those things might not affect the debtor's case in certain circumstances, it is important to alert your attorney to these issues before filing. Even though it might not be possible to avoid filing before letting the timeline run on one of these issues (for example, you might need to file to stop a foreclosure while knowing full well this exposes you to having a debt repayment to a relative rescinded), it is critical to run the facts by your attorney so you can be given all your options.

Often times the debtor will think he/she "needs to file," well before it is actually necessitated. In those circumstances, waiting to file can often lead to a smoother bankruptcy case for the debtor.

Bankruptcy Affects Your Credit Score

Bankruptcy can be an ugly word for anyone who has ever watched Wheel of Fortune. You land on the black "BANKRUPTCY" spot and lose all your money. How awful for that person who was hoping to win a few thousand dollars just for spinning a wheel and picking letters! The difference between that person and someone who actually has to file for bankruptcy is that the contestant on Wheel of Fortune has a chance to earn more money throughout the show. The person filing for bankruptcy is at their wit's end and has decided to make a life-changing decision to start over - literally.

To understand how bankruptcy can affect your credit score, you must first understand bankruptcy itself. There are two types of bankruptcy: liquidation and reorganization. Liquidation is just like it sounds. The bankruptcy trustee will liquidate some of your property in order to help pay back some of your outstanding debt. With reorganization, you are able to keep your property, but must agree to pay timely monthly payments over the course of a set amount of years in order to pay back some or all of your debt, depending on how much there is. Of course, since bankruptcy is a huge deal, there are several rules and regulations in place for each type, and you must abide by them if you want to get through this process.

Something you must keep in mind is that bankruptcy does not work with all debt types. There are several that are not covered under bankrupt law, such as child support and the majority of tax debts. Be aware of your rights.

Now that you understand how bankruptcy works, you can learn about how it will affect your FICO score. The first thing that probably comes to mind is that your score will end up in the toilet, but this is not necessarily true. People who are in danger of going bankrupt are less likely to have a high credit score in the first place, so there really is not much to lose when you do go bankrupt. When you are in danger of going bankrupt, you likely already have a history of late or missed credit card payments and other issues that affect your credit score negatively. In fact, sometimes the only way for that number to go is up because it was already so low in the first place. This is slightly good news hot on the heels of bad news.

Once you declare bankruptcy, your credit report is essentially carte blanche, basically starting over, which may give your credit score a very slight boost. All your delinquencies from the past are wiped clean, which gives you a good solid ground to start building from once again. The best part is that bankruptcy can help your credit score significantly in the long run because you will be compared with other bankruptcy filers, not with people who have never had a credit problem in their life. As long as you keep up the good work, your score will soar. Read more about bankruptcy and credit scores.

What To Expect In Bankruptcy

The bankruptcy process is not intended to be stressful for anyone, but people are often overwhelmed by the process. The main reason is that very few people have an accurate understanding of how the process works and what to expect along the way. Getting informed about the ins and outs of bankruptcy can help prepare you for process and ensure you are able to make a smooth transition.

Qualification Standards

In 2005, some important changes were made to the bankruptcy laws. Some of these changes included specific rules as to the qualification standards associated with bankruptcy. The biggest change occurred in Chapter 7 cases, which now require that debtors pass a means test in order to qualify. In order to qualify for Chapter 7 you must (1) have an income less than the median income of your state or (b) lack sufficient disposable income to repay your debts. Not much was changed about Chapter 13 qualification standards and these cases are generally open to most people who file. However, there are still some rules as to when filers are eligible and which debts may be included.

Debts and Assets

They way debts and assets are handled in each type of personal bankruptcy can vary. The most important aspect for you to remember is that debts are not guaranteed a discharge and assets are not guaranteed protection from creditors. For example, there are certain debts that do not qualify for bankruptcy at all. Student loan debts, some tax debts and domestic support payment debts are generally not eligible for discharge in bankruptcy.

Chapter 7 cases are good for unsecured debts such as credit cards and medical bills, but offers less protection over assets. In a Chapter 7 case, the court will determine if your assets are sufficient or eligible for liquidation in order to satisfy debts to creditors. However, not all assets are at risk in a Chapter 7 case. There are bankruptcy exemption laws that offer protection over several assets, including your house, car and personal property. Chapter 13 cases are open to both secured and unsecured debts, as well as offer a higher level of asset protection. Since you will be repaying your debts in Chapter 13 there is less risk of having them liquidated in this type of bankruptcy.

Credit Challenges

Although most people assume a bankruptcy damages your credit, the truth is that the damage is done prior to bankruptcy when you default on your payments. Nothing about the bankruptcy process causes damage to your credit. In fact, bankruptcy allows you to have a clean slate and fresh start at your credit after a discharge. However, obtaining credit in the future may be more challenging, but his generally has little to do with bankruptcy itself and more to do with the prior default history.

Bankruptcy: An Alternative to the Short Sale

The real estate market is struggling right now and many homeowners have homes with mortgages they can't afford but are unable to sell their property because they owe more than the home is worth. For homeowners in this situation, the short sale is becoming more popular, but for many people it is not the best solution to their financial woes. A short sale is a real estate transaction in which a mortgage company agrees to allow the sale of the property for an amount less than the debt secured by the property, and the unpaid portion of the debt is released by the lender.

The short sale is not without problems though. Three issues often come up in these types of transactions. First, the mortgage documents sometimes fail to address the unsecured portion of the debt that will remain after the sale of the property. If not properly released by the mortgage company, the remaining unsecured portion of the debt may be turned over to collection agents who may seek to collect the debt from the homeowner.

Second, if the debt is released the forgiven portion could be reported to the IRS as income and the homeowner may be stuck with an increased tax liability. In 2007, Congress enacted The Mortgage Forgiveness Debt Relief Act of 2007. This law protects homeowners from tax liability resulting from cancelled home loan debt. In its original form, this Act was set to expire in December of 2009, but Congress extended it to 2012. Before entering into a short sale homeowners should consult with a tax attorney to determine if there will be any tax liability resulting from the forgiven portion of the debt.

Third, a short sale does not address the homeowner's other debts. Mortgages are rarely a homeowner's only debt. After the mortgage is released the homeowner must still find a way to pay their credit cards, medical bills, unpaid child support, taxes, title loans, payday loans, student loans, and all other debts.

For many people bankruptcy is a better option than the short sale. Bankruptcy will allow discharge of the entire mortgage without the homeowner having to get permission from the mortgage company and finding a buyer for their home, debts discharged in bankruptcy are not reported to the IRS as income, and bankruptcy also addresses many of the homeowner's other debts allowing discharge of many of these debts without any repayment. Before pursuing a short sale, a homeowner would be wise to consider their other options, including filing bankruptcy.

Avoiding Bankruptcy Fraud

Filing for bankruptcy can be a tedious process. Besides the numerous requirements and steps involved, debtors must take extra precaution to follow the many specific rules. Bankruptcy laws are very specific about how the process is to be managed and what is required of each filer, which is why accuracy and honest is of utmost importance. Anyone considering filing for bankruptcy should take extra precaution to avoid certain mistakes that could result in a dismissal of the case or even fraud.

Assets

The bankruptcy court uses a list of the debtor's assets to evaluate their degree of financial insolvency. Many people fear losing assets to creditors in bankruptcy and may make some big mistakes when it comes to managing assets. Lying or withholding information about assets in bankruptcy can be problematic. Whether intentional or accidental, not providing a fully accurate list of all assets to the court may be viewed as suspicious or fraudulent.

In some cases, people may give away their assets to friends or family members prior to filing their case with the intent of hiding that asset and getting it back after the case is complete. This can be a costly mistake. Bankruptcy laws do allow debtors to sell their assets prior to filing for bankruptcy, but (1) the asset must be sold for fair market value and (2) the income from the sale must be reported to the court. Any deviations of these guidelines or rules can be extremely problematic in a bankruptcy case and lead to charges of fraud.

Debts

On the other hand, debts are also very important in a bankruptcy case. Lying about debts or not including all creditors in the petition is prohibited. Although the court may not include all of the debts in the debt discharge, it is required that all creditors both past and present be included in the details. If there is any change to debts or the list of creditors, filers must inform the court right away to avoid any suspicions of fraud.

Income

A debtors income is another important factor in determining the financial insolvency of the case. While most people accurately list their income and bank account information, many people forget or leave out information about future income. Payouts from investment accounts, pending payments on a prior claim and inheritance money are common examples of future income that must be included in the petition. These are considered to be income even though the debtor has yet to take possession of the monies. Any attempt to leave out or hide this information can be viewed as fraudulent.

The Cost of Waiting to File Chapter 13 Bankruptcy

Bankruptcy isn't something people look forward to and because this is the case, many people who know bankruptcy is in their future procrastinate and put off filing for years. There is usually some event that creates urgency to file and causes them to seek a bankruptcy attorney. This event could be notice of a foreclosure sale, repossession of their car or being served with a lawsuit. Whatever the reason may be, most people don't file bankruptcy until they feel they are being forced to by their creditors and this delay may cost them tens of thousands of dollars and a lot of unnecessary stress.

Procrastination can be very expensive for the indebted. This is especially true for bankruptcy filers who have a high income. For filers with high incomes a quick and easy Chapter 7 bankruptcy case is usually not an option. The Bankruptcy Code limits relief under Chapter 7 bankruptcy to below-median income households. High income filers are generally required to file a Chapter 13 bankruptcy case and make a payment to a trustee for five years. The Trustee takes the money paid to her and pays it to the creditors.

In Chapter 13 bankruptcy, debtors are only required to pay their unsecured creditors if they have disposable income. Disposable income is calculated using a form very similar to what you would expect to fill out if you were filing a tax return. This form takes your average income for the last six months, excluding payments under the Social Security Act, and then reduces this amount using IRS deductions like taxes, insurance, expenses associated with operating a vehicle and many other deductions. Many Chapter 13 debtors don't pay anything to their unsecured creditors, but high income debtors often repay 100% of the amount owed to these creditors.

If you are in the category of debtors that have to pay back all of your unsecured creditors then procrastinating can be very costly. As anyone with a credit card can tell you, debts grow, and the longer they remain unpaid the larger the balance. For example, the balance of a credit card incurring 30% annual interest is doubling every two and a half years. At that rate a credit card with a $10,000 balance can increase to $40,000 in five years and that isn't taking into account late fees and attorney's fees if you get sued. Filing bankruptcy earlier, means that you repay less in your bankruptcy case because you don't owe as much at the time of filing.

Comparing the Cost of Repaying Mortgage Arrears in Chapter 13 Bankruptcy Versus a Loan Modification

The economy is struggling to recover, unemployment is high, and as a result there are a lot of people who are behind on their mortgage payments and at risk of having their home foreclosed. To help people save their homes, mortgage companies and the federal government are touting the benefits of loan modifications and homeowners are buying into the idea of modifying their mortgage in record numbers. But before modifying a mortgage loan, homeowners should weigh the true cost of refinancing their mortgage and consider curing mortgage arrears in a Chapter 13 bankruptcy case instead.

Loan modifications are often a long process. Many of my clients who apply for a loan modification, don't receive a response until a year after the process began. After months of submitting documents, jumping through one hoop after another, they are often turned down for their loan modification and end up filing bankruptcy to save their home.

Modifications may involve closing costs which may or may not be rolled into the modified loan, further increasing the amount financed. In addition, once mortgage arrears are included in the new loan they begin to incur interest, so curing $10,000 in mortgage arrears could end up costing the debtor $30,000 or more over the life of the loan.

In some instances filing Chapter 13 bankruptcy may be a better alternative to a loan modification. In the Northern District of Texas, mortgage arrears repaid in a Chapter 13 bankruptcy are paid without interest, so the cost of curing mortgage arrears is often lower than it would be in a modified loan. Most homeowners are eligible for Chapter 13 bankruptcy, and the process does not require a long application process.

To determine whether Chapter 13 bankruptcy or a modification is the best option, homeowners should take into account whether the loan modification simply cures the mortgage arrears or whether it actually lowers the interest rate. If it lowers the interest rate then a loan modification may be a better option than Chapter 13 bankruptcy because the cost of paying interest on the mortgage arrears cured in the loan modification may be offset by the savings gotten from the reduction in the interest rate. However, if the interest rate stays the same and the only benefit of refinancing the mortgage is curing the mortgage arrears, then the homeowner should consider whether Chapter 13 bankruptcy might be a better option.

Filing Bankruptcy May Improve Your Credit Rating

Most clients I talk to believe that filing bankruptcy will ruin their credit score permanently. The truth is that most people who are considering filing bankruptcy already have a poor credit rating, and filing bankruptcy will not cause much of a decrease in their score. In fact, filing bankruptcy may be the first step in restoring them to creditworthiness.

There are many reasons that after filing Chapter 13 bankruptcy a debtor may find that their credit rating improves. For example, Chapter 13 bankruptcy requires the debtor to prepare a budget and consider what they spend their money on. It's amazing how many people have serious financial troubles but never take the time to consider what they spend their money on. After reviewing a written record of their income and budget in the form of their bankruptcy schedules many debtors realize that they reduce their monthly expenses.

Second, bankruptcy allows debtors to reorganize their debtors and pay many of them through a repayment plan. A Chapter 13 plan often reduces interest rates, lengthens repayment terms, and discharges debt with no repayment at all. The Chapter 13 plan allows debtors to pay their debts in a way that they can afford. As a result, after filing bankruptcy they are able to pay their bills on time, which is very important for improving a credit rating. By making payments on time, debtors begin to improve their credit score. In addition, a Chapter 13 bankruptcy indicates to creditors that the debtor is trying to improve their financial situation, rather than simply defaulting on their debts.

Chapter 7 bankruptcy may also improve a debtor's credit rating. Chapter 7 bankruptcy cases last between four and five months, after which most of the bankruptcy filer's debts are discharged. At the time of filing bankruptcy the debtor may experience a temporary decrease in their credit score, but the case ends quickly, and afterwards the debtor's credit score will rebound fairly quickly, assuming they pay their bills on time, maintain a job, and do all of the other things that improve a credit rating. Filing a Chapter 7 bankruptcy will usually allow debtors to improve their credit rating faster than if they simply allowed their debt to linger and remain unpaid for years.

If your goal is to improve your credit rating, bankruptcy should be considered. Credit ratings do recover after discharge, and many debtors will find that their ability to obtain credit improves after bankruptcy.

Face Authorities Confidently With Bankruptcy Counseling

Filing Bankruptcy becomes necessary for a person or business when they are not able to fulfill their payment commitments with present income. It is usually the last resort. Individuals who are deep in loans find themselves cornered when put under pressure by their creditors for repayment. A person files for bankruptcy when there is no way out. That is the only way out to keep creditors at bay. Companies resort to it, as a tactical measure, to meet a contingency in order to get financial help from the government. Restructure the organizational set up and business activities to get a position of financial strength and repay all the loans.

Individuals who file File Chapter 7 Bankruptcy, position is more difficult as the agony is personal one unlike in the case of companies. Achieving financial success after filing for bankruptcy may look like a difficult and distant dream. Becoming bankrupt carries a social stigma and affects the person's self esteem. Getting the motivational level required, achieving financial success may appear difficult. A supportive family and circle of friends can do wonders in the matter and through their efforts the person can get enough motivation and the energy levels required to make a new beginning. This may involve a total change of lifestyle and tight control on his purse strings.

Bankruptcy Counseling is available to a person who has filed for bankruptcy to readjust his finances and living methods to payback all pending loans and start on the way to achieving financial success. For an extremely depressed person a counselor gives him the necessary advice and methods to get his finances reorganized. The counseling also helps greatly in giving a big boost to the person's self confidence and also self esteem. The motivation will come automatically when the counselor is able to convince the affected person about his duties and accountability to the family members who have been standing by him during his difficult times.

Achieving financial success after bankruptcy is possible only if the person can be made to change his habits particularly regarding spending. A person used to lavish spending may find it difficult to practice economy in spending. It is a matter of great comfort there are Free Bankruptcy Services whose services may be availed of. The person needs a complete overhaul of his finances and getting into the habit of saving a specific percentage of his income at all costs. Formulating a system of arranging finances is essential and advocated by the counselors. They can help with plans for this purpose.

Effecting economy in spending, whether it is an individual or a business is the most effective method of financial control. With effective control over one's finances, cutting down unnecessary frills in expenses is the key to achieving some financial success even after bankruptcy. Individuals require motivation; managements of businesses require a sense of commitment and accountability to share holders, employees and their vendors. The realization that bankruptcy becomes inevitable if one's or company's finances is badly managed should always be there. In fact financial discipline is the easiest to achieve without having to forgo any essential expenses. It is only a question of good advance planning.

Business houses on the other hand adopt different strategies after bankruptcy for achieving financial success. Their principal aim is to stay in business and keep the company floating. They also do not want the effects of bankruptcy to be reflected in their turn over. For them Business Bankruptcy Information gives the necessary feedback that is required to achieve their ends. Cost cutting is something one cannot avoid. This may involve reduction in the strength in work force and also necessary in employee salary.

Questions To Ask When Filing Bankruptcy

The decision to file for bankruptcy is not an easy one for most people. This is partially because most people lack an understanding of the process and what to expect. Preparing yourself before filing is the best way to ensure you get the most out of your case. In general, there are three main questions you should ask a bankruptcy attorney before filing the petition.

What Debts Can Be Discharged?

Contrary to popular belief not all debts are eligible for discharge in bankruptcy. While most unsecured debts such as medical bills and credit cards do qualify, there are others that may not. Certain tax debts, court ordered payments and personal loan debts may be restricted from your bankruptcy filing. Income tax debts may be eligible, but there are specific rules as to whether or not a particular income tax debt is eligible. Student loan debts and back due child support payments are two debts that rarely become eligible for discharge in bankruptcy. Secured debts such as a mortgage are car loan are generally eligible for bankruptcy, but typically only qualify for Chapter 13. Knowing which type of debt you hold and its likelihood of being discharged can prevent you from wasting time and effort on a case that could end up dismissed in the end.

Are My Assets At Risk?

Although most people hold the assumption that all assets are at risk in bankruptcy, the truth is that this rarely happens. In some cases the bankruptcy court may determine that your financial situation warrants the liquidation of a few assets in order to satisfy debts to creditors. Again, these cases are not the norm and most people find that their assets are completely safe through protection under bankruptcy exemption laws. In general, assets involved in a Chapter 13 filing are 100% safe from creditors as long as payments are being made according to the repayment plan.

Is There Anything I Need To Do First?

Most people are in a frantic state before filing for bankruptcy trying to find a way to resolve their financial troubles. Although there is much to do prior to filing for bankruptcy, there are also important steps that should be taken to prevent certain actions. For example, selling or giving away assets prior to a bankruptcy can be problematic and may impede the outcome of the case. Acquiring more income or paying down debts are also two actions that could negatively impact the outcome of your case. The general rule of thumb is to freeze all unnecessary spending, excess debt payments and moving of assets within the six months prior to filing.

A Quick Look At The Bankruptcy Process

Although many people will need bankruptcy protection in their lifetime it is estimated that less than one in four Americans actually understands how the process works. Even those who never need the help it can provide, understanding the basics behind the process can be very important. Since the majority of Americans are carrying upwards of $10,000 in personal debt, knowing how these debts could be impacted by the bankruptcy process is valuable information.

Qualifying For Bankruptcy

The qualification process is perhaps one of the most important aspects. Although many people seek total debt elimination, not everyone will qualify to have their debts discharged in Chapter 7. If a debtor's income exceeds the median income level of their state, or their disposable income is deemed sufficient, they may not be eligible for Chapter 7. In these cases, many people will qualify for Chapter 13 debt repayment.

Knowing the qualification standards prior to filing for bankruptcy can ensure a debtor does not waste their time filing the wrong case or end up disqualified due to certain actions. Accumulating too much debt within 90 days prior to filing, strategically moving assets or acquiring more income can all prevent a person from qualifying for bankruptcy.

Obtaining A Debt Discharge

Once a debtor is qualified for a particular type of bankruptcy, reporting all their debts and assets to the court becomes top priority. It is extremely important that the debtor provide the full list of both debts and assets on the bankruptcy petition. Leaving out information can jeopardize the outcome of the case and prevent a discharge from being granted.

In a Chapter 7 case, the debtor will have their assets and debts reviewed by the court. The court will determine if there are any funds or assets sufficient for liquidating in order to satisfy debts to creditors. If not, the court may grant a debt discharge, in which creditors must adhere and erase the debts from the debtor's account. In general, most large assets such as a home, car, personal property and benefit funds will be exempt from liquidation.

In a Chapter 13 case, the court will review the debtor's debts and assets in order to develop a repayment plan. This plan typically involves rolling all of the debt payments into a single monthly payment requirement over the next three to five years. Once the debts have been repaid, the debtor will be granted a discharge.

The Facts Behind Bankruptcy Myths

When people hear the word bankruptcy they often picture the worst. The thought of losing assets and damaged credit drives many people in need away from the benefits bankruptcy has to offer them. The truth is much of what is said about bankruptcy is either not true, or exaggerated. Before walking away from a potentially valuable process, get to know the common myths about bankruptcy and the real facts behind them.

Losing Assets

It is no secret that creditors may have the right to seize and liquidate certain assets in efforts to collect on a debt. However, this is far more likely to happen if you don't resolve your debts and continue to default on your payments. In a Chapter 7 bankruptcy case, the court will evaluate your debts and assets in order to determine if asset seizure is warranted. In most cases, a person who qualifies for Chapter 7 will also have few expendable assets that would be sufficient for debt satisfaction. Further, bankruptcy exemption laws protect most major assets such as a home, car, personal property and retirement funds. Asset liquidation is almost unheard of in a Chapter 13 filing since you have negotiated a repayment plan. As long as payments are made according to the Chapter 13 plan, your assets are safe from creditors.

Damaged Credit

One of the most commonly held misconceptions about bankruptcy is that it damages your credit. This is simply not true, but it is the delinquent account standing and missed payments that does all of the damage. There is no direct damage done to your credit as the result of a bankruptcy filing. In fact, bankruptcy resolves your debts and eliminates your negative account status. When your account becomes in good standing, your credit begins to improve immediately. It isn't uncommon for a person to see an improvement in their credit standing following a debt discharge. Credit repair is much easier following a bankruptcy than continuing to allow accounts to be delinquent.

Bad Reputation

Many people worry that their friends and family will find out about their bankruptcy filing. While bankruptcy filings are a matter of public record it is rare for the general public to come across this information. Bankruptcy filing information is publicly available for anyone to search and use by the courts, but there is no legitimate reason friends or family would be searching for this information to begin with. Unless your case is part of a high profile filing, there is malicious action taken against you by a third party or the case becomes part of a divorce proceeding, your filing status should be safe from the eyes of others. Some people are concerned about how a filing will affect their job. In general, employers would have no access to this information unless they (a) conduct a random credit check or (b) are ordered to garnish wages out of your paycheck. However, there are laws that prohibit employer discrimination of a filer based on a bankruptcy status.

Differences Between Debt Settlement Vs Bankruptcy

Spending money before it is earned is common in today's world. One of the reasons contributing to this reason is the existence of economic conditions that are typically identified with factors such as recessionary and inflationary trends. Therefore, people seem to get perplexed and confused when it comes to choice between debt settlement vs bankruptcy.

The entire country is witnessing a record growth in the field of consumer debt. This figure has in fact reached an all-time HIGH. Because people are struggling with debts, it has prompted record number of consumers to opt between debt consolidation vs bankruptcy. Unemployment, illness, overspending or divorces are some of the reasons why people often choose the bankruptcy route. At the same time, there are some who think debt settlement is the ideal approach for improving their financial situation. For, it brings and immediate relief in their life because they are no longer required to face the harassment related with their creditors. The mad rush for debt settlement can better be understood the advantages it carries. For instance, when you choose this option, you end up paying almost forty to fifty per cent of the amount you actually owe. Now, is this not good enough reason to favors it instead of other alternative?

When it comes to debt consolidation bankruptcy, bankruptcy is considered to be the last resort one tends to choose. It is common knowledge that it casts an negative impact of a long-term nature on the creditworthiness practiced by you. The bankruptcy continues to stay on the credit report for a long time sometimes even up to 10 years! Experts of the industry believe this can act as a hindrance to your ability for getting suitable insurance, credit or a job.

Different Debt Relief Options for You

Debts are something that can make your life a living hell; that is why people try to get rid of them at the earliest time possible. But sometimes the amount of debt is such that the monthly interest is more that what you can bear and that is when it becomes a bad debt. If you are only paying the least amount due in your credit card for last few months then it means you are having a bad debt and you need debt relief help.

Debt relief help has three major segments. The segments are debt consolidation, debt settlement and the last one is bankruptcy. Bankruptcy is the last possible option and it needs to be avoided. When you seek debt consolidation help from an experienced advisor or a company it will guide you towards a single account debt management. All your debts would be consolidated to a single account, which has the lowest possible interest rate, or they may ask you to borrow the total amount due from one provider who has less interest. These advisor companies have terms with such providers who will help you in this..

In case the amount of debt is very high, the company may give debt settlement help. These companies have good contact with the credit card providing banks and financial organizations and they can negotiate the amount do. If you are paying the credit card due for a long time, now then this is more effective. You can have a reduction of 50% of the amount due and you need to pay the amount in 12 to 60 easy installment. This would not only cut your debt but eventually help you to pay it off.