Chapter 7 Bankruptcy Basics

A person seeking debt relief through bankruptcy may qualify for one of two types of bankruptcy. Debt elimination is available through Chapter 7 bankruptcy or debt repayment is available through Chapter 13. Each type of bankruptcy offers different advantages, but also comes with different risks. The most sought after form of bankruptcy is Chapter 7, in which a person can receive a complete elimination of their debts. It is important to understand the following information in before filing the petition for Chapter 7.

Your Debts

Chapter 7 bankruptcy can eliminate most of your unsecured debts. These are debts that are not secured against collateral like a mortgage or car. The most common unsecured debts are credit cards, utility bills and medical bills. When you file for Chapter 7, these debts may be eliminated through (a) a write off on the part of the creditor or (b) some measure of liquidating your assets. If the court approves asset liquidation, you may face losing some of your assets to creditors in attempt to satisfy the debts.

Your Assets

In general, your assets are at greater risk for liquidation in Chapter 7 than in a Chapter 13. The reason is because in Chapter 13 you are working towards repaying your debts and would be granted ownership rights to the asset once the debt is satisfied. Bankruptcy exemption laws allow for some of your assets to be protected during either type of bankruptcy. However, each state offers variations on the amount and type of asset protected. Before you file for bankruptcy, it is a good idea to find out your state exemption laws to see if your assets are at risk in Chapter 7.

Your Credit

It is true that a bankruptcy is listed on your credit report for up to 7 years, but that doesn't mean it damages your credit. In fact, the majority of damage done to your credit happens before you even consider filing for bankruptcy. Your credit gets damaged when your accounts become delinquent and the longer the debts go unpaid the worse the damage to your credit. Many people find that their credit improves after filing due to the removal of the delinquency status. In many cases, people are able to begin to repair their credit much faster than prior to filing.

In general, your credit will be better off following a Chapter 13 case than a Chapter 7 case. The reason for this is because the repayment of the debt through a Chapter 13 plan allows creditors to mark your account as "paid" rather than "satisfied". Repaying your debts is always the better strategy if you can afford to do so.

Bankruptcy Research May Be Harmful To Your Financial Health

Today is Monday September 26, 2011 and there's a reason I'm starting this article with today's date. I had no plans of writing anything today. My week is segmented into research days, planning days, and writing days. Today was supposed to be research day, and it is for that reason that I decided to share these thoughts with anyone that may be looking into bankruptcy. I had been doing some initial research on the bankruptcy exemptions in New York State, and what I found during that research turned out to be the motivation for this article.

I have spent considerable time researching, learning, and interacting with bankruptcy attorneys in an effort to clearly understand the many aspects of bankruptcy. However, I still find it necessary to research specific aspects of the Bankruptcy Protection Codes. With any type of law, there is always the possibility of changes and new interpretations and bankruptcy is no exception.

In my work I have found that many people spend countless hours researching bankruptcy before they finally contact an attorney. I have always been an advocate of consumers learning as much as possible about bankruptcy in order that they can properly assess the choice for or against filing. I've also been quite insistent that part of that research include a meeting with an experienced bankruptcy attorney. I have never been more certain of that last fact then I have become today.

During my research today, I came upon a well respected and heavily trafficked site whose sole purpose is to provide bankruptcy information to consumers and have those same consumers fill out information so that their information can in turn be given to an attorney in their area. Many of you will be familiar with these types of "lead pages", which are in great abundance in just about every imaginable category.

This information I found on this particular site was surprising to me in that it contained facts about the New York State Bankruptcy Exemption Rules that were no longer accurate. In January of 2011, the governor of New York signed into law new rules concerning the state bankruptcy exemptions.

The administrators of the site in question, have had nearly 10 months, at the time of this writing, to have updated the information on their web pages to reflect the correct data. I did not look deeper into this site to see what other information might be incorrect, but it would be safe to assume that there must be other outdated information as well.

So the question of how can this hurt you can be answered in this way: Had you been researching bankruptcy and a major concern of your was the ability to keep your family vehicle, the exemption rules are the aspects of bankruptcy that come in to play. The information you find may or may not be accurate, and the resulting decision would have be based on false information.

Obviously, had you decided to contact an attorney to get more information, you would receive correct and accurate facts relating directly to your circumstance. Regardless of the accuracy of the information on the website, there is no doubt that your attorney will be able to provide you with all the correct data. However, the part of this equation that could prove dangerous to your financial health would be if the incorrect information on any website, led you to believe that bankruptcy was not a viable answer to your financial hardship.

Clearly it is important to learn and understand everything you can about something as important as your financial life. Bankruptcy is a major step and should never be undertaken without the advice and representation of a qualified and experienced bankruptcy attorney. There is nothing more critical to your success then being armed with true and accurate information. When it comes to bankruptcy or any aspect of law, only an attorney can provide you with what your really need to know to come to an intelligent decision.

Will You Lose Your Home When You File For Bankruptcy?

Will you lose your home when you file bankruptcy? Maybe, When talking about bankruptcy, your homestead exemption is the amount of equity in your home that you legally are allowed to keep when you file for a Chapter 7 bankruptcy.

As long as your mortgage payments are current and the amount of equity that you have in your home is less than this exemption amount, you can be pretty sure of keeping your home once your bankruptcy filing has run its course. The exemption is state based and each state has different rules as to how it is calculated and how it is applied in a bankruptcy proceeding.

In order to take advantage of this rule, however, you have to be a resident of the state in which you are filing for bankruptcy. Each state has its own residency requirements as to what constitutes someone being a resident of that state. If you are unsure as to your residency status, you may want to talk briefly to a bankruptcy lawyer in that state before filing.

The way your exemption is computed is done on a state by state basis as well. For example, in some states, the homestead exemption is a pure monetary number. In other states, however, it is based on your lot size. And, in still others, it is based on a combination of lot size and a monetary value.

There are various factors at play in determining if you will be able to retain your home once you file for bankruptcy. Of all these factors, however, your homestead exemption is the most critical factor. So, if you are at all confused about the application of the homestead exemption in your state, seek legal help before you file for bankruptcy.

In all but the rarest of cases, the rule only applies to your primary residence - the one that you live in. In other words, if you live in Illinois, and own a vacation home in Wisconsin, the second home is not protected under homestead exemption.

This means that it can be sold or auctioned off to pay back creditors to whom you owe a debt. The homestead exemption, however, does apply to mobile homes and house boats, if they are your primary residence.

In most states, the homestead rule automatically is considered and taken into account when you file for bankruptcy. In other states, however, you have to specifically make a claim in order to receive the benefit. Check with your lawyer to determine the rules in your state.

Post-Bankruptcy Loans: What You Need to Know After Filing

Many of us are aware that bankruptcy is a last-resort strategy if you are in financial trouble. Besides the immense headache that the court process can cause, filing for bankruptcy leaves a stain on your credit that will never go away. While there is a real benefit from having all your past debt erased from your credit history and starting new, the effects and pains of bankruptcy will never really go away.

In an effort to restart your life post-bankruptcy, however, there are options. Due to your clean record in terms of debt, once you are able to find a job and a steady means of income there are lenders who will be more than happy to serve you. There are plenty of opportunities to receive post-bankruptcy loans in today's financial market as long as you know where to look.

Your New Appeal to Lenders

The idea of a lender actually wanting to serve someone post-bankruptcy may at first seem absurd. However, there are a few key factors to your life now that, from the lender's perspective, actually make you a desirable client. Therefore, many lenders will actually specialize in granting post-bankruptcy loans.

Consider the following facts of your situation after filing for bankruptcy:

1) You have limited or no other debts. With the exception of a few key areas (taxes, school loans, and child/spousal support) the process of bankruptcy discharges all the loans you currently have leaving you with a clean slate. Lenders are eager to loan to people with little to no other financial obligations since it ensures that they can afford the monthly payment on their new loan.

2) You have a job. As I mentioned earlier, most post-bankruptcy loans will only be possible once you find a job. If you have consistent employment for five years or more, you are in a really good position since that shows your ability to stay in a position and draw a reliable paycheck. Since you have a job, should you fail to repay your post-bankruptcy loan, the lender knows that he has the option to garnish your wages.

3) You cannot file for bankruptcy again. Once you complete the process of filing for bankruptcy, you are not allowed to do so again for a long period of time. This discourages bankruptcy law from enabling bad spending habits. Lenders offering you a post-bankruptcy loan will know how long you have until you are eligible for another bankruptcy filing and will therefore only offer you a loan with a term inside of that timeframe. This actually makes you an ideal candidate to lend to since you do not have the option of filing for bankruptcy and walking away from the lending table, leaving the lender with nothing.

Loan Qualifications after Bankruptcy

Though your life after bankruptcy does not mean that no loans are available, the ones that are offered will be sparse. Generally, you can expect a lender to offer no more than a $5,000 unsecured loan. However, taking this loan and repaying it according to terms is a really important first step in getting your financial life back on track after bankruptcy.

Another option you should look into is the use of secured credit cards as a means to build a new credit history. These options are often offered by the same lenders who specialize in post-bankruptcy loans and are a safe way to begin to rebuild credit.

Finally, make sure that your life after going bankrupt includes a healthy assessment of the attitudes and habits that led to these problems. By making positive changes today, you set yourself up for a brighter financial future in the years to come.

Five Things You Must Not Do When Choosing A Bankruptcy Lawyer

If you are undergoing major financial distress and you have tried out every possible debt help technique there is available, what else can you do? The only answer left to resolve your problems is by declaring bankruptcy. Bankruptcy is not advised by many financial experts. But, when all else fails and you have no other option left then it is the right time to exercise the method. To make the complicated process less stressful, bankruptcy lawyers are available to help you out.

A bankruptcy lawyer is a professional individual who specializes in the bankruptcy field. It is someone who is an expert and knows every single minor and major detail that is included in the process. This is an attorney who can represent you in the judicial court to make filing for bankruptcy short and fast. At the same time, bankruptcy lawyers guide you towards bettering your finances, they help you pull up yourself and start fresh.

What Not to Do When Finding A Bankruptcy Lawyer

When choosing a bankruptcy lawyer, there are things that you need to watch out for, traits and skills that you must consider. However, there are also factors that you need not look for and you should not do in your search of a bankruptcy attorney. The following are:

Decide On The Last Minute

Most often, debtors tend to put off filing for bankruptcy. Even more, they neglect choosing a bankruptcy lawyer ahead of time. Save yourself from despair by not joining the pack. Delaying your search for professional aid will only make matters worse. Finding an attorney on the last-minute does not help your case at all. The longer you wait, the more your debts will increase and pile up and your attorney will not be able to prepare your case well putting you in the losing end. Finding a good and reliable bankruptcy attorneys' take time.

Demand For A Low Service Fee

Face it, you are going through the most complex debt elimination method and it is just right that you pay your bankruptcy lawyer the best price possible. When you are finding for a bankruptcy attorney to work for you, never negotiate with his service's cost as this will surely scare him out. You can settle for rate that both suits you perfectly during the start of the bankruptcy process, but never demand. The process of bankruptcy is not easy at all so expect the attorney's fee to be expensive. The safest way to go is for you to scour as many bankruptcy lawyers as possible in order to compare rates. If you are truly short on cash, choose the professional with the lowest asking rate but see to it that he is eligible.

Delay Examining Credentials

There are a lot of scammers out there just waiting for you to fall into their trap. In order to avoid making the scenario worse, for every bankruptcy attorney on your list ask them to present their credentials to you. Accreditation's, extra training sessions completed, papers, and other legal documents must be shown to you first hand. Also, make sure that the lawyer is certified by the American Bankruptcy Institute. Verify with the board or with the company he works for to check if all the information given is correct and valid.

Not Asking Questions

While you are choosing a bankruptcy lawyer to make the task easier for you and eliminate the stress it gives you, it is not also right to not ask questions to your attorney. Believing what comes out of their mouth instantly puts you into more danger. Ask basic questions. How many bankruptcy cases has he handled and closed successfully? How does the process work? How long will it last? What goes on in the court? Will you work openly with the bankruptcy lawyer or not? What services do you offer aside from bankruptcy?

Overlook Reactions

Once you have finished making interviews with prospective bankruptcy attorneys evaluate how each one responded on your questions. If someone gives you elusive answers or is not clear in pointing out his services then its best to eliminate them from your list. Another factor to watch for is your feeling towards the lawyer. Always select the bankruptcy lawyer whom you feel most comfortable with. He is going to handle your case and you are going to work with him so might as well hire someone you feel at ease with and with good rapport.

Frequently Asked Questions About Bankruptcy

Between the lawyer's lingo, tons of forms and also the job of organization, there are several elements of personal bankruptcy that might overwhelm those looking to file. Here are just a few FAQ's concerning bankruptcy procedures and working with them.

Do I Need To petition for Chapter 7 or Chapter 13 bankruptcy?

Chapter 7, often called straight bankruptcy or liquidation, is intended for people with minimum cash flow at the moment, who are ready to pay back their debts by way of selling their belongings or properties. Chapter 13 is ideal for an individual who, using their existing earnings, will make a sensible repayment schedule by which to deal with their outstanding debts over the next 3 years.

So, what do I need for my petition?

In 2005, bankruptcy legislation adjustments made credit counseling necessary for a successful bankruptcy, and you cannot file until you've completed the guidance program. In the event you're filing Chapter 7,the following should be added with your petition: the filing fees, Clerk's notice, attorney's payment statement, a listing of creditors with secured and unsecured claims, a report of current monetary matters, and an extremely in-depth account of your possessions, property, obligations, the last three years' tax records, and more. For Chapter 13, the above records excluding the Clerk's notice applies, along with your payment timetable proposal.

Which debts can't be discharged by consumer bankruptcy?

Not all of your money owed may be cleared by your bankruptcy. Common non-dischargeables contain delinquent income taxes, child support payments or alimony/maintenance, education loans, any penalties or fines due to the government due to illegal conduct, and any debt a person didn't put on his or her listing of creditors.

What happens when the request is registered?

Once your request is actually sent in, an automatic stay goes into effect. This prevents creditors from bothering you. You'll be required to go to a 341 meeting, which is just a fact-finding session with you, an assigned trustee and your collectors. A collector could file an opposition to an obligation being discharged, but except for that, these conferences are usually quick and go smoothly.

Is bankruptcy the only way I can get rid of my debt?

Though bankruptcy is a popular option, it's certainly not the only one. Other possibilities are debt consolidation loans, consumer credit counseling, and negotiating with collectors to extend the payment schedule.