Posts Tagged ‘bankruptcy’
Bankruptcy Questions Answered
rticleBody”>
In the United States, bankruptcy is an option for businesses or individuals who cannot afford to pay their debt.
United States bankruptcy laws are defined in Article 1, Section 8, Clause 4 of the U.S. Constitution, which gives the U.S. Government rights to enforce “uniform laws on the subject of bankruptcies throughout the United States.”
Chapters of Bankruptcy
In the United States, there are five chapters of bankruptcy, each of which coordinates a different type of debt with varying solutions. The five chapters of bankruptcy are:
Chapter 7
This is the most commonly filed chapter of bankruptcy in the United States. Chapter 7 creates laws regarding liquidation – the sale of a business or individual’s assets in order to raise money to pay off debt.
After Chapter 7 bankruptcy is filed, all nonessential or exemptible material is awarded to a third party trustee, who is responsible for liquidating these assets until debt can be paid. Chapter 7 is one option when involuntarily assigned bankruptcy.
Chapter 9
Available only to municipalities, this chapter is used to help restructure the debt of cities, counties and states. This chapter was famously used in 1994 by Orange County, CA to relieve more than $1.5 billion in debt.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is available to all businesses and individuals in the United States, but is primarily used by corporations. While Chapter 7 requires a third party trustee to coordinate liquidation, Chapter 11 allows debtors to maintain control of their assets and restructure in order to raise money to pay any debt owed.
Chapter 12 Bankruptcy
This chapter of U.S. bankruptcy code is available only to farmers, fishermen and their families. Chapter 12 was created in 1986, and was initially supposed to expire in 1993, but was continually expanded until being made permanent in 2005.
Aside from its higher debt ceilings and more exemptions, Chapter 12 is very similar to Chapter 13.
Chapter 13 Bankruptcy
This chapter is designated for individuals, and requires debtors to reorganize their assets under supervision of a bankruptcy court. Bankruptcy court will provide the debtor with a rehabilitation program to pay back debt owed over time.
Chapter 15 Bankruptcy
The final chapter of bankruptcy deals with cases of debt involving the United States and one or more other countries.
If one is in deeply in debt however, one should should look into all forms of debt relief and not only bankruptcy. These bankruptcy alternatives include debt settlement and even consumer credit counseling.
Bankruptcy: How Does It Work?
Filing for bankruptcy is a right guaranteed by the U.S. Constitution to help individuals who cannot afford to pay their debt. In order to qualify for bankruptcy filing as an individual, you must fit all of the following requirements:
1. You must have accumulated at least $1,000 in debt
2. You must be unable to meet regular payments as they are due
3. You must have stopped making regular payments as they are due
4. Your non exempt assets, if liquidated, must not provide a sufficient amount of funds to pay off your existing debt.
But just because you qualify for bankruptcy doesn’t mean that it is the best option for everyone. Filing for bankruptcy has many negative, long-term effects that everyone should know about before they seriously consider it as a solution to their debt problems.
The downsides of bankruptcy
Bankruptcy is widely considered to be the last resort option for debt settlement. While bankruptcy can provide immediate relief from large amounts of debt, it also has several negative, long-lasting effects. Filing bankruptcy can stay on your credit report for up to 10 years, making it difficult to apply and obtain credit, or to find employment and a place to live.
Filing for bankruptcy is public information, meaning the fact that you have filed bankruptcy cannot be kept private. In some places, such as upstate New York, the names of bankruptcy filers are even printed weekly in the newspaper.
Bankruptcy can also be an expensive process. Among the fees associated with bankruptcy are the costs of required credit counseling and debtor education certificates, bankruptcy filing fees, and any legal fees charged by your attorney.
What can you keep?
When filing for bankruptcy, you may be required to turn some of your property over to a trustee. This trustee will then liquidate your non exemptible assets in order to raise money to pay off your debt. You are probably wondering what qualifies as non exemptible.
The following possessions are considered ineligible for liquidation and may be kept by an individual filing for bankruptcy:
1. Necessary clothing of the debtor and dependents (up to $4,000 in value)
2. Household furnishings and effects up to ($4,000 in value)
3. One motor vehicle (up to $5,000 in value)
4. Medical and dental aids required by the debtor and his or her dependents;
5. The books of a professional, required in his or her profession
6. Tools of the trade (up to $10,000 in value) and used by the debtor to earn income;
7. Equity in the principal residence of the debtor (up to $40,000)
According to Chapter 12 bankruptcy laws, debtors who are fishermen or farmers by trade are eligible for additional exemptions. All of the values of exemptible items are based upon what price they can currently be sold for – not the cost of their replacement.
However, when faced with mounting credit card debt and the inability to make ends meet, one should not only consider bankruptcy but bankruptcy alternatives. These alternatives include such programs as debt settlement, debt consolidation & debt consolidation loans, and even consumer credit counseling. The fact is that there are many debt relief programs in existence today to help consumers dealing with debt.
Debt Consolidation Loans: Do They Work?
I saw a headline in the paper this morning as I was riding the train in to work. It said, “Battered Traders Tired of Hearing Recession Is Over”. And the meaning is clear: For weeks now the talk on the news has been of economists chiming in unison, “The recession is officially over” – but that hasn’t been felt by the average American.
Wall Street has gotten billions in taxpayer money to help prop itself up, but people on Main Street have hardly received a thing. Cash for clunkers? Big deal. People have been buying cars they couldn’t afford in the first place. It’s more of a cash for suckers type of program. Sorry to be so blunt. I call it like I see it.
The most that the average American has seen in the form of aid during the great recession has been the measly unemployment check that goes out to laid off workers. Let’s be perfectly honest here, if you were someone in a decent job or a very high-paid job and went from your previous salary to receiving barely over $200 a week – would you look at this as a bailout?
In any case, during these troubled times many are those who have sought to take advantage of those in need. Enter the (cough, shark) bankruptcy lawyer and debt consolidation people. They are experts in the field of honing in like vultures over the vulnerable.
The debt consolidation people are really something else. They would have people believe that there is some benefit to enrolling in a debt consolidation plan or worse – signing up for a debt consolidation home equity loan. But the facts speak for themselves.
Most people sign up for a debt consolidation loan when they are strapped with large amounts of credit card debt and are finding it hard to make ends meet. But consider this: when signing up for a debt consolidation home equity loan, the consumer is exchanging unsecured credit card debt for secured debt – debt that is secured with the consumer’s home. This is risky, risky, Risky.
If the consumer were to sign up for a debt consolidation home equity loan and then be unable to make their monthly payments at some time in the future – they could absolutely have their home seized. This is not the strategy for consumers in debt to go with.
Rather than debt consolidation and bankruptcy, consumers should consider bankruptcy alternatives such as debt settlement. Even consumer credit counseling can be effective for many. These provide a better measure of debt relief for those who are struggling in the great recession.
To File Bankruptcy or Not To File Bankruptcy
Bankruptcy is one of those programs that people consider when their backs are up against the wall financially. It’s usually a gut wrenching situation whereby the mortgage is months behind, car payments are falling behind, gas, electric – all these bills are probably late as well. But hopefully, food is on the table.
It’s during these stressful, emotional times that all of a sudden the TV commercials run by bankruptcy lawyers start resonating with a person. “Get out of debt today!”, “Improve your credit score!”, “Get rid of all of those bills!”, etc. Unfortunately, not is all it seems to be at first with bankruptcy.
In fact, rather than considering bankruptcy, one should in fact be considering ways to avoid bankruptcy. The reasons are as follows: bankruptcy has many troubling aspects to it. It stirs a virtual hornets nest of issues, and causes much, much collateral damage in the process, leaving a trail of financial destruction and ruin in its wake.
So what is the deal with bankruptcy? Well, for starters – it is by no means a simple walk in the park, as the bankruptcy lawyers would lead you to believe. In fact, one could argue that it is fact a rather dangerous walk in the park, say like a walk through Central Park alone at 2am, with shiny gold chains dangling around your neck. It is a minefield, and full of pitfalls.
The person who files for bankruptcy is basically destroying their credit record. It’s an implosion, basically. There will be no chance to obtain credit from anyone during this time period because creditors will view the person’s credit report as toxic. They wouldn’t touch it with a 10-foot cattle prod. And how long does a bankruptcy filing stay on the public record? Up to 10 years in many states. Imagine that.
The person who files for bankruptcy can also expect to pay hefty deposits when they order new utility service in the future – gas, electric, water, cable, phone, etc. And quite possibly they could find themselves passed over for a job, as more and more employers these days are performing credit checks as part of their routine job applicant screening process.
Therefore, it’s wiser to consider bankruptcy alternatives rather than bankruptcy itself when faced with mounting financial difficulties.
Bankruptcy Equity Home Loans Explained
There are a number of people who see bankruptcy as the only option for getting out of debt any time soon. This is never an easy decision to reach. Repairing credit ratings after bankruptcy is also not easy. Difficult, but not impossible. Even a person who is in the middle to declaring bankruptcy can still qualify for an equity home loan. You need to be aware of some important information about bankruptcy equity home loans.
Bankruptcy equity home loans can be used to discharge a chapter 13 bankruptcy ahead of schedule. You are given 3-5 years to discharge all debts filed under chapter 13. There are specific circumstances where a person can have his/her lawyer file paperwork to request the right to obtain a new debt in order to pay off the old debts faster and with an interest rate that is lower.
Once approved, the attorney can then negotiate with banks to find a bankruptcy equity home loan that has terms the person can pay off on time and will provide enough money to discharge a good share of the unsecured debts against this person.
If one already has a home equity loan outstanding when filing bankruptcy, it is important to note that this is a secured form of credit. With it being secured, the only way to get rid of the debt using any form of bankruptcy is to let the lender have your property and leave your home.
The same holds true for home equity loans obtained while covered under a bankruptcy proceeding. The only way to discharge this debt is to pay it back according to the terms agreed to when signing the loan papers or to surrender the property.
This is a fact that can come in very handy for a homeowner who is filing bankruptcy. Financial institutions will be more likely to extend a loan to a debtor who owns property that can serve as proper collateral, and will give the debtor a good incentive to pay the money back.
Additionally, bankruptcy equity home loans would be a great way to start mending a damaged credit rating after going through bankruptcy. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.
Even though obtaining credit while one is in bankruptcy is difficult at best, a bankruptcy equity home loan can be the step up that a person needs to get back on track and emerge from the bankruptcy in a better position than would have been thought possible. It is a way for a person to pay of creditors faster than could have otherwise been done. A person may even be able to get smaller payments and get more than the allowed three to five years to make a full repayment. One must simply remember that this loan must be repaid regardless of what else gets done because it is a lien against real property that can and will be taken if the loan is defaulted on.
Chapter 7 Bankruptcy: Don’t Believe The Hype
Chapter 7 Bankruptcy: What is it? How does it work? How much does it cost? These and other questions are being asked by more and more consumers as they continue to be dragged down and bogged down by the weak economy. “Technically”, the great recession has ended. This is according to the results of a poll taken of “top” economists and financial analysts.
But has the recession really ended? It may feel like the recession has ended to the Wall Street firms that have received billions in so-called “bailout” funds from the government (more like “handout” funds), but for consumers on Main Street – no real upswing has been felt. And therefore consumers have the mistaken belief or hunch that bankruptcy can free them from the bondage of credit card debt.
But can bankruptcy really eliminate debt? Or are there superior bankruptcy alternatives today?
The problem with bankruptcy is that it causes more collateral damage than Arnold Schwarzenegger going toe-to-toe with the bad guys in a crystal and wine goblet shop. It can get ugly. Bankruptcy virtually destroys one’s credit record. The bankruptcy filing will stay on the public record for up to 10 full years in many states. During this time it will be nearly impossible to obtain any kind of credit, even for a pack of gum.
The person who files bankruptcy can expect to be required to pay hefty deposits for future home utilities ordered – gas, electric, water, cable, phone, internet, etc. And they could also expect to be passed over for a job, as more and more employers are performing credit checks these days as part of their routine job applicant screening process.
Rather than looking for ways to file for bankruptcy, people should rather be looking for ways to avoid bankruptcy. In this way, the consumer can achieve true debt relief without all the harmful repercussions of a bankruptcy filing.
Ruin in Purchasing Home
Having a bankruptcy record under your name doesn’t mean that you cannot purchase your own home. Believe it or not, people who have filed bankruptcy before are able to rebuild their credit records by taking in credit again.
But the bad news is that the debt will be closely scrutinized and may come in smaller amounts and high interest rates. [This usually happens because when you experience bankruptcy you are now tagged as high-risk borrowers.]
But these negative thoughts rather facts should not dishearten those with deprived credit account from investigating their house loan options. The conscientious use of credit is the only way up from a bankruptcy filing.
Bankruptcy can provide freedom to people in terrible financial constraints by releasing them from the obligation to repay their debts.
It’s a drastic move for anyone because a bankruptcy will stay on a person’s credit rating for up to 10 years, effectively acting like a warning flag to anyone considering lending that person money or a line of credit.
In order to mitigate the risk of providing that person a loan, the lender will charge higher interest rates than they normally would. For instance, an auto loan that might ordinarily carry six percent interest could come with an interest rate of eight percent or higher.
But, as time goes on and small loans and credit card balances are paid off on time, the bankruptcy filing becomes less and less considerable to a creditor.
Establishing good credit after bankruptcy is essential. The following will help recent bankruptcy filers regain their financial strength:
Pay bills on time. This is the single best thing bankruptcy filers can do to build up their credit rating.
Try and obtain a secure or unsecured credit card. They are much safer to use and they will not charge off more than you can afford to pay every single month.
Read your credit report. Errors are possible, and keeping tabs on your progress will help you stay focused on the goal of rebuilding after bankruptcy.
Mortgage companies would want someone with a reassurance that is on safe and responsible track. Many lenders prefer to see three things when considering loaning money to someone following a bankruptcy.
One, they prefer to see a long stretch of on time payment bills. Even though this might be a bit difficult since, especially if you don’t control your job income, however, as long as you discipline yourself, it is not impossible to get 100 percent coverage on your home loan.
Two, your down payment is important and three, you need to have a steady source of income. However, some lenders will be considerate enough to provide loans as soon as two years after filing bankruptcy provided that the person has shown responsibility in paying as well as having a reliable income.
Just keep in mind that after filing for bankruptcy choosing a home is no longer possible.
Finding yourself filing for bankruptcy may be the hardest thing to do, but losing a job or having to many medical bills may be a reason.
The mortgage lending industry has created special loan packages and terms for those who have filed bankruptcy in the past.
Lenders have little to lose in approving a house loan after bankruptcy. With your abode serving as collateral for the loan, the lender can feel confident in approving you for a house loan, often soon after your bankruptcy has been discharged.
Lastly, funds will solve this problem, for sure. However long it takes to gather that funds is how long it will take to get the home.
Start thinking about how you can make cash in your spare time, selling on line at eBay, doing freelance work, or starting your own business.
You can increase your chances by coming into the deal with a lender with as much cash as possible. The more money you can use as a down payment, the less risk for the bank.
There is a level where they’ll lend you the money because the loan is held by the house and the home is worth more than the mortgage.
Debt Consolidation: Does It Work
Debt Consolidation
There is no shortage these days of debt consolidation companies advertising their debt consolidation programs on TV commercials. The reasons are clear: credit card debt is definitely a big issue at the current time. Even thought financial experts seem nearly unanimous that the U.S. recession has “technically” ended, there are still an awful lot of people who are suffering financial hardships and who continue to struggle.
But is debt consolidation really the answer to credit card debt? Can it help consumers reduce their debt load and greatly improve their quality of life as the TV commercials tell us? Or is debt consolidation not all it’s cracked up to be? And if so, are there better programs and better solutions to the issue of credit card debt in America today?
In order for consumers to be able to make an informed decision, they need to have a good understanding as to what debt consolidation is, and how it works. Debt consolidation is the consolidating (combining) of multiple loan (credit card) payments into one payment. This new single payment is lower than the sum of the previous multiple loans. This is achieved through lower interest rates and better payment terms.
Debt consolidation may often involve a “debt consolidation loan”. This is almost always a home equity loan. But consumer beware: a home equity loan is a secured loan. If the consumer who takes out a home equity loan as part of a debt consolidation plan they risk losing their home if they are unable to make their payments at some time in the future.
What is a better form of debt relief? It is clear than when it comes to debt relief, the one program that achieves the greatest results in the least amount of time is Debt Settlement. This program works with a debt settlement company negotiating with the consumer’s creditors. The goal of these negotiations is to obtain a settlement agreement for a much lower amount than what was originally owed. Debt settlement can almost always achieve debt reductions in the amount of 50%, and very often – 75%.
It can truly be a debilitating and demoralizing thing. The good news is that there are indeed debt relief programs that help consumers reduce and eliminate credit card debt, and in fact – kiss it goodbye, once and for all.
Bankruptcy Pros & Cons
idth: 700px; height: 400px” id=”ArticleArticleBody”>
Bankruptcy is almost like a 4 letter word. The sound of the word should have an emotional impact on hearing it. That’s because bankruptcy is a very serious legal issue. It is by no means a simple walk in the park, as the cheesy bankruptcy lawyers would have you believe. Therefore, in this article we shall attempt to clear the air so to speak (nothing green intended) as to what bankruptcy is, what it does and what it does not do.
The first bankruptcy laws can be traced to the 1500′s and Old England, the times of King Henry VIII in fact. In the United States, bankruptcy under went a major update in 1978. These updates and changes to the system are common referred to as the “Bankruptcy Code”. And most recently, bankruptcy laws were changed yet again in 2005.
This latest bankruptcy reform tilted the scale to the side of creditors, as opposed to debtors. The reasons Congress acted on this was the perceived abuse of the bankruptcy system. It was perceived that bankruptcy lawyers were (and even still continue to) recommending bankruptcy as a form of debt relief. People were often racking up large amounts of debt and then claiming that they were unable to pay these debts.
But people are being misled if they think that bankruptcy is a free ticket out of debt. This is simply not the case. Bankruptcy does not dismiss debt outright. Creditors can still be sued for debts which are owed. Property, including homes can still be seized. And to make matters worse – bankruptcy has very serious repercussions which occur after filing.
One’s credit score takes an immediate hit and will actually hit a new low. Obtaining future credit will be nearly impossible, obtaining home utilities will be impossible without paying hefty deposits upfront, and one could very likely be passed over for a job, as more and more employers these days are performing credit checks as part of their routine job applicant screening process.
The bottom line is that bankruptcy is a very serious issue. If one is carrying huge amounts of debt and is looking for a way out, one should very, Very closely examine bankruptcy – but also bankruptcy alternatives such as debt settlement, debt consolidation, debt consolidation debt consolidation loans, and even consumer credit counseling.
Understanding What Chapter Seven Bankruptcy Is
You hear the term chapter 7 bankruptcy quite a lot these days, however normally a proper explanation of exactly what it is is not included. Because of this, there is some confusion as to what exactly chapter seven bankruptcy essentially is and this very often leads to guys desperately in need of knowing some How To File Chapter seven Bankruptcy Facts before they get involved!
Certainly no one wants to become involved in bankruptcy proceedings. Anyone who does will have to have debts that greatly exceed his or her net worth and, in addition, have no visible or viable means of paying back the debts, so without a doubt they will definitely want to read some How To File Bankruptcy Facts to make the whole ordeal less stressful and less problematic.
There are a number of different forms of bankruptcy such as chapter 11 bankruptcy and the more common chapter 7 bankruptcy.
Chapter 7 bankruptcy explained: Chapter 7 bankruptcy as defined by US and its courts law refers to the action or liquidating not legally exempt from liquidation assets with the desired outcome of paying back creditors and ebtors alike.
If you are a corporation, business and or partnership you will also be able to apply for this chapter like an individual. It is also important to note that individuals do also have a special clause open solely to them. The special clause for the public is called a discharge. What a discharge refers to is the freeing of the individual from certain debts.
The first things to do when getting involved in chapter 7 bankruptcy: when one needs to file for chapter seven bankruptcy some of the things you will need are the following: proof of your full income as well as expenditures, proof of your existing liabilities and assets, statements for your financial affairs, copies of any expired executive contracts, and of course copies all your tax returns.
For individuals other additional documentation has to be supplied to the courts. These items include: copies of credit counseling reports and repayment plan programs, employer payments and statements of income, interest payments on student loans, etc.The information in this document is very brief and general, if you need to find out more about chapter 7 bankruptcy and others, a good place to start would be with the links in this article and also with the US courts website. However, remember filing for Chapter 7 protection by yourself is not advised, you should get professional help from a lawyer.