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Answering Some Questions about Bankruptcy

May 20, 2011 By Leave a Comment

The issue of bankruptcy is replete with erroneous notions about what bankruptcy is and what it isn’t. Some of the myths about bankruptcy are tackled here and the truth revealed.

People aren’t aware of a lot of things about bankruptcy. People have different wrong notions and these wrong notions have been on the increase ever since new laws were established in the year 2005. If you’re one of those who may be confused about the meaning of bankruptcy, then you can check out some of the issues tackled below.

You must be flat broke to file for bankruptcy.
This notion is wrong. The only criteria required to file for bankruptcy are an inability of the person to pay their debt as it is due. If you wait for your mortgage company to foreclose before you file for bankruptcy then you may have lesser options in order to protect yourself financially.

If you file for bankruptcy, you’ll never be able to get credit again.
This notion is wrong. Two years after you have fulfilled your debt requirements, you can start to slowly rebuild your credit. The issue of bankruptcy will remain on your credit records for at least a decade but people can easily but slowly rebuild their credit by paying their rent as well as mortgage and utilities on time. You can also apply for a low credit limit store credit card. The final step is to apply for a bankruptcy loan when you feel that you are finally ready.

Once you’ve gone bankrupt, you can never own a home.
This notion is wrong. As soon as you have started rebuilding your credit, a lot of creditors such as mortgage lenders and other institutions will start considering lending you money. Interest rates may be substantially higher than the normal rates but you will definitely be able to obtain a loan. It may take a while to prove to lenders that you have the ability to handle payments once more but you can buy your home after a bankruptcy.

Taxes cannot be discharged in bankruptcy.
This notion is wrong. Certain taxes such as personal income taxes that are more than three years old can be discharged during a bankruptcy filing.

My student loans aren’t dischargeable under the new bankruptcy laws.
This notion is usually true, but exceptions exist to the rule. If a debtor can prove hardship then these student loans may be dischargeable.

If I signed an agreement stating that a debt cannot be discharged in bankruptcy, it is my debt forever.

This notion is usually wrong because although there are some very limited exceptions to the rule, most of such clauses are usually void and are usually used in order to trick debtors into not filing for bankruptcy.

I can lose my job if I file for bankruptcy.

This notion is wrong. The law deems it illegal to fire someone because they filed for bankruptcy. However, if you apply for a new job after you have filed for bankruptcy a new employer may decide to use your bankruptcy filing issue in order to decide whether to hire you or not.

With this understanding of the various wrong notions concerning bankruptcy, you can better make informed decisions as to the best options available for you as well as your family.

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Understanding the Entire Bankruptcy Process

May 20, 2011 By Leave a Comment

The bankruptcy process is hardly a straightforward one. This article tries to summarize the process and addresses the critical issues that are to be considered when filing for bankruptcy.

Anyone considering bankruptcy should know what to expect in each phase of the process after the application has been filed.

Here’s a basic overview of what to expect during the entire process:

The initial thing to do is to decide the sort of bankruptcy that you intend to file. Chapter 7 frees an individual of all their debt and allows rebuilding of credit after some years. However, with the new regulations established in 2005, most people do not qualify for this sort of bankruptcy. In the end, the court has the final say on who qualifies and who doesn’t. The law states that in order to qualify, you must make less than the medium income in your particular state of origin.

Chapter 13 bankruptcy wants you to pay back all of your debt in a specified timeframe due to a schedule that has been set out by the courts. This usually sounds like a terrific solution (you’re gradually paying back what you owe), but it can be difficult as the court will usually determine the amount of your income which may be used for repaying the debt and how much will be available for you to live on. The criteria can be very stringent and you won’t be allowed any luxuries but simply the bare necessities for the duration of the repayment.

As long as you have determined the nature of the bankruptcy that you want to file for, the next thing is to handle the legal issues. If you are filing everything on your own, you may need to file as much as 30 or 60 pages such as schedules and other papers filed
at the time of your bankruptcy. All state and federal regulations must be followed to the letter when you are completing these forms. The entire process is not only tedious but quite confusing as well. All the bankruptcy laws and requirements which apply to your location must be thoroughly understood.

After a month or so of your filing for bankruptcy, you will be required to attend a hearing that is presided over by the trustee for the bankruptcy; this hearing is otherwise known as the First Meeting of Creditors. You will also be required to answer specific and detailed questions about things such as your bankruptcy papers, assets, debts and other issues that may concern your trustees as well as creditors.

After this the creditors have 60 days to contest your filing for bankruptcy. As soon as this deadline has passed, the courts will proceed to notify you of your debt discharge in a period of about 60 to 75 days.

Filing for bankruptcy doesn’t mean that you won’t have access to credit for your whole life. Your credit can easily be reestablished two years after the discharge of bankruptcy. However the fact that you applied for bankruptcy will exist on your credit report for a decade and you are legally required to oblige if questions are asked about your bankruptcy situation. You will not be permitted to file a new bankruptcy request for six years.

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Getting the Required Bankruptcy Help

May 20, 2011 By Leave a Comment

Bankruptcy isn’t a straightforward and simple process; some assistance is usually required when filing for bankruptcy. This article discusses some of the possible assistance that may be provided in the bankruptcy process from particular services.

The whole idea of filing for bankruptcy can be a difficult and bothersome task. If you have no legal background whatsoever, then it can be a nightmare with so many words and terms that cannot be understood. Nevertheless, help is available regardless of whether you can afford a bankruptcy lawyer or not. You’ll easily find all the help that is required to make the necessary decisions and manage them as well. These few places will help you on your way:

Credit Counseling:
Credit counselors have the necessary training to go through your financial information and determine whether or not bankruptcy is your only alternative. People who are usually overburdened and can’t handle bill collectors usually panic and file for bankruptcy before they actually need it. Credit counselors will advise you on all the possible alternatives that may be available to you and this includes debt consolidation and the ways you can get specific portions of your debt forgiven and the organization of repayment schedules with creditors. They also tend to offer help with the organization of a budget and sticking to that same budget.

While a number of credit counselors charge huge fees for their services, a number of not-for profit agencies in the United States are available to help people in dire financial circumstances solve their problems. You can easily search the internet, yellow pages or you local college or bank for information about such services near you.

Debt Consolidation Services:
These services exist to help you consolidate your different debts into one single debt with a lower monthly payment which can be managed quite easily. The danger of using these services is that unless you go through some intensive training in terms of making budgets, you are bound to end up in financial trouble sooner or later. When consolidating you should make sure that you use this time to break the spending cycle which landed you in the situation that you’ve find yourself in.

One other option provided by certain services is the option of debt forgiveness. Each of your creditors are contacted and persuaded to forgive certain aspects of your existing debt, as long as you promise to make the payments quickly. This is a good thing because the less you pay back, then the less you’ll borrow in the consolidation loan. Creditors will agree to take less than what you owe because if you file for bankruptcy, they aren’t really sure of getting anything at all.

Bankruptcy Lawyers:
As long as you have made the decision to file for bankruptcy, then the next thing to do is to ensure that you get a qualified lawyer who will handle your case in the best way they can. Penny pinching isn’t advised in this case. Getting the wrong lawyer may mean losing a lot more money in the longer run. The adage about getting what you pay for is especially true in this scenario. Before a bankruptcy lawyer has the guts to charge top dollar, they must have proved their worth first of all to other clients, so you can remain rest assured of what you’re getting.

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How a Bankruptcy Services Assist You

May 20, 2011 By Leave a Comment

bankruptcy services exist in order to help assist people who have to file for bankruptcy. Some of the services that help you in the process of bankruptcy are discussed in greater detail below.

Anyone considering bankruptcy as a way of freeing themselves of debt should think of the kind of bankruptcy services available and what they offer.

Credit Counseling Services:
Credits counseling services are usually designed to help you assess your situation financially and determine how best you can improve your future. Most of such services will take a look through your finances and determine whether your debt can be paid back without the process of filing for bankruptcy. One great thing about using this kind of service is the fact that it helps you learn how to manage your finances better and allows you to handle your creditors and even get some of them to forgive your debt.

Two major types of credit counseling services exist, some of these services are those that are paid for while the rest are free non-profit services. Both services are essentially the same but one is usually free while the other isn’t. You should be very careful when you choose a service and you should make sure that they are qualified to help out with your specific situation as anything short of this may leave you in trouble.

Bankruptcy Lawyers:
If your credit counselor has truly determined that bankruptcy is the best option for you, then you should find a good lawyer that specializes in bankruptcy in the state where you reside. Bankruptcy lawyers may be quite expensive but they are usually very necessary in order to ensure that the process goes through smoothly and that it is handled professionally. Bankruptcy laws tend to vary from one state to the other so you should ensure that the lawyer you choose is well versed in the field of bankruptcy. Legal fees are not included in your bankruptcy debt so you need to ensure that these fees are paid upfront.

Pre-Filing Services:
One of the most important services that you’ll ever need will be the pre-filing service. This service can easily stop any home foreclosures or repossessions during the bankruptcy proceedings.

Despite the nature of bankruptcy service chosen to aid others through this confusing process, you should ensure that they are qualified to help you determine the sort of bankruptcy that you qualify for and help you quicken the entire process. All your paperwork should be filed out properly before submission to the courts; this is what the bankruptcy service is needed for. What else do you need bankruptcy lawyers for?

Here’s a sample of what to expect:

• The service you choose should help you work out an affordable repayment plan in order to settle any outstanding debts that you may have with your creditors.
• They should help you work out an after bankruptcy plan in order to maintain your payments and make sure that you do not fall into the same trap that landed you in bankruptcy.
• They should help you determine what assets you can legally retain and which must be sold in order to cover your outstanding debts and financial obligations to creditors.

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