If you want to keep property that isn’t exempt, you can still file for bankruptcy, but you typically must choose Chapter 13. Chapter 13 requires debtors to come up with a plan to repay all, or most, of their debts within five years. If they successfully complete their plan, they’re allowed to keep their property while having any remaining debts erased. Unfortunately, most people fail to complete their Chapter 13 plans, and their cases are either dismissed, allowing creditors to resume collection activities, or converted to Chapter 7s.
A bankruptcy filing can make sense if any of the following apply:
You can’t pay back most or all of your unsecured debts in three to five years.
You don’t have much equity in a home or vehicle or much other property to speak of.
You do have considerable equity in a home or vehicle or other valuables that wouldn’t be exempt in bankruptcy - jewels; family heirlooms; valuable artwork or collections; or stocks, bonds, and cash held outside a retirement plan - but you’re willing to agree to a Chapter 13 repayment plan rather than a Chapter 7 liquidation.
Bankruptcy might not make sense if any of these apply:
You could repay your debts within five years.
Most of your debts are the kind that can’t be wiped out. Debts that typically can’t be erased include student loans, child support, and recent taxes. You might still decide to file so that you can free up more money for these debts, but the disadvantages of filing might well overwhelm the advantages.
You defrauded your creditors by hiding assets, say, or lying about your income or debts on a credit application.
You recently ran up large debts buying luxuries, which can include vacations and entertainment. If you did so while you were clearly broke, that can constitute fraud. If you ran up the bills and then lost your job, you might be able to file for bankruptcy on other debts, but the luxury debts might not be wiped out.
You want to file a Chapter 7 liquidation bankruptcy and received a discharge for a previous bankruptcy filing within the past six years. (You can file for a Chapter 13 repayment plan bankruptcy at any time.)
Innovis: The Credit Report You’ve Probably Never Heard Of
Did you know that there’s a fourth credit bureau of considerable influence in this country? The company is called Innovis, and you might want to contact Innovis and find out what information this company is reporting about you.
As recently as 2003, Innovis denied that it was actually in the credit-reporting business. There are numerous published reports in which the company flat-out denied that the information it gathers or sells about consumers could be used by creditors for the purpose of extending credit. Shortly thereafter, consumer advocates - like the Public Interest Research Group (PIRG) - starting insisting that Innovis was in fact a credit bureau and should have to abide by the same rules as other credit agencies.
After some outside pressure and scrutiny, Innovis now acknowledges that it is, indeed a credit reporting agency. According to published reports, Innovis primarily collects negative information about consumers: things like late payments, judgments, bankruptcies, collection accounts, repossessions, and so forth. That information is then sold to banks and other financial institutions. Well, if you do get credit offers, you certainly want them to be the best ones available, like low interest rate balance transfers, for instance.
But when companies buy data from Innovis, reportedly what they are screening for is people with “bad” credit - or at least people who used to have bad credit. This can have two effects on you. First, it would screen you out of the lists of top-tier consumers who are getting low-interest credit offers. Second, it makes you open game for getting a host of credit offers you probably don’t want to get. Think about it for a minute: If a bank or credit card company is actively targeting consumers with poor credit histories, what kind of credit offers do you think they’ll be making? More than likely, they’ll be throwing out high interest-rate offers - above the 20% level - or solicitations for “secured” credit cards.
Again, if you’re already considered a “sub-prime” borrower, you don’t want to get these offers. So make sure you write Innovis and find out what information the company has about you.
Unlike the other credit bureaus - that let you get your credit report online or talk to representatives over the telephone, Innovis doesn’t make it easy to establish contact. The only way you can obtain your Innovis credit report is by writing the company.
To get your Innovis credit report, send them a letter asking for your credit file. Be sure to include your name, current address, and social security number. Innovis also requires your previous address for the last two years if you haven’t been at your current residence for two years, your date of birth, a copy of your driver’s license or a utility bill to verify your address, your telephone number, your current employer, and your signature.
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