Bankruptcy Ch. 7 is one of the forms of bankruptcy that a private citizen or business can file with the courts. This court-supervised process allows a trustee to college all the assets of the debtor, whether private or business, liquidate those assets and make payments to creditors. The debtor has the right to keep some exempt property in a Chapter 7 bankruptcy, but this is rapidly changing. If you are considering using this process, check with current laws to learn what property may be exempt.
In some cases, bankruptcy through Ch. 7 is done on a 'no-asset' basis when the debtor owns nothing that can be liquidated. Any person or business that finds it necessary to file bankruptcy but wants to keep assets that are not covered in those that are exempt then Chapter 13 bankruptcy may be the better solution.
The purpose of bankruptcy Ch. 7 is to allow unsecured debts to be wiped away, giving the person or business another chance to build a financial future. Any creditors which hold unsecured claims against the person or business must file proof of that claim with the court. Certain unsecured debts are discharged and the debtor is no longer liable for that debt.
Bankruptcy Ch. 7 usually takes four to six months to process. Often about three months after the court makes its decision regarding the bankruptcy, the debtor will receive proof of discharge of those debts that were wiped away.
Proper money manage can help you avoid finding yourself in a bankruptcy Ch. 7 courtroom. However, there are some situations where this is simply unavoidable. If you find that you need to file bankruptcy, you should research which form of bankruptcy is best for your specific financial situation. There will be filing fees and possibly legal fees incurred when filing, but it may be the solution that you need to change your future.
http://www.credit-wz.com/bankruptcy/About-Chapter-7-Bankruptcy.html
Thursday, September 27, 2007
What Is Chapter 11 Bankruptcy
The courts refer to Chapter 11 bankruptcy as corporate bankruptcy because it is typically reserved for businesses and large corporations that have exhausted other options for repaying their creditors. In this type of situation, a business or corporation decides to allow the courts to oversee the reorganization of its debts and assets. A bankruptcy court trustee is often appointed to the case and is instrumental in reorganizing the assets of the debtor in order to repay creditors more efficiently. Many times, the company is still allowed to stay in business while their creditors are repaid, but this is not always the case.
Corporate bankruptcy involves much of the same process that personal bankruptcy does. The main difference, however, is that creditors can force a business into Chapter 11 bankruptcy because it ensures that the court will take control of the finances. When this happens, the creditors have a better chance of being repaid by the business. This type of business bankruptcy often allows the company to continue generating revenue for the creditors while the business gets its finances and assets in order.
When a business files for corporate bankruptcy in which its debts are greater than its assets, the stockholders receive nothing after the bankruptcy is completed. Essentially, they lose all rights that they had to the company and its assets. As a result, the creditors take control of the company in order to help it retrieve the monetary losses incurred by extending credit to it. This is also done to help save the jobs that the corporation provides and to help retain the profit-making capabilities of the business.
Although it is a good idea for a failing business, bankruptcy has many critics who feel that it is harmful to allow corporations to file for the court's protection from its creditors. Many critics say that it is unfair for a company to continue to operate once it has filed for bankruptcy. The reason is that the company can cease paying its debts and use that money for improving the business. As a result, the company has an advantage over its competitors because it has more money to unduly put into acquiring more customers, planning better products, and much more. Others say that Chapter 11 bankruptcy only perpetuates the problem of bad financial management in the upper tiers of the corporation's executives. Filing for bankruptcy protection only adds to this problem by maintaining the practice of bad financial management.
The reasons for Chapter 11 bankruptcy vary among the different corporations in need of the services that it provides. Whether or not it is good for the economy, it is still a practice that does not go unused. This is proven by recent occurrences, such as K-Mart and WorldCom, in which major corporations filed for business bankruptcy protection in order to have their debts reorganized while remaining in business and creating revenue. While it may provide unfair advantages and a continuing practice of financial mismanagement, it is sometimes a necessary method to save some corporations from a complete shutdown.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-11-Bankruptcy.html
Corporate bankruptcy involves much of the same process that personal bankruptcy does. The main difference, however, is that creditors can force a business into Chapter 11 bankruptcy because it ensures that the court will take control of the finances. When this happens, the creditors have a better chance of being repaid by the business. This type of business bankruptcy often allows the company to continue generating revenue for the creditors while the business gets its finances and assets in order.
When a business files for corporate bankruptcy in which its debts are greater than its assets, the stockholders receive nothing after the bankruptcy is completed. Essentially, they lose all rights that they had to the company and its assets. As a result, the creditors take control of the company in order to help it retrieve the monetary losses incurred by extending credit to it. This is also done to help save the jobs that the corporation provides and to help retain the profit-making capabilities of the business.
Although it is a good idea for a failing business, bankruptcy has many critics who feel that it is harmful to allow corporations to file for the court's protection from its creditors. Many critics say that it is unfair for a company to continue to operate once it has filed for bankruptcy. The reason is that the company can cease paying its debts and use that money for improving the business. As a result, the company has an advantage over its competitors because it has more money to unduly put into acquiring more customers, planning better products, and much more. Others say that Chapter 11 bankruptcy only perpetuates the problem of bad financial management in the upper tiers of the corporation's executives. Filing for bankruptcy protection only adds to this problem by maintaining the practice of bad financial management.
The reasons for Chapter 11 bankruptcy vary among the different corporations in need of the services that it provides. Whether or not it is good for the economy, it is still a practice that does not go unused. This is proven by recent occurrences, such as K-Mart and WorldCom, in which major corporations filed for business bankruptcy protection in order to have their debts reorganized while remaining in business and creating revenue. While it may provide unfair advantages and a continuing practice of financial mismanagement, it is sometimes a necessary method to save some corporations from a complete shutdown.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-11-Bankruptcy.html
Finding A Good Bankruptcy Attorney
If you are in the throes of financial hardship, then you need to start shopping around for a good bankruptcy attorney who is wise to all of the elements of bankruptcy. If you know you are headed for bankruptcy, then you need to start trying to get your finances in as much order as possible and prepare to go and speak with a bankruptcy attorney in your home town. The best thing to do will be to try and speak with one as soon as possible so you can try to put a stop to all of the credit madness going on in your life at present.
If you know you can not avoid bankruptcy, then it is time to talk to someone who can get you in and out of bankruptcy court as swiftly and as confidentially as possible. You don't want the entire world to know you are in the process of filing bankruptcy but if you don't hurry and get to the bankruptcy court as quickly as possible, then you will likely never get there because of garnishments and everything else to hold you up on filing. When garnishments on your salary start, then that's when you will likely find that everyone does indeed know you are having financial troubles. Especially if you work in a plant or for another large employer of the local area, where the locals in human resources rarely keep anything confidential.
To find a good bankruptcy lawyer, you should start your search online and in your local yellow pages. Don't ask around in the community because the idea is to try to get through the bankruptcy as quickly and as painlessly as possible. If you begin to ask questions then you won't be able to hide the fact that you are going to have to file for bankruptcy because everyone will know if you are out there asking for referrals. Get online and find a good website which will advise you on the ins and outs of bankruptcy and will possibly even list one or two ( maybe many more) bankruptcy attorneys in your local area.
Call around to the area bankruptcy attorney offices and ask for more information if you feel you need it. Make an appointment or schedule a free consultation to meet with an attorney and talk to them about all of your questions regarding bankruptcy. Should you file Chapter 13 or Chapter 7? Should you file Chapter 11 or a chapter you don't know about? What chapter should you file or should you file at all? Make a list of questions and go into your meeting well prepared so you will have all of the information to make an informed decision. Also, make a promise to yourself and your spouse you won't do anything until all of your questions are answered and until you have a chance to go home and sleep on it.
Bankruptcy attorneys make their money from people who file bankruptcy so they will certainly show you the advantages to filing for the bankruptcy chapter that suits your situation. However, just because you find a bankruptcy attorney you believe to be reputable doesn't mean you should immediately file bankruptcy and it doesn't mean you shouldn't still shop around for one you may feel more comfortable talking with or shop around for someone who isn't charging astronomical fees for their services.
When you have all of the bankruptcy information you need, then you should take a moment to reflect on all of your options and decide if bankruptcy is right for you. Will it be a quick fix or should it solve all of your problems financially indefinitely. What are the consequences for filing bankruptcy and will those consequences bother you? If so, then you likely need to reconsider. You also need to reconsider if you don't like or trust your bankruptcy attorney. This is a life changing step for you financially, one that you will never be able to erase.
http://www.credit-wz.com/bankruptcy/Finding-A-Good-Bankruptcy-Attorney.html
If you know you can not avoid bankruptcy, then it is time to talk to someone who can get you in and out of bankruptcy court as swiftly and as confidentially as possible. You don't want the entire world to know you are in the process of filing bankruptcy but if you don't hurry and get to the bankruptcy court as quickly as possible, then you will likely never get there because of garnishments and everything else to hold you up on filing. When garnishments on your salary start, then that's when you will likely find that everyone does indeed know you are having financial troubles. Especially if you work in a plant or for another large employer of the local area, where the locals in human resources rarely keep anything confidential.
To find a good bankruptcy lawyer, you should start your search online and in your local yellow pages. Don't ask around in the community because the idea is to try to get through the bankruptcy as quickly and as painlessly as possible. If you begin to ask questions then you won't be able to hide the fact that you are going to have to file for bankruptcy because everyone will know if you are out there asking for referrals. Get online and find a good website which will advise you on the ins and outs of bankruptcy and will possibly even list one or two ( maybe many more) bankruptcy attorneys in your local area.
Call around to the area bankruptcy attorney offices and ask for more information if you feel you need it. Make an appointment or schedule a free consultation to meet with an attorney and talk to them about all of your questions regarding bankruptcy. Should you file Chapter 13 or Chapter 7? Should you file Chapter 11 or a chapter you don't know about? What chapter should you file or should you file at all? Make a list of questions and go into your meeting well prepared so you will have all of the information to make an informed decision. Also, make a promise to yourself and your spouse you won't do anything until all of your questions are answered and until you have a chance to go home and sleep on it.
Bankruptcy attorneys make their money from people who file bankruptcy so they will certainly show you the advantages to filing for the bankruptcy chapter that suits your situation. However, just because you find a bankruptcy attorney you believe to be reputable doesn't mean you should immediately file bankruptcy and it doesn't mean you shouldn't still shop around for one you may feel more comfortable talking with or shop around for someone who isn't charging astronomical fees for their services.
When you have all of the bankruptcy information you need, then you should take a moment to reflect on all of your options and decide if bankruptcy is right for you. Will it be a quick fix or should it solve all of your problems financially indefinitely. What are the consequences for filing bankruptcy and will those consequences bother you? If so, then you likely need to reconsider. You also need to reconsider if you don't like or trust your bankruptcy attorney. This is a life changing step for you financially, one that you will never be able to erase.
http://www.credit-wz.com/bankruptcy/Finding-A-Good-Bankruptcy-Attorney.html
Bankruptcy Court - The Last Resort
In today's society, people are turning to bankruptcy court more often as a solution to their debt problems. Without significant changes in the spending habits of consumers, this practice will undoubtedly continue. Since bankruptcy provides a type of fresh start for a person's finances, many people rush to file bankruptcy rather than researching the alternatives or the negative impact that it will have on their financial future. Bankruptcy attorneys are important in these situations to help make sure the debtors knows what they are getting into by filing bankruptcy.
The rules and laws of any given bankruptcy court are governed by federal regulations rather than state regulations. While each state has its own laws regarding the process of filing and undergoing bankruptcy procedures, every state must follow the overall guidelines set forth by the federal government. Once a person has hired a bankruptcy attorney and filed a petition with the courts to have all debts discharged through a bankruptcy, all creditors listed on the petition must cease any efforts to collect debts. The reason for this is that the bankruptcy court officials then handle the matter. If the proceedings are finalized and the debtors are granted bankruptcy, either their assets are liquidated to pay off creditors or they enter into a repayment plan, depending on which chapter of bankruptcy they are categorized in.
The best thing for a person to do when deciding to file bankruptcy is to seek out a bankruptcy attorney. There are many different laws and regulations involved in the filing process. Bankruptcy lawyers are familiar with specifics of the process and help ensure that the court treats the case fairly. An attorney will also explain your options to you so you can decide which type of bankruptcy you want to file. In addition, they will typically accompany you to the bankruptcy court on your trial date and advise you throughout the entire process. Many bankruptcy attorneys will also put you on payment plans for their services for people who have no money saved for such an event.
Unfortunately, people often abuse the bankruptcy system by being financially irresponsible. More stories are being reported everyday about people who have filed for bankruptcy two and three times because they have learned nothing from their past mistakes. Because of this abuse, the idea of bankruptcy has acquired a societal stigma that discourages those who truly need the fresh financial beginning that legitimate bankruptcies can provide. One of the advantages of bankruptcy lawyers is that they will accompany you throughout the process and add a sense of legitimacy to your claim.
Bankruptcy court is an option that should only be used as a last resort for debtors who cannot afford to repay their creditors. The detrimental effect that it has on a person's finances, relationships, and self-image is often not worth the relief that it provides. If all other options are exhausted, filing bankruptcy can provide a peace of mind, but it will continuously haunt a person's psyche for the rest of his or her life.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Court-The-Last-Resort.html
The rules and laws of any given bankruptcy court are governed by federal regulations rather than state regulations. While each state has its own laws regarding the process of filing and undergoing bankruptcy procedures, every state must follow the overall guidelines set forth by the federal government. Once a person has hired a bankruptcy attorney and filed a petition with the courts to have all debts discharged through a bankruptcy, all creditors listed on the petition must cease any efforts to collect debts. The reason for this is that the bankruptcy court officials then handle the matter. If the proceedings are finalized and the debtors are granted bankruptcy, either their assets are liquidated to pay off creditors or they enter into a repayment plan, depending on which chapter of bankruptcy they are categorized in.
The best thing for a person to do when deciding to file bankruptcy is to seek out a bankruptcy attorney. There are many different laws and regulations involved in the filing process. Bankruptcy lawyers are familiar with specifics of the process and help ensure that the court treats the case fairly. An attorney will also explain your options to you so you can decide which type of bankruptcy you want to file. In addition, they will typically accompany you to the bankruptcy court on your trial date and advise you throughout the entire process. Many bankruptcy attorneys will also put you on payment plans for their services for people who have no money saved for such an event.
Unfortunately, people often abuse the bankruptcy system by being financially irresponsible. More stories are being reported everyday about people who have filed for bankruptcy two and three times because they have learned nothing from their past mistakes. Because of this abuse, the idea of bankruptcy has acquired a societal stigma that discourages those who truly need the fresh financial beginning that legitimate bankruptcies can provide. One of the advantages of bankruptcy lawyers is that they will accompany you throughout the process and add a sense of legitimacy to your claim.
Bankruptcy court is an option that should only be used as a last resort for debtors who cannot afford to repay their creditors. The detrimental effect that it has on a person's finances, relationships, and self-image is often not worth the relief that it provides. If all other options are exhausted, filing bankruptcy can provide a peace of mind, but it will continuously haunt a person's psyche for the rest of his or her life.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Court-The-Last-Resort.html
Bankruptcy Law In Different States
Although federal bankruptcy law mainly regulates bankruptcies, the individual states can have specific guidelines for the process within their jurisdiction. States can typically choose to have their own rules that govern the types of exemptions that the debtor is allowed to keep after filing for a discharge of their debts. For instance, some states will allow debtors to keep their homes no matter how expensive or extravagant they are whereas other states will force the liquidation of property as an attempt to pay off the debts. Other variations include the types of debt that a debtor can discharge, although many of these are federally mandated without exception.
Florida bankruptcy law heavily favors debtors in regards to the property that they can retain. In fact, Florida has a reputation for being one of the most liberal states in the country for debtors to petition for a discharge of debts. The state government has elected to opt out of the federal regulations concerning the debtor's lawfully retainable property. According to Florida bankruptcy proceedings, you can keep more of your personal property during a bankruptcy than in any other state. As a result, many people who plan to file often move to Florida with their assets in order to take advantage of the state's lenient bankruptcy law.
To see a contrast in the how the bankruptcy law changes from state to state, look at the exemptions that the Maryland law allows. Maryland is stricter in regard to the debtor's assets that must be liquidated in a bankruptcy. For instance, a debtor who files bankruptcy in Maryland is only entitled to keep $500 worth of household goods and furnishings as well as $3,000 of cash in their bank accounts. Also according to Maryland bankruptcy law, debtors can only retain up to $2,500 worth of personal property and the rest must be sold or liquidated so the proceeds can go towards paying the creditors.
Differences in bankruptcy guidelines are not only state specific, but they are also specific to the type of bankruptcy the debtor chooses. Each category had different regulations and it is up to the debtor to decide which type will best suit their needs. The court will also investigate your financial circumstances and help you decide your best options, whether it is a complete dismissal of your debts or making repayment arrangements. In many cases, you can even retain much of your property rather than having it sold to help pay your creditors.
States have certain regulations that they require debtors to adhere to when they file for bankruptcy. As a result, some states end up being more lenient toward creditors while others tend to be more sympathetic to the debtors. This makes for situations where savvy debtors can spot loopholes in the system and use them to their financial advantage. That is why there is a need for federal bankruptcy law to be the ultimate jurisdiction for any bankruptcy petition filed in the United States. This helps to simplify situations in case questions or confusions arrive.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Law-In-Different-States.html
Florida bankruptcy law heavily favors debtors in regards to the property that they can retain. In fact, Florida has a reputation for being one of the most liberal states in the country for debtors to petition for a discharge of debts. The state government has elected to opt out of the federal regulations concerning the debtor's lawfully retainable property. According to Florida bankruptcy proceedings, you can keep more of your personal property during a bankruptcy than in any other state. As a result, many people who plan to file often move to Florida with their assets in order to take advantage of the state's lenient bankruptcy law.
To see a contrast in the how the bankruptcy law changes from state to state, look at the exemptions that the Maryland law allows. Maryland is stricter in regard to the debtor's assets that must be liquidated in a bankruptcy. For instance, a debtor who files bankruptcy in Maryland is only entitled to keep $500 worth of household goods and furnishings as well as $3,000 of cash in their bank accounts. Also according to Maryland bankruptcy law, debtors can only retain up to $2,500 worth of personal property and the rest must be sold or liquidated so the proceeds can go towards paying the creditors.
Differences in bankruptcy guidelines are not only state specific, but they are also specific to the type of bankruptcy the debtor chooses. Each category had different regulations and it is up to the debtor to decide which type will best suit their needs. The court will also investigate your financial circumstances and help you decide your best options, whether it is a complete dismissal of your debts or making repayment arrangements. In many cases, you can even retain much of your property rather than having it sold to help pay your creditors.
States have certain regulations that they require debtors to adhere to when they file for bankruptcy. As a result, some states end up being more lenient toward creditors while others tend to be more sympathetic to the debtors. This makes for situations where savvy debtors can spot loopholes in the system and use them to their financial advantage. That is why there is a need for federal bankruptcy law to be the ultimate jurisdiction for any bankruptcy petition filed in the United States. This helps to simplify situations in case questions or confusions arrive.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Law-In-Different-States.html
About Chapter 13 Bankruptcy
Bankruptcy Ch. 13 is used by individuals or businesses that have steady income to resolve their financial difficulties under court supervision. When this type of petition is filed, a repayment plan is established to allow debt to be repaid over three to five years. When this chapter is used for bankruptcy, the assets of the debtor are retained fully by the debtor, unlike in other forms of court-supervised financial solutions. Due to changes in bankruptcy law in 2005, many people who would previously have been able to use Chapter 7 where debts are wiped out, now must use Chapter 13 for their cases.
To file bankruptcy under Ch. 13, the debtor must have less than $304,675 in unsecured debts and less than $922,975 in secured debts. If the case involves a man and his wife, these limitations are not doubled
A bankruptcy Ch. 13 discharge can not be granted for anyone who received bankruptcy discharge under Chapters 7, 11 or 12 within the last four years or anyone who has declared bankruptcy under Chapter 13 within the last two years.
A person that files bankruptcy Ch. 13 is permitted to keep their home if they successfully follow the repayment plan. If they do not, the home may be kept under martial ownership law or homestead exemption if certain conditions are met. The 2005 law, however changes the homestead exemption to no more than $125,000 if the home was purchased within the 40 months immediately prior to court filing of the bankruptcy or if there was fraud involved.
When filing bankruptcy Ch. 13, a person can keep their vehicle(s) provided they repay based on the repayment plan. If they do not, the vehicle can be taken by the creditors.
Bankruptcy Ch. 13, like all bankruptcies, is quite complex. It is far better to manage your money than to fall into the type of financial troubles that result in this type of court action. The court action will remain on your credit record for ten years.
http://www.credit-wz.com/bankruptcy/About-Chapter-13-Bankruptcy.html
To file bankruptcy under Ch. 13, the debtor must have less than $304,675 in unsecured debts and less than $922,975 in secured debts. If the case involves a man and his wife, these limitations are not doubled
A bankruptcy Ch. 13 discharge can not be granted for anyone who received bankruptcy discharge under Chapters 7, 11 or 12 within the last four years or anyone who has declared bankruptcy under Chapter 13 within the last two years.
A person that files bankruptcy Ch. 13 is permitted to keep their home if they successfully follow the repayment plan. If they do not, the home may be kept under martial ownership law or homestead exemption if certain conditions are met. The 2005 law, however changes the homestead exemption to no more than $125,000 if the home was purchased within the 40 months immediately prior to court filing of the bankruptcy or if there was fraud involved.
When filing bankruptcy Ch. 13, a person can keep their vehicle(s) provided they repay based on the repayment plan. If they do not, the vehicle can be taken by the creditors.
Bankruptcy Ch. 13, like all bankruptcies, is quite complex. It is far better to manage your money than to fall into the type of financial troubles that result in this type of court action. The court action will remain on your credit record for ten years.
http://www.credit-wz.com/bankruptcy/About-Chapter-13-Bankruptcy.html
New Bankruptcy Code
The United States bankruptcy code was recently changed to make it more difficult for debtors to discharge their debts. The increasing number of cases where people simply wanted to clear their debts rather than enter into repayment agreements prompted these changes as a way to make debtors more responsible. The amount of debt that creditors had to simply write-off was beginning to cause problems for the economy as personal financial responsibility was at an all-time low. As a result, Congress enacted the first major reform in the bankruptcy code in almost three decades.
The new bankruptcy code resulted in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, but changes in bankruptcy code are not new for citizens of the United States. Congress was authorized to make changes to the rules and regulations that govern the relationship between debtors and creditors since 1801. Since then, the legislators have amended the bankruptcy code many times. The 2005 changes, however, created the most significant changes in the code in nearly two decades.
In April of 2005, President George Bush signed into law some new regulations to be added to the existing bankruptcy code. Under the new bankruptcy regulations, debtors who file for any form of bankruptcy protection must meet several requirements. Firstly, debtors who file for new bankruptcies are required to complete a financial counseling course. Since a large number of bankruptcy filings are due to irresponsible personal finance management, the counseling course is designed to help people recognize and change their spending behaviors. This also helps to deter future bankruptcy filings because statistics show that many people who file bankruptcy will do it again in the future.
The new bankruptcy code is specifically designed to discourage debtors from filing bankruptcy. In addition to this, it also encourages them to look at their finances and spending habits to see why they got into the predicament to begin with. One way that the new code accomplishes this is by requiring an attorney's signature on the bankruptcy petition before it can be filed with the court. Oftentimes, the lawyer is required to conduct an investigation into the debtor's finances, especially in cases of suspected abuse. The person's income is also evaluated to determine if the debts can be repaid through other means as well.
Other restrictions of the new bankruptcy code make it more difficult for debtors to file Chapter 7 bankruptcy to simply have their debts discharged. With the new regulations, the majority of cases are forced into a Chapter 13 bankruptcy that requires debtors to repay their debts with a scheduled payment plan. This process involves a court-appointed trustee to handle the finances of the debtor and a certain percentage of their regular income is delegated to the creditors. Repayment schedules are typically arranged so that the debts are paid within five years. Under the old bankruptcy code, however, it was much easier for debtors to file Chapter 7, which simply erases their debts without any form of repayment.
The recent changes to the United States bankruptcy code took effect in late 2005. These new regulations are directed toward debtors who have accumulated a large amount of debt and simply want to have their financial slate cleared. Since the new guidelines were enacted, debtors are required to complete a course in money management as well as agree to an investigation into their finances before a bankruptcy can be completed.
http://www.credit-wz.com/bankruptcy/New-Bankruptcy-Code.html
The new bankruptcy code resulted in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, but changes in bankruptcy code are not new for citizens of the United States. Congress was authorized to make changes to the rules and regulations that govern the relationship between debtors and creditors since 1801. Since then, the legislators have amended the bankruptcy code many times. The 2005 changes, however, created the most significant changes in the code in nearly two decades.
In April of 2005, President George Bush signed into law some new regulations to be added to the existing bankruptcy code. Under the new bankruptcy regulations, debtors who file for any form of bankruptcy protection must meet several requirements. Firstly, debtors who file for new bankruptcies are required to complete a financial counseling course. Since a large number of bankruptcy filings are due to irresponsible personal finance management, the counseling course is designed to help people recognize and change their spending behaviors. This also helps to deter future bankruptcy filings because statistics show that many people who file bankruptcy will do it again in the future.
The new bankruptcy code is specifically designed to discourage debtors from filing bankruptcy. In addition to this, it also encourages them to look at their finances and spending habits to see why they got into the predicament to begin with. One way that the new code accomplishes this is by requiring an attorney's signature on the bankruptcy petition before it can be filed with the court. Oftentimes, the lawyer is required to conduct an investigation into the debtor's finances, especially in cases of suspected abuse. The person's income is also evaluated to determine if the debts can be repaid through other means as well.
Other restrictions of the new bankruptcy code make it more difficult for debtors to file Chapter 7 bankruptcy to simply have their debts discharged. With the new regulations, the majority of cases are forced into a Chapter 13 bankruptcy that requires debtors to repay their debts with a scheduled payment plan. This process involves a court-appointed trustee to handle the finances of the debtor and a certain percentage of their regular income is delegated to the creditors. Repayment schedules are typically arranged so that the debts are paid within five years. Under the old bankruptcy code, however, it was much easier for debtors to file Chapter 7, which simply erases their debts without any form of repayment.
The recent changes to the United States bankruptcy code took effect in late 2005. These new regulations are directed toward debtors who have accumulated a large amount of debt and simply want to have their financial slate cleared. Since the new guidelines were enacted, debtors are required to complete a course in money management as well as agree to an investigation into their finances before a bankruptcy can be completed.
http://www.credit-wz.com/bankruptcy/New-Bankruptcy-Code.html
Personal Bankruptcy
People are increasingly choosing to file for a personal bankruptcy as a solution to their growing amount of credit card and other consumer debt that they are unable to repay. Depending on the type of bankruptcy, a person's debts can be completely discharged to provide a debtor with the opportunity to start over with their finances. Unfortunately, the irresponsible spending behavior typically lingers after the debts are discharged and the debtor falls back into the same financial predicament. Instead, debtors have several bankruptcy alternatives that they can take advantage of in order to avoid bankruptcy.
Bankruptcy is, in a nutshell, a person's inability to repay the debts that they have accumulated with any number of creditors. When a person decides to file bankruptcy, they are often admitting that they see no way out of the debt that they have built up. This can happen over a period of a few months or several years and for a variety of reasons, including school loans, medical bills, and credit cards, among others. Many people encounter circumstances that make it difficult to repay their debts while others might buy a lot of stuff on credit with the plan of declaring bankruptcy the entire time.
For years, many people decided to file bankruptcy in order to rid themselves of their student loans. Unfortunately for some people, the United States has recently made laws that exempt federal student loans from personal bankruptcy status. This means that even when a person has declared bankruptcy, they are still responsible for their federal student loans. Currently, this is the only exemption that debtors cannot add to their bankruptcy, but certain circumstances can allow for special provisions in very few cases.
For those who want to avoid bankruptcy, there are several ways to get out of what might seem to be insurmountable debt. Several bankruptcy alternatives are available and they are worth the extra amount of effort and work in order to preserve your credit. Since the United States passed new laws, it is almost impossible to have all of your debts simply relieved. Debts are more likely placed in a repayment plan with courts relegating a percentage of your income to each debt. The problem with this is that you can make deals with your creditors to make payments yourself without damaging your credit as much as a personal bankruptcy would do.
Getting your debts paid off takes a great deal of hard work and discipline. Personal bankruptcy should be reserved for those who are truly unable to repay their debts due to catastrophes or other circumstances. Only after you have exhausted all other bankruptcy alternatives should you decide to file for a personal bankruptcy because it will haunt you for the rest of your financial future with high interest rates and strict repayment schedules for major purchases. If it is at all possible, the best decision for you and your credit rating is to do whatever it takes to pay off your debts.
http://www.credit-wz.com/bankruptcy/Personal-Bankruptcy.html
Bankruptcy is, in a nutshell, a person's inability to repay the debts that they have accumulated with any number of creditors. When a person decides to file bankruptcy, they are often admitting that they see no way out of the debt that they have built up. This can happen over a period of a few months or several years and for a variety of reasons, including school loans, medical bills, and credit cards, among others. Many people encounter circumstances that make it difficult to repay their debts while others might buy a lot of stuff on credit with the plan of declaring bankruptcy the entire time.
For years, many people decided to file bankruptcy in order to rid themselves of their student loans. Unfortunately for some people, the United States has recently made laws that exempt federal student loans from personal bankruptcy status. This means that even when a person has declared bankruptcy, they are still responsible for their federal student loans. Currently, this is the only exemption that debtors cannot add to their bankruptcy, but certain circumstances can allow for special provisions in very few cases.
For those who want to avoid bankruptcy, there are several ways to get out of what might seem to be insurmountable debt. Several bankruptcy alternatives are available and they are worth the extra amount of effort and work in order to preserve your credit. Since the United States passed new laws, it is almost impossible to have all of your debts simply relieved. Debts are more likely placed in a repayment plan with courts relegating a percentage of your income to each debt. The problem with this is that you can make deals with your creditors to make payments yourself without damaging your credit as much as a personal bankruptcy would do.
Getting your debts paid off takes a great deal of hard work and discipline. Personal bankruptcy should be reserved for those who are truly unable to repay their debts due to catastrophes or other circumstances. Only after you have exhausted all other bankruptcy alternatives should you decide to file for a personal bankruptcy because it will haunt you for the rest of your financial future with high interest rates and strict repayment schedules for major purchases. If it is at all possible, the best decision for you and your credit rating is to do whatever it takes to pay off your debts.
http://www.credit-wz.com/bankruptcy/Personal-Bankruptcy.html
About Chapter 11 Bankruptcy
Bankruptcy Ch. 11 is used by corporations and businesses that have developed serious financial problems from which they can't recover to return to a viable position by postponing and/or reducing debt payments. This procedure can be used by corporations, partnerships or even sole proprietorships. It is never used by a private individual except for their business.
Once a Chapter 11 bankruptcy is filed, an automatic stay comes into effect which protects the business from actions by creditors under the court proceedings are completed. During this period, the business can negotiate with creditors, gather funds, and make arrangements to repay creditors based on new agreements. The debtor has control of the business during this period and is known as the debtor in possession.
A creditor's committee, usually made up of the creditors holding the seven largest outstanding unsecured debts of the business, work with the debtor to create a plan to recover from their financial difficulties. This provides added insight and ensures that a fair plan is developed and also prevents the business owner from attempting to liquidate assets.
Bankruptcy Ch. 11 requires that the business file a plan of reorganization with the court within 120 days. Creditors have an opportunity to respond to the plan or submit a different plan of their own. Sometimes these plans include paying debts at a percentage of the total amount of the debt and discharging the debt while other debts might be repaid over a longer period of time with smaller payments.
One reason bankruptcy Ch. 11 is attractive is that small businesses with debts under $2 million, can get a fast track case where, after disclosure and a confirmation hearing, a creditor's committee is not mandatory. In this fast track format, the debtor has only 100 days to file a recovery plan and all plans from anyone in interest must be filed within 160 days from the order of relief.
http://www.credit-wz.com/bankruptcy/About-Chapter-11-Bankruptcy.html
Once a Chapter 11 bankruptcy is filed, an automatic stay comes into effect which protects the business from actions by creditors under the court proceedings are completed. During this period, the business can negotiate with creditors, gather funds, and make arrangements to repay creditors based on new agreements. The debtor has control of the business during this period and is known as the debtor in possession.
A creditor's committee, usually made up of the creditors holding the seven largest outstanding unsecured debts of the business, work with the debtor to create a plan to recover from their financial difficulties. This provides added insight and ensures that a fair plan is developed and also prevents the business owner from attempting to liquidate assets.
Bankruptcy Ch. 11 requires that the business file a plan of reorganization with the court within 120 days. Creditors have an opportunity to respond to the plan or submit a different plan of their own. Sometimes these plans include paying debts at a percentage of the total amount of the debt and discharging the debt while other debts might be repaid over a longer period of time with smaller payments.
One reason bankruptcy Ch. 11 is attractive is that small businesses with debts under $2 million, can get a fast track case where, after disclosure and a confirmation hearing, a creditor's committee is not mandatory. In this fast track format, the debtor has only 100 days to file a recovery plan and all plans from anyone in interest must be filed within 160 days from the order of relief.
http://www.credit-wz.com/bankruptcy/About-Chapter-11-Bankruptcy.html
What Is Chapter 13 Bankruptcy
For times when debt gets out of hand, Chapter 13 bankruptcy is an ideal financial option. Repaying debts is very important to some people. Unfortunately, circumstances sometimes stand in the way of this goal. Although it will be a big blemish on your credit report, Chapter 13 allows you to repay your debts through a court-appointed trustee while requiring the creditors to stop their actions to collect the debts. This is also an ideal option for homeowners who have fallen behind on mortgage payments because it allows them to catch up on payments without losing their home.
Foreclosures are the biggest reason that most people choose Chapter 13 bankruptcy rather than the more attractive Chapter 7. With Chapter 13, homeowners who face foreclosure proceedings can halt the legal actions by choosing this bankruptcy option. A court appointed bankruptcy trustee will act on the behalf of the homeowner to make provisions with the mortgage company. The homeowner is then allowed to make their monthly mortgage payments with an extra amount each month until they have caught up on their delinquent payments.
Another thing that Chapter 13 bankruptcy affords to debtors is the opportunity to repay secured debts over a period. Oftentimes, the payment plans reduce the amount of the monthly payment that the debtor was paying. While Chapter 7 is the most popular option in bankruptcy, many people choose Chapter 13 because they feel a moral obligation to repay their debts. This type of bankruptcy gives them the help that they need to negotiate with their creditors. It also provides some "wiggle room" for repaying debts with a timely schedule. Psychologically, this form of bankruptcy is less detrimental to people's self-images because they have fulfilled their financial obligations rather than simply having them completely discharged.
Chapter 13 bankruptcy is similar to entering into a debt consolidation loan, which is often an option many people exhaust before having their debts discharged by courts. Both instances involve the debtor giving the monthly payment to an appointed trustee. The trustee then relegates the payments to the creditors according to the agreement. For purposes of getting a mortgage, many companies view both of these equally. In other words, a debt consolidation loan is the same thing as filing for Chapter 13 bankruptcy in the eyes of many mortgage companies. One advantage of these options is that the debtor does not need to have direct contact with the creditors who can have a significant negative impact on a person's self-esteem.
Chapter 13 also protects third parties when a debtor files bankruptcy. This means that if a debtor acquired an auto loan, a home loan, or any other type of loan in which a co-signer was needed, the co-signer is not affected by the bankruptcy. Typically, if a debtor does not repay a loan, the creditor has the right to sue either the debtor of the co-signer on the loan. In Chapter 13 bankruptcy, however, this is not the case. The co-signer receives a type of protection from the creditors so their credit remains intact.
Bankruptcy was designed to offer consumers a fresh start after getting into a tough financial situation. Some people, however, prefer to repay their debts due to financial reasons or moral obligations. For these people, the courts offer Chapter 13 bankruptcy as a viable option. Not only does it require the creditors to stop contacting the debtor, it also protects homes from foreclosures and third parties from legal recourse. Chapter 13 has several advantages for those who are trying to honestly fulfill their obligations.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-13-Bankruptcy.html
Foreclosures are the biggest reason that most people choose Chapter 13 bankruptcy rather than the more attractive Chapter 7. With Chapter 13, homeowners who face foreclosure proceedings can halt the legal actions by choosing this bankruptcy option. A court appointed bankruptcy trustee will act on the behalf of the homeowner to make provisions with the mortgage company. The homeowner is then allowed to make their monthly mortgage payments with an extra amount each month until they have caught up on their delinquent payments.
Another thing that Chapter 13 bankruptcy affords to debtors is the opportunity to repay secured debts over a period. Oftentimes, the payment plans reduce the amount of the monthly payment that the debtor was paying. While Chapter 7 is the most popular option in bankruptcy, many people choose Chapter 13 because they feel a moral obligation to repay their debts. This type of bankruptcy gives them the help that they need to negotiate with their creditors. It also provides some "wiggle room" for repaying debts with a timely schedule. Psychologically, this form of bankruptcy is less detrimental to people's self-images because they have fulfilled their financial obligations rather than simply having them completely discharged.
Chapter 13 bankruptcy is similar to entering into a debt consolidation loan, which is often an option many people exhaust before having their debts discharged by courts. Both instances involve the debtor giving the monthly payment to an appointed trustee. The trustee then relegates the payments to the creditors according to the agreement. For purposes of getting a mortgage, many companies view both of these equally. In other words, a debt consolidation loan is the same thing as filing for Chapter 13 bankruptcy in the eyes of many mortgage companies. One advantage of these options is that the debtor does not need to have direct contact with the creditors who can have a significant negative impact on a person's self-esteem.
Chapter 13 also protects third parties when a debtor files bankruptcy. This means that if a debtor acquired an auto loan, a home loan, or any other type of loan in which a co-signer was needed, the co-signer is not affected by the bankruptcy. Typically, if a debtor does not repay a loan, the creditor has the right to sue either the debtor of the co-signer on the loan. In Chapter 13 bankruptcy, however, this is not the case. The co-signer receives a type of protection from the creditors so their credit remains intact.
Bankruptcy was designed to offer consumers a fresh start after getting into a tough financial situation. Some people, however, prefer to repay their debts due to financial reasons or moral obligations. For these people, the courts offer Chapter 13 bankruptcy as a viable option. Not only does it require the creditors to stop contacting the debtor, it also protects homes from foreclosures and third parties from legal recourse. Chapter 13 has several advantages for those who are trying to honestly fulfill their obligations.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-13-Bankruptcy.html
What Is Chapter 7 Bankruptcy
The most common form of bankruptcy is Chapter 7 bankruptcy. Because it provides debtors with a full discharge of their debts rather than a repayment plan, the majority of debtors often choose this option as their financial solution. It is an ideal choice for people who have a huge mountain of unsecured debt that is next to impossible to ever pay off. According to the new codes, though, the bankruptcy court system investigates suspicion of abuse from debtors who opt to completely discharge their debts.
Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a "means test," which is a comparison of the person's monthly income to that of the state's median income. Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one's petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.
In addition to these guidelines, the courts also look for abuse of the bankruptcy system. If a person is suspected of abuse, their entire Chapter 7 bankruptcy can be dismissed and the debtor can be forced to make repayment plans to their creditors through Chapter 13 bankruptcy or, worse yet, receive no discharge or protection at all. Among other forms of wrongdoing, abuse of the bankruptcy system normally entails a person running up a large amount of consumer debt in a short period and immediately filing bankruptcy afterwards. The courts will often see this action as an exploitation of the system and refuse your petition to discharge your debts.
Chapter 7 bankruptcy is not the only bankruptcy alternative for a debtor. Other bankruptcy options, such as Chapter 13 bankruptcy, allow the debtor to repay the debts in a 3-5 year repayment plan set up by the bankruptcy courts. The court's trustee assesses the debtor's income and debts and decides on a plan in which the money is taken directly out of the debtor's income for the purposes of paying the creditors. This option is often settled out of court with the creditors and is often used as a means for debtors to save their home from foreclosure.
As with any legal or financial matter, the best thing for a debtor to do before filing for Chapter 7 bankruptcy is to consult with a lawyer. You may be able to avoid bankruptcy or find a bankruptcy alternative. Bankruptcy can have many negative effects on a person's life, so it is vital to completely research the advantages and disadvantages of what it will do for you and your finances. For many people facing the decision, Chapter 7 bankruptcy is the best choice because they have few, if any, repayment options. For others, Chapter 13 is a better choice due to psychological and moral obligations to repay their debts. Whatever the reasoning behind the decision, behavior change is often the most important thing to prevent the predicament from happening again.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-7-Bankruptcy.html
Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a "means test," which is a comparison of the person's monthly income to that of the state's median income. Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one's petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.
In addition to these guidelines, the courts also look for abuse of the bankruptcy system. If a person is suspected of abuse, their entire Chapter 7 bankruptcy can be dismissed and the debtor can be forced to make repayment plans to their creditors through Chapter 13 bankruptcy or, worse yet, receive no discharge or protection at all. Among other forms of wrongdoing, abuse of the bankruptcy system normally entails a person running up a large amount of consumer debt in a short period and immediately filing bankruptcy afterwards. The courts will often see this action as an exploitation of the system and refuse your petition to discharge your debts.
Chapter 7 bankruptcy is not the only bankruptcy alternative for a debtor. Other bankruptcy options, such as Chapter 13 bankruptcy, allow the debtor to repay the debts in a 3-5 year repayment plan set up by the bankruptcy courts. The court's trustee assesses the debtor's income and debts and decides on a plan in which the money is taken directly out of the debtor's income for the purposes of paying the creditors. This option is often settled out of court with the creditors and is often used as a means for debtors to save their home from foreclosure.
As with any legal or financial matter, the best thing for a debtor to do before filing for Chapter 7 bankruptcy is to consult with a lawyer. You may be able to avoid bankruptcy or find a bankruptcy alternative. Bankruptcy can have many negative effects on a person's life, so it is vital to completely research the advantages and disadvantages of what it will do for you and your finances. For many people facing the decision, Chapter 7 bankruptcy is the best choice because they have few, if any, repayment options. For others, Chapter 13 is a better choice due to psychological and moral obligations to repay their debts. Whatever the reasoning behind the decision, behavior change is often the most important thing to prevent the predicament from happening again.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-7-Bankruptcy.html
Avoiding Bankruptcy - Tips For Couples
No one ever gets married thinking they will eventually get a divorce. No one ever goes into a partnership expecting to go for broke and no one ever plans on ever having the need to file for bankruptcy. However, more and more people were certainly filing bankruptcy in record numbers until the laws for filing bankruptcy changed in 2005. The reason so many people have filed bankruptcy in the past has really been contributed to the fact that many people didn't know how to manage money independently so when they faced marriage and joining their assets together as a couple, then it was even more difficult to manage financially.
Often, if young couples were just given some tips to follow to help them get started out on the right financial foot, then the idea of bankruptcy could be avoided altogether. Below are some of the tips young couples should consider.
* Did you bank separately before you came into the marriage? Of course you did! That's why you should continue to do so, regardless of what any book tells you to do. The reasons couples have a hard time balancing their checkbooks is because they have no idea what the other person is doing with their money. So, keep it simple and keep it separate!
* Never charge anything whatsoever. Don't start doing it and if you have credit cards, then pay off the balances and forget about charge and credit cards.
* Remember, cash is king so buy only what you can pay for right now with the exception of your home purchase.
* Buy a used car until you can afford, really afford a new car.
* Invest in every retirement plan you can-you will need it one day.
* The moment you have a child, you should start saving for their college education.
* UPromise and many other college saving ideas are available today. Go online and find out the best way to save for your child's college.
* Never ask a parent for a loan. It causes too many problems in families and even after you pay them back, you'll still owe them and the siblings could become jealous. It just isn't wise. Don't borrow from relatives.
* If you want something or need something really desperately, grab a second job for a while to pay for it. There's nothing like the gratification of earning your own money for the things you want and need. Even if it takes you two or three jobs to do it!
There is no reason for anyone to ever file bankruptcy if each person within the couple unit works together and sets some ground rules down about budgeting. Learn to work together financially so the finances never drive you apart.
http://www.credit-wz.com/bankruptcy/Avoiding-Bankruptcy-Tips-For-Couples.html
Often, if young couples were just given some tips to follow to help them get started out on the right financial foot, then the idea of bankruptcy could be avoided altogether. Below are some of the tips young couples should consider.
* Did you bank separately before you came into the marriage? Of course you did! That's why you should continue to do so, regardless of what any book tells you to do. The reasons couples have a hard time balancing their checkbooks is because they have no idea what the other person is doing with their money. So, keep it simple and keep it separate!
* Never charge anything whatsoever. Don't start doing it and if you have credit cards, then pay off the balances and forget about charge and credit cards.
* Remember, cash is king so buy only what you can pay for right now with the exception of your home purchase.
* Buy a used car until you can afford, really afford a new car.
* Invest in every retirement plan you can-you will need it one day.
* The moment you have a child, you should start saving for their college education.
* UPromise and many other college saving ideas are available today. Go online and find out the best way to save for your child's college.
* Never ask a parent for a loan. It causes too many problems in families and even after you pay them back, you'll still owe them and the siblings could become jealous. It just isn't wise. Don't borrow from relatives.
* If you want something or need something really desperately, grab a second job for a while to pay for it. There's nothing like the gratification of earning your own money for the things you want and need. Even if it takes you two or three jobs to do it!
There is no reason for anyone to ever file bankruptcy if each person within the couple unit works together and sets some ground rules down about budgeting. Learn to work together financially so the finances never drive you apart.
http://www.credit-wz.com/bankruptcy/Avoiding-Bankruptcy-Tips-For-Couples.html
About Recent Changes In Bankruptcy Laws
In 2005, personal bankruptcies were at an all time record high. Perhaps this, at least in part, was due to the changes in bankruptcy laws that took effect in October, 2005. However, it does clearly indicate the sad fact that far too many Americans are allowing themselves to fall into financial trouble all too frequently. In large part, the cause of these financial difficulties is the unwise use of credit to make unneeded, often impulse driven, purchases.
During 2005, 2,039,214 bankruptcy cases were filed in federal court, 30% more than the 1,563,145 filed in 2004 according to information released by the Administrative Office of the U.S. Courts and published in the USA Today. This increase was probably a result of the fact that the changes in bankruptcy law prevent many people that previously would have qualified to file bankruptcy under Chapter 7 from being able to do so. In past years, bankruptcy had been filed at a relative stable rate with no large fluctuations.
The bankruptcy law changes involve the use of Chapter 7 to wipe out debts. Today, people that have income that is above average and have $100 or more left over each month after paying their debts and expenses must declare bankruptcy under Chapter 13 which requires a repayment plan where debts will be repaid with a r-year plan filed with the bankruptcy court.
Under the new bankruptcy law, people must undergo credit counseling in order to file bankruptcy in many cases. Even those people who have developed financial problems due to events they were not in control of must undergo this required counseling. Sometimes people that lose their jobs or have huge medical expenses because of a spouse or child having a life-threatening medical problem, but this does not waive the requirement for credit counseling in order to file bankruptcy under the new laws.
In recent years, banks and credit card companies have wanted to see these changes to bankruptcy laws to stop abuses of the system used to wipe out debts. While this does place many people in a position of hardship, it does stop people that are high income from running up large debts only to have them wiped away by filing bankruptcy. There are two sides to the changes in bankruptcy laws, as with every issue. To avoid having to file bankruptcy, manage your money effectively and avoid having to learn all the details about these changes in the bankruptcy laws.
http://www.credit-wz.com/bankruptcy/About-Recent-Changes-In-Bankruptcy-Laws.html
During 2005, 2,039,214 bankruptcy cases were filed in federal court, 30% more than the 1,563,145 filed in 2004 according to information released by the Administrative Office of the U.S. Courts and published in the USA Today. This increase was probably a result of the fact that the changes in bankruptcy law prevent many people that previously would have qualified to file bankruptcy under Chapter 7 from being able to do so. In past years, bankruptcy had been filed at a relative stable rate with no large fluctuations.
The bankruptcy law changes involve the use of Chapter 7 to wipe out debts. Today, people that have income that is above average and have $100 or more left over each month after paying their debts and expenses must declare bankruptcy under Chapter 13 which requires a repayment plan where debts will be repaid with a r-year plan filed with the bankruptcy court.
Under the new bankruptcy law, people must undergo credit counseling in order to file bankruptcy in many cases. Even those people who have developed financial problems due to events they were not in control of must undergo this required counseling. Sometimes people that lose their jobs or have huge medical expenses because of a spouse or child having a life-threatening medical problem, but this does not waive the requirement for credit counseling in order to file bankruptcy under the new laws.
In recent years, banks and credit card companies have wanted to see these changes to bankruptcy laws to stop abuses of the system used to wipe out debts. While this does place many people in a position of hardship, it does stop people that are high income from running up large debts only to have them wiped away by filing bankruptcy. There are two sides to the changes in bankruptcy laws, as with every issue. To avoid having to file bankruptcy, manage your money effectively and avoid having to learn all the details about these changes in the bankruptcy laws.
http://www.credit-wz.com/bankruptcy/About-Recent-Changes-In-Bankruptcy-Laws.html
Bankruptcy Filing - Non-Dischargeable Debts
Contrary to what many people believe, not all debts are dischargeable regardless of your bankruptcy filing options. For debts like student loans and mortgages, a debtor must enter into some type of repayment agreement rather than have these debts completely discharged. In many cases, the court will appoint a trustee to liquidate your assets so the proceeds can be used to repay your creditors. The courts have established these guidelines as a way of preventing abuse and harm to society.
Bankruptcy filing does not solve all of a debtor's financial problems. Courts have deemed that debts which could be harmful or unproductive to the nature of society are non-dischargeable in a typical bankruptcy. The idea behind this is so that people cannot relinquish their obligations to pay child support, alimony, and other money that contributes to the good of society. This idea of non-dischargeable debts also spreads to student loans because of the amount of money granted by the government each year for college educations. Student loans are possibly the most difficult types of loans to get discharged through bankruptcy. Until recently, they were covered under the types of debt that were dischargeable under loan bankruptcy guidelines, but recent amendments to the code have changed this.
In terms of bankruptcy, business filings are often forced into a plan to repay the business's creditors. The bankruptcy courts often see completely discharging the debts of a business as detrimental to society because of the ramifications involved. With a Chapter 7 bankruptcy, business assets are typically liquidated and the company shuts down. This results in a loss of jobs that help to pump money into the economy. This is why businesses are often forced into a Chapter 11 bankruptcy because their debts can be reorganized and the creditors can be paid in installments while the business continues to operate.
For people who have fallen behind on car payments or home mortgage payments, bankruptcy filing can grant a temporary protection from their creditors. Chapter 13 is designed in such a way that homeowners or consumers with other types of secured debts can retain their property even if they have fallen behind in the payments. The debtor makes arrangements with their court-appointed trustee to make payments along with extra money to help them catch up on missed payments with this type of bankruptcy. Mortgage companies are willing to work with debtors because they would rather afford them some leeway rather than go through the trouble of court proceedings involved with foreclosures.
Contrary to what many people believe, it is possible to receive a mortgage after bankruptcy. Even if you have recently completed a bankruptcy filing, mortgage companies will often work with you to get you into a new home. Debtors who have filed for Chapter 13 have better loan opportunities than those who filed Chapter 7 because they made arrangements to repay their debts. Once you have decided to apply for a mortgage after bankruptcy discharge, choose a mortgage company that does manual underwriting so your particular situation can be evaluated on an individual basis.
People who decide to go through bankruptcy will undoubtedly experience a life changing event. Bankruptcy filing can affect a person's finances for several years following the discharge and oftentimes the debtor is still left with some debts that were not dischargeable. Unfortunately, once a person has gone through a bankruptcy, mortgage loans and other types of credit will have an unusually high interest rate attached to their repayment requirements.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Filing-Non-Dischargeable-Debts.html
Bankruptcy filing does not solve all of a debtor's financial problems. Courts have deemed that debts which could be harmful or unproductive to the nature of society are non-dischargeable in a typical bankruptcy. The idea behind this is so that people cannot relinquish their obligations to pay child support, alimony, and other money that contributes to the good of society. This idea of non-dischargeable debts also spreads to student loans because of the amount of money granted by the government each year for college educations. Student loans are possibly the most difficult types of loans to get discharged through bankruptcy. Until recently, they were covered under the types of debt that were dischargeable under loan bankruptcy guidelines, but recent amendments to the code have changed this.
In terms of bankruptcy, business filings are often forced into a plan to repay the business's creditors. The bankruptcy courts often see completely discharging the debts of a business as detrimental to society because of the ramifications involved. With a Chapter 7 bankruptcy, business assets are typically liquidated and the company shuts down. This results in a loss of jobs that help to pump money into the economy. This is why businesses are often forced into a Chapter 11 bankruptcy because their debts can be reorganized and the creditors can be paid in installments while the business continues to operate.
For people who have fallen behind on car payments or home mortgage payments, bankruptcy filing can grant a temporary protection from their creditors. Chapter 13 is designed in such a way that homeowners or consumers with other types of secured debts can retain their property even if they have fallen behind in the payments. The debtor makes arrangements with their court-appointed trustee to make payments along with extra money to help them catch up on missed payments with this type of bankruptcy. Mortgage companies are willing to work with debtors because they would rather afford them some leeway rather than go through the trouble of court proceedings involved with foreclosures.
Contrary to what many people believe, it is possible to receive a mortgage after bankruptcy. Even if you have recently completed a bankruptcy filing, mortgage companies will often work with you to get you into a new home. Debtors who have filed for Chapter 13 have better loan opportunities than those who filed Chapter 7 because they made arrangements to repay their debts. Once you have decided to apply for a mortgage after bankruptcy discharge, choose a mortgage company that does manual underwriting so your particular situation can be evaluated on an individual basis.
People who decide to go through bankruptcy will undoubtedly experience a life changing event. Bankruptcy filing can affect a person's finances for several years following the discharge and oftentimes the debtor is still left with some debts that were not dischargeable. Unfortunately, once a person has gone through a bankruptcy, mortgage loans and other types of credit will have an unusually high interest rate attached to their repayment requirements.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Filing-Non-Dischargeable-Debts.html
How To Locate A Bankruptcy Attorney
If you find you must file bankruptcy, you need to know how to locate a bankruptcy attorney. Of course, if you have an extremely simple case, you can file in federal court on your own and obtain the bankruptcy. However, if you have a more complex situation, you will need to locate a qualified, skilled lawyer to assist you. This is especially true since bankruptcy reform laws went into effect in 2005, changing the criteria for filing under certain bankruptcy chapters.
Legal counsel can provide you with assurance that all the paperwork is done correctly and that you have the best plan possible for submitting to the federal court judge. The process can often be too complex and confusing for an average person to tackle alone, especially when they are already dealing with the stresses of financial issues that have resulted in the need to seek this type of legal assistance.
If you are determining how to locate a bankruptcy attorney, start by looking in your local telephone book's yellow pages under 'attorneys'. Most yellow page sections of telephone books have a breakdown of listings for attorneys that list them by specialty. Simply turn to the section that lists bankruptcy attorneys. You will probably find that the attorneys will consult with you by telephone at no charge. This allows both the lawyer and you to learn if this is the right counsel for you. The lawyer will also be able to tell you what type of information to bring to his or her office if you both decided that an office appointment is in order.
Another way to locate a bankruptcy attorney is to search on the Internet for one in your area. Simply search using the term 'bankruptcy attorney' or 'bankruptcy lawyer' followed by the city and state in which you reside. If you live in a large city, you'll find dozens and dozens of lawyers this way. Even if you live in a small town or rural area, your search will reveal several choices for you.
If you don't find results in these ways or you need more information about how to locate a bankruptcy attorney, call your state's bar association or a lawyer referral service. Both of these options will provide you with more information than you will find in the telephone book or online. You might also consider calling a financial counseling service and asking what local attorney they recommend. If you aren't too shy about admitting the fact that you are about to file bankruptcy, you can even ask friends and relatives.
http://www.credit-wz.com/bankruptcy/How-To-Locate-A-Bankruptcy-Attorney.html
Legal counsel can provide you with assurance that all the paperwork is done correctly and that you have the best plan possible for submitting to the federal court judge. The process can often be too complex and confusing for an average person to tackle alone, especially when they are already dealing with the stresses of financial issues that have resulted in the need to seek this type of legal assistance.
If you are determining how to locate a bankruptcy attorney, start by looking in your local telephone book's yellow pages under 'attorneys'. Most yellow page sections of telephone books have a breakdown of listings for attorneys that list them by specialty. Simply turn to the section that lists bankruptcy attorneys. You will probably find that the attorneys will consult with you by telephone at no charge. This allows both the lawyer and you to learn if this is the right counsel for you. The lawyer will also be able to tell you what type of information to bring to his or her office if you both decided that an office appointment is in order.
Another way to locate a bankruptcy attorney is to search on the Internet for one in your area. Simply search using the term 'bankruptcy attorney' or 'bankruptcy lawyer' followed by the city and state in which you reside. If you live in a large city, you'll find dozens and dozens of lawyers this way. Even if you live in a small town or rural area, your search will reveal several choices for you.
If you don't find results in these ways or you need more information about how to locate a bankruptcy attorney, call your state's bar association or a lawyer referral service. Both of these options will provide you with more information than you will find in the telephone book or online. You might also consider calling a financial counseling service and asking what local attorney they recommend. If you aren't too shy about admitting the fact that you are about to file bankruptcy, you can even ask friends and relatives.
http://www.credit-wz.com/bankruptcy/How-To-Locate-A-Bankruptcy-Attorney.html
Bankruptcy Risk Score is Just the Tip of the Iceberg
Recently, there's been a lot of news coverage about the "bankruptcy risk score," a score used by many lenders in making decisions. The mere existence of a bankruptcy risk score that consumers don't know about and may not be able to see called into question some basic assumptions about managing our credit. These mysterious numbers in the hands of creditors, but unavailable to consumers, largely defeat the purpose of the credit disclosure requirements of the FCRA.
http://www.totalbankruptcy.com/bankruptcy_articles_risk_score.htm
It turns out that the situation is far worse than it initially appeared-and that it isn't a new development. The Federal Citizen Information Center has information about risk scoring on its website that was made available by Experian in 2003. And risk scoring is far more varied and complicated than the bankruptcy risk score we've been hearing so much about. Equifax offers Score PowerR to consumers with the tag line, "Know what lenders know and become a better negotiator." The truth is, though, that consumers purchasing their credit reports and FICO scores may not "know what lenders know."
A Risk Scoring Model for Everyone
Each of the three major credit bureaus offers industry-specific risk scores to businesses. Experian, for instance, offers the TEC Risk Model SM, a risk assessment program designed specifically for telecommunications, energy and cable companies. This model purports to more accurately assess the risk of a consumer as it specifically relates to this kind of service account, and claims to do so by "accurately scoring a larger number of consumers considered unscorable by traditional generic risk models." What information and criterion are used to make those determinations isn't clear.
Other specific risk scores venture even further into traditional lending areas. The Fair, Isaac Corporation-the people who give us FICO scores-have a variety of alternative products available to companies that extend credit. In addition to the Credit Bureau Bankruptcy Score, the Credit Bureau Risk Score, and the FICO Expansion Score (which generates credit scores for consumers who lack sufficient credit history to be scored traditionally), the company now offers the Next Generation Risk Score. The Next Generation Risk score-a score offered by all three major credit reporting agencies under different names-"identifies and projects the full range of credit risks-including bankruptcies, charge offs, repossessions, loan defaults and delinquencies."
TransUnion offers the automotive industry "specialized options that predict the likelihood of delinquency or even the potential for bankruptcy on an auto loan."
You Don't Know What Information Your Creditors are Considering
The bottom line is that what your prospective creditors are looking at when they make decisions might well not be the same thing you looked at when you ordered your free credit report. You can ask a potential creditor what risk model or scoring system they use, but the answer won't necessarily benefit you, since much of the information that goes into determining these auxiliary scores isn't available to consumers.
We can assume that many of the traditional factors like timely payment and not using too high a percentage of your available credit will impact these various scores, so it's important to stay focused on those factors that we already know help build credit. Still, it's just as important to be aware that, when you order and review your free credit reports, you really haven't seen the whole picture.http://www.totalbankruptcy.com/bankruptcy_articles_risk_score.htm
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