In many ways, bankruptcy laws are designed for lawyers. One leading creditor’s attorney claimed that some type of fraud in bankruptcy filings occurs in almost 100% of all cases! Changes in bankruptcy laws often favor creditors, and it seems that the idea is to make filing for bankruptcy more difficult. Ordinary citizens will need more information and better tools to prepare for possible missteps in bankruptcy, while some lawyers will see big benefits.
There are many “red flags” that wave in front of creditors and trustees, causing suspicion of fraud in bankruptcy filings.
A debtor never should try to lie his or her way into a bankruptcy court. The costs and risks are too high, no matter what pressure or stress you may feel. With creditors becoming increasingly suspicious and maybe even vicious, you should be aware of the arguments creditors will use to accuse you of fraud, even if you did not purposefully do so. Such debtors look especially for two big red flags:
* Delaying tactics. Trustees are impatient with both debtors and creditors who seem to be trying to delay proceedings. Creditors simply may be attempting to annoy, while debtors may be trying to hold on to property or slowly distribute assets.
* Transfers of assets within one year of filing, especially to friends or family, often for little or no value.
Specific evidence creditors may use to oppose discharge of a debt include:
* Repeated bankruptcy (“frequent filers”)
* Lack of usual records and accounts
* Blank spaces or repeated incomplete answers on schedules and filing forms
* Many cash dealings rather than credit
* Amendments to items such as prior year tax forms
* Very high debts with no stated income to match
* Odd bank actions, such as bounced checks
* An attorney known to be unscrupulous in bankruptcy (ask about any bar complaints and double-check)
* Run-up debts on credit cards before filing
* False social security numbers
* Incorrect credit references
* Owning a small business that shows low inventory and high debts
* Use of limited partnerships or other business forms to protect assets
* Use of mortgages and equity in several rental properties, with no apparent attempt to pay the mortgages
* Payment of high expenses, leases or at-home salary
* Many creditors contacting the Trustee about the filing
* Transfers of property interests through quit claims
* Claims of large gambling losses
* Large insurance policy claims or absence of property having been insured
* Tax returns, prior bankruptcies, lawsuits not listed as being filed by or against the debtor
* Savings, annuities or IRAs suddenly used up with no explanation
* The same attorney representing the debtor and anyone receiving assets from the debtor
* Complicated business dealings with the same people, in several business forms (corporations, partnerships, and sole proprietorships).
While these actions may be popular “evidence” for creditors, such measures do not necessarily indicate fraud. People do have the right to manage their debt to avoid maximum liability. The assumption now seems to be, unfortunately, that a debtor in bankruptcy is just trying to get away with something.
It more important than ever to plan a bankruptcy filing carefully, so that you can offer as much evidence as possible that you are honest, efficient and accurate in your finances.
http://www.debthelp.com/kc/99-bankruptcy-red-flag-filings.html
Friday, October 12, 2007
Bankruptcy for Military Service Personnel
The Servicemembers’ Civil Relief Act (SCRA) was passed to thwart attempts to sue or to file liens against members of the military in the United States.
The protection that SCRA grants to military personnel also benefits many individuals who are associated with servicemen and -women. This makes a great deal of sense for a military that relies on young members, whose families may be helping with the financial sacrifices that go along with military service. Anyone who is a co-signer, or who shares debt with a military member, will have some protection from suits and judgments, as well.
SCRA accomplishes three things that result in making bankruptcy filing unnecessary or unattractive for military personnel:
1. It prevents the filing of a default judgment by a creditor.
2. It requires that notice be given to a military member about his or her accounts.
3. It can wipe out judgments and garnishments against service members. These very broad powers even can stop evictions.
The SCRA protections apply to all active duty military personnel, as well as many reservists and Guard members. Of course, the law is only good if a military member actually uses it. Fortunately, a serviceperson can enjoy the benefits of SCRA simply through the submission of a sworn affidavit to any court considering a lawsuit against him or her.
While SCRA goes to great lengths to protect those in uniform, it does eventually run out. At the longest, it can be in affect for up to 60 days after a military member’s discharge.
SCRA protection highlights:
Mortgages Not only can foreclosure on one’s home be halted, but a new payment plan also may be ordered by a court.
Rent Servicemen and –women and their dependents are protected against eviction, as long as rent is not more than $1200 per month.
Interest Rates Service members may be protected against interest rates over six percent, and may request that rates not exceed that amount.
Insurance If the premium on insurance has not been paid for a certain period of time and cancellation normally would be imminent, SCRA will help to prevent such action.
Credit Report Creditors’ rights to report negative items if a service member is unable to pay is limited, based on difficult conditions related to his or her service.
The backbone of SCRA is the right to stop actions against military personnel. Simply by writing to a court and providing some proof of one’s inability to attend a hearing, case, lawsuit or deposition, he or she cannot be punished or lose any credit and debt rights. The court almost certainly will order that any action to collect a debt be stopped until the service member is available.
One common problem addressed by courts is whether or not to allow a service member to keep residency in a particular state while he or she is posted elsewhere. Under SCRA, residency often is upheld. This can affect rights of homestead or even bankruptcy rights that are unavailable to non-military personnel.
In so many ways, protection under SCRA is better than filing for bankruptcy. In addition to the above considerations, many military personnel are concerned about possible damage to their careers due to bankruptcy.
There is one basic qualification that must be met by personnel to qualify for SCRA protections; their service must “materially affect” their ability to pay. In short, a well-paid general usually cannot take advantage of the act. Instead, the SCRA is there for those who serve and sacrifice in every aspect of their lives, including succumbing to financial hardship.
http://www.debthelp.com/kc/95-bankruptcy-military-service-personnel.html
The protection that SCRA grants to military personnel also benefits many individuals who are associated with servicemen and -women. This makes a great deal of sense for a military that relies on young members, whose families may be helping with the financial sacrifices that go along with military service. Anyone who is a co-signer, or who shares debt with a military member, will have some protection from suits and judgments, as well.
SCRA accomplishes three things that result in making bankruptcy filing unnecessary or unattractive for military personnel:
1. It prevents the filing of a default judgment by a creditor.
2. It requires that notice be given to a military member about his or her accounts.
3. It can wipe out judgments and garnishments against service members. These very broad powers even can stop evictions.
The SCRA protections apply to all active duty military personnel, as well as many reservists and Guard members. Of course, the law is only good if a military member actually uses it. Fortunately, a serviceperson can enjoy the benefits of SCRA simply through the submission of a sworn affidavit to any court considering a lawsuit against him or her.
While SCRA goes to great lengths to protect those in uniform, it does eventually run out. At the longest, it can be in affect for up to 60 days after a military member’s discharge.
SCRA protection highlights:
Mortgages Not only can foreclosure on one’s home be halted, but a new payment plan also may be ordered by a court.
Rent Servicemen and –women and their dependents are protected against eviction, as long as rent is not more than $1200 per month.
Interest Rates Service members may be protected against interest rates over six percent, and may request that rates not exceed that amount.
Insurance If the premium on insurance has not been paid for a certain period of time and cancellation normally would be imminent, SCRA will help to prevent such action.
Credit Report Creditors’ rights to report negative items if a service member is unable to pay is limited, based on difficult conditions related to his or her service.
The backbone of SCRA is the right to stop actions against military personnel. Simply by writing to a court and providing some proof of one’s inability to attend a hearing, case, lawsuit or deposition, he or she cannot be punished or lose any credit and debt rights. The court almost certainly will order that any action to collect a debt be stopped until the service member is available.
One common problem addressed by courts is whether or not to allow a service member to keep residency in a particular state while he or she is posted elsewhere. Under SCRA, residency often is upheld. This can affect rights of homestead or even bankruptcy rights that are unavailable to non-military personnel.
In so many ways, protection under SCRA is better than filing for bankruptcy. In addition to the above considerations, many military personnel are concerned about possible damage to their careers due to bankruptcy.
There is one basic qualification that must be met by personnel to qualify for SCRA protections; their service must “materially affect” their ability to pay. In short, a well-paid general usually cannot take advantage of the act. Instead, the SCRA is there for those who serve and sacrifice in every aspect of their lives, including succumbing to financial hardship.
http://www.debthelp.com/kc/95-bankruptcy-military-service-personnel.html
Bankruptcy, Your Spouse, and Divorce
Bankruptcy outcomes usually depend on state law. When there are issues concerning spousal support, alimony, or property settlement involved, however, bankruptcy courts are relying increasingly on federal law instead.
Rather than just a simple bankruptcy filing, these cases may require several visits to lawyers specializing in different areas of the law, or even lawyers in more than one state depending on the location of spouses and property. In such cases the court may not only overlook state law, in fact, but may even overlook personal agreements made between the former spouses, as well.
* Alimony While most states west of the Mississippi allow alimony, many states to the east also have spousal support that is called ‘temporary alimony’. Neither of these debts can be discharged in bankruptcy, because promises between spouses take precedence over financial hardship and bankruptcy, according to Congress.
* Community Property Community property laws exist in nine states: Arizona, California, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. All other states adhere to what is called “equitable distribution”. In those states with community property laws, a spouse who does not file for bankruptcy still can face creditors’ claims if the other spouse files. In such a case, the non-community property of the filing spouse is utilized first to pay the debts, but if this is insufficient, community property can be used. The rules for exemption of property do still apply, however, and they may protect community property.
* Separate Property Even in states with community property laws, some separate property (such as property acquired individually, especially before marriage) cannot be taken by creditors when only one spouse files.
* Credit Reports Credit reports quickly can turn into a battle of forms. “Co-signing” for a spouse who has filed bankruptcy previously sometimes can result in a note on the innocent spouse’s credit report, especially if the filing spouse listed his or her share of a joint debt. Even if one spouse does not file, it is crucial that both spouses carefully monitor their credit reports. They both should argue for complete accuracy – there is no reason why bankruptcy necessarily should poison both reports.
Many states now have laws that protect spouses, especially after divorce, from discrimination in credit reporting due to the other spouse’s actions. By contacting your state’s Attorney General’s Consumer Affairs office, you can file a written complaint and may find relief.
* Mortgages One of the largest problems concerning bankruptcy and divorce is when one spouse gets the house, and subsequently lists the mortgage in bankruptcy. If both spouses took out the loan together, then it is likely that both spouses (even if they split up during the bankruptcy) remain liable on the loan.
In bankruptcy cases involving couples, financial strain can lead to emotional strain, so protect your assets as well as possible. Communicate openly about your finances, and consider seeking separate legal advice to protect your separate assets.
http://www.debthelp.com/kc/91-bankruptcy-your-spouse-and-divorce.html
Rather than just a simple bankruptcy filing, these cases may require several visits to lawyers specializing in different areas of the law, or even lawyers in more than one state depending on the location of spouses and property. In such cases the court may not only overlook state law, in fact, but may even overlook personal agreements made between the former spouses, as well.
* Alimony While most states west of the Mississippi allow alimony, many states to the east also have spousal support that is called ‘temporary alimony’. Neither of these debts can be discharged in bankruptcy, because promises between spouses take precedence over financial hardship and bankruptcy, according to Congress.
* Community Property Community property laws exist in nine states: Arizona, California, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. All other states adhere to what is called “equitable distribution”. In those states with community property laws, a spouse who does not file for bankruptcy still can face creditors’ claims if the other spouse files. In such a case, the non-community property of the filing spouse is utilized first to pay the debts, but if this is insufficient, community property can be used. The rules for exemption of property do still apply, however, and they may protect community property.
* Separate Property Even in states with community property laws, some separate property (such as property acquired individually, especially before marriage) cannot be taken by creditors when only one spouse files.
* Credit Reports Credit reports quickly can turn into a battle of forms. “Co-signing” for a spouse who has filed bankruptcy previously sometimes can result in a note on the innocent spouse’s credit report, especially if the filing spouse listed his or her share of a joint debt. Even if one spouse does not file, it is crucial that both spouses carefully monitor their credit reports. They both should argue for complete accuracy – there is no reason why bankruptcy necessarily should poison both reports.
Many states now have laws that protect spouses, especially after divorce, from discrimination in credit reporting due to the other spouse’s actions. By contacting your state’s Attorney General’s Consumer Affairs office, you can file a written complaint and may find relief.
* Mortgages One of the largest problems concerning bankruptcy and divorce is when one spouse gets the house, and subsequently lists the mortgage in bankruptcy. If both spouses took out the loan together, then it is likely that both spouses (even if they split up during the bankruptcy) remain liable on the loan.
In bankruptcy cases involving couples, financial strain can lead to emotional strain, so protect your assets as well as possible. Communicate openly about your finances, and consider seeking separate legal advice to protect your separate assets.
http://www.debthelp.com/kc/91-bankruptcy-your-spouse-and-divorce.html
Being Pushed to Bankruptcy?
Sometimes financial hardships become so difficult that filing bankruptcy seems to be the only alternative, but there probably also are nagging doubts that come with such an important decision. Unfortunately, these doubts should be taken seriously, because nowadays there are many people who will try to sell you prematurely on the idea of bankruptcy. Remember this: every time a bankruptcy is filed, someone is making money.
General problems that can lead to bankruptcy include personal crises, employment changes, family pressures, health concerns, and especially financial uncertainty. This uncertainty is that terrible feeling of doubt: Is the light at the end of the tunnel really the end of the tunnel? Could the light actually be an oncoming train?
Instead of being pushed into bankruptcy by a professional, you need to be brought to it inevitably by your problem. You should not file just because a friend, family member or respected leader says that it is ok. Do not blindly agree to file without knowing what you are doing.
The two most common types of personal bankruptcy filings are Chapter 7 and Chapter 13. Chapter 7 is used to end the cycle of debt, often having been caused by a personal or medical crisis, while Chapter 13 is used to save a home and to repay debts.
Listed below are five common reasons that cause individuals to file for bankruptcy. For each, we will consider whether or not there are alternate solutions to the problem.
1. “Enough!”
Creditors are quite good at making day-to-day life unbearable, and non-stop calls border on harassment. Option: You have a right to end creditor phone calls! Consult an attorney for more information.
2. “They’re threatening my wages!”
Option: State and federal law gives you a right to maintain a minimum amount of money to pay your bills based on low-income standards. Speak with an attorney to determine what can - and what cannot be - garnished. Never sign an agreement to garnish wages without talking to a lawyer or legal aid clinic.
3. “I am going to lose my car!”
Option: Most lenders do not actually want to repossess a car. Contact a credit counseling company to work out a payment plan. Furthermore, even if your car was repossessed, this would be much less damaging to your credit than would be a bankruptcy!
4. “I don’t have medical insurance!”
The single largest financial cause of bankruptcy is medical expenses, and this is reason for concern. Even with insurance, hospital costs have been going up almost 20% every year. Option: Before filing to discharge medical debts, consider state insurance for low-income individuals. If this will not work, every hospital should have a case worker who generally knows alternative funding sources, and usually is very willing to negotiate debt and payments. Additionally, hospitals are required under law to provide a certain percentage of their gross revenue every year to those who cannot afford to pay.
5. “My company is downsizing, and I am going to be unemployed!”
Option: In the event of a job loss, you immediately should seek professional help to plan your budget for at least the next three months. There are programs you may be interested in that will provide you with training in a new skill, and some even offer compensation. Additionally, you can visit a vocational counselor to inquire about state jobs, and potentially could become employed (insist on benefits!) within one week!
Filing bankruptcy always should be a last resort. While filing as a reaction to life’s curveballs might be understandable, it may not be in your best interest to do so. Do not allow yourself to become convinced to file before you explore other options to reduce existing debt.
http://www.debthelp.com/kc/83-being-pushed-bankruptcy.html
General problems that can lead to bankruptcy include personal crises, employment changes, family pressures, health concerns, and especially financial uncertainty. This uncertainty is that terrible feeling of doubt: Is the light at the end of the tunnel really the end of the tunnel? Could the light actually be an oncoming train?
Instead of being pushed into bankruptcy by a professional, you need to be brought to it inevitably by your problem. You should not file just because a friend, family member or respected leader says that it is ok. Do not blindly agree to file without knowing what you are doing.
The two most common types of personal bankruptcy filings are Chapter 7 and Chapter 13. Chapter 7 is used to end the cycle of debt, often having been caused by a personal or medical crisis, while Chapter 13 is used to save a home and to repay debts.
Listed below are five common reasons that cause individuals to file for bankruptcy. For each, we will consider whether or not there are alternate solutions to the problem.
1. “Enough!”
Creditors are quite good at making day-to-day life unbearable, and non-stop calls border on harassment. Option: You have a right to end creditor phone calls! Consult an attorney for more information.
2. “They’re threatening my wages!”
Option: State and federal law gives you a right to maintain a minimum amount of money to pay your bills based on low-income standards. Speak with an attorney to determine what can - and what cannot be - garnished. Never sign an agreement to garnish wages without talking to a lawyer or legal aid clinic.
3. “I am going to lose my car!”
Option: Most lenders do not actually want to repossess a car. Contact a credit counseling company to work out a payment plan. Furthermore, even if your car was repossessed, this would be much less damaging to your credit than would be a bankruptcy!
4. “I don’t have medical insurance!”
The single largest financial cause of bankruptcy is medical expenses, and this is reason for concern. Even with insurance, hospital costs have been going up almost 20% every year. Option: Before filing to discharge medical debts, consider state insurance for low-income individuals. If this will not work, every hospital should have a case worker who generally knows alternative funding sources, and usually is very willing to negotiate debt and payments. Additionally, hospitals are required under law to provide a certain percentage of their gross revenue every year to those who cannot afford to pay.
5. “My company is downsizing, and I am going to be unemployed!”
Option: In the event of a job loss, you immediately should seek professional help to plan your budget for at least the next three months. There are programs you may be interested in that will provide you with training in a new skill, and some even offer compensation. Additionally, you can visit a vocational counselor to inquire about state jobs, and potentially could become employed (insist on benefits!) within one week!
Filing bankruptcy always should be a last resort. While filing as a reaction to life’s curveballs might be understandable, it may not be in your best interest to do so. Do not allow yourself to become convinced to file before you explore other options to reduce existing debt.
http://www.debthelp.com/kc/83-being-pushed-bankruptcy.html
Creditor Strategies to Collect After Bankruptcy
Even if you are just about to file bankruptcy, or even if your debt already has been discharged, there still are creditors who will pursue claims as far as possible. No matter what, always make your finances a matter of protecting your family, interests, and conscience.
Many large companies actually have in-house collections, because they do no want to pay the fees associated with traditional collections. Such companies tend to be fairly responsive to bankruptcy warnings and even may offer a quick negotiation to eliminate your debt.
If your account has been listed with an external collector, on the other hand, it is likely that your debt has been increased dramatically by the costs and fees of collection. The collection agents want their money, period. If you file for bankruptcy, it usually will take one full week for your creditors to be notified, and then they must stop harassing you.
When told that someone will be filing bankruptcy, most collection agencies will act as though they do not care, but they do. Most collection agencies work off a script, and some even may lie to collect their money. You might hear that your debt is not dischargeable or that they have an attorney who will fight the listing of the debt. For the most part, this simply is a game of nerves.
Just because you receive a letter from a lawyer regarding a particular debt does not mean that the lawyer is involved personally. Usually, such letters come from a paralegal or secretary who works for the attorney, and unless it is a very large debt, most lawyers do not actually go to court. If a law office does secure judgment on your debt, that judgment is just as dischargeable after bankruptcy as it was before the judgment. Because so many people actually file bankruptcy for fear of being sued, this topic is addressed in another debthelp.com article.
http://www.debthelp.com/kc/89-creditor-strategies-collect-after-bankruptcy.html
Many large companies actually have in-house collections, because they do no want to pay the fees associated with traditional collections. Such companies tend to be fairly responsive to bankruptcy warnings and even may offer a quick negotiation to eliminate your debt.
If your account has been listed with an external collector, on the other hand, it is likely that your debt has been increased dramatically by the costs and fees of collection. The collection agents want their money, period. If you file for bankruptcy, it usually will take one full week for your creditors to be notified, and then they must stop harassing you.
When told that someone will be filing bankruptcy, most collection agencies will act as though they do not care, but they do. Most collection agencies work off a script, and some even may lie to collect their money. You might hear that your debt is not dischargeable or that they have an attorney who will fight the listing of the debt. For the most part, this simply is a game of nerves.
Just because you receive a letter from a lawyer regarding a particular debt does not mean that the lawyer is involved personally. Usually, such letters come from a paralegal or secretary who works for the attorney, and unless it is a very large debt, most lawyers do not actually go to court. If a law office does secure judgment on your debt, that judgment is just as dischargeable after bankruptcy as it was before the judgment. Because so many people actually file bankruptcy for fear of being sued, this topic is addressed in another debthelp.com article.
http://www.debthelp.com/kc/89-creditor-strategies-collect-after-bankruptcy.html
DebtHelp Guide to Bankruptcy
Bankrupty is an option for consumers and businesses in desperate need of financial relief. It is a process by which a court either eliminates one’s debts or approves a repayment plan under the discretion of the court. The four most common types of bankruptcy filings are Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
Some bankrupcies are considered “liquidations”, in which property is seized and sold in exchance for an elimination of debt. Other bankrupcies are “reorganizations”, in which some debt still must be repaid in accordance with court supervision after the bankruptcy.
Chapter 7
Chapter 7 bankruptcy is liquidation bankruptcy. It can be filed both by consumers and businesses, with a main of goal of discharging debt. The filer’s property is taken and sold to pay off as much unsecured debt as possible, and most or all of what remains generally is discharged.
Not all of your property will be liquidated, however. The court will leave you with enough property to utilize in order to re-start your finances, and some assets automatically are exempt. In addition, if you have very little property to begin with, the court may deem you a “no asset” case, and all of your property will be exempt. In such circumstances, creditors may not receive any payment at all, and you may enjoy a clean financial slate.
Some types of secure debt also can be discharged, although this is much more rare. As a filer, you have a choice to handle your secure debt either by allowing your creditor to repossess your propety, continue payments as part of a plan with the agreement of your creditor, or to pay your creditor the amount equal to your secured property.
Chapter 7 is one of the most popular forms of bankruptcy filing, and most people choose this form if they are able to do so. If your income is considered too high, you may not be able to file Chapter 7. The entire process usually takes between three and six months.Chapter 13
Chapter 13 is the other most popular form of bankruptcy filing. Unlike Chapter 7, 13 is reorganization bankruptcy and is for use only by consumers. In Chapter 13, you agree to a repayment plan on your unsecured debt under the discretion of the bankruptcy court. Some of your creditors may end up being paid in full, some may not be paid at all, and some may receive partial payment. The amounts that you will be required to pay are determined by the court through a number of different factors including income and amount of the debt.
For debt that is secured, the filer may be able to pay missed payments in lieu of repossesion.
Chapter 13 often is not preferred in comparison to Chapter 7, because it requires you to pay your debt instead of discharging it. However, many consumers are not eligible for Chapter 7, so 13 is their best bet. In addition to too high of an income, you might not be eligible for Chapter 7 because of past bankruptcy filing. In order to be eligible for Chapter 13 you must have sufficient income to pay off some of your debts. Your secured debt must be less than $922,975, and your unsecured debt must be less than $307,675. Thousands of people file for Chapter 13 bankruptcy every year.
Chapter 11
Like Chapter 13, Chapter 11 also is reorganization bankruptcy. While it is available both to consumers and to businesses, it is utilized almost entirely by businesses because it is expensive and complicated. It is a good option for individuals with debts more than that of the Chapter 13 limits, or who have many assets.
Chapter 12
Chapter 12 is reorganization bankruptcy, as well. It is like Chapter 13, but designed specifically for farmers and fisherman whose debt is made up of at least 80% occupational costs. Chapter 12 offers the power to eliminate liens, as well.
Is bankruptcy right for me?
No matter which form of bankruptcy you are considering or for which you may be eligible, there are careful considerations that you should make before embarking on the road to filing. While bankruptcy can be a very useful way to rid oneself of, or to manange, suffocating debt, it always should be considered a last resort for anyone in need of a financial solution. You should explore every other available option before filing bankruptcy. It is not a “quick fix”, but is instead a very serious blemish on your credit history and financial livelihood.
On the other hand, it can discharge your debt, or grant you the ability to pay only what your situation allows. With the “automatic stay” policy in effect upon filing, creditors will be prohibited from harrassing and further trying to collect for you.
You should consider the types of debts that you owe to determine whether or not bankruptcy is worthwhile for you. Some forms of debt very rarely (or never) are dischargable, such as tax debt, student loans, and child or spousal support. If your debt is made up of such types, look for another solution. Individuals consumed with credit card debt, on the other hand, often have much luck with discharge through bankruptcy.
Bankruptcy can do wonders for consumers and businesses in difficult financial decisions, but filing is not a decision to take in stride. Consider your options, and if bankruptcy is the only viable alternative, then work with an attorney who can help you to choose the liquidation or reorganization filing that is best for you.
http://www.debthelp.com/kc/131-debthelp-guide-bankruptcy.html
Some bankrupcies are considered “liquidations”, in which property is seized and sold in exchance for an elimination of debt. Other bankrupcies are “reorganizations”, in which some debt still must be repaid in accordance with court supervision after the bankruptcy.
Chapter 7
Chapter 7 bankruptcy is liquidation bankruptcy. It can be filed both by consumers and businesses, with a main of goal of discharging debt. The filer’s property is taken and sold to pay off as much unsecured debt as possible, and most or all of what remains generally is discharged.
Not all of your property will be liquidated, however. The court will leave you with enough property to utilize in order to re-start your finances, and some assets automatically are exempt. In addition, if you have very little property to begin with, the court may deem you a “no asset” case, and all of your property will be exempt. In such circumstances, creditors may not receive any payment at all, and you may enjoy a clean financial slate.
Some types of secure debt also can be discharged, although this is much more rare. As a filer, you have a choice to handle your secure debt either by allowing your creditor to repossess your propety, continue payments as part of a plan with the agreement of your creditor, or to pay your creditor the amount equal to your secured property.
Chapter 7 is one of the most popular forms of bankruptcy filing, and most people choose this form if they are able to do so. If your income is considered too high, you may not be able to file Chapter 7. The entire process usually takes between three and six months.Chapter 13
Chapter 13 is the other most popular form of bankruptcy filing. Unlike Chapter 7, 13 is reorganization bankruptcy and is for use only by consumers. In Chapter 13, you agree to a repayment plan on your unsecured debt under the discretion of the bankruptcy court. Some of your creditors may end up being paid in full, some may not be paid at all, and some may receive partial payment. The amounts that you will be required to pay are determined by the court through a number of different factors including income and amount of the debt.
For debt that is secured, the filer may be able to pay missed payments in lieu of repossesion.
Chapter 13 often is not preferred in comparison to Chapter 7, because it requires you to pay your debt instead of discharging it. However, many consumers are not eligible for Chapter 7, so 13 is their best bet. In addition to too high of an income, you might not be eligible for Chapter 7 because of past bankruptcy filing. In order to be eligible for Chapter 13 you must have sufficient income to pay off some of your debts. Your secured debt must be less than $922,975, and your unsecured debt must be less than $307,675. Thousands of people file for Chapter 13 bankruptcy every year.
Chapter 11
Like Chapter 13, Chapter 11 also is reorganization bankruptcy. While it is available both to consumers and to businesses, it is utilized almost entirely by businesses because it is expensive and complicated. It is a good option for individuals with debts more than that of the Chapter 13 limits, or who have many assets.
Chapter 12
Chapter 12 is reorganization bankruptcy, as well. It is like Chapter 13, but designed specifically for farmers and fisherman whose debt is made up of at least 80% occupational costs. Chapter 12 offers the power to eliminate liens, as well.
Is bankruptcy right for me?
No matter which form of bankruptcy you are considering or for which you may be eligible, there are careful considerations that you should make before embarking on the road to filing. While bankruptcy can be a very useful way to rid oneself of, or to manange, suffocating debt, it always should be considered a last resort for anyone in need of a financial solution. You should explore every other available option before filing bankruptcy. It is not a “quick fix”, but is instead a very serious blemish on your credit history and financial livelihood.
On the other hand, it can discharge your debt, or grant you the ability to pay only what your situation allows. With the “automatic stay” policy in effect upon filing, creditors will be prohibited from harrassing and further trying to collect for you.
You should consider the types of debts that you owe to determine whether or not bankruptcy is worthwhile for you. Some forms of debt very rarely (or never) are dischargable, such as tax debt, student loans, and child or spousal support. If your debt is made up of such types, look for another solution. Individuals consumed with credit card debt, on the other hand, often have much luck with discharge through bankruptcy.
Bankruptcy can do wonders for consumers and businesses in difficult financial decisions, but filing is not a decision to take in stride. Consider your options, and if bankruptcy is the only viable alternative, then work with an attorney who can help you to choose the liquidation or reorganization filing that is best for you.
http://www.debthelp.com/kc/131-debthelp-guide-bankruptcy.html
Differences in State Bankruptcy Laws
Some creditors have offices all across America, and this makes a debt as mobile as computerized data. Recently a Florida resident, for example, deposited money in a bank that happened to have offices in California. Unfortunately, there was a judgment against this man in California, and the California bank allowed a seizure against the Florida bank account.
As our technologies and financial systems become ever more entwined, it is getting difficult to make any one state’s laws work for you, even when they should. For anyone who has the freedom to plan far enough ahead, choosing a tax-friendly, consumer-oriented, best-for-bankruptcy state could be a great advantage.
One little known fact about bankruptcy is that eligibility to file is not based on United States citizenship. In fact, the bankruptcy code allows not only citizens but also anyone who is domiciled, doing business, residing in, or owns property in the U.S. to file for bankruptcy. This is in part because filing takes place in federal court, not state court.
So why does it matter in which state you reside? Because bankruptcy courts apply much of the state’s own property laws in making judgments. While this currently is changing, there still is reason to search for an attorney or counselor who is knowledge about your state’s bankruptcy laws.
Sometimes even being on the right side of a state line still is no protection for managing a debt through bankruptcy. There are so many conflicting laws between states that it may be more expensive to fight a debt than to give in, in some cases. However, this should not be the case, and there are ways to protect your assets from mega-businesses. As a first step, you can avoid banking with interstate banks, especially when the bank is headquartered in a location where court judgments can create liens against your accounts.
When it comes to understanding bankruptcy laws, you must use the knowledge of applicable state laws to get the best results. Many paralegal programs and bankruptcy programs available over the internet just do not provide all the necessary information. Search out an experienced, competent attorney or counselor in your local area.
The location of your property has much to do with where you should file for bankruptcy. If you own homes in more than one state, it is possible to pick the state in which you will file. In there is a move in progress, you may have to file in the state from which you are moving. Legal advice is essential to anyone thinking of changing their residence if bankruptcy is involved. Allegations of escaping creditors can cause very serious problems.
A new federal bankruptcy law has tried to stop people from moving to states where they get more benefits from filing bankruptcy. The new rule sets a two-year residency standard to file in a state. Besides, even if you were to file in State A while your real estate is located in State B, most bankruptcy courts probably would use the laws of State B, anyway.
Finally, it is worthwhile to look at the state-by-state rates of bankruptcy. The results for the ten most common (creditor friendly) and the ten least common (debtor friendly) filings indicate the need for bankruptcy in many states. For example, states that are debtor friendly have lower rates, while those that are creditor friendly have higher rates. States that allow more shielding of assets from creditors do not have to use bankruptcy as often.
http://www.debthelp.com/kc/93-differences-state-bankruptcy-laws.html
As our technologies and financial systems become ever more entwined, it is getting difficult to make any one state’s laws work for you, even when they should. For anyone who has the freedom to plan far enough ahead, choosing a tax-friendly, consumer-oriented, best-for-bankruptcy state could be a great advantage.
One little known fact about bankruptcy is that eligibility to file is not based on United States citizenship. In fact, the bankruptcy code allows not only citizens but also anyone who is domiciled, doing business, residing in, or owns property in the U.S. to file for bankruptcy. This is in part because filing takes place in federal court, not state court.
So why does it matter in which state you reside? Because bankruptcy courts apply much of the state’s own property laws in making judgments. While this currently is changing, there still is reason to search for an attorney or counselor who is knowledge about your state’s bankruptcy laws.
Sometimes even being on the right side of a state line still is no protection for managing a debt through bankruptcy. There are so many conflicting laws between states that it may be more expensive to fight a debt than to give in, in some cases. However, this should not be the case, and there are ways to protect your assets from mega-businesses. As a first step, you can avoid banking with interstate banks, especially when the bank is headquartered in a location where court judgments can create liens against your accounts.
When it comes to understanding bankruptcy laws, you must use the knowledge of applicable state laws to get the best results. Many paralegal programs and bankruptcy programs available over the internet just do not provide all the necessary information. Search out an experienced, competent attorney or counselor in your local area.
The location of your property has much to do with where you should file for bankruptcy. If you own homes in more than one state, it is possible to pick the state in which you will file. In there is a move in progress, you may have to file in the state from which you are moving. Legal advice is essential to anyone thinking of changing their residence if bankruptcy is involved. Allegations of escaping creditors can cause very serious problems.
A new federal bankruptcy law has tried to stop people from moving to states where they get more benefits from filing bankruptcy. The new rule sets a two-year residency standard to file in a state. Besides, even if you were to file in State A while your real estate is located in State B, most bankruptcy courts probably would use the laws of State B, anyway.
Finally, it is worthwhile to look at the state-by-state rates of bankruptcy. The results for the ten most common (creditor friendly) and the ten least common (debtor friendly) filings indicate the need for bankruptcy in many states. For example, states that are debtor friendly have lower rates, while those that are creditor friendly have higher rates. States that allow more shielding of assets from creditors do not have to use bankruptcy as often.
http://www.debthelp.com/kc/93-differences-state-bankruptcy-laws.html
Negotiated Debt Agreements and Discharge
Some people follow all of the right advice for managing debt and still end up in over their heads. Because bankruptcy - at least in theory - leaves no stone unturned, agreements negotiated right before filing have the ability to be really harmful to a debtor.
People need to consider realistically how likely bankruptcy is in their future. As other debthelp.com articles discuss, this ability to plan for bankruptcy unfortunately is complicated by some people who try to make money off of others’ financial hardships.
While this means that you must be very careful in negotiating agreements before succumbing to bankruptcy, this is not meant to take away options. In fact, debt negotiation done correctly either can eliminate the need for bankruptcy completely, or can make a Chapter 13 filing work better for you. Chapter 7 comes with the biggest risk for separately negotiated agreements -- it keeps a debt alive that could have been discharged.
A good lawyer will do your paperwork properly. A great lawyer also will provide you with financial planning advice about your debt both during and after bankruptcy. Try to go with the latter. In particular, avoid bankruptcy “mills” – companies with hundreds of clients that all are treated indiscriminately.
Non-Discharged Debts
Non-discharged debts are debts that still are owed after the bankruptcy court discharges a case, and may include taxes, child support, student loans or hidden assets. Such items should be considered individually through separate agreements, so as to be sure that all possibilities of discharging them have been explored (for example, student loans may be discharged if “undue hardship” can be proven), and that a Chapter 13 plan includes a realistic budget of all debts. Since Chapter 13 can take up to five years to be complete, it is essential that these non-dischargeable, big-ticket items are dealt with appropriately. Save yourself years of headaches by having everything in writing.
Securing Debt Agreements
Some negotiated agreements actually provide a security interest in property. These agreements, especially property settlements in particular, may assume a non-dischargeable nature in court. In the event of financial duress, seek out a lawyer’s advice regarding property and debt agreements, and possibly bankruptcy in the future.
Reaffirmation Agreements
People often file bankruptcy to gain control over their debts and personal affairs. Surprising, many of these people are interested in repaying old debts after they have been discharged, even if they do not have to do so. An agreement of this nature is called a “reaffirmation agreement”, and it may require bankruptcy court approval even if entered into as a matter of conscience. Without approval, there is a chance that the whole bankruptcy process can become a sophisticated “cherry-picking” of creditors: good creditor, bad creditor….
Be aware that after discharging your debts in bankruptcy some creditor(s) may attempt to revive a debt by offering you some type of “deal”. While repaying old debts can be a great way to repair your credit, remember that these discharged debts no longer are considered “debts” at all. Therefore, beware of reaffirmation agreements that have been proposed by creditors. For more information on this topic, see “Creditor Strategies to Collect.”
http://www.debthelp.com/kc/87-negotiated-debt-agreements-and-discharge.html
People need to consider realistically how likely bankruptcy is in their future. As other debthelp.com articles discuss, this ability to plan for bankruptcy unfortunately is complicated by some people who try to make money off of others’ financial hardships.
While this means that you must be very careful in negotiating agreements before succumbing to bankruptcy, this is not meant to take away options. In fact, debt negotiation done correctly either can eliminate the need for bankruptcy completely, or can make a Chapter 13 filing work better for you. Chapter 7 comes with the biggest risk for separately negotiated agreements -- it keeps a debt alive that could have been discharged.
A good lawyer will do your paperwork properly. A great lawyer also will provide you with financial planning advice about your debt both during and after bankruptcy. Try to go with the latter. In particular, avoid bankruptcy “mills” – companies with hundreds of clients that all are treated indiscriminately.
Non-Discharged Debts
Non-discharged debts are debts that still are owed after the bankruptcy court discharges a case, and may include taxes, child support, student loans or hidden assets. Such items should be considered individually through separate agreements, so as to be sure that all possibilities of discharging them have been explored (for example, student loans may be discharged if “undue hardship” can be proven), and that a Chapter 13 plan includes a realistic budget of all debts. Since Chapter 13 can take up to five years to be complete, it is essential that these non-dischargeable, big-ticket items are dealt with appropriately. Save yourself years of headaches by having everything in writing.
Securing Debt Agreements
Some negotiated agreements actually provide a security interest in property. These agreements, especially property settlements in particular, may assume a non-dischargeable nature in court. In the event of financial duress, seek out a lawyer’s advice regarding property and debt agreements, and possibly bankruptcy in the future.
Reaffirmation Agreements
People often file bankruptcy to gain control over their debts and personal affairs. Surprising, many of these people are interested in repaying old debts after they have been discharged, even if they do not have to do so. An agreement of this nature is called a “reaffirmation agreement”, and it may require bankruptcy court approval even if entered into as a matter of conscience. Without approval, there is a chance that the whole bankruptcy process can become a sophisticated “cherry-picking” of creditors: good creditor, bad creditor….
Be aware that after discharging your debts in bankruptcy some creditor(s) may attempt to revive a debt by offering you some type of “deal”. While repaying old debts can be a great way to repair your credit, remember that these discharged debts no longer are considered “debts” at all. Therefore, beware of reaffirmation agreements that have been proposed by creditors. For more information on this topic, see “Creditor Strategies to Collect.”
http://www.debthelp.com/kc/87-negotiated-debt-agreements-and-discharge.html
Refinancing After Bankruptcy
If you have filed for bankruptcy, you might be amazed at how quickly you are able to buy a new home or refinance an existing mortgage thereafter. In other debthelp.com articles, we discuss the different types and benefits of bankruptcies. Just as it is important to select the best form of bankruptcy and a great bankruptcy attorney, it also is important to have a plan for after the bankruptcy is discharged (a final order comes from the court).
Believe it or not, there is no law against refinancing almost immediately after filing, or in many instances, right after discharge from a bankruptcy. In determining the best plan of action for managing finances, one must consider the power of the Trustee to protect creditors, and also acknowledge that bankruptcy never should be used to keep available resources hidden. Anyone who plans on filing for bankruptcy to protect a home and to refinance the current mortgage needs to work with the best legal advisor he or she can afford.
About one year after a bankruptcy filing, you should begin to see more attractive borrowing rates. By refinancing relatively quickly, there is a likely possibility that you will improve your credit score within two years, and consequently will reduce your interest rate further. Home equity should increase within the same timeframe.
How much will the bankruptcy cost you in terms of refinancing? A bankruptcy filer almost certainly will be classified as a sub-prime borrower for approximately two years after filing. Many lenders do not lend within that period, and those who do usually demand at least 3% above prime for the average low credit score and modest equity.
There are certain loan programs that have built-in time limits for refinancing or taking out a new mortgage. An FHA mortgage is one of the most popular federal loan programs, and it allows refinancing one year after filing Chapter 13 (not discharge) if trustee and mortgage payments have been made on schedule. Fannie Mae requires a two year wait.
Generally, limits on how soon a refinancing can occur favors Chapter 13. Since Chapter 7 seeks to wipe out debt while Chapter 13 is for repaying debts, it is sometimes even possible to refinance before a discharge in Chapter 13 is granted.
The ability to refinance immediately after filing usually depends on the credit score and the equity in a home (generally 30% or more).
Replacing an old mortgage with one that is new is in many ways a fresh start. If you are about to file bankruptcy, work with an attorney or financial counselor in order to plan for life after the bankruptcy.
http://www.debthelp.com/kc/81-refinancing-after-bankruptcy.html
Believe it or not, there is no law against refinancing almost immediately after filing, or in many instances, right after discharge from a bankruptcy. In determining the best plan of action for managing finances, one must consider the power of the Trustee to protect creditors, and also acknowledge that bankruptcy never should be used to keep available resources hidden. Anyone who plans on filing for bankruptcy to protect a home and to refinance the current mortgage needs to work with the best legal advisor he or she can afford.
About one year after a bankruptcy filing, you should begin to see more attractive borrowing rates. By refinancing relatively quickly, there is a likely possibility that you will improve your credit score within two years, and consequently will reduce your interest rate further. Home equity should increase within the same timeframe.
How much will the bankruptcy cost you in terms of refinancing? A bankruptcy filer almost certainly will be classified as a sub-prime borrower for approximately two years after filing. Many lenders do not lend within that period, and those who do usually demand at least 3% above prime for the average low credit score and modest equity.
There are certain loan programs that have built-in time limits for refinancing or taking out a new mortgage. An FHA mortgage is one of the most popular federal loan programs, and it allows refinancing one year after filing Chapter 13 (not discharge) if trustee and mortgage payments have been made on schedule. Fannie Mae requires a two year wait.
Generally, limits on how soon a refinancing can occur favors Chapter 13. Since Chapter 7 seeks to wipe out debt while Chapter 13 is for repaying debts, it is sometimes even possible to refinance before a discharge in Chapter 13 is granted.
The ability to refinance immediately after filing usually depends on the credit score and the equity in a home (generally 30% or more).
Replacing an old mortgage with one that is new is in many ways a fresh start. If you are about to file bankruptcy, work with an attorney or financial counselor in order to plan for life after the bankruptcy.
http://www.debthelp.com/kc/81-refinancing-after-bankruptcy.html
Understanding the New Bankruptcy Rules
Changes to our national bankruptcy laws in 2005 have made it easier than ever to cast doubt on transfers of valuable property that have occurred within a year of a filing for bankruptcy. The Trustee, or a creditor, can allege within one year of filing that you attempted to avoid bankruptcy through fraudulent means, which may make your situation even worse. Always keep in mind: the Trustee is there for the bankruptcy court and for the creditors. This is why anyone making large transfers before filing needs expert advice and representation.
Fraudulent transfers, or “fraudulent conveyances”, can be charged even if there never was any real intent to cheat anyone on the part of the debtor. Many people who face credit crises simply give away some of their assets, often to family members and others who have tried to help them. However nearly every transfer made “under the table” is subject to examination, so it is much better to transfer openly.
Before filing for Chapter 7 or Chapter 13 bankruptcy, debtors are required to list all valuable transfers for the previous year. Failure to list a transfer is a violation of the law, and also can cause suspicion about the legality of the transfer. If a fraudulent transfer is discovered after discharge, the bankruptcy even can be vacated
There are two types of fraudulent transfers: constructive fraud, and actual fraud. Constructive fraud is fraud that was meant to relieve oneself of more hardship but not to cheat creditors outright. It can be evidenced if the debtor already was out of money when the property was disposed or if the transfer appears to be a gift, and if the transfer is unfair to a creditor to whom money is owed. Actual fraud is just that – fraud. Both types of transfers result either in a return of property, or a payment of the value of the property. Actual fraud also can result in jail time.
The bankruptcy court can be very unforgiving with fraudulent transfers. Often a home is a debtor’s largest asset, and if a trustee finds fraud, he or she may go after home equity. In other words, bankruptcy may tragically end up consuming the asset for which you sought protection through filing in the first place.
Luckily, there is a strong defense against constructive fraud. It must be proven that there has been a “reasonably equivalent” transfer in value, and sometimes this just is not the case. This is where bankruptcy lawyers often earn their weight in gold.
Finally, keep in mind that most states also have the power to examine your prior year transfers to search for fraud. Be sure that you are ready to pass the test. If you are transferring property and are considering bankruptcy, or if you have transferred property that is now uncovered and in question, a good lawyer will work to protect your transfer, and perhaps even the recipient of your “innocent” favor.
http://www.debthelp.com/kc/85-understanding-new-bankruptcy-rules.html
Fraudulent transfers, or “fraudulent conveyances”, can be charged even if there never was any real intent to cheat anyone on the part of the debtor. Many people who face credit crises simply give away some of their assets, often to family members and others who have tried to help them. However nearly every transfer made “under the table” is subject to examination, so it is much better to transfer openly.
Before filing for Chapter 7 or Chapter 13 bankruptcy, debtors are required to list all valuable transfers for the previous year. Failure to list a transfer is a violation of the law, and also can cause suspicion about the legality of the transfer. If a fraudulent transfer is discovered after discharge, the bankruptcy even can be vacated
There are two types of fraudulent transfers: constructive fraud, and actual fraud. Constructive fraud is fraud that was meant to relieve oneself of more hardship but not to cheat creditors outright. It can be evidenced if the debtor already was out of money when the property was disposed or if the transfer appears to be a gift, and if the transfer is unfair to a creditor to whom money is owed. Actual fraud is just that – fraud. Both types of transfers result either in a return of property, or a payment of the value of the property. Actual fraud also can result in jail time.
The bankruptcy court can be very unforgiving with fraudulent transfers. Often a home is a debtor’s largest asset, and if a trustee finds fraud, he or she may go after home equity. In other words, bankruptcy may tragically end up consuming the asset for which you sought protection through filing in the first place.
Luckily, there is a strong defense against constructive fraud. It must be proven that there has been a “reasonably equivalent” transfer in value, and sometimes this just is not the case. This is where bankruptcy lawyers often earn their weight in gold.
Finally, keep in mind that most states also have the power to examine your prior year transfers to search for fraud. Be sure that you are ready to pass the test. If you are transferring property and are considering bankruptcy, or if you have transferred property that is now uncovered and in question, a good lawyer will work to protect your transfer, and perhaps even the recipient of your “innocent” favor.
http://www.debthelp.com/kc/85-understanding-new-bankruptcy-rules.html
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