Of the many types of debts that a person can discharge with a bankruptcy filing, there are some forms of debt are often the most difficult to get completely discharged without some type of repayment plan. Whether it is a student loan, a personal loan, or a home equity loan, bankruptcy does not always clear the obligations of the debtor without undergoing some type of asset liquidation or repayment agreement. The bankruptcy courts have made this provision for several reasons and it is nearly impossible to change their minds.
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.
Mortgages are not impossible to get after bankruptcy. With manual underwriting, many companies will work with your particular case to help you achieve your home buying goals. Even though debtors who go through Chapter 13 are favored, those who have filed Chapter 7 can also be eligible depending on the circumstances surrounding their bankruptcy and their current financial situation.
Once a person goes through bankruptcy, their life will never be the same. Bankruptcy filing proceedings can remain on your financial records for many years to come. Since some debts cannot be eradicated, the debtor's situation often becomes worse. Either way, debtors who go through any type of bankruptcy can expect many years of high interest rates as well as stringent payment requirements.
Tuesday, December 11, 2007
Do You Need Advice Deciphering the New Bankruptcy Code?
Congress decided to make major changes to the United States bankruptcy code in recent years because of the problem the current code was creating. With more people filing for bankruptcy protection and discharging their debts, companies that extended credit to the debtors were forced to cease trying to collect on the money that was owed to them. Under the new guidelines, it is much more difficult for debtors to simply discharge their debts and they are forced to enter into repayment options if they choose to file. The most recent reformations were a result of many years of abusing the bankruptcy system.
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.
Another amendment that coincides with the BAPCPA is that debtors must acquire the signature of an attorney. Bankruptcy proceedings are not complete unless a lawyer puts their signature on the debtor's petition. Whether it is a state-appointed bankruptcy lawyer or a private attorney, bankruptcy petitions will not be considered until a reasonable investigation is completed into the circumstances surrounding the bankruptcy. Included in the investigation is a "means test," which is typically conducted by the bankruptcy lawyer. This test compares the debtor's income to that of the state's mean income to decipher if the debtor is even eligible for bankruptcy.
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.
As of October 17, 2005, these and other changes were added to the United States bankruptcy code for several reasons. Because of the toll that unpaid debts have on the economic status of society, major changes were needed to lessen these detrimental effects. Since the focus of these amendments was placed on behavior change and reducing the abuse of the bankruptcy system, the new code should be able to force debtors to think about their financial decisions more carefully.
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.
Another amendment that coincides with the BAPCPA is that debtors must acquire the signature of an attorney. Bankruptcy proceedings are not complete unless a lawyer puts their signature on the debtor's petition. Whether it is a state-appointed bankruptcy lawyer or a private attorney, bankruptcy petitions will not be considered until a reasonable investigation is completed into the circumstances surrounding the bankruptcy. Included in the investigation is a "means test," which is typically conducted by the bankruptcy lawyer. This test compares the debtor's income to that of the state's mean income to decipher if the debtor is even eligible for bankruptcy.
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.
As of October 17, 2005, these and other changes were added to the United States bankruptcy code for several reasons. Because of the toll that unpaid debts have on the economic status of society, major changes were needed to lessen these detrimental effects. Since the focus of these amendments was placed on behavior change and reducing the abuse of the bankruptcy system, the new code should be able to force debtors to think about their financial decisions more carefully.
Bankruptcy Help - The Advantages of 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.
Many debtors might choose to file under Chapter 13 bankruptcy because they have loans that required co-signers. With this type of bankruptcy, the third parties are protected from the creditors. This means that the creditors can no longer pursue either party in an attempt to collect the debt. They must deal with the trustee that the court appointed to the particular case if they have any questions or concerns.
In bankruptcy, debtors have options to help them receive a fresh start. For others who are not comfortable with completely discharging their debts, Chapter 13 bankruptcy affords them the opportunity to repay their creditors through a court-appointed trustee. This is sometimes ideal because it teaches people about behavior change when it comes to their finances. Not only that, but it also gives debtors a psychological peace of mind by knowing that they did not completely disregard their adult responsibilities.
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.
Many debtors might choose to file under Chapter 13 bankruptcy because they have loans that required co-signers. With this type of bankruptcy, the third parties are protected from the creditors. This means that the creditors can no longer pursue either party in an attempt to collect the debt. They must deal with the trustee that the court appointed to the particular case if they have any questions or concerns.
In bankruptcy, debtors have options to help them receive a fresh start. For others who are not comfortable with completely discharging their debts, Chapter 13 bankruptcy affords them the opportunity to repay their creditors through a court-appointed trustee. This is sometimes ideal because it teaches people about behavior change when it comes to their finances. Not only that, but it also gives debtors a psychological peace of mind by knowing that they did not completely disregard their adult responsibilities.
Seeking Advice - Chapter 7 Bankruptcy and You
With the options available to debtors for discharging debts, Chapter 7 bankruptcy is the most popular. The reason is that this form of bankruptcy provides no obligation to repay the debts that the debtor has accumulated. Until recently, it was much easier to have your debts erased through Chapter 7. However, new regulations and guidelines have made it much more difficult to have debts discharged without a plan for repayment.
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.
The new bankruptcy code guidelines are designed to discourage abuse of the system. If an investigation finds abuse, the court can cancel the bankruptcy or require the debtor to repay their creditors through other means. Suspected abuse includes multiple bankruptcy filings or trying to get debts discharged immediately after an expensive shopping spree. In the end, the court and its officials make the final decision regarding a Chapter 7 bankruptcy before debtors are granted relief.
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.
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.
The new bankruptcy code guidelines are designed to discourage abuse of the system. If an investigation finds abuse, the court can cancel the bankruptcy or require the debtor to repay their creditors through other means. Suspected abuse includes multiple bankruptcy filings or trying to get debts discharged immediately after an expensive shopping spree. In the end, the court and its officials make the final decision regarding a Chapter 7 bankruptcy before debtors are granted relief.
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.
Bankruptcy Questions? Get Help About Bankruptcy
The very word "bankruptcy" puts fear into many people's hearts. For years, the word has been equated with being destitute, being unable to pay bills and being financially insecure. But is that all that bankruptcy is about? The truth of the matter is that many people simply don't understand what bankruptcy really is. For many people, bankruptcy is a way out of a bad situation and a hand up when they need it most. It is also a life changing experience. These questions and answers are designed to teach you about bankruptcy, what it is, what it can do and what it cannot do.
What is bankruptcy?
Bankruptcy is a legal declaration of the inability to pay your creditors. This does not mean you have no money. On the contrary, many people who declare bankruptcy have enough money to live on. Instead, it means that you do not have enough money to match your basic living expenses and pay people to whom you owe money. How much this is can vary from person to person because every person needs a slightly different amount of money to meet their living expenses. Since there is no set amount, bankruptcy is often granted by a judge.
How do I know if I qualify for bankruptcy?
The best way to find this out is to speak with a bankruptcy lawyer. These lawyers are trained to know the state and federal bankruptcy laws and can inform you if you qualify. It is hard to know when the proper time to check with such a lawyer is, however. In general, if you are only barely making ends meet and are often hounded by creditors, it is probably a good idea to check with a bankruptcy lawyer. You should view bankruptcy as a last resort, however, and attempt to find ways to work with your creditors before you file.
How does bankruptcy help me pay my debts?
There are several different types of bankruptcy, all of which function in different ways. Businesses have several different versions of bankruptcy, some of which are useful for individuals. In general, should you need to file for bankruptcy, one of three things will happen. Either you will be required to pay a fixed amount per month until your debts are paid off, your assets will be liquidated and sold off to pay your debts and you will pay monthly to cover the rest, or your assets will be liquidated and sold off and then you will be absolved of any further debt. With any of these options, creditors can not attempt to collect above and beyond the agreed payment.
What are assets in bankruptcy terms?
Assets are basically anything you own. Which things are liquidated can depend on your quality of life, of course. If you own your house, but aren't making enough every month to cover living expenses, your house may not be liquidated. If your car is mandatory to your ability to support yourself and pay your bills, your car may not be liquidated. As well, some assets are protected from liquidation in case of bankruptcy. These items vary from state to state.
How much money per month has to go to payment in a Chapter 13 bankruptcy?
Bankruptcy law states that "every penny of disposable income" must go to payment. This can vary depending on various factors, such as where a person lives, what they do for a living and whether or not they have a family. The courts tend to define "disposable income" as any income that does not go towards living expenses and upkeep of property. So items such as rent, car payments, and grocery money are not counted when the courts consider "disposable income". As such, many people aren't able to file for Chapter 13 bankruptcy because they do not make enough disposable income per month to properly pay creditors.
What is bankruptcy?
Bankruptcy is a legal declaration of the inability to pay your creditors. This does not mean you have no money. On the contrary, many people who declare bankruptcy have enough money to live on. Instead, it means that you do not have enough money to match your basic living expenses and pay people to whom you owe money. How much this is can vary from person to person because every person needs a slightly different amount of money to meet their living expenses. Since there is no set amount, bankruptcy is often granted by a judge.
How do I know if I qualify for bankruptcy?
The best way to find this out is to speak with a bankruptcy lawyer. These lawyers are trained to know the state and federal bankruptcy laws and can inform you if you qualify. It is hard to know when the proper time to check with such a lawyer is, however. In general, if you are only barely making ends meet and are often hounded by creditors, it is probably a good idea to check with a bankruptcy lawyer. You should view bankruptcy as a last resort, however, and attempt to find ways to work with your creditors before you file.
How does bankruptcy help me pay my debts?
There are several different types of bankruptcy, all of which function in different ways. Businesses have several different versions of bankruptcy, some of which are useful for individuals. In general, should you need to file for bankruptcy, one of three things will happen. Either you will be required to pay a fixed amount per month until your debts are paid off, your assets will be liquidated and sold off to pay your debts and you will pay monthly to cover the rest, or your assets will be liquidated and sold off and then you will be absolved of any further debt. With any of these options, creditors can not attempt to collect above and beyond the agreed payment.
What are assets in bankruptcy terms?
Assets are basically anything you own. Which things are liquidated can depend on your quality of life, of course. If you own your house, but aren't making enough every month to cover living expenses, your house may not be liquidated. If your car is mandatory to your ability to support yourself and pay your bills, your car may not be liquidated. As well, some assets are protected from liquidation in case of bankruptcy. These items vary from state to state.
How much money per month has to go to payment in a Chapter 13 bankruptcy?
Bankruptcy law states that "every penny of disposable income" must go to payment. This can vary depending on various factors, such as where a person lives, what they do for a living and whether or not they have a family. The courts tend to define "disposable income" as any income that does not go towards living expenses and upkeep of property. So items such as rent, car payments, and grocery money are not counted when the courts consider "disposable income". As such, many people aren't able to file for Chapter 13 bankruptcy because they do not make enough disposable income per month to properly pay creditors.
Can There Be Life After Bankruptcy?
Life after bankruptcy can have a great impact on your financial life. For some, bankruptcy provides a fresh start and debtors receive numerous loan and credit offers before their debts are even fully discharged. For others, bankruptcy prevents them from getting a decent interest rate on a house or other major purchase. It is always important to consider all of the ramifications and other options before making the final decision to file bankruptcy.
One of the biggest complaints that people have about bankruptcy for the sake of a new start is that it does not change a person's habits. Oftentimes, people get deep in debt because of bad spending habits or because of letting their credit cards and consumer debts get out of control. The actions you take after bankruptcy are vital to keeping the management of your finances under control. This is one reason that bankruptcy does not actually help people. Without behavior change, the majority of filers fall back into the same destructive spending habits that they had before their debts were discharged. Therefore, recognizing that you have a spending problem is vital before considering bankruptcy.
More important than receiving a fresh start through bankruptcy is the need to change your spending habits. This is often the leading cause for people getting deep into debt and filing bankruptcy only reinforces these bad habits. Credit cards can be advantageous if you know how to use them responsibly. Unfortunately, all too often they get out of control until it is too late to fix the problem. Without proper counseling and education, bankruptcy is just a temporary fix that many people use to get them out of financial trouble.
The final step following a bankruptcy is to deal with the negative ramifications it has on your credit. For purposes of getting a home mortgage, bankruptcy will stay on your credit record for the rest of your life. This could be bad news for the interest rate or the repayment terms of your mortgage even several years after bankruptcy. If you file bankruptcy due to one single major setback in your life, such as an illness that resulted in huge medical bills or a job loss, some mortgage companies will work with you. While it still shows up on your credit, mortgage companies that do manual underwriting can customize your home loan and they will consider your specific situation. Be sure to save any papers related to the event so you can present them to the mortgage company when it is time to buy a home.
The choices you make after bankruptcy can affect your financial future. Realizing what put you into debt in the first place is your first step to moving on from the bankruptcy and making sure it does not happen again. Although it can have a negative impact on your pride or self-image, dwelling on the bankruptcy is neither helpful nor productive, so moving on with your life is the best thing to do. This is especially true if your financial troubles were a result a single life event. Recognize the mistakes you made and take measures to ensure that it does not happen again.
One of the biggest complaints that people have about bankruptcy for the sake of a new start is that it does not change a person's habits. Oftentimes, people get deep in debt because of bad spending habits or because of letting their credit cards and consumer debts get out of control. The actions you take after bankruptcy are vital to keeping the management of your finances under control. This is one reason that bankruptcy does not actually help people. Without behavior change, the majority of filers fall back into the same destructive spending habits that they had before their debts were discharged. Therefore, recognizing that you have a spending problem is vital before considering bankruptcy.
More important than receiving a fresh start through bankruptcy is the need to change your spending habits. This is often the leading cause for people getting deep into debt and filing bankruptcy only reinforces these bad habits. Credit cards can be advantageous if you know how to use them responsibly. Unfortunately, all too often they get out of control until it is too late to fix the problem. Without proper counseling and education, bankruptcy is just a temporary fix that many people use to get them out of financial trouble.
The final step following a bankruptcy is to deal with the negative ramifications it has on your credit. For purposes of getting a home mortgage, bankruptcy will stay on your credit record for the rest of your life. This could be bad news for the interest rate or the repayment terms of your mortgage even several years after bankruptcy. If you file bankruptcy due to one single major setback in your life, such as an illness that resulted in huge medical bills or a job loss, some mortgage companies will work with you. While it still shows up on your credit, mortgage companies that do manual underwriting can customize your home loan and they will consider your specific situation. Be sure to save any papers related to the event so you can present them to the mortgage company when it is time to buy a home.
The choices you make after bankruptcy can affect your financial future. Realizing what put you into debt in the first place is your first step to moving on from the bankruptcy and making sure it does not happen again. Although it can have a negative impact on your pride or self-image, dwelling on the bankruptcy is neither helpful nor productive, so moving on with your life is the best thing to do. This is especially true if your financial troubles were a result a single life event. Recognize the mistakes you made and take measures to ensure that it does not happen again.
Need Information? The Basics of Chapter 11 Bankruptcy
Corporations that get into deep financial trouble have the option of filing for Chapter 11 bankruptcy protection. This is basically the process of the courts ordering the company's creditors to cease their pursuit of monies extended to the business in the form of credit. This often happens because the company's finances get mismanaged and the debt piles up until it becomes too overwhelming to repay. As a result, the court appoints a trustee to oversee the company's debts and assets in order to help repay the creditors in a timely and efficient manner.
Bankruptcy in business is not much different from personal bankruptcy, but there are some slight differences. Business bankruptcy can be voluntary, but sometimes it is forced upon them if their debts are too great and their debtors are calling for it. The business then files for Chapter 11 bankruptcy protection and its debts are assessed so the court can decide how their creditors will be repaid. One advantage of corporate bankruptcy is that oftentimes the business has the option of continuing its normal business operations without liquidating all of the assets. As a result, the company can usually continue to operate and make money while its creditors receive a portion of the revenue to apply to the debts.
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.
Chapter 11 bankruptcy offers a variety of services to corporations in financial troubles. While it holds many positive aspects for the corporations, some critics claim that the practice could have a detrimental effect on society and its economy. Even the biggest names in business are subject to financial troubles and Chapter 11 has given them a relief from creditors while they reorganize their finances. Oftentimes, they can stay in business and create more revenue for their creditors. Despite criticisms, this form of financial relief is sometimes necessary to give corporations another chance.
Bankruptcy in business is not much different from personal bankruptcy, but there are some slight differences. Business bankruptcy can be voluntary, but sometimes it is forced upon them if their debts are too great and their debtors are calling for it. The business then files for Chapter 11 bankruptcy protection and its debts are assessed so the court can decide how their creditors will be repaid. One advantage of corporate bankruptcy is that oftentimes the business has the option of continuing its normal business operations without liquidating all of the assets. As a result, the company can usually continue to operate and make money while its creditors receive a portion of the revenue to apply to the debts.
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.
Chapter 11 bankruptcy offers a variety of services to corporations in financial troubles. While it holds many positive aspects for the corporations, some critics claim that the practice could have a detrimental effect on society and its economy. Even the biggest names in business are subject to financial troubles and Chapter 11 has given them a relief from creditors while they reorganize their finances. Oftentimes, they can stay in business and create more revenue for their creditors. Despite criticisms, this form of financial relief is sometimes necessary to give corporations another chance.
Need Bankruptcy Help - Taking it to Bankruptcy Court
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.
Financial irresponsibility is one of the leading causes of bankruptcy. Bad spending habits and poor financial decisions cause many people to fall into debt. If they remain unchecked, these bad habits will continue until the debt becomes so insurmountable that the debtor sees no other option but to file bankruptcy. Because of the negative aspects of the entire process, debtors are advised to use the services of one of the bankruptcy lawyers in their area to help them face the bankruptcy officials.
For people who see no other way out, bankruptcy court is often an option that is twofold. On one hand, debtors can get relief from their debts by getting them completely discharged or by agreeing to a strict repayment plan regulated by a court-appointed trustee. On the other hand, filing bankruptcy will stay on your credit report for many years which will hurt your chances of getting a decent interest rate for major purchases in the future. This could be significant if you plan to buy a new home anytime soon. Unfortunately, bankruptcy is often the most logical decision for people who have suffered catastrophic life events and have no other options available to them.
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.
Financial irresponsibility is one of the leading causes of bankruptcy. Bad spending habits and poor financial decisions cause many people to fall into debt. If they remain unchecked, these bad habits will continue until the debt becomes so insurmountable that the debtor sees no other option but to file bankruptcy. Because of the negative aspects of the entire process, debtors are advised to use the services of one of the bankruptcy lawyers in their area to help them face the bankruptcy officials.
For people who see no other way out, bankruptcy court is often an option that is twofold. On one hand, debtors can get relief from their debts by getting them completely discharged or by agreeing to a strict repayment plan regulated by a court-appointed trustee. On the other hand, filing bankruptcy will stay on your credit report for many years which will hurt your chances of getting a decent interest rate for major purchases in the future. This could be significant if you plan to buy a new home anytime soon. Unfortunately, bankruptcy is often the most logical decision for people who have suffered catastrophic life events and have no other options available to them.
Seeking Bankruptcy Help - Bankruptcy Law and the 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.
Not only do the states have differing laws that affect bankruptcy exemptions, but the exemptions and guidelines also pertain to the differences in the bankruptcy chapter that the debtor files. For instance, debtors who file for Chapter 7 bankruptcy have the option of having their debts completely discharged but their assets are typically liquidated to help repay the creditors. For a Chapter 13 bankruptcy however, debtors are placed on a repayment schedule and they can keep their homes and other personal property as long as they continue to make the required payments.
Federal bankruptcy law regulations have the final word on any bankruptcy filed in the United States. The guidelines of individual states are meant to allow some leeway in the laws that govern the rights of a debtor to their property. The guidelines in some states are particularly advantageous to the debtor, but other states seem to benefit the creditors. Recent changes to the federal code also favor the rights of the creditors and they try to discourage debtors from filing for a discharge.
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.
Not only do the states have differing laws that affect bankruptcy exemptions, but the exemptions and guidelines also pertain to the differences in the bankruptcy chapter that the debtor files. For instance, debtors who file for Chapter 7 bankruptcy have the option of having their debts completely discharged but their assets are typically liquidated to help repay the creditors. For a Chapter 13 bankruptcy however, debtors are placed on a repayment schedule and they can keep their homes and other personal property as long as they continue to make the required payments.
Federal bankruptcy law regulations have the final word on any bankruptcy filed in the United States. The guidelines of individual states are meant to allow some leeway in the laws that govern the rights of a debtor to their property. The guidelines in some states are particularly advantageous to the debtor, but other states seem to benefit the creditors. Recent changes to the federal code also favor the rights of the creditors and they try to discourage debtors from filing for a discharge.
Want Advice About Fighting Personal Bankruptcy
Today's culture has seen an unmatched rise in the number of people who file personal bankruptcy. With the amount of consumer debt at an all-time high, a growing number of people feel that this is the best option for them so they can start over with their finances. The only problem with this idea is that it does not change a person's behavior. Instead, it almost reinforces the irresponsible habits and behaviors that resulted in the debt in the first place. People who find themselves in this predicament and want to avoid personal bankruptcy will want to look into bankruptcy alternatives before making their final decision.
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.
Even if it takes some hard work and effort, researching your financial options is of utmost importance for making the right decision. Instead of just allowing a personal bankruptcy to affect your credit for years to come, look into the ramifications it will have on your financial future. For instance, it will always affect your ability to get a low interest rate when you decide to buy a home or for many other types of major purchases. The best thing to do is to pick up as much overtime and negotiate with your creditors in order to pay them off. Of course, it will take some extra effort on your part, but your credit rating will thank you for it.
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.
Even if it takes some hard work and effort, researching your financial options is of utmost importance for making the right decision. Instead of just allowing a personal bankruptcy to affect your credit for years to come, look into the ramifications it will have on your financial future. For instance, it will always affect your ability to get a low interest rate when you decide to buy a home or for many other types of major purchases. The best thing to do is to pick up as much overtime and negotiate with your creditors in order to pay them off. Of course, it will take some extra effort on your part, but your credit rating will thank you for it.
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