Bankruptcy-Chapter 13 Or Chapter 7?

The main purpose of bankruptcy laws is to give people hopelessly overburdened with debt a financial fresh start. Bankruptcy filings are public records. However, under normal circumstances, no one will know about the bankruptcy. Credit Bureaus will maintain a record of the bankruptcy and it will remain on the credit record for 10 years.

The most common reasons for bankruptcy filings are unemployment, large medical expenses; seriously overextended credit; marital problems, and other large unexpected expenses.

There are two ways a debtor can go bankrupt. The first and most common way is for an individual to file a voluntary petition asking the Court to allow bankruptcy. The second, and rarely used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In this way, a creditor can gain payment, at least in part, for debts a debtor is refusing to pay. In both these cases a Bankruptcy Trustee is required to administer the bankruptcy.

There are two different types of legal bankruptcy proceedings.

Chapter 7, also called a straight bankruptcy, is a liquidation proceeding. The debtor gives all non-exempt property to a bankruptcy trustee who then converts it to cash for distribution to creditors. The debtor is freed from all dischargeable debts, usually within 4 months. Chapter 7 is filed in cases where the debtor has few assets to lose, so this option gives a relatively quick release from debts. A debtor can file Chapter 7 again if more than 8 years have passed since discharge of a previous Chapter 7 bankruptcy.

Chapter 13 bankruptcy is also called a reorganization bankruptcy. It is filed by individuals who wish to pay off their debts in 3 to 5 years. This type of proceeding is suited for individuals with non-exempt property they wish to keep. It is only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.

Under the new Bankruptcy Law which took effect on October 17, 2005, individuals who can afford to make some repayment of their debts must file Chapter 13. Only debtors who meet strict financial requirements are allowed to erase their debts completely through Chapter 7. Debtors must take an approved Financial Counseling Course within 6 months of filing. Then, their income is assessed according to the formula (monthly income-expenses) X 60. If the result is $6,000 or less, and unsecured debts are less than 25%, Chapter 7 is allowed. If income is greater than $10,000 or unsecured debts are greater than 25%, the debtor must file Chapter 13.

Once bankruptcy is filed, creditors are forbidden from harassing the debtor. By law, creditors cannot initiate or continue any lawsuits, wage garnishees, or even make telephone calls demanding payments. Secured creditors such as banks holding, for example, a lien on a car, will get the stay lifted if the debtor cannot make payments.

Spouses are legally unaffected by a debtor’s bankruptcy if they are not responsible (did not sign an agreement or contract) for any of the debt. If they have a supplemental credit card they are probably responsible for that debt. However, in community property states, either spouse can contract for a debt without the other spouse’s signature on anything, and the spouse will still be obligated to pay. There are some exceptions to this rule, such as the purchase or sale of real estate; those few exceptions do require the signature of both spouses on the contract for both to be liable. But mundane purchases, such as credit cards, do not require both spouses to have signed. Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Declaring bankruptcy does not mean that an individual’s subsequent access to credit is cut off. Whether a debtor is allowed to keep credit cards after filing bankruptcy is up to the credit card company. If the bankruptcy involves discharging a credit card, the card company will cancel the card unless the debtor reaffirms the debt. Even if the card has a zero balance the credit card company might still cancel the card.

A number of banks now offer “secured”credit cards, for which the debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Initially the credit limit is equal to the security given and is increased as the debtor demonstrates ability to pay the debt.

Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on par with applicants of the same financial profile who have not filed bankruptcy. Income stability and the size of the down payment are seen as more relevant than a past bankruptcy filing. Though bankruptcy stays on a credit report for 10 years, it becomes less significant as time passes. People who have filed for bankruptcy are often better credit risks than people who have not, and are struggling to pay multiple accumulated debts.

Debtors filing for bankruptcy are allowed to keep certain assets. The exemption for a homestead is limited to $125,000 if the property was acquired within the previous 1215 days (3.3 years). The cap is not applicable to any interest transferred from a debtor’s previous principal residence which was acquired prior to the beginning of the 1215-day period. The value of the state homestead exemption is reduced by any addition to the value brought about on account of a sale of nonexempt property made by the debtor with the intent to evade or defraud creditors during the 10 years before the bankruptcy filing.

An absolute $125,000 homestead cap applies if either the court determines that the debtor has been convicted of a felony demonstrating that the filing of the case was an abuse of the provisions of the Bankruptcy Code, or the debtor owes money due to criminal acts. This limitation is not applied if the homestead property is “reasonably necessary for the support of the debtor and any dependent of the debtor.”

Some laws relating to bankruptcy vary from state to state. Legal residency is determined by which state the debtor lived in the 730 days (2 years) before filing; or if the debtor did not live in a single state in the previous 2 years, the state of residence where the debtor spent the majority of the 180 period preceding the 2 years. If this leaves the debtor ineligible for any exemptions then the debtor is allowed use federal exemption laws.

In some cases of Chapter 7 bankruptcy, tax debts are also wiped out, but only if stringent conditions are met: the IRS does not have a tax lien against the debtor’s property; no fraudulent tax returns have been filed; tax liability is due for a tax return filed at least 2 years before the bankruptcy filing; the tax return was due at least 3 years ago, and the taxes were assessed at least 8 months before filing for bankruptcy.

Student loans from government and private organizations are usually not wiped out, unless repayment would cause undue hardship to the debtor.

All non-exempt property, such as real estate, cars and motorcycles will then be liquidated by the trustee.

There is no legal requirement to use a lawyer to file for bankruptcy, and debtors can do so themselves for about $300; however, it is strongly advised the use the services of a specialized bankruptcy lawyer as bankruptcy law is complex. A bankruptcy lawyer is well worth the cost, which is usually only $1,600 to $2,000. Debtors will recoup the legal fees many times over through peace of mind and avoidance of stress in addition to actual money saved by following the bankruptcy attorney’s advice.

Finishing College And Feeling Concerned About Your Debt-Helpful Information To Put You On The Right Path

Many people that go off to college never expect to graduate and suddenly have to be terrified by the fact that they collected some big expensive debts while they were there and are responsible now for paying them back. Debt can build up before you ever notice and especially whenever you are spending years working your tail off during college. Student loans will cost you after you graduate from college, so being prepared is definitely where it is at and what is going to save you tremendous heartache.

Debt is something that many people have to deal with throughout their lives and getting right out of college can be a scary time for anybody to have to worry about any sort of debt ordeal, there is no doubt about that. Paying back student loans that were collected during the time that you were in college can be very scary but knowing what to expect whenever that time does come is always better than not being familiar with it.

These loans can be quite substantial, to say the very least but as long as you always make your payments promptly and in a timely manner, you will be just fine and will not have to worry about them coming after you, wanting their money. Creditors can be extremely pushy whenever it comes to collecting their money for anyone of you out there but avoiding them is only you prolonging the inevitable and you know that is never going to completely fix anything for you in a positive manner.

Finishing college is a very trying time for anyone going through that experience and you totally deserve as little stress as possible because you have worked for so long and so hard, that the last thing you need right now is to be concerned and stressed over any type of debt. There are different things that anyone of you could try doing to ensure that you do not have to be bogged down with any sort of student loan debts after finishing college. Make sure you speak up front to the one’s loaning you your money about all of the terms and conditions so that everything is completely understood.

Your future could be brighter by you just taking some simple steps in planning and preparing in a more efficient manner each time that something does come up that will cost you money down the road. Having a financial plan is always extremely crucial when determining whether or not you are going to be able to live by your means or end up struggling severely down the road because of your debt.

Make sure that you start saving money during college and planning for that time whenever you do finally graduate because that is the moment of truth and the time in your life where you will be responsible for paying back any student loans that you acquired during those years. Your debt is just that, it is your debt, nobody else is going to handle things for you, so be a grown up finally and handle your finances properly.

Debt Is Something That Can Completely Take Over Your Life

Debt is something that too many of us have to worry about day after day, feeling as though things might not ever get better some days. It is so very stressful wondering how in the world you could ever possibly find some debt relief and in many instances, it can cause depression, anxiety and even problems within a relationship or marriage. Throughout this article I want to discuss with you some more information regarding debt relief from collection agencies like Dynamic recovery solutions and how you can get it.

There are many options available for those of you who are completely flipping out each day just trying to make ends meet, feeling as if it will never get any better for you. Nothing positive is going to come your way if you do not decide to try and do something about it. Some choices are not easily made but in life, if you do not sacrifice when needed, things just might not get any better for you. We all want more information regarding debt relief, right! So, keep reading this article.

One thing that you could do if you are noticing that debt is controlling every aspect of your life is, start making some changes on the way you spend money, what you spend money on, how much you are spending and anything else within your daily routine that might need to be changed a little, to ease you from some of your financial struggles. Sit down and really give this a great deal of thought, instead of crying all the time, wishing, hoping and just waiting for something to change, without doing anything to make it happen!

Really pay close attention to what financial mistakes you are currently making that is helping to keep this debt burden on your shoulders at all times. Are you doing everything right, are you blowing unnecessary money on unimportant things, are you working hard enough to earn the money that it is going to take to clear up some of the debts that have collected over time? These are some questions that you all need to be asking yourself in order to begin the process of making corrections and different improvements in your life.

You also have the option of debt consolidation but make sure before you make any decision to do something such as this, that you are going through a legitimate company that is highly reputable. This decision needs to be one that is going to really help you financially. Ask plenty of important questions and really make sure that this is the best decision which will benefit you the most.

Get on the internet and do some research in your spare time, to find out more about debt relief, as well as different little things you can do on your own to try and help out with your stressful financial situation. Anybody can run into problems such as these and it can happen when you least expect it. Do not wait for it all to pile up so drastically that nothing could possibly be done about it, do something now!

Debt Harassment Phone Calls

No one likes coping with persistent calls collection agencies, particularly if you and your creditor cannot reach a settlement. However, so if you are harassed by creditors and therefore are hounded with threatening cell phone calls, a line may be crossed and also you need to make a change. If you are called by a number search this database to find out who is making those harassing phone calls. Debt collectors are famous for applying dirty ideas to get what they desire. Some are in fact trained to focus on friends, neighbors, relatives, and categories of delinquent borrowers simply to embarrass the borrower into paying up. Continue reading

Debt management

Debt management is vital for individuals and organizations aiming to keep their bills in order, and pay off the invoices in the most effective and timely manner possible. One of the key principles with debt management is usually to prioritize your finances based on their significance, payment time lines, as well as the ability of the people or organization to repay them. During the process of prioritizing your finances, payment time lines to your particular debts is usually the most important factors in determining which debts you’ll pay first, in addition to allocate by far the most funding for. If possible, order debts so that by far the most overdue debts receive first priority, that helps to serve the intention of preventing the payment of varied charges that could certainly accumulate like a debt ages. Allocate your funding and seek to spend as many of by far the most overdue debts as is possible, that will to buy time for you to repay some of greater current and overdue debts inside a more timely manner. Continue reading

Medical Debt Harassment

Several class action lawsuits have recently been filed against medical providers, and their contracted collection agencies and law firms. It’s likely that the filing of these class action lawsuits will have a serious impact on the collection industry—including attorneys, collection agencies, and large medical providers which use collection agencies (like Dynamic Recovery Solutions)—regardless of how the suits fare in court. Continue reading

The Deceitful Practices Of Collection Agencies

Unscrupulous debt buyers and collection agencies (like Dynamic Recovery Solutions and Allied Interstate)are finally meeting widespread resistance, from the people they ruthlessly pursue and a growing number of consumer rights attorneys. In Spokane, Washington, a group of consumer law attorneys have been joining together to represent people being sued (and often jailed) over debts which are often flawed and fraudulent. Continue reading