|
Author: Alan Barnes Article source: http://www.consolidatemybill.com/. Used with author's permission.
Personal bankruptcy is a legal way to give people with overwhelming debt a fresh financial start. Many people do not realize that there are five types of bankruptcy options available under the U.S. Bankruptcy Code; however, for most consumers there are really only two viable options; Chapter 7 and Chapter 13 bankruptcy.
Chapter 7, bankruptcy is entitled Liquidation: In a Chapter 7 bankruptcy, a court-supervised procedure occurs during which a court-appointed trustee collects the assets of the debtor's estate, converts them to cash for repayment, and makes all necessary distributions to the debtor's creditors; however this is all done within the debtor's right to retain certain exempt property. Traditionally, there is little or no nonexempt property in a chapter 7 bankruptcy. Due to this fact, there may not be an actual liquidation of the debtor's assets. In this case, it is called a "no-asset bankruptcy." It is important to realize that a creditor that is trying to collect on an unsecured claim will only get a distribution from the bankruptcy estate if the case is an "asset bankruptcy" and the creditor can provide proof of their claim with the bankruptcy court. In almost all chapter 7 bankruptcies, the debtor will be grated a discharge that releases them of personal liability for most dischargeable debts. The entire process normally takes just a few months from the time the bankruptcy petition is filed.
Chapter 13, bankruptcy is entitled Adjustment of Debts of an Individual with Regular Income: A chapter 13 bankruptcy is traditionally used for people who have a regular source of income or a full-time job. For many people, chapter 13 is preferable to chapter 7 because it allows the debtor to keep some assets. A chapter 13 bankruptcy allows the debtor to repay creditors over time. This time traditionally varies from three to five years. This type of repayment proposal takes place at a confirmation hearing. During this confirmation hearing, the court will either approve or disapprove the debtor's repayment plan. This decision largely depends on whether the repayment plan meets the Bankruptcy Code's requirements for confirmation. In a Chapter 13 bankruptcy the debtor is usually able to remain in control of their possession and property while making payments to creditors; however, payments are made via a court trustee. Unlike chapter 7 bankruptcy, the debtor does not receive an immediate discharge of their debts. Under chapter 13 bankruptcy, the debtor must complete the repayment plan before the discharge is granted; however, the debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect.
It is important to remain cognizant of the fact that not all debts are discharged under bankruptcy. The debts that are able to be discharged will vary under each chapter of the Bankruptcy Code. However, the most common types of non-dischargeable debts are tax claims, debts that are not presented by the debtor to the court while filing for bankruptcy, debts for spousal or child support or alimony, debts to governmental units for fines and penalties owed to government entities, debts for personal injury caused by the debtor's operation of a motor vehicle while driving intoxicated, debts for willful and malicious injuries to person or property, debts for government funded or guaranteed educational loans, and debts for certain condominium or cooperative housing fees.
In order to file for bankruptcy, you must file a petition in federal bankruptcy court. You must file a statement of assets and liabilities as well as schedules listing of your creditors. Once you have finished filing bankruptcy, your creditors can no longer take action against you to collect discharged debts.
Negative Aspects of Bankruptcy
In chapter 13 bankruptcies, you may end up paying back 50% or more of your current debts. Additionally, if you miss a regularly scheduled payment at anytime during your chapter 13 bankruptcy repayment plan, you could end up in violation of the court and forced to repay all the debt!
One of the most difficult parts of bankruptcy is learning to live with the fact that filing bankruptcy limits your personal spending to items that the court considers absolutely necessary. In most cases, debtors do not complete their chapter 13 bankruptcy repayment plans. Most people filing chapter 13 bankruptcies think they will be able to complete their repayment plan; however, only about a third of them actually do. Additionally, chapter 7 bankruptcy may stay on your credit longer than a chapter 13 bankruptcy. This time ranges from 7-10 years for most people. Many people do not realize that if you own a home with a sizable amount of equity, have a fair amount of assets to protect, or have co-signers on a loan, you most likely will not be able to file chapter 7 bankruptcy under current law. Now that the new bankruptcy legislation has passed, it will be even more difficult to file for bankruptcy.
Many people think that filing bankruptcy is the silver bullet that will fix all of their debt and credit related problems; however, filing bankruptcy is the worst thing you can do to your credit. Most lending institutions will consider your bankruptcy when evaluating you for a personal loan even after the bankruptcy has expired. Qualifying for a loan after filing for bankruptcy can be very difficult and could cost you considerably more than a person that has not filed for bankruptcy.
It is understood that some situations will require you to file for bankruptcy. However, you should avoid bankruptcy if at all possible. A good debt settlement company can help eliminate most, if not all, of your unsecured debt so that you do not have to file for bankruptcy. If you require additional information on the subject of bankruptcy you may want to contact a bankruptcy attorney in your area. Alan Barnes
IAPDA Certified Debt Arbitrator
President and CEO of Debt Regret
http://www.debtregret.com
Authentic Success
A More Effective Way I own a stack of self improvement books ten feet tall. Achievement seminars I've attended number in the dozens. I had been trying to improv...
Telecommuting Interview Tips
Interviewing for a telecommuting job is different then an offline job. Here are some tips of what to say, what not to say and other tid bits.
Healthy Eating At Fast Food Places - Are You Kidding Me?
Is it possible to eat healthfully at a fast food restaurant? The big name chains, such as McDonald's, Wendy's, Burger King, and Taco Bell want you to think so. ...
Where To Get Money For a Franchise Idea
Got a Business Idea. Do you need money or start up capital to put your business plan into action. If you're like most who are seeking opportunity and wealth and...
What Is A Destination Wedding Dress?
What exactly is a destination wedding dress? It is a trendy, sensible, cost effective alternative to the traditional wedding gown.
Long Distance Love
Before the advent of the internet, long-distance relationships were rare. Most people met their mates in school, through a friend or neighbor, at a party or in...
Making Sense of Cellular Phone Minutes
Cellular phones are different from your land-line home phone in that you'll need to determine in advance how many minutes you'll use in any given month. Decidi...
Priority and Goals: The Importance of Direction
We can't get where we want to be without an accurate map. Here are some simple steps that can help you be on your way toward your goals.
Are You Watching Too Much TV?
Many folks tell me that they just don't have time to be organized. As old saying goes-one will always find time to do what they want to do. I am a firm believ...
Teach Children The Skills Of Optimism
Optimistic thinking is a skill that all children can learn. But what are the basics of optimism and what are the first steps to teaching it? This article gives ...
From Spyware with Love!
Its late. You've been scouring the web for that perfect present for your Aunt Bess in Idaho.
Will Science Get Closer To God Than Religion Has?
Spirituality has been a subject of debate for thousands of years. Science, though, has been reluctant to tread this field with any enthusiasm. In the future, wi...
Allergy Approaches through Lifestyle
What we do is just as powerful as what we eat to keep ourselves operating at our very best health. This applies to taking care during allergy season as well. So...
Productivity at Home
Productivity at home makes time available for other activities. For many homemakers, that has opened up an opportunity to earn an extra income and improve the f...
Chamber Of Commerce Meetings
If you run a small business you should be a member of the local chamber of commerce. Most cities which 50,000 people in them have 5000 small businesses. Yet the...
Troubadours
Pythagoras and Chretien de Troyes are part of the tradition which the Cathars kept alive.The Harmonic studied by Pythagoras is part of the Lost Chord and String...
The Nuts And Bolts Of Traffic Exchanges
Traffic Exchanges. What are they? How do they work? What do they do? First of all, a "Traffic Exchange" is exactly that, a way to exchange traffic, a way to get...
Relationship Problems Begin With Poor Communication
Many relationship problems often begin with poor communication. Many couples often feel that their partner should know what they are thinking and do not communi...
Adjustment DENIED
Marketing is a process of doing business, and they were not doing the process in a manner that supported returning customers. Return customers are a fundamenta...
Avoiding Tilt While Playing Online Poker
Advanced strategies to avoid going on tilt while playing poker both online and off.
Reviving Vitamin E Studies That Challenge Claims of Wonder Supplement Also Leave Openings
Vitamin E had been considered, at worst, harmless. People take anti-oxidants because they want to live longer. Researchers acknowledged several potential in t...
How Did This Happen to Me? Top 10 Ways to Get Spyware or Viruses on Your Computer
If you use the internet, you have probably been infected with a virus, trojan or spyware. Many people want to know what they did to get infected. Unfortunately,...
Hyperfocal Focusing: What Is It And Why Should You Use It?
Sometimes when shooting a photograph, you want everything sharp from the front to the back of the scene. Setting a small aperture such as f/16, f/22 or even f/3...
Use Events to Market on the Internet
Having difficulty knowing what to offer people online? Worried that your prospects are too bombarded by sales pitches to pick yours out from the hundreds they ...
|
Print this page