|
Author: Christopher Cooper Article source: http://www.online-loans-pro.com/. Used with author's permission.
Most American consumers are living too close to the edge. They are carrying too much credit card and mortgage debt and have too little in the way of savings. When the inevitable unexpected crisis comes along, they have little left to handle it and quickly slip into a critical financial state.
According to many bankruptcy experts, most people file for bankruptcy due to life-changing experiences, such as a job loss, divorce or serious illness. Uninsured medical expenses are supposedly the cause of about 20% of bankruptcy filings. But excessive debt also plays a very large role.
If you are drowning in debt with little realistic hope of paying off your bills, bankruptcy is your only real option. Although far from pleasant, bankruptcy can be easier to handle than the constant pressure put on a debtor by lenders and collection agencies. You can immediately stop all harassment and legal actions, wipe out a good deal of your debt and get a new start on life.
The anomalies of credit scoring also work against debtors struggling to pay off debt. Your score will be low because of excessive use of debt and missed payments. You're unlikely to get new credit and the interest rates on your credit cards might be raised to usurious levels. You are likely to have a better credit score and find it easier to get credit - very expensive credit - after bankruptcy than before.
Also the stigma and embarrassment that used to accompany bankruptcy has largely disappeared. To many, it has become just another financial planning tool.
The Bankruptcy Procedure
Bankruptcy courts are part of the Federal court system. The bankruptcy law itself is a Federal law, although the states can have their own laws, which govern such things as exemptions. Federal bankruptcy judges apply both the Federal and state laws in the jurisdiction where they sit. Debtors sometimes have a choice of which law should apply.
Bankruptcy proceedings are commenced by filing certain required forms and paying a fee. Filling automatically stays all legal proceedings against you as well as all debt collection actions. Fees can be paid in installments, but must be completely paid before the dischare will be granted.
A trustee will be appointed. His job is to review your financial affairs, collect and sell assets, if necessary, and distribute the proceeds to your creditors. If you are setting up a repayment plan, he will be responsible for seeing it implemented. He will even pursue your debtors to collect money owed you that can be used to pay off your creditors.
The trustee's powers include the power to set aside preferential transfers made to creditors within 90 days before the filing of the bankruptcy petition, the power to undo security interests and other transfers
of property that were not properly recorded under non-bankruptcy law at the time the petition was filed and the power to pursue claims such as fraudulent conveyance and bulk transfer remedies available under state law.
He also holds meetings which are attended by the debtor filing for bankruptcy and his creditors. This is probably the hardest part of the whole proceedure for most people.
The trustee will question the debtor about his financial affairs and go over his financial records to determine that all assets have been disclosed and that no fraud is being perpetrated on the court.
Attorneys for the creditors are also allowed to ask questions about your expenses and assets.
The trustee will also instruct you on other alternatives and lecture you on the proper use of credit.
He will then issue a report the bankruptcy judge will use in deciding whether to dicharge your debts and which debts are to be included.
A debtor is unlikely to ever meet the judge. In a Chapter 7 case, the debtor will not appear in court unless an objection is made. In a Chapter 13 case, the debtor might have to appear at a hearing approving his repayment plan.
Most of the work will be done in the trustee's office.
What Debt Can Be Discharged?
Not all debt can be discharged by a bankruptcy court.
A bankrupcy court cannot discharge debts arising from alimony, child maintenance and support obligations; certain taxes (including the last three years income taxes); debts for educational benefit overpayments or federal student loans; debts for willful and malicious injury; debts for death or personal injury caused by the driving while intoxicated from alcohol or other substances; and debts from criminal restitution orders.
To the extent that these types of debts are not fully paid by the sale of assets during during a Chapter Seven case or not fully repaid during a Chapter Thirteen case, the debtor is still responsible for them after the bankruptcy case has been concluded.
Other debts may or may not be discharged. Debts for money or property obtained by false pretenses, through fraud, embezzlement or misuse of funds while acting as a fiduciary; debts for willful and malicious injury to another entity or to the property of another entity; and debts arising from a property settlement agreement incurred in connection wth a divorce or separation are discharged, unless a creditor convinces the court to have such debts declared exempt from discharge.
If you can't get at least half of your debts discharged, it's not worth the effort. Chris Cooper is a retired attorney who has spent several periods of his life deep in debt. At http://www.credit-yourself.com he tries to pass on some of the knowledge he picked up in his journey to become debt free.
Quick Tips to Resolving Depression with Hypnosis Cds
Quick and easy tips to help you come our of depression. Just take these tips and choose the one that appeals the most to you. Then come back and do the next one...
PR: Advice You Didnt Ask For
Although, as a business, non-profit or association manager, you may be glad this came your way. Especially if your current public relations effort is deliverin...
The Myth of the Earnings Yield
Abstract A very slim minority of firms distribute dividends. This truism has revolutionary implications. In the absence of dividends, the foundation of most -...
Tsunami Day
Many gazed in wonder before their world was torn asunder
when the massive wall of water reached the shore
They, uncomprehending that the life they knew was endi...
Free Web Site Traffic - 10 Ways
You don't have to just sit there and wait for free web site traffic. There are ways to generate it starting today.
Thou Shalt Not Judge
How many times have you been judged? "Did it feel good?", or, did you want them to just accept you. How does GOD feel about this?
Smoke
Life is about setting priorities. Are yours set on the truly important things, or are they just grasping at smoke?
Babies Born During The Sign Of Gemini
If you have a baby due between May 21 and June 20, he or she will be a Gemini. An article about babies born under that sign.
Shift Happens
Did I spell that right? What I mean is change happens. Like what we are seeing now in the stock market. In the Spring everything was headed down. For most of th...
Product Marketing for Home Based Online Businesses
Product marketing for your home based online business is essential for your success. Here are some suggestions to market your web page affordably.
Penile Dysfunction
Penile Dysfunction-Does yours work? I have found there are alot of men out there that just need a little help with this problem. Some complain of it not workin...
Voice in Narrative and Dialogue - A Contrast of Writing Styles
One of the nice things about being an author is that we can break any rule we want. (I just did.) It's part of our job description. Language changes through usa...
Mortgage loans: Are No Cost Loans Really at No Cost?
When refinancing, beware of the common pitfal of the "no cost loan". If not careful, you could end up several thousand dollars more in debt than before you ref...
The Cheapest Christmas Ever!
A Christmas with no bills!
How to Improve Your Search Engine Positioning and Increase Traffic Today
Tips, Tactics, and Secrets for Achieving Search Engine Success
Is Your Life in Balance
As a professional speaker, one of the topics I often speak on is "Is Your Life In Balance?", so I thought I would talk about Balance in this article.
How to Write Testimonials that Sell CDs Like Magic
"Which is your best CD?"
Selling Investment Houses: Props & Profits
New Marketing and Design Psychology ideas help you stage homes for sale to motivate buyers and generate top dollar.
Earn Money Now from Selling Childrens Items on Ebay
Selling for a profit on eBay is easy when you have kids. People are earning hundreds of dollars a month by selling kid related items. Here are some general idea...
Quality Graphics for your Web Site
For most people graphic design does not come easy. Unfortunately this is why there's an abundance of shall we say "struggling websites." At best, most are les...
Top Ten Things to Do to Make your Signature File Sell
Always include a powerful signature on every email you send out, even to friends. It's even more important when you send out articles to opt-in ezines (no spam)...
Becoming A Digital Artist On A Budget
So, you want to become a digital artist but paying several hundred dollars for Photoshop seems too much. Don't worry, there are dozens of very inexpensive tools...
Roulette - An Easy Method
Here is an easy method that just may help you win big at roulette.
How to Beat the Winter Blues
If your mood begins to fall as soon as the weather turns cold, don't miss these natural tips to brighten your mood and beat the winter blues this season.
|
Print this page