Some Answers To Basic Bankruptcy Questions

If you're in debt over your head, and your job is not looking too secure, or if you've lost your job, filing bankruptcy can seem like a way to stop creditors, get rid of your debts, and move on with your life. Here is some basic bankruptcy information which can help explain more about how to file for bankruptcy.

Declaring bankruptcy is a way to clear your financial slate, and start fresh. That is the purpose of federal US Bankruptcy laws. There are bankruptcy around the United States, and you would file in a district near you. Usually your involvement with a bankruptcy judge will be fairly limited. For example if you file for chapter 7 bankruptcy, you likely won't have to appear in court and you won't see the bankruptcy judge except in a case where an objection is raised within the case by a creditor or other party.

For chapter 13 debtors, you may only need to appear in front of the bankruptcy judge one time, at a plan confirmation hearing. Normally, the only proceeding where you must appear as a debtor is at the meeting of creditors, and this meeting usually is held at the local office of the U.S. bankruptcy trustee. The debtor attends this meeting so that creditors can question the debtor about debts and property, but note that normally most creditors do not even appear.

There are six basic types of bankruptcy cases in the Bankruptcy Code, but for individuals, the two major types are Chapter 7 and Chapter 13.

Chapter 7, which is called Liquidation, is a type of bankruptcy where the trustee will take over your assets within your estate, sell them for cash, and then distribute the cash to your creditors. In some cases, you have a right to keep certain exempt property and also there are rights of secured creditors who can take back the asset. In nearly all chapter 7 cases for individuals, you will receive a discharge that releases you from any future personal liability for your dischargeable debts. Normally, you will receive a discharge within a few months after your petition is originally filed. With the new bankruptcy laws in the Bankruptcy Abuse Prevention and Consumer Protection Act enacted in 2005 there will be a "means test" which determines whether you qualify for relief under Chapter 7. For example, if your income is higher than certain limits, you may not qualify for bankruptcy under Chapter 7.

Chapter 13 is called Adjustment of Debts of an Individual With Regular Income, and is
designed for individuals who have a regular source of income. Many times, a debtor prefers Chapter 13 to Chapter 7 because it will allow you to keep certain valuable assets, such your home, and because it allows you to create a repayment plan to repay creditors over time, usually three to five years.

Chapter 13 is also available to consumer debtors who don't qualify for chapter 7 based on the means test. There is a confirmation hearing where the bankruptcy court will either approve or disapprove your repayment plan, depending on whether it meets the Bankruptcy Code's requirements. Chapter 13 is different from chapter 7 in that as a chapter 13 debtor you will usually retain possession of the property within the estate, and you continue to make payments to creditors through the trustee, based on your expected income throughout the life of the plan. Unlike chapter 7, you do not get an immediate discharge of your debts. Instead, you must complete the payments as required by the plan before you can receive a discharge. In the mean time, while making payments you are protected from lawsuits, garnishments, and other creditor actions.

Filing personal bankruptcy under Chapter 7 bankruptcy laws or Chapter 13 bankruptcy laws requires detailed information. It's best to seek the help of a bankruptcy lawyer or credit counselor who can provide professional advice and bankruptcy information about all of your options.

Can Bankruptcy Stop Foreclosure?

So many Americans today are facing financial trouble, and that means they are in danger of losing the one thing they worked so hard for - their home. Many times, when facing foreclosure, a homeowner may consider bankruptcy, as there is a myth that bankruptcy can help stop your foreclosure. Here are some points to think about.

First, there are two kinds of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy mans you do not have the money to pay your debts, and your assets are sold to pay your debt, and your unsecured debt is discharged. In a Chapter 7 bankruptcy, you are in danger of losing your home., While your mortgage lender is temporarily stopped from proceeding with foreclosure steps, eventually the bankruptcy court will probably allow them to proceed to sell the house, if you can't make the mortgage payment.s Sometimes, having some time to put off the foreclosure can be a reason to file for personal bankruptcy, but it's not necessarily going to save your home.

Then there is Chapter 13 bankruptcy. This type of filing requires you to set up a repayment plan for your debt. The court will oversee your plan and approve it, and under Chapter 13 you can probably keep making payments on your home and keep it. However without that plan, or if you can't make payments, you will likely lose your home.

In just a very few states, such as Florida, the state bankruptcy law will provide that you can keep your primary residence. Some high profile bankruptcies, like that of O.J. Simpson, are probably responsible for the myth that you can always keep your home in bankruptcy. But this is not the case in most states, and it will depend on your home state's law. BEst to check with a bankruptcy attorney to be sure.

You might be stuck in pre-foreclosure hell, where your lender is starting or is threatening to start proceedings, you are desperate and trying to find out if you qualify for the new government programs. You want to do everything you can to keep your house out of foreclosure including file for bankruptcy. Or, you might be worried about forfeiting a car loan in bankruptcy, especially if it's your only way to get to work to earn money to pay your bills. When you're in bad financial shape, bankruptcy starts to look like a life saver. But remember - bankruptcy will cost you upwards of $2,000 for legal and court fees, as well as make it possible take longer to qualify for credit for some time. Some people do not think that's a bad thing, since often bad credit habits got you here in the first place!

Your credit score after bankruptcy might not be much worse than before, but your bankruptcy credit score and your foreclosure credit score can have different results. Bankruptcy lasts longer on your credit, and can be harder to overcome when getting new credit - lenders won't just look at your score, but also the fact that you filed for bankruptcy.

If you can't get your mortgage lender to work with you on revising your mortgage and loan repayment, then you may have to consider bankruptcy. But remember that it is not a guarantee of keeping your home.

You really should talk to both a bankruptcy attorney and a credit counseling agency, which you will have to do before filing bankruptcy anyway. Calculate how your income, expenses and debt will impact your future financial decisions. You may have to choose between saving your home and protecting your credit score. In such a case, whether your bankruptcy credit score or your foreclosure credit score is more important will be up to you.

Where To Turn For Bankruptcy Help

Thinking about bankruptcy but not sure? You need to know where to turn for bankruptcy help to make the right decision for yourself and your family. Help can come from friends, professionals, websites and books, but how do you know which is the right information?

There are plenty of excellent sources of information on bankruptcy that can help you. There are many books for example written by lawyers which explain in detail the process of filing for bankruptcy and everything you need to think about before filing. You can also find books to explain how to file bankruptcy on your own, which while it's not recommended, is possible if you cross all the t's and dot all your i's.

You can also find plenty of websites, like this one, with information telling you your different choices and options when it comes to bankruptcy. They can also explain more about how bankrtupcy works, what you can do to avoid filing for bankrtupcy, and what might happen afterward, depending on your situation.

Still, the more information out there, the more confusing and difficult it can be to decide what exactly you should be doing. Making things even more confusing is that each person, each family, will have a different financial situation, different income capacity, and different debts and obligations, so there is no one size fits all solution. So where do you begin to get the bankruptcy help you need?

First, it's probably best to rely on professionals and not ask friends or family for advice or information. Next, don't be afraid to take the time to read and review many sites and books.

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With so many Americans out of work, and so much debt being accumulated over the years, bankruptcy starts to look like the only way to get creditors to stop calling and get out from under a financial burden that can be overwhelming. But a big question people ask is what are the negative effects of personal bankruptcy? Is it worth it to file bankruptcy if you just continue to have credit problems?

Under current bankruptcy laws, if you are working, you are more likely to file a Chapter 13 bankruptcy, which helps craft a repayment plan for your creditors and does not wipe your credit slate clean. Once you are on the plan, however, the creditors have to accept the terms and can't keep dogging you for payment. But you will have to repay your debts over the course of several years.

For others who are out of work and are facing a difficult job market, a Chapter 7 bankruptcy, where your debts are discharged, coudl be a possibility. Some debts like student loans or tax liens are not dischanged, but unsecured debts can be eliminated.

For secured debts, however, such as cars and homes, you could be forced to sell or return the property to the creditor, depending on your state. Contrary to popular belief, only in some states is your home protected from foreclosure if you file bankruptcy. If you are working through a Chapter 13 repayment plan, you might be able to keep your home if it is clear you can continue to pay your mortgage.

Keep in mind that a bankruptcy will stay on your credit report for ten years, and is worse than simply having delinquent debts. It may take several years of current payments after a bankruptcy in order to be able to qualify for credit once more. In today's difficult economy however, getting credit is nearly impossible anyway. It's best to check with a bankruptcy attorney before declaring person bankruptcy to see whether or not it is right for you.

After Chapter 7 Bankruptcy, What Happens Next?

Well you decided to file bankruptcy under Chapter 7, and a few months and a few meetings and a couple thousand dollars later, your debts are now discharged. What happens next to your credit, and what can you do after Chapter 7 bankruptcy to rebuild your financial life?

The idea behind a Chapter 7 filing is to give you a fresh start. If you were able to file Chapter 7, it's likely that you don't have a regular source of income, since anyone with income may be moved into Chapter 13 to repay some debts within a bankruptcy plan. So, if you now find yourself after Chapter 7 bankruptcy discharge, you probably need to consider how to get some significant, regular income coming in, and figure out how to pay any debts that were not discharged in your bankruptcy.

For example, if you had any student loans, you will still be responsible for those. So, you may want to talk to your loan servicing company to see if you qualify for any kind of hardship forbearance, or other way to pay less on your monthly payments. You want to try to keep these current though. At this point, you may not easily be able to get any other credit due to your filing, and these student loans will help you by giving you something current to appear on your credit report. So don't let these payments get behind!

You may want to start getting credit again, to try and rebuild your credit file. But it will be hard to get lenders to approve you with the bankruptcy on your file, and also if you have no regular income. Getting that regular income is of primary importance right now. Try everything you can think of to get back into a job. And don't jump too quickly into another credit nightmare either. Learn to live within your means by using a monthly budget, and learn to get past the desire to buy whatever you want, based on your old credit card habits. Remember that buying things on credit means you can't really afford it anyway, or you wouldn't need the credit!

After Chapter 7 bankruptcy, you now have a clean slate, and you should make the most of it by fixing your financial resources, getting steady income in place, and working to pay any left over debt on time. Everything else can wait until you are successful in building back your credit by paying on time the debts you still have.

After Bankruptcy, Then What?

Once you file for bankruptcy, you'll have some credit matters to deal with. For some of these issues, you should consider them before filing, if possible. When you have a bankruptcy on your credit report, it will stay there for ten years. Unlike other credit, which drops off after just seven years in most cases, your bankruptcy past will follow you. It also will mean you can have credit trouble even if your credit score rises again. Bankruptcy credit report flags can cause serious credit problems for you.

Just a few years ago, it was relatively easy to get credit cards after bankruptcy, since lenders were willing to take a lot more risk, and poor credit risk customers could be charged much higher fees. After bankruptcy, a debtor's file would usually be wiped clean, so without other debts to pay, a debtor was considered worth at least a risk. That is not true today. Now that the economic crisis has hit mainstream America, with more people losing jobs, or having to deal with lots of debt piled up over the last five to ten years, creditors - banks and other lenders - are afraid to hand out credit the way they did in the past.

The same was true of loans after bankruptcy. While you might have had trouble getting an unsecured personal loan, you might have been able to get a car loan after bankruptcy, since borrowers are less likely to default if they need to have a car, and the lender could always get the car back if the borrower didn't pay. But today, even secured loans re difficult to get approval for after bankruptcy.

When a lender looks at your bankruptcy credit report, it might not be an issue of your credit score being low. Even before you field, it's likely that you were struggling to pay debt on time, and your score was already low. However, if you had paid off the debt, the effort to pay debt back looks better to a lender than walking into bankruptcy court and blowing away debts from multiple lenders at once. Even if several years go by and you're able to rebuild credit after bankruptcy, remember that you score is not the only thing the lender will look at. They will also see the bankruptcy itself, and that will count against you.

If at all possible, you should consider alternatives to bankruptcy before you file. However, once you have filed, you can still rebuild credit after bankruptcy, and even possible qualify for some credit. It can take a few years however, so you need to be patient. Work to repay whatever debt you still have, such as student loans, on time. Don't give up trying to find secured debt, like auto loans, even with bankruptcy on your credit report. Talk to your bank about setting up a small secured loan, where you put $1,000 in a savings account, and get a loan against that deposit, to establish good repayment history.

What Affordable Bankruptcy Options Are Out There?

When you first decide to file for bankruptcy and start calling bankruptcy lawyers, you'll fin out right away that filing for bankruptcy is not cheap. It starts at about $2,000 for legal fees, plus there can be hundreds of dollars in court filing fees. If you're already broke and planning to file bankruptcy, where do you come up with a couple thousand dollars? you do have some bankruptcy options to choose which can help you reduce the cost or avoid it altogether.

To start with, the cost of bankruptcy includes the lawyer fees, court filing costs, and any other extras the lawyer needs to charge, for example copies, or overnight packages to the court. when you first meet with your bankruptcy attorney, make sure you understand what those extra expenses are, and what are fees and what are the court costs.
After seeing that huge expenses, you might be inclined to find out where you can find a cheap bankruptcy option, or even if you can prepare a do it yourself bankruptcy. It's not likely you can find a discount on bankruptcy fees from lawyers, as the process is pretty paperwork intensive, and there is generally a rate that most lawyer will charge. So if someone offers to do it for you cheaply, you should be concerned about whether your paperwork will be done correctly and on time.

As for a do it yourself bankruptcy, it has never really been easy, since there is so much documentation to be done for each case. Lawyers have software programs that they can use to enter all your financial data and spit out the forms. When you are doing it yourself, you will have to type all the forms by hand, and know which form is which. The process also got a little more complicated after the bankruptcy laws changed in 2005. Now, you have other requirements, such as going to credit counseling prior to filing, that you need to be aware of. However, if you feel up to the challenge, there are some books on How to File for Chapter 7 Bankruptcy which will help walk you through the process of filing bankruptcy yourself.
However, there are other bankruptcy options which include not filing at all. Avoiding bankruptcy is the cheapest bankruptcy alternative there is! How do you decide when to file bankruptcy? Bankruptcy can help most when you have so many debts that your total debt is greater than your annual salary. For example, someone making $50,000 per year, who has $60,000 in debt, is going to have trouble paying that back. It's possible though if you get on payment plans with your creditors.

If you are employed, filing bankruptcy today is more likely to require that you file Chapter 13, which allows you to keep some property and pay your debts over three to five years. In other words, it's not a slam dunk that you will get all of your debt wiped clean. This could be a good thing if you are trying to keep your house out of foreclosure, for example. If you are likely to have to file Chapter 13, why not try to work with your creditors to create a debt repayment plan before you spend thousands on a bankruptcy lawyer?

If however you do not have a regular income, a bankruptcy Chapter 7 filing would allow you to discharge, or wipe away, most of your debt. Without income, though, you might also consider just not filing bankruptcy either, unless you have assets you want to try to protect. For example, if you have a car loan, and you file bankruptcy, unless you reaffirm that debt, or agree to pay, you will lose your car in bankruptcy. could you instead work out a revised payment plan with the lender? The same is true for your home; if you do not have the ability to pay the mortgage then either in Chapter 7 or Chapter 13, and can't work to refinance your mortgage, you may be forced to sell your house.

Finally, you want to consider your credit and bankruptcy. If you file bankruptcy, most lenders will consider that a very big red flag for many years to come. It stays on your credit report for 10 years. Unlike just past due accounts, bankruptcy is more serious, and even if your credit score rises, the mere fact that there is a bankruptcy on your record could lead many lenders to just turn you down for credit.

Keep in mind that most bankruptcy lawyers will meet with you in an initial meeting for free or low cost. You should talk with a professional before deciding what to do, and learn if you have any alternatives to bankruptcy that will not cost thousands of dollars.