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.