What is Bankruptcy?
Filing a bankruptcy petition is the declaration of one's inability to pay back loans or debts. It's also a plea to the bankruptcy court for legal assistance and protection. Bankruptcy is found right in our Constitution, and after dealing with Great Britain's oppression and debtor's prisons, bankruptcy still exists today to provide Americans a "Fresh Start."
There are now various different forms of bankruptcy designed to be used in a variety of situations. These different forms of bankruptcy are referred to as "chapters" after different-numbered chapters found in the statutes of the bankruptcy laws. Some of the most frequently filed forms of bankruptcy include Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 can be filed by individuals. Under this chapter, a person's assets over a certain amount are sold and the money raised by the sale is used to pay back creditors. But, in exchange for selling excess assets, Chapter 7 Bankruptcy generally wipes clean a person's credit slate. Usually, the goal is to get a Fresh Start and possibly an opportunity to rebuild responsible credit. However, a notation may stay on the person's credit for about ten years. So, reestablishing credit should always take a second or more distant seat when considering bankruptcy. The promise of Bankruptcy is not to get new credit, but to relieve oneself of the crushing stress of old credit.
What is Chapter 13 Bankruptcy?
Chapter 13 is another popular form of bankruptcy. Individuals are able to retain most if not all of their assets while their debts are adjusted to affordable repayment levels. It is important that individuals who need to file a Chapter 13 Bankruptcy have a fixed and steady income with which to affordably repay debts. Filers will have a period of time to affordably repay their debts and get their finances under control. For most individuals, the time permitted to repay is three or five years. Chapter 13 Bankruptcy is complex, and an experienced bankruptcy attorney can help make the determination.
What are the Differences Between Chapter 7 and Chapter 13 Bankruptcy?
Both forms can be filed by individuals, and they will both have a negative impact on future ability to obtain credit; however, there are some key differences to be aware. The main differences are the control of property and assets and the length of time for court involvement. Under Chapter 7 Bankruptcy, individuals give up their rights to excess property and assets and can get out of bankruptcy quickly. In a Chapter 13 filing, the individual will generally get to keep control of his or her property, but be under court supervision for a longer period of time. Additionally, the individual will work with the court to propose an affordable repayment plans in which to pay debts over time. The quicker and decisive fashion of Chapter 7, sometimes called Straight Bankruptcy, and the more controlled but longer periods of court involvement are the main differences between these two popular forms of bankruptcy.
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Tuesday, 28 August 2012
When Is The Time Right for Filing Bankruptcy?
When enduring financial hardship one might wonder when bankruptcy filings might be right for them. The Federal Trade Commission states that bankruptcy is a last resort. The Department of Justice requires that one undergo credit counseling before they are allowed to file. And according to the U.S. Bankruptcy Code there are two ways to file personal bankruptcy, Chapter 7 and Chapter 13. A qualified attorney can help a client determine which is more suitable. Many attorneys offer a free or low cost initial consultation. Just be sure to investigate the private attorney you choose. Look them up on line, view there reviews you can even ask your friends. Local attorneys are the best so you do not have a problem meeting with then to as any questions you may run into.
When the last resort arrives one should file if these measures have been explored or attempted and you are still sinking.
•Always make sure to pay the most important bills first like rent, mortgage, and car payments. Credit card bill collectors may be very aggressive, but put them off before being evicted or foreclosed. And one can't work if their car is reposed. Most attorneys do not want to be bothered with small questions. Just be sure you find one you are compatible with. Can speak freely about your problems and get advise you need.
•Scrutinize the budget with a credit counselor
•Don't be sucked in by newspaper and radio ads claiming they will eliminate your debt warns the FTC. One of the many warning signs of a scam is that the company requires up front fees. Another caution is sometimes nonprofits build into their fine print voluntary donations which amounts to the same as an up front fee, so read the small print carefully. Look over the FTC website for other come ons.
•Negotiate with creditors. Some organizations will consider lesser amounts on balances. Others like the northeastern utility NStar have forgiveness programs under certain conditions, or revised payment plans.
•Carefully consider future credit standings. A bankruptcy will stay on ones record for ten years and bad credit will only stay for seven. However in many cases people who file already have irreparably damaged their credit, but if there is a chance for salvation take the seven years.
•Finally consult with a bankruptcy attorney. They may have working relationships with creditors. They can also determine if there are no other options.
A qualified lawyer will help one decide which Chapter is right for each client after considering ones present equity and financial position.
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When the last resort arrives one should file if these measures have been explored or attempted and you are still sinking.
•Always make sure to pay the most important bills first like rent, mortgage, and car payments. Credit card bill collectors may be very aggressive, but put them off before being evicted or foreclosed. And one can't work if their car is reposed. Most attorneys do not want to be bothered with small questions. Just be sure you find one you are compatible with. Can speak freely about your problems and get advise you need.
•Scrutinize the budget with a credit counselor
•Don't be sucked in by newspaper and radio ads claiming they will eliminate your debt warns the FTC. One of the many warning signs of a scam is that the company requires up front fees. Another caution is sometimes nonprofits build into their fine print voluntary donations which amounts to the same as an up front fee, so read the small print carefully. Look over the FTC website for other come ons.
•Negotiate with creditors. Some organizations will consider lesser amounts on balances. Others like the northeastern utility NStar have forgiveness programs under certain conditions, or revised payment plans.
•Carefully consider future credit standings. A bankruptcy will stay on ones record for ten years and bad credit will only stay for seven. However in many cases people who file already have irreparably damaged their credit, but if there is a chance for salvation take the seven years.
•Finally consult with a bankruptcy attorney. They may have working relationships with creditors. They can also determine if there are no other options.
A qualified lawyer will help one decide which Chapter is right for each client after considering ones present equity and financial position.
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Your Second Mortgage in Chapter 13 Bankruptcy
Let's be honest, this economy sucks. Ever since the financial collapse in 2008, it has been very difficult for a great many people. For many, the biggest problem is unemployment. Most people are 90 days away from filing bankruptcy because we require income to survive. Many people, most of whom never even considered bankruptcy, now must face a stiff choice.
If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.
Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.
You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.
So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.
The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.
For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.
All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.
Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.
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If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.
Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.
You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.
So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.
The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.
For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.
All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.
Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.
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Monday, 27 August 2012
What Is the Chapter 13 Repayment Plan?
Repayment Plans in Chapter 13 Bankruptcies
Chapter 13 is a specific type of bankruptcy that allows debtors to propose a plan for paying off their debts. This type of bankruptcy is best for those who have enough income to create a debt Repayment Plan. If a bankruptcy petitioner does not make enough income, or if the income is irregular, the court may not approve a Chapter 13 bankruptcy. Chapter 13 benefits debtors because they can keep personal property under the terms of an accepted Repayment Plan. It can be the most important component of a Chapter 13 bankruptcy.
Repayment Plan Terms
When someone files for bankruptcy, a Repayment Plan must be filed within 15 days of the filing of the bankruptcy petition. The Plan provides for regular fixed payments to a bankruptcy trustee, who then distributes the payments to creditors. Claims are given one of three statuses. Priority claims are debts given special treatment under bankruptcy law. Priority claims must be paid off in full unless the creditor agrees to a different payment arrangement. Secured claims are debts that have been secured by collateral. Unsecured claims are debts that have not been secured by collateral.
Secured and Unsecured Claims
Chapter 13 allows petitioners to keep certain property as long as they are making payments. Under this type of Repayment Plan, the bankruptcy petitioner must pay the creditor at least the value of the property. In some cases, these payments are made on the original loan repayment schedule. Unsecured debts do not have to be paid in full, but each creditor needs to receive as much as they would have received if the petitioner filed a Chapter 7 bankruptcy and liquidated his or her assets. Under a Chapter 13 Repayment Plan, a petitioner must pay all of his or her disposable income toward unsecured debts over a certain period of time. Disposable income is any income that is left over after all necessary and reasonable expenses have been paid. Necessary expenses include food, shelter, utilities, and child support payments.
Creditor Meeting and Confirmation Hearing
The 341 Meeting gives creditors an opportunity to protest, dispute, or seek changes to the details of the bankruptcy and/or the proposed Repayment Plan. The 341 Meeting typically involves the bankruptcy petitioner, his or her lawyer, a bankruptcy trustee, and representatives of creditors (not common). No more than 45 days following the 341 meeting, the bankruptcy judge holds a confirmation hearing. During this hearing, the judge decides whether the Plan meets legal standards and is feasible based on the petitioner's financial status. Creditors receive a notice of this hearing 25 days before it occurs. This will afford creditors a chance to object to confirmation of the Plan. If the judge confirms the Plan, the monthly payments received will be distributed to creditors by a Chapter 13 trustee. If the it is not confirmed, the petitioner may choose to convert the case to a Chapter 7 bankruptcy or to file a modified Chapter 13 Repayment Plan.
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Chapter 13 is a specific type of bankruptcy that allows debtors to propose a plan for paying off their debts. This type of bankruptcy is best for those who have enough income to create a debt Repayment Plan. If a bankruptcy petitioner does not make enough income, or if the income is irregular, the court may not approve a Chapter 13 bankruptcy. Chapter 13 benefits debtors because they can keep personal property under the terms of an accepted Repayment Plan. It can be the most important component of a Chapter 13 bankruptcy.
Repayment Plan Terms
When someone files for bankruptcy, a Repayment Plan must be filed within 15 days of the filing of the bankruptcy petition. The Plan provides for regular fixed payments to a bankruptcy trustee, who then distributes the payments to creditors. Claims are given one of three statuses. Priority claims are debts given special treatment under bankruptcy law. Priority claims must be paid off in full unless the creditor agrees to a different payment arrangement. Secured claims are debts that have been secured by collateral. Unsecured claims are debts that have not been secured by collateral.
Secured and Unsecured Claims
Chapter 13 allows petitioners to keep certain property as long as they are making payments. Under this type of Repayment Plan, the bankruptcy petitioner must pay the creditor at least the value of the property. In some cases, these payments are made on the original loan repayment schedule. Unsecured debts do not have to be paid in full, but each creditor needs to receive as much as they would have received if the petitioner filed a Chapter 7 bankruptcy and liquidated his or her assets. Under a Chapter 13 Repayment Plan, a petitioner must pay all of his or her disposable income toward unsecured debts over a certain period of time. Disposable income is any income that is left over after all necessary and reasonable expenses have been paid. Necessary expenses include food, shelter, utilities, and child support payments.
Creditor Meeting and Confirmation Hearing
The 341 Meeting gives creditors an opportunity to protest, dispute, or seek changes to the details of the bankruptcy and/or the proposed Repayment Plan. The 341 Meeting typically involves the bankruptcy petitioner, his or her lawyer, a bankruptcy trustee, and representatives of creditors (not common). No more than 45 days following the 341 meeting, the bankruptcy judge holds a confirmation hearing. During this hearing, the judge decides whether the Plan meets legal standards and is feasible based on the petitioner's financial status. Creditors receive a notice of this hearing 25 days before it occurs. This will afford creditors a chance to object to confirmation of the Plan. If the judge confirms the Plan, the monthly payments received will be distributed to creditors by a Chapter 13 trustee. If the it is not confirmed, the petitioner may choose to convert the case to a Chapter 7 bankruptcy or to file a modified Chapter 13 Repayment Plan.
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Foreclosure Alternative: Bankruptcy
As bankruptcy professionals, we hear all kinds of financial concerns. These days, in a down housing market, one of the biggest financial concerns that plagues most people is foreclosure. If you're struggling to make your mortgage payment every month, foreclosure can become a very real threat on the horizon. And, even if you're thinking about refinancing or adjusting the terms of your loan, the savings won't catch up with you for at least two or three years.
If you're struggling with foreclosure, you need a fix now
. Chances are, you probably have some other debts as well. If you're feeling burdened by debt and stressed about your impending foreclosure, then you have to know about preventing foreclosure with bankruptcy! It's a trick that's becoming quite popular. Thousands of people have done it successfully. Why not you?
The Type of Bankruptcy: Chapter 13
Any and all forms of bankruptcy stop collectors from harassing you about the debts you owe. However, some forms of bankruptcy are better than others when it comes to preventing foreclosure. Chapter 7, for example, is a form of liquidation bankruptcy. While it will prevent foreclosure for the short term, it's not a good long term strategy for preventing foreclosure.
Chapter 13 is going to be your ticket! If you have an income that would allow you to pay your mortgage if you didn't have all of those other financial obligations, then Chapter 13 is probably just the type of bankruptcy you
need!
When you file for Chapter 13 bankruptcy, you undergo debt reorganization. Under a court-appointed trustee, your debts will be reduced and restructured, making repayment more feasible. Meanwhile, as you work through eliminating your debts and attaining solvency, your foreclosure is put on hold. With your foreclosure on hold, you have the opportunity to continue to make payments on your mortgage!
Other Benefits
Of course, while preventing foreclosure might be the main focus of your efforts, it's worth mentioning all of the other benefits that come along with filing for Chapter 13 bankruptcy! Under Chapter 13, you'll finally get relief from all of those other debts that have been keeping you awake at night: medical debt, credit card debt, and more.
If you're feeling overwhelmed, talk to us about how we can help you get the financial peace that you deserve. Remember, the bankruptcy code exists for those who are suffering under undue financial hardship. Whether your debt is a couple thousand of dollars or a hundred thousand dollars, no amount is too big or too small.
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If you're struggling with foreclosure, you need a fix now
. Chances are, you probably have some other debts as well. If you're feeling burdened by debt and stressed about your impending foreclosure, then you have to know about preventing foreclosure with bankruptcy! It's a trick that's becoming quite popular. Thousands of people have done it successfully. Why not you?
The Type of Bankruptcy: Chapter 13
Any and all forms of bankruptcy stop collectors from harassing you about the debts you owe. However, some forms of bankruptcy are better than others when it comes to preventing foreclosure. Chapter 7, for example, is a form of liquidation bankruptcy. While it will prevent foreclosure for the short term, it's not a good long term strategy for preventing foreclosure.
Chapter 13 is going to be your ticket! If you have an income that would allow you to pay your mortgage if you didn't have all of those other financial obligations, then Chapter 13 is probably just the type of bankruptcy you
need!
When you file for Chapter 13 bankruptcy, you undergo debt reorganization. Under a court-appointed trustee, your debts will be reduced and restructured, making repayment more feasible. Meanwhile, as you work through eliminating your debts and attaining solvency, your foreclosure is put on hold. With your foreclosure on hold, you have the opportunity to continue to make payments on your mortgage!
Other Benefits
Of course, while preventing foreclosure might be the main focus of your efforts, it's worth mentioning all of the other benefits that come along with filing for Chapter 13 bankruptcy! Under Chapter 13, you'll finally get relief from all of those other debts that have been keeping you awake at night: medical debt, credit card debt, and more.
If you're feeling overwhelmed, talk to us about how we can help you get the financial peace that you deserve. Remember, the bankruptcy code exists for those who are suffering under undue financial hardship. Whether your debt is a couple thousand of dollars or a hundred thousand dollars, no amount is too big or too small.
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How Will Filing Bankruptcy Affect My Immigration Status?
People from all over the world come to the United States because they want to chase the American Dream. What is the American Dream? It means different things to different people, but mostly it boils down to being successful in their line of work and being financially independent. When our economy was booming a lot of people achieved this dream. However, during our current economic downturn a lot of people saw those dreams turn into nightmares. Houses that were purchased at the height of the real estate boom are now so far underwater that they are now practically worthless. Speaking to a bankruptcy lawyer to file bankruptcy seems like the only way out of the financial hole. A lot of immigrants have the same question before filing for bankruptcy: "What will filing for bankruptcy do to my immigration status?"
Filing for bankruptcy alone will not affect your immigration status. You must have committed a crime that is subject to deportation. Under 8 U.S.C. §1227(a)(2), you could be subject to deportation if you fall into one or more of these categories: if you commit certain crimes of moral turpitude or aggravated felony, if you are convicted of owning controlled substances, if you are convicted of certain firearm offenses, miscellaneous crimes (like espionage, sabotage, treason), crimes of domestic violence, stalking, crimes against children, and trafficking (drug or human).
Crimes of moral turpitude are analyzed on a case by case basis. A crime of moral turpitude must involve highly reprehensible conduct that was done intentionally, deliberately, willfully, or recklessly. A crime involving 'moral turpitude' involves 'conduct that shocks the public conscience as being inherently base, vile, or depraved, contrary to the rules of morality and the duties owed between man and man, either one's fellow man or society in general. Some crimes that are considered to be a crime of moral turpitude that pertain to people filing for bankruptcy are: writing bad checks with the intent to defraud, crimes of domestic violence, and tax evasion.
There is a long list of crimes that are considered to be aggravated felonies under 8 U.S.C. §1101(a)(43) including murder, rape, and sexual abuse of a minor. The main ones that may pertain to people filing for bankruptcy are §1101(a)(43)(M)(i) and (ii): fraudulent transaction where the loss to the victim exceeds $10,000 and tax evasion where the loss to the government exceeds $10,000.
What you should take away from this article is that if you have not committed a crime listed above you should not be subject for removal from the United States. Filing bankruptcy is not a crime period and is not a path to deportation. Committing a bankruptcy crime (such as lying under penalty of perjury or committing fraud against one of your creditors) may get you deported. As long as you do not commit a bankruptcy crime you should not have to worry about your immigration status. If you are unsure if you fall under any of these categories, please consult with a bankruptcy attorney before you go forward.
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Filing for bankruptcy alone will not affect your immigration status. You must have committed a crime that is subject to deportation. Under 8 U.S.C. §1227(a)(2), you could be subject to deportation if you fall into one or more of these categories: if you commit certain crimes of moral turpitude or aggravated felony, if you are convicted of owning controlled substances, if you are convicted of certain firearm offenses, miscellaneous crimes (like espionage, sabotage, treason), crimes of domestic violence, stalking, crimes against children, and trafficking (drug or human).
Crimes of moral turpitude are analyzed on a case by case basis. A crime of moral turpitude must involve highly reprehensible conduct that was done intentionally, deliberately, willfully, or recklessly. A crime involving 'moral turpitude' involves 'conduct that shocks the public conscience as being inherently base, vile, or depraved, contrary to the rules of morality and the duties owed between man and man, either one's fellow man or society in general. Some crimes that are considered to be a crime of moral turpitude that pertain to people filing for bankruptcy are: writing bad checks with the intent to defraud, crimes of domestic violence, and tax evasion.
There is a long list of crimes that are considered to be aggravated felonies under 8 U.S.C. §1101(a)(43) including murder, rape, and sexual abuse of a minor. The main ones that may pertain to people filing for bankruptcy are §1101(a)(43)(M)(i) and (ii): fraudulent transaction where the loss to the victim exceeds $10,000 and tax evasion where the loss to the government exceeds $10,000.
What you should take away from this article is that if you have not committed a crime listed above you should not be subject for removal from the United States. Filing bankruptcy is not a crime period and is not a path to deportation. Committing a bankruptcy crime (such as lying under penalty of perjury or committing fraud against one of your creditors) may get you deported. As long as you do not commit a bankruptcy crime you should not have to worry about your immigration status. If you are unsure if you fall under any of these categories, please consult with a bankruptcy attorney before you go forward.
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Sunday, 26 August 2012
Seek Credit Counseling Help Before Bankruptcy
Many people who are struggling financially get to a certain point in their debt where they feel as if they have nowhere to turn. As they take on more loans, credit cards, and debts they know they will never be able to repay, their problem only exacerbates. However, it doesn't have to be that way!
If you feel like your life resembles that description, then you should know that you have options before turning to bankruptcy. While bankruptcy is a great way to get rid of your financial problems, it is a last resort. Before you seek out bankruptcy, try fixing your debt management issues as early as possible with credit counseling.
Why Credit Counseling
You might be thinking that credit counseling is designed for people who are going through the bankruptcy process. And, while you will be required to go through the process should you file for bankruptcy, that doesn't mean that you have to wait until then! You may be able to prevent bankruptcy from being in your future by getting help today!
Here are just a few of the benefits you'll enjoy by meeting with a good credit counseling service:
Debt management solutions. Of course, this is the main reason people seek out their services. Getting debt under control is almost always the biggest issue that drives people to seek professional help. Your credit counseling service will be able to help you bring things back under control by strategizing and offering solutions tailored for you. You may even decide to snowball your debt through a credit counseling service.
Budgeting & Money Management. However, credit counseling is not a Band-Aid. Don't expect to go into it and have your current issues addressed without taking a look at the underlying causes. You will learn good budgeting and money management skills that will help ensure you don't have to end up going through it again. This is one of the most valuable aspects of the service!
Education. Also, you'll be able to ask all of the questions you've always wanted answers for. What's APY? How do you get lower rates on your loans? Should you be "building equity in your home"? Anything finance-related is fair game. This is your chance to learn!
These are just a few of the many benefits you'll enjoy in credit counseling. Remember, you don't have to wait until bankruptcy to seek out these services. Do yourself a favor, and find an agency near you today, before things get out of hand!
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If you feel like your life resembles that description, then you should know that you have options before turning to bankruptcy. While bankruptcy is a great way to get rid of your financial problems, it is a last resort. Before you seek out bankruptcy, try fixing your debt management issues as early as possible with credit counseling.
Why Credit Counseling
You might be thinking that credit counseling is designed for people who are going through the bankruptcy process. And, while you will be required to go through the process should you file for bankruptcy, that doesn't mean that you have to wait until then! You may be able to prevent bankruptcy from being in your future by getting help today!
Here are just a few of the benefits you'll enjoy by meeting with a good credit counseling service:
Debt management solutions. Of course, this is the main reason people seek out their services. Getting debt under control is almost always the biggest issue that drives people to seek professional help. Your credit counseling service will be able to help you bring things back under control by strategizing and offering solutions tailored for you. You may even decide to snowball your debt through a credit counseling service.
Budgeting & Money Management. However, credit counseling is not a Band-Aid. Don't expect to go into it and have your current issues addressed without taking a look at the underlying causes. You will learn good budgeting and money management skills that will help ensure you don't have to end up going through it again. This is one of the most valuable aspects of the service!
Education. Also, you'll be able to ask all of the questions you've always wanted answers for. What's APY? How do you get lower rates on your loans? Should you be "building equity in your home"? Anything finance-related is fair game. This is your chance to learn!
These are just a few of the many benefits you'll enjoy in credit counseling. Remember, you don't have to wait until bankruptcy to seek out these services. Do yourself a favor, and find an agency near you today, before things get out of hand!
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Friday, 24 August 2012
Seeking Out Credit Counseling
Credit counseling gets its reputation for helping people who are in serious financial trouble. It may be bankruptcy or it may be severe debt that drives most people to credit counseling. While these services are great solutions for these people who are seriously struggling, it's worth asking the question, "How many serious financial problems could be avoided by pre-emptive credit counseling?"
If you are struggling financially, but still able to keep your head above water, don't wait until things take a turn for the worse before you seek out assistance in credit counseling. If you're nervous that you might lose control of your finances, or if you're just one step away from disaster, it's time to start taking your situation seriously, and to seek out help immediately. Getting the help you need when there's no disaster can make a world of difference.
The Benefits of Pre-Emptive Counseling
Here are just a few of the benefits you'll enjoy in going through the credit counseling process and not having to deal with bankruptcy at the same time...
You will learn how to create a budget and manage your money. Good budgeting is the foundation of healthy financial living. When you know exactly where your income is going, not only will you have peace of mind like never before, but you'll also be able to live a much more comfortable financial life.
Your counselor will be able to give you suggestions on how to save and invest for the future. If you've been too worried about debt to think about the future, now is the time to make a change for the better!
You'll get custom tailored advice for you. Credit counseling is a one-on-one experience, which means you'll get advice that pertains to your situation. No matter how complicated you may think your finances to be, a good credit counselor will help you work through all the details!
Most importantly, however, you'll receive advice about debt solutions that work! Of course, this is the main reason people seek out credit counseling services. Getting rid of debt while building new money management skills will turn your life around!
If you've been on the fence about getting assistance through credit counseling, we want to strongly encourage you to get the help you need today. You will have to take the initiative! However, you'll find that finding a good credit counselor isn't nearly as challenging as you may think it is. The U.S. Department of Justice has a helpful tool that will find an agency near you.
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If you are struggling financially, but still able to keep your head above water, don't wait until things take a turn for the worse before you seek out assistance in credit counseling. If you're nervous that you might lose control of your finances, or if you're just one step away from disaster, it's time to start taking your situation seriously, and to seek out help immediately. Getting the help you need when there's no disaster can make a world of difference.
The Benefits of Pre-Emptive Counseling
Here are just a few of the benefits you'll enjoy in going through the credit counseling process and not having to deal with bankruptcy at the same time...
You will learn how to create a budget and manage your money. Good budgeting is the foundation of healthy financial living. When you know exactly where your income is going, not only will you have peace of mind like never before, but you'll also be able to live a much more comfortable financial life.
Your counselor will be able to give you suggestions on how to save and invest for the future. If you've been too worried about debt to think about the future, now is the time to make a change for the better!
You'll get custom tailored advice for you. Credit counseling is a one-on-one experience, which means you'll get advice that pertains to your situation. No matter how complicated you may think your finances to be, a good credit counselor will help you work through all the details!
Most importantly, however, you'll receive advice about debt solutions that work! Of course, this is the main reason people seek out credit counseling services. Getting rid of debt while building new money management skills will turn your life around!
If you've been on the fence about getting assistance through credit counseling, we want to strongly encourage you to get the help you need today. You will have to take the initiative! However, you'll find that finding a good credit counselor isn't nearly as challenging as you may think it is. The U.S. Department of Justice has a helpful tool that will find an agency near you.
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Your Second Mortgage in Chapter 13 Bankruptcy
Let's be honest, this economy sucks. Ever since the financial collapse in 2008, it has been very difficult for a great many people. For many, the biggest problem is unemployment. Most people are 90 days away from filing bankruptcy because we require income to survive. Many people, most of whom never even considered bankruptcy, now must face a stiff choice.
If bankruptcy makes sense, then there can be significant relief. Most credit card bills and medical bills will be discharged completely. Some debts remain, such as taxes, child support and student loans. Locked deep within the bowels of the bankruptcy code, however, lies another big advantage.
Let us pretend you have a mortgage on a house. And let's say that mortgage is about 150k. Let's also pretend there is a second mortgage in the amount of 75k. You took out this second mortgage to pay off some debt, fix up the house and take a vacation. Why not? It was 2005. Your house was worth 225k. You had a well paying job. Times were good and the payments were easy. Enter 2008.
You still have a job. Perhaps there was a 20% pay cut. And the value of your house has plummeted to 120k. All of a sudden, that house is a huge problem. It's not the only problem, because you also fell behind on credit cards and some utility bills. But you are in a bad place financially and you believe you're stuck because you're still employed.
So many people believe you have to be completely dead broke to file bankruptcy. It is untrue, as you can look up any number of high-earning individuals who need the relief provided by bankruptcy. When someone in the above-mentioned case files for bankruptcy, they are able to receive one huge advantage, assuming their lawyer chooses to place them under the protection of Chapter 13.
The second mortgage, in that case, can be stripped off from the home. The key ingredient is that the value of the home has fallen to the point where the second mortgage would receive nothing in a sale at foreclosure. The second mortgage, in bankruptcy terms, is completely unsecured.
For many people, the monthly payment to the second mortgage they've been making will quite possibly be enough to pay all their debts in a Chapter 13 Bankruptcy plan. The situation would improve drastically, almost overnight.
All of a sudden, the house would be 30k under the mortgage instead of over 100k. All of their other bills would be wrapped up into one monthly payment. The stress and heartache caused by this financial disaster could be smoothed over. People can begin to have a bit of extra spending money that can be injected into their local economy as opposed to paying late fees to Visa and Mastercard.
Bankruptcy is not right for everyone. If you find yourself in an impossible financial situation, where you are juggling bills from paycheck to paycheck, it quite possibly can provide tremendous relief.
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Thursday, 23 August 2012
What Is the Chapter 13 Repayment Plan?
Repayment Plans in Chapter 13 Bankruptcies
Chapter 13 is a specific type of bankruptcy that allows debtors to propose a plan for paying off their debts. This type of bankruptcy is best for those who have enough income to create a debt Repayment Plan. If a bankruptcy petitioner does not make enough income, or if the income is irregular, the court may not approve a Chapter 13 bankruptcy. Chapter 13 benefits debtors because they can keep personal property under the terms of an accepted Repayment Plan. It can be the most important component of a Chapter 13 bankruptcy.
Repayment Plan Terms
When someone files for bankruptcy, a Repayment Plan must be filed within 15 days of the filing of the bankruptcy petition. The Plan provides for regular fixed payments to a bankruptcy trustee, who then distributes the payments to creditors. Claims are given one of three statuses. Priority claims are debts given special treatment under bankruptcy law. Priority claims must be paid off in full unless the creditor agrees to a different payment arrangement. Secured claims are debts that have been secured by collateral. Unsecured claims are debts that have not been secured by collateral.
Secured and Unsecured Claims
Chapter 13 allows petitioners to keep certain property as long as they are making payments. Under this type of Repayment Plan, the bankruptcy petitioner must pay the creditor at least the value of the property. In some cases, these payments are made on the original loan repayment schedule. Unsecured debts do not have to be paid in full, but each creditor needs to receive as much as they would have received if the petitioner filed a Chapter 7 bankruptcy and liquidated his or her assets. Under a Chapter 13 Repayment Plan, a petitioner must pay all of his or her disposable income toward unsecured debts over a certain period of time. Disposable income is any income that is left over after all necessary and reasonable expenses have been paid. Necessary expenses include food, shelter, utilities, and child support payments.
Creditor Meeting and Confirmation Hearing
The 341 Meeting gives creditors an opportunity to protest, dispute, or seek changes to the details of the bankruptcy and/or the proposed Repayment Plan. The 341 Meeting typically involves the bankruptcy petitioner, his or her lawyer, a bankruptcy trustee, and representatives of creditors (not common). No more than 45 days following the 341 meeting, the bankruptcy judge holds a confirmation hearing. During this hearing, the judge decides whether the Plan meets legal standards and is feasible based on the petitioner's financial status. Creditors receive a notice of this hearing 25 days before it occurs. This will afford creditors a chance to object to confirmation of the Plan. If the judge confirms the Plan, the monthly payments received will be distributed to creditors by a Chapter 13 trustee. If the it is not confirmed, the petitioner may choose to convert the case to a Chapter 7 bankruptcy or to file a modified Chapter 13 Repayment Plan.
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