January 2010

Mortgage Underwriting guidelines For Bankruptcy

VA and FHA tends to be much more lenient on approving a loan after a bankruptcy.  In fact, with FHA we can get you a new loan or refinance your existing loan if you have a chapter 13 bankruptcy and have had on time payments for the past 12 months.  VA generally requires 2 years from the discharge date.  Conventional loans (Fannies Mae & Freddie Mac) tend to require the longest time line from a bankruptcy-usually 3-7 years.  It all depends if you have a chapter 7 or a chapter 13 bankruptcy.  You can view the PDF of the Fannie Mae rules to see how they are currently underwriting when someone has had a foreclosure.

FannieBankruptcyFC.pdf

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How To Recover From Bankruptcy In Half The Time

By Alexander Wennstrom

If you should pose the above-mentioned question to a bankruptcy law expert or attorney bankruptcy law professional, the answers might surprise you. Mostly those who have not been successful to fend off, stave or avoid bankruptcy, are looking for quick fixes. Once they realize that the blemish will be affecting their credit rating, ability to access financing, loans and other financial necessities like a check-book, savings account, bank loans, car loans, mortgages etc. they are more motivated than ever to turn a new leave, recover from this blemish in half the time, making every moment of bankruptcy recovery count, matter and making a difference, having positive impact.

Credit counseling services and debt consolidators all tote and advocate doing everything in your power to boost your credit rating, live some good habits, avoid errors and ills from before, returning to your spending and lending, financial administration, regardless of the personal bankruptcy, chapter 7 bankruptcy or business bankruptcy filing.

Bankruptcy attorney California practitioner shingles, business cards and adverts, online websites and even mega-sites, all tote and advocate very comprehensive bankruptcy services for those in desperate search of answers. Many focus on what to do every step of the way, planning, preparing, filing and even optimizing recovery strategies, phases and solutions.

Advice and input on and for home equity loan bankruptcy type instruments, remedies and hopes. Tips for securing a bankruptcy loan, filling out an application, amendment, appendices for the required bankruptcy form and documentation, for formally and legally filing bankruptcy, effectively starting the process (that could sometimes take as long as a year to wrap up) all get attention as does what to do and what not to do after filing, discharge etc. as the bankrupt regain their footing and try to claim and re-establish some freedoms, rights and privileges of lending, borrowing, access, rates etc.

Florida bankruptcy experts and markets have expanded in recent downturns in the real estate market, with increased in foreclosures. Many a Florida bankruptcy lawyer and even bankruptcy Los Angeles practitioners alike, are seeing more and more after bankruptcy challenges and recovery issues, with all this market-driven and sparked activity.

Securing a bankruptcy car loan or getting your hands on the required cash or choice, market-competitive after bankruptcy car loan rate, terms and stipulations, might prove a little more than challenging. It is hard to find those institutions willing to deal and do business with what most would consider to be a credit risk. Even something as standard as a car loan after bankruptcy, can prove to be almost impossible to get, unless you do some creative financing or are willing to pay higher rates.

The more you read this enticing title, (phrased purposely as a how to type question), invitation to the masses, suffering in the aftermath of their bankruptcy filing and recovery stages, the more you hope that there is really a way to actually do what it says!

Putting it into practice unearths numerous ways that this could be more like just a sounds-like-it-might-be-possible type teaser or hyped promise that no-one could really successfully live up to ore deliver on. Yet, there is some light at the end of the tunnel and some hope!

Bankruptcy recovery in half the time, sounds too good to be true, almost. Mockingly hollow, just empty words, not feasible, possible, realistic or legal (?). What are your thoughts? Do you think it possible? How would you go about it? Are there ways to do it effectively?

Well, it is fair to respond to this controversial statement and claim, depending on how you read and interpret it of course, with a lot of skepticism, questions and doubts. Take a closer look at what we are dealing with here, though. There are mandatory aspects of the process to take into consideration. Certain aspects of the process simply take as long as it takes. The credit reports will have this entry as part of the public records, as per law and court ruling for period of 7-10 years for example.

Recovery, how to RECOVER from bankruptcy – what do you understand that term to mean?

What is bankruptcy exactly ? What is the nature, different types of filings, implications and durations of each? How are they similar? How do they differ? How do you deal with each of them in order to facilitate and expedite the recovery phase and time-frame?

How long does it take normally or typically for credit consolidation, repair, bankruptcy recovery?

Half the time means what exactly? What is the typical recovery time frame for these types of filings (both Chapter 7 and Chapter 13, personal, business etc.)

What is your measure of creditworthiness and how can you improve it?

These are the real questions and eventually even answers that can be inferred and turned into a set of practical tips and how to’s. The secret here is to ask the right type of questions. Educate and empower yourself about how credit reporting systems work for example and how to make them count in your favor, despite a recorded bankruptcy filing entry.

Records of timely repayment will also reflect well on you – you can increase your credit score after bankruptcy – opening a checking and savings account at the local bank

Most will tell you 7-10 years that you will have to wait and live with the one mistake and aftermath of bad judgment, worsening debt/credit and declared bankruptcy on your credit reports and negatively impacted financial standing, reputation, with little or no recourse of action or retribution other than letting time pass and keeping your nose clean. That simply is not entirely the whole picture or the only truth, path and remedy.

The encouraging words from any knowledgeable bankruptcy attorney are that you can finally do something pro-active about improving your credit scores, if you will and want to.

Utilizing bankruptcy recovery and credit repair strategies that work, can save you precious time and standing, in record and no time flat! Taking the first step sooner rather than later, with immediacy and urgency is extremely important. It shows that you are proactive and serious about your finances and getting your credit back, despite for example having a chapter 7 or 13 bankruptcy on your record.

Bankruptcy does not have to be a doomsday, inevitability type death sentence. It all depends on what you understand that recovery to mean specifically. If you are trying to get your credit and standing back like what you had prior to your filing, yes, that will take time, effort and some creative doing. BUT, if you are working towards merely again getting approved for loans, having credit and credit cards at your disposal, despite declaring personal bankruptcy, then you are ready to do so quickly, even in under eight to ten months if you set your mind to it.

Negotiating for better interest rates and terms, even for non-filers of bankruptcy, can be quite possible, with a little know how, insider information, processes, protocol and maybe even some representation, where you cannot do it yourself.

Getting a strategy together quickly and in the works, to embrace life after bankruptcy for all its has to offer, is what the real key and secret is.

A bankruptcy lawyer can take you through some of the legal implications and issues pertaining to your filing, recovery, rights and freedoms. If you have failed before to avoid bankruptcy, it is not an unforgivable sin, disarming you from all responsible financial decision-making and fiscal transactions.

You can still get credit, buy a car, home, get a loan, despite what you might think and look at when faced with the realities and intricacies, dynamics and implications of the on-file declaration of bankruptcy (regardless of type, how long it has been etc.). THERE IS HOPE!

Visit the site for more information if you are serious about getting out of debt and recover from bankruptcy: Avoid Bankruptcy [http://www.toavoidbankruptcy.com/bankruptcy/index.html]

Article Source: http://EzineArticles.com/?expert=Alexander_Wennstrom
http://EzineArticles.com/?How-To-Recover-From-Bankruptcy-In-Half-The-Time&id=690326

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Top 10 Bankruptcy Mistakes

By Richard Waple

Bankruptcy mistakes can be very costly and all too often an individual filing bankruptcy will make inadvertent mistakes that jeopardize their chance of discharging their debts and retaining exempted property. Avoid these Top 10 mistakes and you will be well on your way to a successful bankruptcy filing.

1. Transferring Real Estate or Other Assets: Some people try and protect their assets by transferring them out of their name, but this strategy will not work in a bankruptcy proceeding. Recent property transfers must be disclosed to the bankruptcy trustee and the bankruptcy court may “avoid the transfer” and put the parties in the same position they were in before the transfer. Even if you don’t feel that the property or asset that your name is rightfully yours, the bankruptcy court may still “avoid the transfer”. It is often unnecessary to transfer any property or assets before filing bankruptcy as each state has bankruptcy exemptions designed to protect all or a portion of your assets.

2. Transferring Credit Card Balances: Transferring a large amount of debt to one credit card can result in debt on the new credit card not being eliminated due to the large amount of debt incurred to one creditor right before filing bankruptcy. The new creditor may have a strong argument that the balance transfer should be presumed fraudulent, especially if the transfer was within 60 days prior to filing and over $1500.

3. Repaying Loans to Family Members: The bankruptcy code requires that you treat all of your creditors equally and does not want you choosing which creditors to repay right before filing bankruptcy. You can’t repay Uncle Bob the $2000 from when the furnace went at the expense of your other creditors. The bankruptcy trustee may pursue the relative for a portion of any funds recently transferred to them. You are required to list debts that are owed to family members, but assuming there is no discharge objection brought, the debt will be legally eliminated and you can repay the loan if you choose to.

4. Not Including All Your Debts on your Bankruptcy Petition: You are required by law to include all of your debts on your bankruptcy petition, even if you want to keep the debt. If you want to keep your house and automobile when you file a Chapter 7 bankruptcy, you usually will sign a reaffirmation agreement with the bankruptcy court excluding the discharge of those specific debts.

5. Ignoring Lawsuits: Many people fear lawsuits and don’t know what to do when they get a summons in the mail. In most cases, if you have already filed bankruptcy and receive a summons from a debt listed on your bankruptcy petition, your bankruptcy attorney should be able to fax your case information to the creditor’s attorney and get the case dismissed. However, if you are in the process of filing bankruptcy, but the case is not officially filed yet, it can be helpful to attend the designated court hearing and request a continuance to give you an opportunity to file for bankruptcy relief.

6. Withholding Information from Your Bankruptcy Lawyer: Bankruptcy Lawyers are often frustrated at 341 hearings when their clients are placed under oath and disclose new information that was previously withheld from their attorney. Bankruptcy lawyers need all the requested information to properly advise you and protect your income and assets. The horror stories about bankruptcy that we’ve all heard are frequently due to an individual failing to disclose vital information to a qualified bankruptcy attorney for proper advice and planning.

7. Cashing in 401(k)’s, IRA’s, and other Retirement Funds: Generally, 401(k)’s, IRA’s, and other retirement funds are protected from the reach of your creditors and are allowed to be kept during and after a bankruptcy. However, a common mistake is people cashing in their retirement accounts or obtaining a loan. The money that is taken out of your retirement account is no longer protected from your creditors, and you’ll likely owe penalties and taxes on any accounts that were cashed in.

8. Filing Bankruptcy when you are expecting a Large Tax Return: In many states, a tax refund is considered to be an asset that can be liquidated if the bankruptcy exemptions aren’t enough to protect it. Depending on the amount of the refund and the relevant state laws, it is often advisable for you to receive your tax refund and spend the proceeds on living necessities before the bankruptcy is filed. Many states offer a “wildcard” exemption that can be used to protect tax refunds among other things.

9. Waiting Until the Last Minute Before Filing Bankruptcy: The moment you file a bankruptcy an “automatic stay” goes into place which prohibits your creditors from any further collection activity against you, but it is unlikely that you will be able to recover any wages garnished or property taken before the filing of the case. Too many people wait until their creditors have already taken action against them before consulting with a bankruptcy attorney. It can take considerable time to prepare the bankruptcy petition, review the relevant documentation, and be certified by a trustee approved credit counseling agency. Once you have made the decision that bankruptcy is your best alternative, you should file as soon as possible to avoid anymore creditor harassment and allow yourself to put future earnings towards long-term goals and savings instead of chipping away at an insurmountable amount of debt.

10. Not Hiring a Bankruptcy Attorney: Fortunately, experienced bankruptcy attorneys are aware of all of these common mistakes and many more. Bankruptcy is a complex area of the law and the process has being further complicated with the new bankruptcy laws. Mistakes can be costly and a thorough case evaluation from a local bankruptcy attorney is the best way to identify any possible issues and develop a strategy to relieve your debt problems.

Richard Waple is the creator of http://www.bankruptcyhq.com, a bankruptcy information website containing insight and information primarily based on Richard’s experiences as a bankruptcy attorney with one of the largest consumer bankruptcy law firms in the nation.

Article Source: http://EzineArticles.com/?expert=Richard_Waple
http://EzineArticles.com/?Top-10-Bankruptcy-Mistakes&id=549194

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Cheap Fast Bankruptcy Loans!

By Kirthy Shetty

Bankruptcy stains a debtor’s financial life and reflects badly on his credit. He sometimes feels that all avenues for funding any further need in his life is closed for ever. But a cheap fast bankruptcy loan can help you out of your financial predicament and provide you loans after bankruptcy. Fast Bankruptcy loans can help you live in your dream home, drive a car of your choice or set up a new business after you have been discharged of your bankruptcy. Provided you have paid back all your creditors and cheap bankruptcy loan can help a bankrupt, post-bankruptcy.

Cheap Fast Bankruptcy loans: How does it work for a bankrupt?

Cheap fast bankruptcy loans are usually referred to people who have filed bankrupt by bankruptcy attorney and have discharged their bankruptcy in other words have repaid all their creditors and have emerged out of debt. However, it does not serve a bankrupt who has just been discharged of his bankruptcy recently, say less than two years. The reason being a lender does not want to jeopardize his cheap loan amount by making fast loan approvals to a credit challenged bankrupt.

It is quite challenging to take up a fast bankruptcy loan with in two years of bankruptcy discharge. The two factors that play a pivotal role in facing this challenge and approving you a cheap bankruptcy loan despite of recently discharged bankruptcy is that clean credit report and your down payment. While you have been declared bankrupt, if you have made your payments regularly then you will have a flawless credit and you can be a strong contender for cheap fast bankruptcy loan. With a sound down payment say 3-5% no lender will refuse a post- bankruptcy loan. Few bankruptcy advisors do add that its not enough if you have a flawless credit history and a down payment but also proof of constant income. Not all income is considered sufficient enough to obtain a post-bankruptcy loan.

IVA Spacialist – Chapter 7 and Chapter 13 bankruptcy

If you have filed for chapter 7 bankruptcy, then an online bankruptcy loan will be made to you only after your two year completion of bankruptcy discharge. Bankruptcy loan is approved fast to a chapter 13 bankrupt on condition that he has made his full payment to all his creditors.

Fast Bankruptcy loan: how to raise down payments?

In order to increase your chance of cheap loan approval before two year of bankruptcy discharge, you need to make some down payments.

Seek financial aid from your relatives or friends and repay them later with the help of second mortgage after you have obtained a bankruptcy loan or

Look out for down payment assistance online or

Request for grants online

Now, you no more have to feel financially stressed or run from pillar to post to raise funds post-bankruptcy. An array of online bankruptcy loan will ease your financial burden and get you fast loan after you have merged out of your debts. Your dream home or a dream car can take wings with uk cheap bankruptcy loan even after your bankruptcy discharge. Also avail of online quotes and compare the loan terms, conditions and rates before you take up a loan.

Get free bankruptcy advice and information online – Advice IVA

Read more on or inquire about bankruptcy alternative – Bankruptcy Alternative-IVA, Debt Consolidation, CCJ

Article Source: http://EzineArticles.com/?expert=Kirthy_Shetty
http://EzineArticles.com/?Cheap-Fast-Bankruptcy-Loans!&id=457928

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Avoid Bankruptcy With 3 Effective Alternatives

By Dean Shainin

One must avoid bankruptcy while he still can. Filing bankruptcy may save one from his debts, yet this has serious demands and consequences so it shouldn’t be dealt with without due consideration.

Avoid bankruptcy and one also avoids its profuse demands.

So should one avoid bankruptcy?

This stringency in bankruptcy is (blamed) justifiable against Bankruptcy Fraud of those with the criminal intention of evading provision/payment for ‘debts’ although they have funds to use as payment – so-called petition mills, false oath, assets concealment, and fraudulent conveyance of property. Even the use of multiple-filings as ‘strategic’ bankruptcy (which is not a fraudulent criminal act per-se), is an all-precarious move, creating court-prejudice against the filer if evidence shows that the bankruptcy is being used strategically. Enough exasperating reasons for apt individuals to avoid bankruptcy, there are even more practical reasons to avoid bankruptcy: the filing cost, penalties, what you lose, finding an attorney, making a court-appearance, not to mention the obvious stigmas and disentitlements.

Even if one succeeds in the bankruptcy plan, being able to put up with the repayment plan until the end and even finding creditors granting credit at the end of the repayment period, the bankruptcy could still stay on the debtor’s credit history for 6-10years.

Bankruptcy shouldn’t be taken casually. Avoid bankruptcy, if at all possible, and make a smart fiscal move.

Different Effective Bankruptcy Alternatives To Consider

Bankruptcy is a legal term that allows individuals or businesses who in debt to others more money than they are able to pay to either work out a plan to repay the money over time or completely eliminate most of the bills.

Though most bankruptcies are granted, it doesn’t mean that it would be an easy way out of anyone’s debt. Extensive damages to credits and long term issues from bankruptcy will cause many problems in the years to come and it is definitely far better to explore different bankruptcy alternatives before making a decision to file for personal bankruptcy. Bankruptcy alternatives will help one person to save himself from further devastation.

The existence of various bankruptcy alternatives helps one to consider several options as to what they want to pursue other that personal bankruptcy.

The following are 3 bankruptcy alternatives one might want to consider other than personal bankruptcy:

1. Renegotiate secured loans as bankruptcy alternative:

Bankruptcy does not get rid of all one’s debt. If one’s debt has not completely caught up with you and ruined one’s credit already, he or she may be able to renegotiate these loans with creditors or take the loan elsewhere. This is the principle of renegotiating secured loans as bankruptcy alternative

2. Renegotiation of unsecured loans:

Another bankruptcy alternative is the renegotiation of unsecured loans. Unsecured loans are far more at risk and there may be more wiggle room in this bankruptcy alternative. Professional debt negotiation is another bankruptcy alternative

3. Professional debt negotiation:

Professional debt negotiation is another bankruptcy alternative. Here, debt negotiation companies do much of the work by developing and taking care of one’s case to the creditors.

Dean Shainin offers online Bankruptcy and debt advice. For more information, articles, current news, tools and valuable resources on bankruptcy and debt solutions, visit this site: Bankruptcy Alternatives

Article Source: http://EzineArticles.com/?expert=Dean_Shainin
http://EzineArticles.com/?Avoid-Bankruptcy-With-3-Effective-Alternatives&id=302025

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Bankruptcy Information – Common Courtroom Terms

By Rick Munster

Bankruptcy- Bankruptcy Terminology, 45 Terms to Know and Understand

Many debtors and creditors know little of the bankruptcy process. These terms are to help assist individuals in understanding bankruptcy. The terms provided are as defined from the Public Information Series of the Bankruptcy Judges Division.

TERMS & DEFINITIONS

Adversary Proceeding –

A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court.

Automatic Stay –

An injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

Bankruptcy –

A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 on the United States Code (the Bankruptcy Code).

Bankruptcy Judge –

A judicial officer of the United States district court who is the court official with the decision-making power over federal bankruptcy cases.

Bankruptcy Mill –

A business not authorized to practice law that provides bankruptcy counseling and prepares bankruptcy petitions.

Bankruptcy Petition –

A formal request for the protection of the federal bankruptcy laws. (There is an official form for bankruptcy petitions.)

Bankruptcy Trustee –

A private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases to represent the interests of the bankruptcy estate and the debtor’s creditors.

Chapter 7 –

The chapter of the Bankruptcy Code providing for “liquidation,” i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.

Chapter 7 Trustee –

A person appointed in a chapter 7 case to represent the interests of the bankruptcy estate and the unsecured creditors. (The trustee’s responsibilities include reviewing the debtor’s petition and schedules, liquidating the property of the estate, and making distributions to the creditors. The trustee may also bring actions against creditors or the debtor to recover property of the bankruptcy estate.)

Chapter 13 –

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debt over time, usually three to five years.)

Exempt –

A description of any property that a debtor may prevent creditors from recovering.

Exemption –

Property that the Bankruptcy Code or applicable state law permits a debtor to keep from creditors.

Exempt Property –

Property or value in property that a debtor is allowed to retain, free from the claims of creditors who do not have liens.

Lien –

A charge upon specific property designed to secure payment of a debt or a performance obligation.

Liquidation –

A sale of a debtor’s property with the proceeds to be used for the benefit of the creditors.

Claim –

A creditor’s assertion of a right to payment from a debtor or the debtor’s property.

Complaint –

The first or initiatory document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of money or other relief against the defendant.

Confirmation –

Approval of a plan of reorganization by a bankruptcy judge.

Consumer Debts –

Debt incurred for personal, as opposed to business, needs.

Contingent Claim –

A claim that may be owed by the debtor under certain circumstances, for example, where the debtor is a cosigner on another person’s loan and that person fails to pay.

Creditor –

A person to whom or business to which the debtor owes money or that claims to be owed money by the debtor.

Debtor –

A person who has filed a petition for relief under the bankruptcy laws.

Defendant –

An individual (or business) against whom a lawsuit is filed.

Discharge –

A release of a debtor from personal liability for certain dischargeable debts. (A discharge releases a debtor form personal liability for certain debts known as dischargeable debts (defined below) and prevents the creditors owed those debts from taking any action against the debtor or the debtor’s property to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding their debt, including telephone calls, letters, and personal contact.)

Dischargeable Debt –

A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.

Disclosure Statement –

A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide “adequate information” to creditors to enable them to evaluate the chapter 11 plan of reorganization.

Equity –

The value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered. (Example: If a house valued at $60,000 is subject to a $30,000 mortgage, there is $30,000 of equity.)

Liquidated Claim –

A creditor’s claim for a fixed amount of money.

No-Asset Case –

A chapter 7 case where there are no assets available to satisfy any portion of the creditor’s unsecured claims.

Non Dischargeable Debt –

A debt that cannot be eliminated in bankruptcy.

Objection to Discharge –

A trustee’s or creditor’s objection to the debtor’s being released from personal liability for certain dischargeable debts.

Objection to Exemptions –

A trustee’s or a creditor’s objection to a debtor’s attempt to claim certain property as exempt, i.e., not liable for any prepetition debt of the debtor.

Party in Interest –

A party who is actually and substantially interested in the subject matter, as distinguished from one who has only a nominal or technical interest in it.

Plan –

A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.

Plaintiff –

A person or business that files a formal complaint with the court.

Preferential Debt Payment –

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in a chapter 7 case.

Priority –

The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full.

Proof of Claim –

A written statement describing the reason a debtor owes a creditor money. (There is an official form for this purpose.)

Reaffirmation Agreement –

An agreement by a chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy, usually for the purpose of keeping the collateral or mortgaged property that would otherwise be subject to repossession.

Secured Creditor –

An individual or business holding a claim against the debtor that is secured by a lien on the property of the estate or that is subject to a right of setoff.

Secured Debt –

Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default.

341 Meeting –

A meeting of creditors at which the debtor is questioned under oath by creditors, a trustee, examiner, or the United States trustee about his/her financial affairs.

Typing Service –

A business not authorized to practice law that prepares bankruptcy petitions.

United States Trustee –

An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees, monitoring plans and disclosure statements, monitoring creditors’ committees, monitoring fee applications, and performing other statutory duties.

Unscheduled Debt –

A debt that should have been listed by a debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)

These terms are for the general public to have a better understanding of bankruptcy and the terminology that accompanies the filing or inquiry of a bankruptcy.

Article written by Rick Munster

Rick Munster is the Media Planner for http://www.DebtReductionServices.com

Article Source: http://EzineArticles.com/?expert=Rick_Munster
http://EzineArticles.com/?Bankruptcy-Information—Common-Courtroom-Terms&id=80348

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The Myths and Reality of Avoiding Bankruptcy

By Cole Collins

The reasons to avoid bankruptcy.

The number of people filing for bankruptcy in 2006 was 617,660 – in 2007 that number increased to 850,912. Bankruptcy is turning into the most convenient option for people who are facing severe financial problems. However, strikingly, the majority of these people are ignorant of two very significant factors. One, bankruptcy is not the best solution for all people who are burdened by debt. Two, bankruptcy has long term consequences that can have a negative effect on your life forever.

What is bankruptcy and why you should avoid it

The definition of bankruptcy is a federal court process that exists to help businesses and consumers repay their debt or eliminate their debt under the protection of bankruptcy court. The term bankruptcy comes from the Italian work ‘banca rotta’ which means broken bench. District courts take care of bankruptcy filings and procedures under the Federal Bankruptcy Act.

Types of Bankruptcy

There are eight chapters of the Federal Bankruptcy Code. These consist of Chapter 1, Chapter 3, Chapter 5, Chapter 7, Chapter 9, Chapter 11, Chapter 12 and Chapter 13. Chapters 7 and 13 are the most popular bankruptcies filed by debtors.

Bankruptcy Drawbacks

The following are a few drawbacks to filing for bankruptcy:

• Credit History: Bankruptcy is one of the worst things that can happen to your credit history. It stays on your report for up to 10 years and stays in court records for 20 years. The damage it creates goes further than just your credit report; it severely limits your ability to receive a loan and employment as banks and employers typically judge you by your credit report.
• Repossession: Discharging a bankruptcy can cause you to lose valuable assets and money.
• Social status: Personal bankruptcy can ruin your social status.
• Business reputation: Businesses that file for the protection of bankruptcy stand to lose more than their reputation, they also lose all chances to grow their business. Their credit rating will deter banks from qualifying them for future business loans.
• Financial: The most serious consequence to bankruptcy is the closing of all your bank accounts, credit cards, and more. Anything you are currently buying through financing or leasing, like your car, will be returned to the owner.
• Life conditions: People who declare themselves bankrupt will find it difficult to buy a home, rent an apartment, get insurance, or buy a car. These conditions are extremely difficult in today’s world.

Because of these reasons and more, it is worth it to avoid bankruptcy for a more secure future.

Why do people file for bankruptcy?

• Unemployment: The sudden loss of a job definitely has an impact on the decision to declare bankruptcy. In order to keep a certain standard of living, people who are unemployed are more apt to accept more debt without the ability to pay it back.
• Divorce: When a couple separates or divorces, one or both parties typically tends to suffer financially. This seems to also be directly related to the rise in bankruptcy.
• Credit Cards: There is a direct correlation between the number of accounts used by an adult and the rise in the rate of filing for bankruptcy. The more cards that a person has, the more debt will be accrued.
• Debt-income ratio: This ratio is the percentage of a consumer’s monthly gross income that goes towards paying debts. As this rate rises with the general public, the filing rate for bankruptcy has also risen.

Common Myths About Bankruptcy

Bankruptcy seems like an easy way out of debt, but the reality is a lot worse than most people realize. Following is a list of common bankruptcy myths:

• You will eliminate all debt: Bankruptcy will not get rid of all your debts. There are some that cannot be discharged in bankruptcy like taxes, child support, alimony, student loans, etc.
• You will have a new beginning: Bankruptcy does not put you back at square one – it actually puts you at a negative beginning. As bankruptcy will be reflected on your credit report for 10 years, creditors will not be able to offer you credit terms – and if they do, they will cost a lot in interest.
• You can still keep some accounts out of bankruptcy: There are very strict bankruptcy laws that include stiff punishment if you try to hide or not include any accounts. The only ones you don’t have to include with filing for bankruptcy are ones that you will have paid off before you file.
• It’s easy to file for bankruptcy: Filing is extremely time consuming, as well as expensive. Recent law changes also make it much more difficult to file as well.
• Debts are removed for free: Bankruptcy makes you debt free only by liquidating your assets – which could mean losing your home, car, etc.

Is debt consolidation better than declaring bankruptcy?

Debt consolidation can actually make you debt free with more benefits. It can be a permanent solution to your burdened finances, while bankruptcy only provides temporary relief. Consolidating your debt can reduce your monthly payments by 40-60%. Your credit report will be repaired as soon as your debts are paid for – not for the next 10 years like with bankruptcy. You will also be free from the hounding of creditors. In short, bankruptcy should only be chosen when there is no other choice. Debt counselors can help with these decisions as well.

For more information on avoiding bankruptcy or if you need immediate debt relief please visit debtrelief.us.com Use the debt calculator to see how much debt you can eliminate.

Article Source: http://EzineArticles.com/?expert=Cole_Collins
http://EzineArticles.com/?The-Myths-and-Reality-of-Avoiding-Bankruptcy&id=1479141

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Bankruptcy: What You Need to Know

By Alan Barnes

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

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Can Debtors Afford Bankruptcy? Finding Low-Cost Bankruptcy

By Benjamin Anosike, Ph.D.

There seems palpably in the air, one ominous additional burden for the average heavily indebted American debtor and consumer in today’s dire national economic conditions who may perhaps see his only recourse for some relief, in filing bankruptcy: finding low-cost bankruptcy, finding low-cost bankruptcy that you can afford. Meaning, in essence, a non-lawyer pro se alternative.

The latest figures just released by the Administrative Office of the U.S. Bankruptcy Courts on the February 2009 bankruptcy filings, made one vital reality crystal clear to almost every one, namely, that the rate at which the increasingly overburdened and restive American debtors (both individuals and businesses) are filing for bankruptcy, is at its highest levels since the now-famous (or infamous, many would say!) draconian changes of 2005 to the U.S. bankruptcy law. But, even more significantly, that the new filing rate is ominously beginning to return to the old “hated” high bankruptcy filing levels that the nation had reached before that new law was passed in 2005, supposedly meant to correct and drastically curtail or reverse the then pre-existing high filing levels.

This latest trend in American debtor bankruptcy filings strongly underscores a few fundamental points, among others. First, the depth and gravity of the financial straights and difficulties in which the average American consumer and debtor is in today. Second, the reality that, no matter how difficult a legal hurdle and impediment the institutional powers that be (the Congress, the lawyers, or the financial institutions, the courts, etc) may try to place on the path of the American debtors to try discouraging or making it more difficult for them in seeking the bankruptcy relief from their debt burdens, when it really comes time of dire financial and economic crunch, Americans will somehow still find a way, and will still persevere and persist even against all odds, in demanding their constitutional rights to be heard in bankruptcy; and thirdly, the critical necessity, for the average debtor, for finding low-cost bankruptcy filing alternatives to lawyer.

Elizabeth Warren, a Harvard Law School professor and author of several books on bankruptcy, probably sums up the point best this way, alluding to the persuasion of the Congress by various special interests to pass the 2005 law that restricted debtors from filing for bankruptcy: “The credit industry [and other vested interests] did its best to drive up the cost of filing [for bankruptcy]. But when families are in enough trouble, they will fight their way through the paper ticket and higher attorneys’ fees to get help,” adding that “The word is now leaking out [once again] that the bankruptcy courts are open for business.”

THE “UNOFFICIALLY BANKRUPT DEBTORS” – DEBTORS WHO CAN’T FILE BECAUSE THEY CAN’T AFFORD IT

But, even most importantly than that, from the standpoint of the average bankruptcy-seeker today, this raises one fundamental questions, however. Namely, just how do the current growing army of increasingly despairing American debtors who not only seek to file for personal or business bankruptcy, but in a great deal of cases, truly NEED to file one, AFFORD to file bankruptcy – in particular, the high lawyers’ legal cost of filing for bankruptcy? How do these debtors get or find low-cost bankruptcy? A bankruptcy that debtors can reasonably afford?

Some 1.1 million (1,064,000) American debtors filed for bankruptcy this past 2008 year – filings which, many analysts are quick to remind us, were carried out by these debtors in spite of, and under tough conditions of, a whole host of stringent, restrictive requirements and drastically increased legal fees imposed by the 2005 law. But, even more significant, from the stand point of the debtor or bankruptcy-seeker, is another closely related FACT: that, worse still, according to experts, THERE’S NEARLY AS MANY AMERICAN DEBTORS MORE who wanted to file for bankruptcy and are eligible, but could not, because they simply couldn’t AFFORD the lawyers’ legal fees. These are debtors who Justin Harelik, a bankruptcy lawyer with Price Law in Los Angeles, call the “unofficially bankrupt debtors” – debtors who are all but bankrupt but only lack the lawyers’ hefty price to make their status official!

YEARLY NUMBER OF BANKRUPTCY FILINGS SINCE 1998

Source: creditslips.org

Year…….Bankruptcy……. Filings……… Source & Notes

1998…….1,442543……….AO data……(Office of U.S. Courts)

1999…….1,319,465………AO data

2000…….1,253.444………A.O data

2001…….1,492-129………AO data

2002…….1,577 ,561……..AO data

2003…….1,589,383………AO data

2004…….1,597,462………AO data

2005…….2,078,415………AO data……..includes spike in filings before 2005 bkr. law

2006…….590,544………..AACER data…(Automated Access to Court Records)

2007…….826,665………..AA.CER data

2008…….1,064,000………AACER data

EVEN THE LAWYERS AGREE, THEIR BIG FEES IS A PROBLEM WITH DEBTORS

In deed, though many bankruptcy lawyers would rather that it be shaded, many other lawyers, themselves, objectively acknowledge that the lawyers’ legal fees for bankruptcy is a principal frequent issue and concern to debtors and clients in bankruptcy law practice.

“You have to pay the Chapter 7 legal fees upfront in cash. You can be too poor to go bankrupt,” is how Professor Robert M. Lawless of the University of Illinois College of Law once put it.

Another observer, Jenny C. McCune, a contributing editor at Bankrate.com, notes that rather astoundingly, we’ve now come to the point where a debtor may have to “finance bankruptcy filing,” adds: “It may sound like a Catch-22…you have no money so you’re filing for bankruptcy, but you need [legal fee] money so you can file for bankruptcy.”

Janathan Ginsburg, bankruptcy attorney, Atlanta, Ga., explains that in phone conversations he often has with callers facing severe financial crises who are pondering possible bankruptcy, after their initial question which is often general in nature, “The next question I get has to do with fees: ‘If I have no money, how am I supposed to pay for a lawyer?’”

Bankruptcy lawyers, schooled in the art of argumentation and the defense of even the clearly indefensible, particularly when it centers on the protection of a lucrative means of making a living, would often plunge into what, in essence, are really deep philosophical arguments in justification of the high fees they charge – it is really still a “bargain” for debtors, considering the much larger sums they stand to discharge in bankruptcy; if a debtor is “really” hard pressed enough by his debt burden and is “serious” about freeing himself of it, he’ll somehow find a way; a debtor, if he is really “serious,” can always find the lawyer’s fees somewhere by, say, withholding the payments he would have had to make to other creditors and then using it to pay the lawyer to free him of the bigger debt burden, etc., etc. It is a complex web of arguments that would have to wait for another day to address. But, for our current immediate purposes in this article, the relevant issue is crystal clear. The point, clearly, is that for the average American debtor today, already reeling from the high debt burden which is the prime object he’s out attempting to address through bankruptcy filing, the average lawyer’s fee for bankruptcy (some $2,000 or more for the simplest Chapter 7 bankruptcy, and $4,500+ for its Chapter 13 counterpart) is high, in deed even exorbitant, and frequently is just plain beyond his means – in short, simply UNAFFORDABLE.

LAWYERS’ FEES HAVE “PRICED OUT” A LOT OF DEBTORS

Seems that the bankruptcy lawyers, through greed and monopolistic instinct, are gradually pricing themselves out of the personal bankruptcy filing business, that the only realistic alternative now left to the tried, seems to be a non-lawyer low-cost bankruptcy.

“Surveys have shown that many attorneys have doubled their fees to cope with new requirements imposed by the BAPCPA of 2005. Many thousands of debtors have therefore been priced out of lawyer representation in their bankruptcies,” asserts Stephen Elias, a California attorney and bankruptcy specialist and author of several books on the subject. “Because of rules governing the practice of law, the only legal alternative to attorney representation is self representation… bankruptcy petition preparers can assist with your paperwork.”

The point then is crystal clear. The fundamental task at hand this very minute in the field of bankruptcy, is devising a credible system that is low-cost for filing bankruptcy, which is simple, straighforwards, and readily accessible, and is, above all, AFFORDABLE to most debtors who legitimately seek or need bankruptcy and are qualified and eligible to file under the eligibility rules. It is, after all, no “gift” or some kind of “favor” being meted out by “the law,” or some kind of mercy-peddling do-gooders of the legal establishment. But, a direct sacred right and gift of the American Constitution.

It is a task which confronts us all, particularly the bankruptcy constituency and the bankruptcy industry powers-that-be who control the current bankruptcy system – the financial and credit industry, the courts, the Congress, but including private entrepreneurs and ideas persons who can come up with new or fresh ideas about how to fix the current broken personal bankruptcy system, and yes, the current bankruptcy lawyers and bar, and others.

But, of more immediacy and urgency in the mean time, however, while we await such a new system to be designed by the responsible parties, qualified American entrepreneurs, institutions and entities who are able, should be free to come up with practical and effective ways and methods – alternatives to the current wholly deficient and inadequate lawyer-controlled bankruptcy system – that actually enable legitimate bankruptcy seekers to exercise their legitimate constitutional right to seek the bankruptcy relief option when and if necessary – simply, accessibly, and AFFORDABLY. In sum, America, both the public as well as private sector, must fast prepare for, devise, and implement, a drastically different but effective bankruptcy filing system that provides the current million plus per year and the upcoming additional millions of bankruptcy filers who will be coming into the bankruptcy filing pipeline per year, a genuinely affordable means for them to file for bankruptcy – the 1.4 million American filers (or more) that are expected to seek the bankruptcy relief in 2009 calendar year alone, and beyond.

Benjamin Anosike, Ph.D., has been dubbed by experts and reviewers of his many books, manuals and body of work, which dwell largely on self-help law issues, as “the man who almost literally wrote the book on the use of self-help law methods” by America’s consumers in doing their own routine legal chores – in uncontested divorce, will-making, simple probate, settlement of a dead person’s estate, simple no-asset bankruptcy, etc. A pioneer and intellectual and moral leader of the 1970s-based “you do your own law” movement and a lifelong vehement advocate and veteran of historical battles for the right of the American consumers to perform their own tasks in the area of routine legal matters, Anosike was one of the pioneers who fought and survived (along with many others of courage) the lawyers’ and organized bar’s stiff war of the 1970s and ’80s against American consumers and entrepreneurs who merely sought, then, to use, write, distribute or sell law-related self-help books and kits for non-lawyers to do their own law, upon the lawyers’ claim then of such being purportedly “unauthorized practice of law” or “practicing law without a license” Anosike holds graduate degrees in labor economics and management and a Ph.D. in jurisprudence. Once characterized by a review of the American Library Association’s Booklist Journal as “probably the most prolific author in the field of legal self-help today,” Dr Anosike is the author of over 26 books and manuals (and countless number of articles) on various topics of American law, including 4 volumes on personal and business bankruptcy filing, in a lifetime of dedication. For more on the subject matter discussed in this article, or on how to get a low-cost, affordable bankruptcy filing, or the author’s other books and manuals, visit this site: http://www.Afford-Bankruptcy.Com

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How Bankruptcy Works by State

By Cole Collins

Numbers of local consumers newly uncomfortable with their accumulated debt loads are beginning to worry over the economic problems affecting Colorado and the nation as a whole. These consumers tend to flock toward bankruptcy attorneys to see whether or not Chapter 7 or Chapter 13 bankruptcy protection would better their situation, and, after the changes to the bankruptcy code following the 2005 legislation, whether or not they would even qualify for Chapter 7 debt elimination bankruptcy in their state of residence. While virtually all the citizens of Coloradan that we have spoken with maintain some knowledge of bankruptcy processes – after all, growing up in the United States of America, even children recognize that bankruptcy is meant to offer a fresh start to debtors who have gotten in over their head with bills they’re unable to pay – most ordinary consumers are unaware of the actual specifics regarding bankruptcy declaration and eventual discharge.

While we can’t pretend that the totality of knowledge floating about the potential repercussions and intrinsic loopholes of bankruptcy should be able to be glossed over in an article such as this, there is information every Coloradan debtor should be aware of before taking another step. It seems, from our correspondence, that almost no Coloradan not already working in the financial services industry has more than a cursory understanding of how their local statutes will protect their assets in the event that they do decide to go through with bankruptcy declaration. For instance, every state holds personal exemptions that borrowers can choose to invoke rather than taking advantage of the (generally far harsher) federal exemptions, and these may change greatly depending on the borrowers’ location around the country. Any consumer seriously interested in bankruptcy should first do their own research on how bankruptcy (and, especially, bankruptcy in Colorado) could help their own financial scenario before paying the ever more expensive costs that comes along from even a consultation with experienced bankruptcy attorney firms. These lawyers charge by the hour, after all, and there is no reason to ask questions that could be easily answered for free should the borrowers have sufficient interest.

Once again, virtually everyone your authors have spoken with in Colorado knows the most basic information about bankruptcy protection – consumers with sufficient debt balances (provided they’re the right sort of unsecured loans) will be considered for a Chapter 7 debt elimination program (provided they have not earned too much money in the preceding years) that could liquidate their credit card bills and similar burdens under the full protection of federal and Colorado state law. The bankruptcy process was originally legislated to offer a new hope for borrowers that have bitten off more than they could chew. To a large degree, for debtors sufficiently desperate and who have suffered genuine calamities necessitating governmental assistance, this can still be true, but, sadly, only a minority of people living in Colorado would actually qualify under current conditions. Fortunately, even as the official protections continue to dissipate, a number of new debt relief and debt management companies have come into existence which attempt to help debtors in Colorado and across the United States erase their more problematic high interest loans and learn proper household budgets and correct spending behaviors to preclude a return to similar situations. Since the discrepancies between debt consolidation and debt settlement and Consumer Credit Counseling are significant and each solution may be different for different sorts of Coloradan families, it should certainly be a priority for every borrower to learn all that they can about these debt maneuvers prior to helplessly concluding that bankruptcy would be the only solution available.

To be sure, however difficult it may now be for Colorado borrowers to avail themselves of bankruptcy protection, it is nonetheless a federally sanctioned legal right to at least file a petition declaring your intentions, and the very act of bankruptcy declaration prevents your accounts from debtor harassment or attempts at collection. Once any borrower files for Chapter 7 or Chapter 13 bankruptcy protection in the state of Colorado, the various lenders – and whichever bill collectors the lenders may have been working with – are legally required to end all forms of communication. Unless the lenders can prove that they will lose money by waiting for the trustee chosen by the Colorado courts to render a judgment on the borrowers eligibility for bankruptcy through depreciation of collateral or other means (this rarely happen), the filer should at the least be granted a sudden peace of mind just after declaration. This does not, of course, guarantee the Coloradan borrower shall qualify for bankruptcy nor that the Chapter 7 debt elimination proceedings would be advantageous once all the drawbacks were taken into consideration. Like virtually all elements of consumer finance, no strategies should be entered into blindly or chosen without time for reflection and sufficient amounts of research and self education that would allow all due deliberation. In this article, we would primarily like to go over the reasons each Colorado borrower may invoke when first thinking about bankruptcy, the various processes and statutes borrowers should be aware of before filing (as well as those alterations and exemptions specific to Colorado), and the other debt relief techniques that have become popular in recent years.

When deciding on the necessity of bankruptcy, there are a few different aspects each Coloradan should consider fully before making a final decision – or, again, even spending dollar one on a discussion with the bankruptcy lawyer they would consider using. If the interest rates on any given loan are sufficiently high so that the borrowers cannot satisfy much more than the minimum payments each month, Chapter 7 or Chapter 13 protection should certainly have to be thought of as an option. In the same way – this almost always goes alongside the previous problem, as a matter of fact – borrowers whose collected unsecured debts have amassed to a degree that they would be virtually impossible to repay over the near future may genuinely need look into bankruptcy or any other debt solution available in Colorado. Further, as you should imagine, the regular threatening phone calls and mailings from lenders or collection agents working on their behalf should be a strong warning signal that something has to be done. Remember, as soon as you start working with a debt management firm or file a bankruptcy petition, Colorado state law guarantees that all collector harassment shall immediately cease. In the event that secured lenders have begun the proceedings to enact foreclosure of personal residences or the repossession of automobiles (or, even, the much less common but still effective civil court summons for potential forfeiture of property), you’ll have little choice other than to employ an attorney or debt professional to aid you with your financial burdens.

Essentially, Colorado borrowers must sit down with their families and struggle through the question of whether or not they can justifiably expect to pay back their worst bills (those debts either featuring high interest rates or adjustable interest rates bound to escalate plus loans which demand balloon payments or risk default) in a reasonable amount of time. What do your debts look like compared to the family financial situation of one year ago? Have they become progressively worse? Clearly, demonstrable headway that has been made in paying loans down should be seen as a sign that successive attempts at personal debt management may be enough to eliminate the majority of your problems while, in the same way, ever increasing debts are a reason to investigate bankruptcy or seek out professional assistance from your area of Colorado. Do you have any reason to believe that your income will greatly increase over the short term? Have you considered the overall financial free fall otherwise seen by most aspects of the Coloradan economy and the status of the American economy as a whole? If your motivation for believing the resolution of all debts shall come from some preyed upon inheritance or similar windfall, we strenuously counsel suspicion and a clear headed maintenance of resolve. You have no idea how many Colorado citizens we have corresponded with who let their debts fester while vainly waiting on a miracle only to end up declaring bankruptcy after their credit rating had been unnecessarily ruined (even worse than if they had gone bankrupt in the first place) and family morale irreparably harmed.

It’s easy enough to recognize your problems when you have bill collectors breathing down your neck and even the minimum payments seem beyond hope of remuneration. Once consumers realize that they can’t depend on their own incomes to better their own situation – no matter the attempts at controlling spending and hewing to a budget – it’s a simple step toward bankruptcy. However, for those Colorado borrowers who have not yet reached rock bottom, who still think they may be able to climb out of debt burdens on their own, it may be surprisingly difficult for consumers untutored in the complexities of finance to understand just how potentially dire their debt circumstances may be. Any Coloradan resident with unsecured debt obligations in the amount of ten thousand dollars or greater needs to give serious thought to employ some debt solution program, but, still and all, this is still not necessarily the time for bankruptcy. For this reason, your authors advise using one of the debt calculators online to attempt some more accurate estimation of your payment time lines and how much you would end up paying in compound interest over the duration of your various debts. Even then, if you still have trouble with the math (and credit card companies have little reason to simplify this process), you may wish to talk with one of the debt management or debt settlement companies that offer free consultations to see what they would suggest.

Once again, in many situations, these debt relief firms are likely to say that utilizing the bankruptcy protection of federal and Colorado law would be the most beneficial alternative. Successfully undertaken, Chapter 7 bankruptcies could liquidate all applicable revolving debts – credit card accounts primary among them – and your authors understand how very attractive that scenario must seem. Discharged obligations are the cherry on the cake of bankruptcy protection, but there are other benefits above and beyond the potential of dissolution of legal debts much as that aspect garners the headlines. In Colorado, as we have mentioned, merely filing the initial documents for Chapter 7 or Chapter 13 bankruptcy declaration will force all creditors to halt their attempts toward debt collection even if court actions had already been begun to garnish wages or repossess vehicles. Indeed, even those assets recently reclaimed by the collection agency will be (temporarily, depending on the Colorado trustee ruling) returned by the lender following a bankruptcy petition. In the same way, utilities that had been turned off because of faulty payments will be immediately restored, and foreclosure proceedings for residences will be suspended for the time being. For borrowers who believe their mortgage company or other lenders acted in poor faith or had even committed out and out fraud but were unaware of how to alert authorities or afford proper lawyers, this time and avenue toward the courts should alone be worth the bankruptcy proceedings. It’s especially difficult to fight multinational corporations when your power has been shut off, and the Colorado justice system will be allowed additional time to study and consider any borrower claims.

At the same point, much as Chapter 7 bankruptcy protection can do grand things for the lucky Colorado consumer, it’s certainly not the savior to every borrower. Even if you are accepted into the program, you will find that dollar one of many sorts of debts – for some individuals and families, perhaps even the majority of your debts – will not be affected in any way. Secured debts such as home mortgages and car loans, presuming you wish to maintain the possessions that these debts are attached to, will be essentially left alone although the consumers will be asked to reaffirm these obligations with the original lenders. Student loans, for these purposes, will be considered another sort of secured debt since legislation pushed through congress in the late 1980s ever after disallowed the discharge of all education loans in Colorado and throughout the country. Furthermore, borrowers should not expect any funds that are owed for familial debts like alimony or child support to be done away with, and, for that matter, all debts handed down by the government or courts (from penalties to taxes resulting from criminal misdeeds) of America or Colorado are similarly rendered invulnerable. As another element to consider, should the debts have been co-signed, the other party may be held liable for the entirety of the obligation. Considering the limited debt liquidation available even from successful Chapter 7 bankruptcies, one can’t presume the program shall best aid each consumer problem.

More to the point, there is also no guarantee that Chapter 7 protection will even be made available to every Colorado borrower that genuinely seeks an elimination of their burdens. Once a petition is filed for Chapter 7 debt liquidation, the court decides on whether or not the potential for unsecured loan discharge will be deserved. Should the Colorado court trustee decide otherwise, the borrower will be deemed eligible for Chapter 13 bankruptcy debt adjustment program which – while still forcing a temporary stay of collection that may be of sufficient help for truly needy consumers – demands a monthly payment to the trustees which the courts shall then distribute among the assembled lenders. Unlike the Chapter 7 program, even credit card bills will be largely satisfied by the original borrower under Chapter 13 protection, and the courts shall determine a budget (alongside the budgetary guidelines predetermined by the Internal Revenue Service according to their, shall we say, somewhat fantastical expectations about Colorado living expenses) that the household shall have to survive under for the sixty month period of repayment. In this way, aside from the temporary end to bill collector harassment, Chapter 13 will be not much more effective than any personal attempt at debt relief, but the programs legal restrictions could prove far more damaging should the court unfairly decrease your actual expenses or should your household earnings falter during the time of repayment.

There are other forms of bankruptcies, the different Chapter applicable under Colorado law range from those dealing with family farms to actual municipalities, but virtually every borrower shall only have to concern themselves with Chapter 7 or Chapter 13 protections. Really, since the Chapter 13 budgetary guidelines are so strict and the benefits so small, consumers in Colorado should only knowingly enter Chapter 13 when they have a tax obligations that they’re otherwise unable to resolve or secured (mortgage, auto loan, investment) loans that are in jeopardy of default but which they believe they should be able to repay given reaffirmed terms. As happens, most every borrower that goes into Chapter 13 protections only does so because the Colorado trustee – following the directives of the 2005 congressional alteration of the US bankruptcy code – finds the individual or couple declaring bankruptcy earns too much money. The recent code changes examine each bankruptcy petition in terms of the filers gross income as compared to the median income of their state of residence. For consumers filing in Colorado, this means that a single borrower must have less than forty two thousand in earnings according to recent census information. A Colorado household with two members would have to earn less than sixty thousand, three members would need less than sixty four thousand, four members would need less than seventy five thousand and so on. Understand, beyond simple tax records of earnings, that the formal stipulation does not allow the Colorado trustee to look at the filers’ debts but only their incomes, and borrowers who petition for bankruptcy without properly checking their figures against the median income of Colorado residents could be in for five desperate years.

The legislation of 2005 did more than simply make it more difficult to enter Chapter 7 debt elimination programs, of course. There is so much misinformation swirling around the recent changes that many of the Coloradan citizens we have spoken to are falsely convinced that bankruptcy protection which would liquidate credit card bills no longer even exists. As we have written, presuming borrowers pass the income regulations, Chapter 7 protection could be a salvation for the right filer, but, still and all, further hurdles have been erected. The documentation requested from all debtors upon finishing their petitions – from expense receipts to half a years worth of income evidence – has become far more challenging for ordinary citizens who have little time to go tracking down paperwork. Also, borrowers will be forced to take a credit counseling course before their bankruptcy will first be considered and, again, before their bankruptcy will be discharged. Not only will the interested consumers have to pay the not inconsiderable costs from their own pockets, they may have to travel some ways from their area of Colorado just to find a training course certified by the federal government. For many debtors, especially those who most need the assistance of bankruptcy protection, the time required by these various new obligations and the initial costs involved are more than they could easily bear. Frankly, once the charges for the courses are put together with the governmental fees and the truly significant funds demanded by the attorneys – more than ever, after the paperwork grew exponentially more difficult following code alterations, attorneys experienced in Colorado bankruptcy law are needed to ensure not only that borrowers find the best representation but also that they shield themselves from fraud charges following documents mishandled from laziness or neglect – personal bankruptcy could be out of reach just because consumers needed the protection too much.

There is still more elements to be considered for any Colorado borrower considering bankruptcy. Either form of debt protection thoroughly harms credit ratings and F.I.C.O scores for years afterwards, up to a decade in the worst possible case, and filers should expect interest rates approaching twenty percent for vehicle loans or whatever other credit accounts they could land. Even more troubling, Chapter 7 bankruptcies, even presuming the trustee should agree that the case should go forward (and presuming the debtor could afford to declare bankruptcy in the first place), essentially guarantees that the courts are now in charge of the filers personal possessions. As long as debt elimination bankruptcy has existed in the United States, the assets of those borrowers accepted into what became known as the Chapter 7 bankruptcy were subject to forfeiture by the courts and eventual auction with the funds to be handed over the lenders whose burdens would be defaulted upon. However, previously, the courts only looked at the potential resale value of the household items when deciding what and what was not an asset while, currently, borrowers must now worry about their lives possessions being prized as according to their replacement value which renders most everything up for grabs.

Colorado borrowers declaring Chapter 7 are considerably more fortunate than their fellow citizens in this matter. Under Colorado state exemptions – as opposed to federal ones – residents filing for bankruptcy may vouchsafe household furnishings up to three thousand dollars, tools of trade up to twenty thousand, and two thousand dollars worth of art, music, collectibles, or hobby equipment. Compared to the national exemptions, the Colorado bankruptcy statutes should be seen as exceedingly generous. Furthermore, under the Colorado homestead exemption, residents filing for bankruptcy may keep their homes provided there is not more than sixty thousand dollars of equity as would be proven by recent appraisal (which should not be much of a problem given the current real estate market slowdown), and they’re also able to keep their automobiles as long as there is not more than five thousand dollars of equity from blue book pricing (which, for most any vehicle, should not be an issue at all). Furthermore, aside from the homestead, all of these Colorado exemptions would be doubled for married couples filing jointly. Also, though this is true for most of the nation, retirement plans (social security benefits, I.R.A, and most any pension) won’t be touched as well as most forms of public assistance including unemployment compensation and veterans benefits no matter how large the eventual funds may be.

Even though debtors filing for bankruptcy protection in Colorado are demonstrably better off than their counterparts throughout America, any consumers who remain curious about the option should keep in mind how quickly – regardless of the exemptions Colorado grants – the values of household possessions could grow depending upon the wrong trustee at the wrong time. Again, depending upon circumstances, Chapter 7 or, even, Chapter 13 bankruptcy declaration could be the right choice for a certain sort of Colorado borrower, but other alternatives should not be ignored. Admittedly, the depressed property values in Colorado, particularly the Denver and Colorado Springs areas, should effectively preclude mortgage debt consolidation for any borrower that wants to keep their family residence. Also, the Consumer Credit Counseling approach has recently come into question after the income profile of most consumer credit counseling companies showed that they accepted as much if not more from the credit card companies they were supposedly fighting against as they did from their debtor clients. When speaking with Coloradan borrowers that managed to liquidate their accumulated burdens without braving the potential household destruction of bankruptcy protection, the industry that comes up time and again as a success story has been debt settlement.

After employing a certified and experienced debt settlement negotiator to use the very threat of Chapter 7 debt elimination against the lenders, these counselors regularly induce representatives of the credit card companies to cut the accounts owed by as much as fifty percent with minimal effects toward the borrowers’ credit ratings. Nothing comes for free, of course, and the debt settlement companies shall still insist upon an eventual repayment of the lingering unsecured balances in less than five years. Obviously, the debt settlement firms also have little assistance to offer with those loans attached to neither collateral nor any governmental protections. Nevertheless, considering the minimal upfront costs and the limited damage done to credit reports and F.I.C.O scores from a successful debt settlement negotiation (as well as the long list of satisfied Colorado debt settlement clients we have corresponded with over the past year), your authors would be remiss if we did not urge every potential filer for bankruptcy protection to at least have a chat with a local debt settlement professional. Even if your area of Colorado doesn’t have a debt settlement specialist easily obtainable in person, there is any number of relevant professionals available from internet sites throughout the web. So much of financial analysis ends up being conducted remotely, in any event, and, as long as the Coloradan client researches the online firm they wish to talk with, there should not be any more fear to web sites than from unfamiliar store fronts. It’s still likely, even probable, that bankruptcy protection will be the best possibility for you and your family, but, as long as debt settlement continues to thrive in Colorado, there is no reason not to explore other solutions.

For more information on this topic or if you are in immediate need of debt relief or debt settlement, please visit TotalDebtRelief.net.

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