Voices in Finance » Bankruptcy

On the Verge of Bankruptcy? Make Sure You Have Assessed Your Options

Mike — Mon, 30 Apr 2012 17:01:44 +0000

The stigma of dealing with unmanageable debt can be very difficult to manage, particularly for the older generation who view debt very differently and as something to avoid at all costs.

But today many thousands of people are contemplating bankruptcy as their last solution, having found that they cannot deal with their escalating debts. This can be for a variety of reasons – a loss of a job, failure of a business, a divorce or separation or general bad luck and poor financial management over a sustained period of time. Regardless of the reason, bankruptcy is a serious procedure and one to be considered very carefully. The good news for most people is that there are alternative solutions to pursue at an earlier stage before bankruptcy becomes necessary.

Dealing with Debt

Large and unmanageable debts cause stress, pressure on relationships, worry and can lead to depression for those struggling to deal with the money worries on their own. So the first step to tackling the problem is to share it – ideally with a qualified debt counsellor.

Bankruptcy used to be the only real solution but now there are other options such as Individual Voluntary Arrangements (IVAs) and other structured debt-management plans, including debt consolidation.

Speak to Someone

A credit counselling agency will give you professional help and your adviser will work with you to understand your personal situation. This means taking a deep breath and totalling your debts, ascertaining your income and looking at your budget. They will help you to create a budget, so that you can see if it’s possible to get out of debt without needing further professional help. Often some good planning, support, discipline and a clear approach can help many people to pay off their debts without needing further services. They can transfer expensive credit-card balances to a single zero-per-cent-interest card, for example and refrain from any further spending with it. A cash-only lifestyle can also be very effective, along with identification of ways to increase income such as a second job, selling assets or working overtime.

If the debts do need a more structured approach and you can’t handle them alone, your advisor will enrol you onto a special debt-management scheme in which you repay your debts through a single monthly payment and have lower interest rates. Your debt advisor will negotiate with your creditors for you so you won’t be chased any further by them. At the end of the programme, providing you have stuck to the terms, you will be debt free.

There are also settlement plans under which a portion of your debt is waived so the principal becomes an amount you can afford to repay. Again, you make a single repayment to the debt-settlement company. Be aware that this will damage your credit score, as you’ll still be writing off debt.

Bankruptcy will continue to be the only option for some cases where other avenues are either left too late or are not appropriate. But the best course of action is always to seek out qualified and expert advice before you do anything else.

This guest post was written by Francesca, a UK-based freelance writer who enjoys sharing her knowledge on topics relating to financial matters. She writes on behalf of IVA Expert.

Should You Pay for a Credit Monitoring Service?

J. Hamilton Fraser — Wed, 06 Apr 2011 18:11:38 +0000

Financial problems are epidemic today. People are struggling to maintain their financial footing and are looking for tools to help stabilize them. Many people in Minnesota who have been overwhelmed by debt turn to Minnesota bankruptcy lawyers for a solution. Others who are concerned about protecting their credit score from identity theft or other damaging events are choosing to use a credit monitoring service.

What Does a Credit Monitoring Service Do?

The main purpose of a credit monitoring service is to keep you informed of what is happening with your credit records. Credit monitoring services aren’t the same thing as requesting your free annual credit report. These services provide continuous monitoring, alerting you instantly to any changes or unusual activity, and there is a fee involved.

One of the most touted benefits of credit monitoring services is the prevention of identity theft by quickly warning you of activity occurring in your name. Statistics show it usually takes about a year for someone to realize their identity has been stolen and by that time, it’s usually too late to salvage your credit score. The crime is realized much sooner with the monitoring service, decreasing the risk that your credit rating will be damaged.

Is it Worth It?

Naturally, there are two different opinions about the answer to that question. The fees charged by these services usually range from $10-$15 a month. Some experts feel that it is a beneficial service for certain people, including those who know their identity has been compromised. Others say that it is an unnecessary expenditure and the benefits are superficial.

Whether you choose to pay for credit monitoring services or not is a personal decision. It may be the right choice for some, particularly those who have recently had personal papers such as credit cards or a drivers license go missing. People in the process of applying for a mortgage or those with a very high credit score may also get some benefits from the service.

If, on the other hand, your credit score is already damaged due to job loss, medical bills, or other financial crisis, bankruptcy is probably the better tool to consider. So if you live in Minneapolis, talk to a Minneapolis bankruptcy lawyer and see if bankruptcy is a viable option for you.

Bankruptcy Attorneys Can Clear Up 7 Myths About Bankruptcy

J. Hamilton Fraser — Tue, 05 Apr 2011 15:08:13 +0000

Not all the chitchat you hear through the grapevine is true. If you live in or around LA and you have any questions about debt consolidation, filing for bankruptcy, how to handle creditors, etc. bankruptcy attorneys in Los Angeles will gladly clear up several myths that are still circulating, despite all the legal advice that is available in books and on the Internet.

For those readers looking for quick answers, here are a few myth busters.

1. It is NOT true that you will never be able to borrow money again. Once debts have been discharged for a certain period of time, you can start the process of credit restoration.

2. It is NOT true that both spouses have to file for bankruptcy. Married people can file jointly or individually.

3. It is NOT true that it is difficult to file for bankruptcy. There are many bankruptcy attorneys in Los Angeles ready to answer your questions, assist you with the paperwork you need to file for bankruptcy, or to help you deal with creditors.

4. It is NOT true that you can file for bankruptcy only once. There is a waiting period to prevent abuse.

5. It is NOT true that filing for bankruptcy helps your credit rating. Actually, filing for bankruptcy will put a black mark on your credit rating.

6. It is NOT true that all debt is wiped out just because you filed for bankruptcy. Ask your bankruptcy attorneys in Los Angeles for more details on which of your debts will be eliminated and which ones will remain.

7. It is NOT true that you will lose everything you own when filing for bankruptcy. Your California bankruptcy lawyer will sit down with you and explain exactly how much you can keep. You will have to decide if you want to keep your home, your car, or other assets. A lot of your property will be divided into categories. Choose wisely!

Dealing with the Money Problem of Debt

J. Hamilton Fraser — Thu, 24 Feb 2011 13:38:07 +0000

Debt is a huge money problem that is very common. So many people have quickly racked up debt on credit cards and through loans and struggle to pay it back. Dealing with debt can cause problems in other parts of your life as well such as stress and problems with relationships. If you want to deal with your debt without filing bankruptcy, follow these steps to get it done as fast as possible so you can move on with your life.

The very first and most important thing you can do is stop using your credit cards and accumulating more debt. You can’t help the interest at this point, but you can stop charging. In order to minimize your interest, you may be able to find a good consolidation loan that helps you consolidate all your loans and credit cards into one loan with a lower rate. Another idea is to transfer your credit card balances to a new card with 0% balance transfers for the first 6 months or another time frame. If you can’ manage this, you can go several months without paying interest.

Next, set up a budget. A budget is what is keeping you from managing your payments and what got you in this mess in the first place. You should be spending less than you earn and putting that money toward your debt payments. The faster you want to cut out your debt, or the more severe your situations is, the more spending you will need to cut out. Cut out any spending you don’t need, such as cable or eating out, and learn how to conserve gas, food, energy, etc. Use your budget to place limits on your spending to maximize your savings.

Pay the minimum payment on your loans and cards every month to maintain good credit. After that, put all the extra money you save each month toward the loan or card with the highest interest rate. Once that loan is paid off, put all the extra money toward the next highest interest rate. This will maximize your interest savings. If you’ve gotten a consolidation loan, put it all toward that loan. Keep working hard and soon all your debt will disappear.

What Is Bankruptcy Assistance?

J. Hamilton Fraser — Tue, 19 Oct 2010 21:21:54 +0000

It is all too easy to focus on acquiring material things in a consumer-driven society. And if it becomes a habit, there is a distinct possibility that you will lose a lot of money. In the end, this habit of overspending may result in being broke, in debt and will the need may arise for bankruptcy assistance. Often times we spend too much on things like homes, cars, toys, vacations and more, without knowing if we can pay for them within a sensible budget. So if you are facing a bankruptcy situation, having knowledge on a bankruptcy assistance program can help you handle your financial difficulties.

More often than not, when people get behind on their bills, the first possible reaction may be one filled with fear. Being in debt can also instill a great stress for one’s family and can result in more complicated issues. You might then find yourself deciding whether to file for bankruptcy assistance and you might be worried you will be in even deeper debt. If you really need money then filing bankruptcy assistance could be your best option.

Getting assistance can also bring stress relief from the thought of being penniless. Professionals and financial experts will be more than willing to work with your creditors in order to decrease the amount of money that you owe. The support you can get may be in the form of a payment plan that is much more affordable than what you currently have, or a reduction in interest rates on loans and credit cards on top of that. You may think that it would be impossible to convince your creditors of a lower interest rate or overall debt reduction but, they would rather get something over nothing. So any payment from you is a step up for them.

Getting bankruptcy assistance is not that difficult and it is very beneficial to you personal finances – in some cases hiring a bankruptcy lawyer may be appropriate too. You can search for many companies that offer this service. However, you should take time to research on the background of the company because a company or a financial institution that offers this service has the possibility of fraud. Being careful to choose which company to apply for your bankruptcy assistance will be very helpful in minimizing you efforts, time and money in the fight to get out of debt and the financial trenches of bankruptcy.

Can I File For Bankruptcy More Than Once?

J. Hamilton Fraser — Sun, 17 Oct 2010 21:42:57 +0000

If you’re not good with money, you may have been forced to file with bankruptcy in order to reduce or even eliminate your mountain of debt. Unfortunately, not everybody is able to get out of debt even after filing for an bankruptcy and may be stuck in the regrettable position of considering filing for a second bankruptcy. If you are in this position, you will need to consult with your Chicago bankruptcy lawyer in order to be sure that you are still eligible to file for bankruptcy. Your options may be limited if you have recently filed for bankruptcy.

Chapter 7 Bankruptcy

The rules for filing multiple bankruptcies depend on the type of bankruptcy you have previously filed and which type of bankruptcy you plan to file. If you have recently filed for chapter 7 bankruptcy, you will not be able to file for another chapter 7 bankruptcy for the next eight years. If you recently filed for chapter 13 bankruptcy there is a slightly shorter waiting period. You must only wait six years from a chapter 13 bankruptcy before you file for a chapter 7 bankruptcy.

Chapter 13 Bankruptcy

The rules for chapter 13 bankruptcy are slightly more lenient than the Chapter 7 rules. The only required waiting period between chapter 13 bankruptcies is two years. As long as you have not filed for chapter 13 bankruptcy within the past two years you are free to file for another bankruptcy. However if you have filed for a chapter 7 bankruptcy any time in the past four years it is a different story. Because chapter 7 is a more serious type of bankruptcy the waiting period is twice as long. The waiting period between chapter 7 bankruptcy and a chapter 13 bankruptcy is four years.

Although bankruptcy is a necessary tool for some people’s financial well being, the best advice is to avoid filing for bankruptcy if at all possible. Consulting your Chicago bankruptcy attorney may help you to find ways to avoid bankruptcy. Your credit record will have a giant mark on it for ten years after filing for any type of bankruptcy, causing many lenders to be extremely wary of providing loans. This can hinder credit card applications, car loans and mortgages. Multiple bankruptcies should be avoided as they can make the already difficult process of getting a credit card or car loan even more difficult. Except as an absolute last resort, multiple bankruptcies should not be used.

Declare Yourself Bankrupt: Chapter 7 and Chapter 13

J. Hamilton Fraser — Thu, 17 Jun 2010 11:30:02 +0000

Nobody wants to do it and sometimes it is the best thing you can do: declaring bankruptcy. You can declare yourself bankrupt if you find that the debt you currently have you cannot pay. Frequent reasons for filing bankruptcy include sudden loss of a job, divorce, excessive medical bills and excessive credit card debt. In every case bankruptcy is a last resort—though making the decision to file may free you up for future financial success and a slow rebuilding of credit. If you are forced to file due to large insurmountable debts, remember that there are strategies to rebuilding your credit and make the best decision you are able to do. Also keep in mind that there are several types of bankruptcy, for example, chapter 13 bankruptcies for those who are able to make monthly payments. Chapter 13 bankruptcy can be a good way to retain valuable property in cases where the declaring is able to make payments. Filing Chapter 7 bankruptcy, on the other hand, erases most types of debt at the surrender of valuable property still owned by the debtor.

Often times when it comes time to consider filing bankruptcy, the debtor knows the ins and outs of his own situation and has explored numerous routes and alternatives. Let it be stressed that if there is any other option available to the debtor, taking it will greatly and positively effect the debtors future and should be taken. If no other option exists, filing for bankruptcy does have distinct benefits. If you are reading here, you are familiar with the stress, anxiety and sleeplessness that comes with exorbitant debt. The debt collectors call at all hours of the day making threats and trying to force you to pay. You sit hoping you can buy groceries not knowing how you will make even a single payment on any of your existing debts. Bankruptcy can remove that stress and free you from the constant calls.

By filing for chapter 7 or 13 bankruptcy you declare that you are released from personal liability for certain types of debt. That discharge from debt is permanent. Keep in mind however that in the event of a chapter 7 bankruptcy you cannot keep valuable possessions such as a house or car that is still being paid off. Also, in both cases, existing student loans are not forgiven—only under very specific conditions will student loans be relieved from the debtor. You may have many other questions. Researching bankruptcy is advisable; remember, even filing bankruptcy has associated costs: $200 for Chapter 7 and $185 for Chapter 13. If filing bankruptcy is your last option it is the best option.

Choosing Between Foreclosure or Bankruptcy

J. Hamilton Fraser — Fri, 04 Jun 2010 18:14:57 +0000

When an individual hits a rocky patch financially, they are often faced with difficult decisions. In today’s tough economic times, many people are faced with the possible loss of their home. In searching for options to save their home, many people consider bankruptcy. Bankruptcy has a different set of pros and cons than a home foreclosure. For the unlucky people trying to make this difficult choice, there are some real differences to consider first.

With a home foreclosure, a borrower has fallen behind on their monthly mortgage payments, and the lender is threatening to foreclose. In the foreclosure process, a mortgage holder takes the property back from the home owner in repayment, or partial repayment, for the mortgage debt that is unpaid. The home is sold either at sheriff’s sale or at some other courtroom proceeding, in order that the bank be repaid. The most difficult part of a foreclosure is losing ones home. The default on the mortgage debt will remain on a homeowner’s credit report for seven years, and can cause the borrower to be turned down for additional credit. But after a number of years, this default is treated as any other blemish on a credit report. In other words a borrower can eventually rebuild their credit and regain a good credit score. For the homeowner that is unable to afford their home, even if they can work out a plan for the bank, a foreclosure may be difficult but necessary. The short term affects are the same as any other credit default.

In a bankruptcy proceeding, a borrower seeks to either set up a repayment plan or discharge their existing debt. This debt can include any unsecured loans, credit cards, or secured loans on homes and cars. While certain debts cannot be discharged in bankruptcy, it’s also true that recent bankruptcy law changes may force a debtor to repay some or all of their debt. The reason bankruptcy is a difficult choice is because the debtor is defaulting on all of their debts from multiple lenders, not just a single debt as with a home foreclosure. In bankruptcy, even if the debtor repays some of their debt, lenders will look at it suspiciously for years. One of the benefits of bankruptcy is that if you have steady income, you can work out a repayment plan that might allow you to keep your home for example. This is the main reason many borrower seek bankruptcy protection instead of allowing their home to go to foreclosure. If you aren’t able to make payments under a bankruptcy repayment plan however, perhaps because of job loss, your house will still go to foreclosure even in the bankruptcy process. Bankruptcy does not prevent foreclosure, it may only delay it.

So which should you choose, foreclosure or bankruptcy? If you really want to keep your home, and you’re able to make payments on the note if you reorganize your debt, you may elect to go to bankruptcy court. If however you cannot afford the home at all, and if ending your mortgage payments will allow you to bring other debt current, you may have to make the hard choice to allow the bank to foreclose, and avoid bankruptcy which can have worse credit implications.

Hiring A Lawyer When You Declare Bankruptcy

J. Hamilton Fraser — Fri, 04 Jun 2010 00:52:54 +0000

If you are like many Americans, and you are falling deep into debt, you may be considering declaring for personal bankruptcy. Regardless of whether you file as an individual, married couple, partnership, or corporation, this is a long and tedious process, with a lot of paperwork and forms that have to be filed and submitted. Even though it is going cost you additional money just to file, it is recommended that you get a lawyer to represent you throughout this process.

Do your research and ask around, there are many lawyers that specialize in bankruptcy cases. Also many of them offer free consultations, this way you can check out two or more lawyers if you would like before you commit to one. Ask them about their experiences with bankruptcy, and also their prices. Since you are declaring bankruptcy, you obviously are struggling financially. Most lawyers will offer some sort of deferred payment options and will work with you knowing that you can’t pay for everything upfront. If they say that they don’t, find one that will.

Having a lawyer represent you is going to save you a lot of time and confusion. They can advise you in regard to what chapter to file under, and assist you with other aspects of the process. There is so much legal paperwork, and it can be very confusing. You want to make sure that this paperwork is filed and submitted correctly and legally for your personal benefit. You want someone explaining to you and directing you through the United States legal system. When you are interacting with the trustee assigned to your case, you are going to want to have your lawyer present. The cost of a lawyer may save you additional costs and some of your assets in the long run.

Go ahead and sit down and get a free consultation with a lawyer, and take their advice. They may not even recommend that you file for bankruptcy. Make sure you know your rights and the facts before you proceed. With proper representation the bankruptcy process can go quickly and smoothly.

How to File for Bankruptcy Without a Lawyer

J. Hamilton Fraser — Mon, 22 Mar 2010 21:15:08 +0000

If you need to file for bankruptcy, you’re likely hoping to save money on the various fees you’ll need to accrue during the bankruptcy process. You may feel inclined to proceed with the bankruptcy process without the help of a Minneapolis bankruptcy lawyer. Depending on the complexity of your bankruptcy situation, it is possible for you to file without help. It is important to understand that bankruptcy is a process requiring a great deal of effort, time and paperwork. If you’re ready to attempt bankruptcy on your own, here are some tips:

1. Thoroughly understand bankruptcy law in your state. Research different types of bankruptcies and have a general understanding of Minneapolis bankruptcy law. Understand the qualifications for filing and the process regulations to avoid trouble.

2. Fill out the bankruptcy means test. The completion of the bankruptcy means test is required for you to proceed with bankruptcy. The test will also reveal whether you are allowed to file for a Chapter 13 or Chapter 7 bankruptcy. The test involves calculating your household income and comparing it to the household income for a household of the same size in your state—this will require some research. If your monthly income average falls below the household income average in your state, you may file Chapter 7 bankruptcy. If your average is above the comparable median income, calculate and subtract your monthly expenses from that number. The remaining amount is considered ‘disposable income.’ The larger your disposable income, the smaller your chance of being eligible for Chapter 7 bankruptcy.

3. Obtain your credit report. You can request one free copy of your credit report annually. Ensure that this copy includes reports from all three primary credit reporting agencies. Debt not included in your bankruptcy is not eligible for liquidation.

4. Receive credit counseling. Before filing for bankruptcy, you are required to undergo credit counseling and training regarding debt management. This is something you can do online with a few hours and less than $100.00. A certificate of completion is required by the court.

5. Review and submit paperwork. Depending on your location, you can file online or at the courthouse. Either source can provide you with paperwork. Complete the form as instructed, provide information about all debts and assets and most importantly, offer complete honesty. Failure to provide complete and accurate information will lead to a denial of bankruptcy and more fees. You must pay a required filing fee and wait approximately one month. At that time, a creditors meeting will occur. As long as there are no objections, you can expect your case to be finalized in about half a year.

While it is possible to file for bankruptcy on your own, the paperwork can be very intimidating and stressful, especially when added to financial woes. Accuracy is critical. While it may seem difficult to find money to hire a Minneapolis bankruptcy attorney, your attorney can work with you to find the funding and ensure accuracy on all filed paperwork.