ANSWERS TO COMMON BANKRUPTCY QUESTIONS:

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Personal Bankruptcy: A Very Worrying Thought - By: Jona

Looking at the majority of cases, merely seriously considering personal bankruptcy is enough to scare somebody so much that they be tempted to panic and be afraid to carefully examine their financial troubles. Unfortunately, statistics show that around five people out of every thousand have found themselves filing personal bankruptcy and even more worrying, this number is going up. To compound this, reports from research agencies show that the fundamental reason that consumers are filing for personal bankruptcy is due to excessive spending which accounts for excessive debt. If these same people then get the financial weight of unplanned and unanticipated circumstances this can throw their monetary resources into total turmoil.

There are numerous reasons why an individual might file for bankruptcy. Getting laid off from a job or paying for divorce proceedings are all too common as is the death of a spouse. All have the possibility to spell calamity for your money and budget. The average person that chooses to file for bankruptcy is usually one who has graduated from high school, is a blue collar employee, and is also the head of the household, although they are probably in the class of lower middle income. Simultaneously this person is also going to have stretched their finances too far and will have depended heavily on credit in the past.

Laws presently exist that work to protect both the creditor and debtor and such laws are in place to ensure that those consumers who are honest suffer as little as possible because of their financial mismanagement. The identical laws also offer protection to the creditor and helps them to recover any money they are owed.

If you are looking at filing for personal bankruptcy there are two options open to you. The first is that you can choose to file for Chapter 7 bankruptcy. The second option is Chapter 13 bankruptcy and both differ quite substantially. Chapter 7 bankruptcy requires all of your assets (that are not exempt) to be sold off and the revenues of these assets will be dispersed amongst your creditors to satisfy the debt they are owed.

Chapter 13 bankruptcy is a slightly gentler choice in that it does not expect any elimination of your assets. It does however require you to reorganize your debt load in such a way that you are able to make debt payments over a timeframe of between three and five years.

One of the aspects that many individuals do not think of, however, is that the option of which chapter to file is not their decision. This is a determination of the courts, who will make that decision after a close inspection of your particular financial data. It is because of this that a bankruptcy lawyer is strongly recommended so your information can be shown in the correct format.

However, fear exists within numerous financial analysts who see personal bankruptcy as a serious menace to the wellness of the economy and there is good grounds for this. The count of people who file for personal bankruptcy is rising which in turn causes a worrying trend. In turn this has prompted some dramatic measures being taken.

Only recently, in March 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was introduced and this requires people who file for personal bankruptcy to accomplish a number of tests on the state of their income and to adhere to stricter regulations before they are permitted to declare this type of bankruptcy.

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Finding Answers To Common Bankruptcy Questions - By: Jona

Unsurprisingly, there are many usually asked bankruptcy questions. Unfortunately, this is probably not shocking since bankruptcy is one of the most serious situations anyone can face. Bankruptcy should always be the absolute last resort and only be considered if you are over-burdened with heavy debts, constantly receiving call after call from creditors , and you are determined to find a way out.

Before beginning the bankruptcy process and the complexities of the paperwork, you need to ask yourself some questions that are raised frequently and which you must have the answers to.

Who Will Discover I Am Bankrupt?

To a greater extent than any other, this specific question is one of the most commonly asked of bankruptcy questions. You want to know exactly who needs to know about your situation once you have filed for bankruptcy. You may be planning to apply for a new job in the not-too-distant future or you might wish to apply for a loan. You will need to know what information people have the ability to get and whether they can see you have filed for bankruptcy.

If you have a number of large clear and free assets, a letter will be sent to every one of your creditors informing them of your aim to file for bankruptcy. Do not be concerned about this; this letter will put a stop to the phone calls chasing you for money. When you file for bankruptcy, this information is made public allowing anybody access to it if they wish to see it.

Which Assets Can I Retain?

One other standard bankruptcy question you may wish to ask is which of your assets you are permitted to keep. The good news is that you will almost certainly be permitted to keep most of your assets and possesssions. Even so, you should keep in mind that you do have financial obligations and that some of your assets will be utilized to cover the money that you owe to your debt holders.

When you file for bankruptcy, a record of your assets will be made. Any assets which belong to you at the time of bankruptcy will be taken into account. If those assets have a resale value bigger than the amount you owe on the assets (taking away any exemptions), they will be turned over to your bankruptcy trustee and utilized to cover your debt. This means that a lot of the hard work will be completed on your behalf and you can be assured that the payments to your debt holders will be handled efficiently.

What Happens To My Earnings?

If you are employed when you file for bankruptcy, any money you earn will be given to you directly. Even so, this is only for the current time until you have bills that need to be paid.

These are just some of the bankruptcy questions that are asked. It is worth spending some time to learn as much as you can about bankruptcy so that you can be sure it is the correct option for your situation.

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Finding Answers To Common Bankruptcy Questions - By: Jona

Unsurprisingly, there are many usually asked bankruptcy questions. Unfortunately, this is probably not shocking since bankruptcy is one of the most serious situations anyone can face. Bankruptcy should always be the absolute last resort and only be considered if you are over-burdened with heavy debts, constantly receiving call after call from creditors , and you are determined to find a way out.

Before beginning the bankruptcy process and the complexities of the paperwork, you need to ask yourself some questions that are raised frequently and which you must have the answers to.

Who Will Discover I Am Bankrupt?

To a greater extent than any other, this specific question is one of the most commonly asked of bankruptcy questions. You want to know exactly who needs to know about your situation once you have filed for bankruptcy. You may be planning to apply for a new job in the not-too-distant future or you might wish to apply for a loan. You will need to know what information people have the ability to get and whether they can see you have filed for bankruptcy.

If you have a number of large clear and free assets, a letter will be sent to every one of your creditors informing them of your aim to file for bankruptcy. Do not be concerned about this; this letter will put a stop to the phone calls chasing you for money. When you file for bankruptcy, this information is made public allowing anybody access to it if they wish to see it.

Which Assets Can I Retain?

One other standard bankruptcy question you may wish to ask is which of your assets you are permitted to keep. The good news is that you will almost certainly be permitted to keep most of your assets and possesssions. Even so, you should keep in mind that you do have financial obligations and that some of your assets will be utilized to cover the money that you owe to your debt holders.

When you file for bankruptcy, a record of your assets will be made. Any assets which belong to you at the time of bankruptcy will be taken into account. If those assets have a resale value bigger than the amount you owe on the assets (taking away any exemptions), they will be turned over to your bankruptcy trustee and utilized to cover your debt. This means that a lot of the hard work will be completed on your behalf and you can be assured that the payments to your debt holders will be handled efficiently.

What Happens To My Earnings?

If you are employed when you file for bankruptcy, any money you earn will be given to you directly. Even so, this is only for the current time until you have bills that need to be paid.

These are just some of the bankruptcy questions that are asked. It is worth spending some time to learn as much as you can about bankruptcy so that you can be sure it is the correct option for your situation.

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How To Navigate The Complexities of Bankruptcy Law - By: Jona

Bankruptcy law is always evolving even though most of its rules and regulations are mostly not impacted by this continual stream of changes. Did you know that many states actually have their own specific bankruptcy laws in place? These laws serve to decipher the methods people file for bankruptcy, but if this is in conflict with the federal law then federal law will prevail. What this means to you is that you will not have any advantage if you file for bankruptcy in another state than the state in which you normally reside. In fact, most states do not allow you to file in a state other than the one you reside in.

Let’s take a close look at the latest bankruptcy laws. The law consists of three fundamental areas within which business and individuals are grouped. The Chapter 13 bankruptcy law is relevant to individuals with limited financial ability with which to settle their current debts and it would take them approximately three to five years to settle these debts.

Chapter 7 is a more intense bankruptcy law. Under this law, the person needs to clear debts that would not be possible to pay off otherwise. This is much more serious than Chapter 13 as the process requires the individual’s assets to be liquidated in order to settle the existing debts.

However, the current bankruptcy laws require, despite the various Chapters you can use to file for bankruptcy, that a number of financial obligations must be met and can’t be discharged when you file for bankruptcy. If your debts fall under this heading then you would get small benefit by filing for bankruptcy as the current laws are going to make bankruptcy less of a viable option in assisting you with your debts.

You must also look at the types of debt that you have, since there are particular types of debt that cannot be discharged through any chapter.

Still, it’s a good idea to research as much as you can on the variations of the current bankruptcy law so that you can learn how to put these laws to good use and to your advantage. However, this is oftentimes tougher than it appears and the bulk of consumers who file for bankruptcy will discover the research hard going.

Therefore, it in all likelihood makes a lot more sense to look for the help of a professional who is experienced and qualified in the area of bankruptcy law. This would normally be in the form of a bankruptcy attorney who specializes in this area and who will assist you in plotting the most appropriate course of action to suit your situation.

The fact is that filing for bankruptcy is a very drastic decision and it must only be considered after you have looked at all other alternatives for paying or clearing your existing debt.

You might also wish to consider utilizing financial assistance from debt consolidation companies or receiving guidance from a debt specialist than automatically opting for bankruptcy. If these options have been explored to no avail then you need to relinquish the reins to somebody who understands the complexities and consequences of filing for bankruptcy and the laws that govern the process.

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Facts You Must Consider When Seeking Bankruptcy Information - By: Jona

There are many things that you must consider if your financial situation is poor enough to where you think bankruptcy might be your only alternative. The fact of the matter is that this is frequently not your only option, and further, it may actually be your worst option when you may have better options to consider.

Determining When Is The Right Time?

A lot of people believe that a correct time to file for bankruptcy does not exist. This fact is the cause many don’t put forth the effort to acquire bankruptcy information and check out their choices when things start to get difficult. These people are of the opinion that bankruptcy shouldn’t ever be a consideration for anyone.

The sad truth is that things do sometimes go terribly wrong and it doesn’t matter what you do. You try and try to proportion your expenses and pay your bills, but it is not possible to do it all and finally you see yourself in a risky position.

A recession can be damaging for many people and nobody is immune to the perils of redundancies, reduced wages, and rising financial obligations. You might all of a sudden determine that you have so much debt you can’t see a way to pay them all on time, and if matters get really bad you might need to consider bankruptcy as an alternative. Naturally this will damage your credit scoring, but when you have no other choices you need to jump in at the deep end. Researching bankruptcy as much as you are able will help you make the appropriate decision. It is not an option to be taken lightly and you must know the effects of your decision.

Obtaining the Proper Bankruptcy Information

Before contacting a bankruptcy lawyer, you’ll need to learn as much as you are able and read lots of bankruptcy information. The more you can read the better and there are plenty of resources available offline and online. Doing this will mean you don’t need to visit an information center where you’ll be given lots of bulky and frequently confusing information on bankruptcy. It would be a much easier option to simply visit a lawyer and ask them for the bankruptcy information. However, this will cost you a little money. Lawyers charge for their time by the hour so if you lack any spare money to pay for this your better choice is to carry out research yourself. You don’t need to be concerned. There is a great deal of information readily available and it won’t cost you much, if anything, to carry out your own research.

Positioning Of Your Bankruptcy Petition

If you make the conclusion to file for bankruptcy once you have read as much bankruptcy information as possible, you need to work on the petition you will submit to the court. It may be required to hire a lawyer now and get some help preparing your petition. A lawyer will know the procedure well and will save you a lot of time and energy checking all the paperwork. Even So, you might feel that you can deal with the paperwork yourself in which case you can visit a local bankruptcy court and obtain the applicable forms. You will need to complete these forms and submit them to the court.

It is probably important to mention, after having said that, that almost all people who have filed for bankruptcy on a "do it yourself" basis have stated that if they had to do it again, they would most certainly find a bankruptcy lawyer. The reason for this is quite simple -- the laws are different in each state, and if the forms and your petition are not presented in the right way, it is very likely that the court will grant your bankruptcy utilizing the wrong chapter, as well as potentially having many of your assets at risk. Lawyers do this task all the time and are well aware of the loopholes and how to properly show your particular position to the courts.

The best thing you can do for yourself when you need bankruptcy information is to sign up for a free bankruptcy evaluation from a lawyer. They will review your particular situation and financial status, and make a recommendation as to your best course of action, as well as being in an great position to recommend possible options.

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Understanding The Effects of Bankruptcy Debt - By: Jona

Bankruptcy debt is often misunderstood these days and unfortunately, that can cause many problems. If you are considering bankruptcy then there are a number of things that you will need to familiarize yourself with. First, you need to know which types of debt are often exempt from bankruptcy and you need to understand the different types of bankruptcy available too.

What you may not realize is that there are different chapters of bankruptcy that you can file for. There are many different chapters but there are two main ones that you should familiarize yourself with and these are Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 bankruptcy is what most people imagine bankruptcy to be. It eliminates your debt and you have the opportunity to start a fresh. The negative aspect of this type of bankruptcy debt is that it can stay on your credit report for up to 10 years. It will make life a lot more difficult too, especially if you ever need credit again. Lenders look at your credit report to determine whether they will lend you the money or not. If they see Chapter 7 bankruptcy on your report then they will definitely think twice about lending you the money. Remember, from a lender's perspective, the approval or rejection of your loan as well as the interest rate that is set for you reflects the lender's assessment of how much of a risk you will be. Even if you have collateral, the lender really does not want your car or plasma TV if they need to take it if you default, they would much rather be paid.

Chapter 13 bankruptcy would be the preferred type of bankruptcy for those who have experienced problems due to a job loss or accident and illness. It basically involves arranging to pay back the bankruptcy debt that is owed to each creditor over a period of time. You pay the money back in installments. This chapter of bankruptcy will stay on your credit report for up to 7 years but it will not look as bad as a Chapter 7 bankruptcy debt would. Note the key difference here is that with Chapter 13, your debts are not wiped out or eliminated, but instead are simply reorganized so that you can afford to make payments on them.

There are so many things that you need to think about before you decide to file for any type of bankruptcy. One thing that needs some serious consideration is what type of debt you have.

If you have student debts or tax liens then they are usually exempt from bankruptcy and you will still owe the creditors money. That is right, outstanding debts such as tax liens, federal student loans can not be wiped out or eliminated via any form of bankruptcy. If you have a loan secured on your home, then again you could still lose the home when you are declared bankrupt. Bankruptcy is never an easy option to get out of debt and it will affect your life negatively for up to 10 years.

Overall, you should always look at the alternatives that you have before you file for bankruptcy. Perhaps a consolidation loan would better help you. Or perhaps a credit counselor could show you different ways in which you can get out of your debt. Only consider bankruptcy if you have looked at all other alternatives as bankruptcy debt is not an easy thing to deal with and requires serious thought and consideration.

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Can You Avoid Bankruptcy? - By: Jona

You can still avoid bankruptcy even when you are backed into a corner with financial problems. No one plans to have financial downfalls when they go through life, but life happens. Sometimes things can be out of your control such as you or a family member getting sick or perhaps you lost your job due to a lay off. No matter what the reasons is for your financial problems, there are other options to seriously consider before resorting to bankruptcy.

First of all, you cannot blame yourself or take the time to have your own pity party. If your financial woes are due to financial mismanagement, then hopefully you will have learned some very valuable lessons to get you where you are now, and these are the kind of lessons that you will remember for a very long time. Also note that studies indicate that the majority of people who declare bankruptcy do not do so because of financial mismanagement, but because of circumstances that were out of their control, such as a job layoff, huge medical bills, or other unforeseen circumstances. Whatever the reason, however, you need to focus and not allow yourself time to pity yourself.

One of the first things that you can do is to check with local agencies to see what assistance is available for you to help you get back on your feet. Often times there are many avenues available for people, but they are just not aware of what their choices are. Jumping into bankruptcy is not something to take lightly as it can have a long lasting effect on your credit, as well as other areas of your life.

In order to avoid bankruptcy, you need to have a good support system in place that can help walk you through what to do. It can be very beneficial for you to seek the advice of a bankruptcy attorney so you know where you stand and what you can do. A bankruptcy attorney will know all of the laws and stipulations on each type of bankruptcy that you can file for and he or she can tell you which option is best for you.

Many people have the misconception that bankruptcy attorneys are there just to help you file bankruptcy, but that is not true. They can offer you the best advice in order to help you avoid bankruptcy. They can point you in the right direction to help save your credit and to help you get back on your feet. Remember, they deal with this all the time, so they should be very well aware of what bankruptcy options and alternatives you may have, based on your specific situation.

If you and your attorney find that bankruptcy is your only option for your financial problems, then your attorney can help walk you through the entire process of filing for bankruptcy. Your attorney will talk to you about each type of bankruptcy there is and will help you decide which one will be the best for you and your situation.

Learning to avoid bankruptcy can be hard to do on your own. There are so many laws and stipulations that you would need to know, so seeking the help of a qualified bankruptcy attorney is in your best interest. You want to be sure to go with an attorney that is up to date on these issues and can help do what is best for you and your family. If you are left with no choice but to file for bankruptcy, then you want to be sure that you and your possessions and assets are protected to the maximum extent possible.

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What Can You Expect From A Good Bankruptcy Attorney? - By: Jona

If you have filed for bankruptcy or you're thinking about it, it's a good idea to obtain the services of a bankruptcy attorney. A bankruptcy attorney can help you wend your way through the legal ramifications of a bankruptcy because he or she will have knowledge you may not have.

You can do some of your bankruptcy work yourself, it still helps significantly to have a bankruptcy attorney look over your documentation and make sure everything is in order before you file. You also need to know your rights as someone who is filing for bankruptcy, and an attorney can help you make sure that you get all of your rights met and keep whatever you're entitled to as well.

In addition, a qualified, experienced and knowledgeable bankruptcy attorney is going to have many insights you do not have. For example, they can make suggestions or recommendations as to what other options you may have which may be much better for you than facing the long-term negative effects of bankruptcy.

Bankruptcy laws have changed in the last few years, so that today, it's harder to file for what's called "Chapter 7" or liquidation bankruptcy than it used to be. Chapter 7 bankruptcy is basically what used to be called "straight bankruptcy." With this, those who file for bankruptcy turn over any nonexempt assets for liquidation to creditors, and then debts are paid off with these liquidated assets. When the proceedings are over, the debtor is completely exempt from further pursuit by creditors and the debt is completely discharged. A bankruptcy attorney can tell you whether or not you qualify for this particular type of bankruptcy. If you do, it's generally advised that you take advantage of this type of bankruptcy, since it will exempt you from any further responsibility for these debts once the bankruptcy is complete. However, be advised that you will lose nonexempt assets for liquidation, including perhaps your house. Therefore, the pros are that you are completely "forgiven" your debts, but you may have to start from scratch.

Also you need to be aware that there are certain types of debts such as tax liens, student loans, child support and others that cannot be discharged by any form of bankruptcy, so if this type of debt makes up a major portion of your indebtedness, declaring bankruptcy is not going to help you in the least.

Chapter 13 bankruptcy is the other major type of bankruptcy that most debtors look to file for today. With new bankruptcy laws, most states will not let you file for Chapter 7 bankruptcy if you have a regular income. What this type of bankruptcy says is that you're not going to be forgiven your debts. Instead, Chapter 13 bankruptcy is what is known as "reorganization" bankruptcy for debtors with an income. With this, you are allowed to keep most assets, including your house in most cases. However, you're going to have to make payments to your creditors through a trustee over a period of several years, usually, until the debt is paid off. A plan is drawn up for the repayment and then a court approves or disapproves of it, based upon whether or not it meets bankruptcy code requirements for confirmation.

Again, obtaining a bankruptcy attorney is a good idea to help you determine what type of bankruptcy you qualify for and which is best for you. Be advised, though, that bankruptcy attorneys aren't free and even if you are facing financial hardship, you're still going to have to come up with attorneys' fees of roughly several hundred dollars to have a bankruptcy attorney handle your matter for you. Still, it's money well spent so that you know you've done everything you can to make your bankruptcy proceedings go as smoothly as possible. After that, of course, you can get on with your life. Most people who file discover that they have saved much more than the amount of the attorney's fees in terms of the money and assets they were able to retain, based on the attorney's intimate knowledge of the new bankruptcy laws.

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Learning To Play By The New Bankruptcy Laws - By: Jona

It used to be that bankruptcy was a relatively easy process to go through. Before the new bankruptcy law came into effect, you could file for bankruptcy relatively easily. If you had too many debts, it didn't matter what your income was, for the most part. You could simply file for bankruptcy and have your debts wiped out so that you could start fresh, and people were doing this all the time, some even every year. However, that's not true anymore.

New bankruptcy laws have made it much more difficult to both file for bankruptcy and to prove that you qualify for bankruptcy. In addition, if you do file for bankruptcy, you have to prove absolute financial hardship and lack of income to have the slate wiped clean. Even then, you don't walk away scot-free, because you'll usually lose any unprotected assets such as your house.

Instead, new bankruptcy laws have made it necessary for those in debt to take careful stock of their financial behavior and take responsibility for it. It's still true that you can file for Chapter 7 bankruptcy (also known as "straight bankruptcy"), which allows you to completely walk away from your debts. However, you have to prove that you don't have the income to pay back your debts no matter how you slice it, AND you're going to lose unprotected assets such as your house in the process. This is because anything you owned that's not protected is going to be liquidated and turned into cash to pay back creditors whatever can be paid back.

Most consumer bankruptcies filed these days fall under what's called Chapter 13 bankruptcy. In this situation, you are called to account for your financial situation and debts, and will be required to pay them back through careful planning. If you fall into this situation, you have an income and have the ability to pay your debts back over time. You are held to account for your debts and are given a schedule by which you will pay them back to various creditors, usually over a period of several years. This is mandated by the court and you must do so. One advantage to Chapter 13 bankruptcy is that you usually get to keep such assets as your house; these would normally be liquidated in a Chapter 7 bankruptcy so that creditors could be paid back whatever monies could be squeezed out of your assets.

So you see, the new bankruptcy laws are much tougher on people than used to be true. In some cases, of course, this may not seem fair to those consumers who have gotten into debt through no fault of their own, such as because of expensive medical care. However, it can be a good thing for those consumers who have simply been financially irresponsible with credit card debt or other unnecessary debt and need to be called to account for their actions, and held responsible for them. Regardless of your feelings on the matter, though, the new bankruptcy laws are here and aren't likely to change soon.

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