Why Bankruptcy?

The bottom line in today’s financial system for a person who is deep in debt without hope is bankruptcy. The number 1 thing that holds people back from dealing with this issue is fear, lack of understanding. It’s true, this is not a pleasant subject to talk about, but faced with legal ramifications due to debt problems it’s an option you must consider.

Historically bankruptcy is as old as man himself. Debt is not something new, in fact going back there was debtors prison where jail was an option for non-payment. Now compared to that system bankruptcy isn’t so bad. It doesn’t seem right that a bank could go out make risky loans, make billions of dollars, sell them off to the Feds and start all over again, but they do. That’s the way the system works, bankruptcy is what’s provided for the average person.

Debt causes emotional stress, this makes your thinking cloudy. Out of all the debt help programs bankruptcy is the only option that provides legal protection. You know there are 2 types for personal use, there’s chapter 7 and 13. If you qualify for chapter 7 you’ll have a full discharge of all qualified debt. The downside is you can’t file again for 8 years and it’s on your credit report for 10 years. The upside is your pretty much debt free, this is a fresh start.

The quicker you get past the stigma of the word bankruptcy and your concern of what other people think, the quicker you can look objectively at what’s best for you.

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Go to Bankruptcy Newsline This is an important decision. Get informed, get more answers and most of all get on with life. You have choices, it’s time to use them.

The devil is in the detail – “all of your assets are liquidated and sold”, and this includes your home, your business if you are self-employed, your vehicles and your investments as well as any savings if you have them.

The most common factor is of course, losing your home and having to move your family to usually, rented accommodation.

You can be made bankrupt in two different ways – voluntary bankruptcy is where you file your own petition with the court to have you declared bankrupt and involuntary bankruptcy, which is where a creditor who you owe more than £750 files to have you declared bankrupt.

The process is started by filing a petition with the High Court in London or if you live out of the London area, with your local county court. The Official Receiver, a court officer who is appointed by the Secretary of State, will then advertise the bankruptcy in the London Gazette which is a publication dealing with legal notices. They are responsible for acting as your trustee in bankruptcy and are required to oversee the liquidation of your assets and the fair distribution of them to your creditors. They are also required to ensure you are honest in your dealings and are not concealing assets from your creditors. In addition, they are also responsible for making sure the bankruptcy notice is distributed to the various agencies involved and who have an interest in any bankruptcy order such as HM Land Registry, bailiffs, other courts handling your financial issues, and HM revenue and Customs.

An Insolvency Practitioner may be appointed as your trustee in bankruptcy as an alternative to the Official Receiver. An Insolvency Practitioner is a qualified professional who is authorised to act as your trustee in bankruptcy and do all of the functions normally performed by the Official Receiver. They will also perform the supervision of your finances for the next 12 months until you are eligible to be discharged. Discharge is usually granted after the 12 month period and you are now a discharged bankrupt and free to pursue your life without any financial supervision or restraint though the fact you have been declared bankrupt will be recorded and obtaining credit and a mortgage to buy a home may be more difficult.

Bankruptcy may be a simple and relatively quick method of clearing your debts but it is not suitable for many people; indeed, there are a number of other methods for dealing with your debt situation which do not include losing your home. It is absolutely vital that you seek professional and independent advice at the very earliest stage – the sooner you seek advice then the quicker and easier it will be to come up with an alternative that falls short of losing your home and assets.

This article was commissioned by http://www.talkaboutdebt.co.uk

Talk About Debt provides a single, one stop forum equipped with a wide range of free resources including leading debt relief charities and organisations.

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First of all, your financial reputation will be tarnished. Your credit record will carry information ascertaining to your declaring bankruptcy for around ten years. This is going to make it very, very difficult to obtain any kind of finance and in situations you find you are able to get credit, you will find yourself on the receiving end of very high interest rates. You can rebuild good credit, however.

You may also find that your family members and close friends have little sympathy. Many people, particularly those of an older generation, a generation before hire purchase and when everyone only bought what they had the cash for, struggle to understand credit, excessive finance and thus bankruptcy. You may also feel embarrassed about declaring personal bankruptcy and feel that relationships are strained with those who feel let down by this.

You should also bear in mind that declaring personal bankruptcy is a matter for public record. Everyone can find out this happened to you. Of course, it’s probably only a real issue if you live in a small town where everyone seems to know everyone else’s business thanks to issues like this being posted in the local newspaper. It’s highly unlikely that such a public announcement of your bankruptcy would take place if you live in a large city.

Finally, this may affect job applications negatively. While there is law in place that stipulates discrimination to be illegal, certain jobs do require you to pass a credit check.

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Right now, there are roughly 30 million clients. This is undeniable proof that applying for their loan programs is really beneficial. So what are the advantages of applying for this federal program?

- This type of loan will give you leeway to purchase a house with a miniscule down payment. Future homeowners will only need to shell out a down payment worth 3% of their entire home purchase value. There are also some instances when the down payment can be given in gift form. One must be aware though that aside from the down payment amounts there are usually other fees to take care of such as insurance and processing.

- FHA loans are unlike the mortgages that have taken over the market during recent years, and these are the very loans with hidden triggers high interest rates and that inevitably caused the wave of foreclosures. A loan from the FHA will not contain any such traps hidden within the terms and conditions. The consumer can rest assured that there will be no predatory payment increases.

- A lot of lenders and banks who give out mortgage loans are very careful with screening. They sometimes need proof that the applicant has money. What this usually means is that one will need thousands stored up beyond the down payment amount just so that they could qualify for the loan. FHA mortgage program does not have this difficult requirement.

- Sub-prime financing can be replaced by an FHA approved loan. And what is good about this is that FHA rates are much lower compared to those of sub-prime mortgage. Also, one does not need to shell out for pre-payment and FHA mortgages have a secured, fixed rate.

- Those who are troubled with bankruptcy and foreclosures should look into what the FHA has to offer. Unlike with non FHA approved lenders, the Federal Housing Administration give loans to people after three years for a foreclosure, a year past bankruptcy chapter 13, and two years for a chapter 7 bankruptcy.

- A potential borrower can apply and get an FHA mortgage program by providing repayment capacity, cash to close, credit history, and collateral. However, for those who do not have conventional credit, other documents such as rental payment slips, utility receipts, and car insurance receipts.

- With this type of loan, one may be able to get a lot more money than in conventional loan packages since the qualifications are very liberal. It is very similar to loans given to first time borrowers. One can get as high as 43% of one’s monthly paycheck.

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The main aspect you have to work on after bankruptcy is finding ways to regain your credit worth to an acceptable level. This is vital as banks and lenders check your credit with credit bureaus before lending a bankruptcy equity home loan. If you maintain a healthy bank account and a credit card without misconducts and delays, you will reach the position you were at earlier on after about two years.

Avoid paying minimum rate to your credit card and pay cash somewhat higher than the required minimum rate and be careful to deposit it every month in time. If you have a permanent employment at one place for over a year it will also help you to gain the confidence of the lenders. Normally, interest rates for home equity loans are a little bit higher, but still considerably lower than what is paid for other types of loans.

Sometimes, you may not have a clear idea what options you have to get a loan, due to overworking yourself to raise your credit ratings. Get a loan broker if it is the case, as they know how to find a lender and all other tricks and tips of the trade. Your true bankruptcy situation should be revealed to the broker when contacting him as it helps the broker when discussing with a lender for a suitable bankruptcy equity home loan

plan.

But, some people do not like brokers interfering in their work. If you feel this way, you can find good lenders or financial institutions through the web that give home equity loans to those who are bankrupt. But the difficulty comes when you see many such websites on the Internet and you may wonder how to go about contacting a genuine one, as it is not an easy task. The only way is to research, inquire and get information relevant to a website before filling in its online application as sometimes these lenders have hidden charges, interest rates and agendas that may lead from the agreement to foreclosures.

More about bankruptcy home loans and the bankruptcy equity home loan.

If you are still working in the same company when the bankruptcy occurred after a year from the date, you are qualified to apply for a bankruptcy home loan and your chances for the approval of the application are also good. The loan you obtain by securing your house can give you enough credit. But you have to be extremely cautious in your steps to repay the loan as it may jeopardize your position further, jeopardizing even your house.

More often, the chances of obtaining a credit card when you are in a bankruptcy situation are almost zero because banks are reluctant to grant credit cards to those who are bankrupt. Not only the credit card but also other loans you applied for will encounter the same problems. But, a bankruptcy equity home loan is sometimes granted, as there is no risk involved to the lenders, if your home is the security to cover repayment failures. When you make repayments on schedule, you have a great chance of rebuilding your credit reputation.

Patience is the most needed virtue in bankruptcy discharge. You will be refused time and time again when attempting to locate a lender. On the other hand, unscrupulous moneylenders who work with hidden agendas will also come your way. In this situation, you should be patient enough to get the right money lender who charges low interest rates rather than taking advantage of your desperate situation to their profit.

Many good brokers are available who can assist you to get a loan. The Internet is also a great way of finding the right place or person. But be careful when searching online, as there are many dishonest people there. Before committing, it is essential to examine their credentials. You are now facing one of the most difficult times in your life. At this time, the roof above your head can be the most precious thing. Before offering it for a loan, close all the loopholes that can lead dishonest moneylenders to take advantage of you. Commit only to the ones who are genuine.

More about getting a bankruptcy home equity loan and an after bankruptcy home loan.

Fortunately, even during bankruptcy proceedings, a parent is still required to make his or her court-ordered child support payments. The welfare and care of the children is considered a top priority under American law, and these obligations take precedence over the relief afforded by filing for bankruptcy. The recent Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) helps clarify the rules surrounding such payments, and re-emphasizes the importance of providing for and caring for one’s children.

Chapter 7 bankruptcy is a type of liquidation bankruptcy, in which non-exempt property is sold. The sale of these items is used to pay off one’s creditors. For example, if you owe $10,000 to the bank and can’t pay it, you can file for Chapter 7 bankruptcy, and the money made from the sale of your possessions is used to pay off that debt. Under the BAPCPA, the continued support of any children is considered a serious priority, and proceeds from the sale go towards your court-ordered payment plan first, before creditors are able to take the money.

Chapter 13 is the other common type of personal bankruptcy, and it is a restructuring bankruptcy. In Chapter 13, you present the courts with a plan to repay your debts over a set number of years with regular payments to your creditors. When child support is involved, the payments are included in the court documents describing the repayment plan. For the Chapter 13 bankruptcy filing to be confirmed, there must be clear plan to make regular child support payments.

While the idea of having your former spouse enter into bankruptcy may be initially scary, bankruptcy actually allows him or her to make the child support payments on a more regular basis. Because the other outstanding debts are being reduced, there will be more money available for the children.

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Joseph Devine

Not True. As with any other credit information, the fact of the bankruptcy can stay on your credit report for 7 to 10 years. (Remember, if you are considering bankruptcy it is highly likely that your credit rating has already been damaged, especially for the purpose of obtaining a home loan.) You can start rebuilding your credit, however, even before your bankruptcy is completed. Continuing to make your house or car payment on time can help you reestablish a good credit rating, as can making timely payments on a Chapter 13 plan or on any new loans.

Everyone will know you filed for bankruptcy.

Not True. The fact of your bankruptcy is a public record but unless you are a prominent official or high profile person, people aren’t going to go looking.

After the recent changes to the bankruptcy law, filing bankruptcy doesn’t help much.

Not True. The 2005 changes mean that a few people may no longer be able to file a Chapter 7 case, but most people are still able to get the same relief now as before the law changed. If a Chapter 7 is not available to you because of the 2005 changes, Chapter 13 may still offer you significant relief.

You are a bad person for filing bankruptcy.

Not True. Bankruptcy is a solution to help good people go through a tough financial time. It provides people with the fresh start that they deserve. Congress passed the bankruptcy laws because Congress recognized that we needed a safety net in our economic system for individuals, who have little control over large shifts in our economy or over unexpected personal developments such as job losses and medical expenses. The events of late 2008 should be making it clear to all of us that our financial health is not usually a function of whether we are good or bad persons.

You can pick and choose what to put into bankruptcy.

Not True. This myth seems especially prevalent in Florida, as we frequently have clients tell us that they do not wish to “file on” a particular item of indebtedness. You must list in your bankruptcy filing all of the debts that you owe and the property that you own. For some of those debts, such as car and home loans, we may help you “reaffirm” the debt, and it will be as if you never filed bankruptcy as far as that obligation is concerned. For debts that you do not formally reaffirm, if you feel like paying a particular creditor after the bankruptcy process has been completed, you are free to do that. But whether you intend to reaffirm or continue making payments on a debt does not affect your obligation to disclose all of your debts and property to us and to the Court.

It’s hard to file for bankruptcy.

Not Necessarily True. There is a lot of paperwork involved, but having a skilled attorney makes the process much smoother. We try through my office procedures to streamline the process for you. After the case has been filed, you will probably only need to appear at the Bankruptcy Court once, for a relatively informal meeting with the Trustee for your case. We will prepare you thoroughly for that meeting, which we will attend with you.

You will never be able to own property or obtain credit again.

Not True. You actually can, through the bankruptcy, eliminate the barriers to ownership that are inherent in your current distressed financial situation. Phrased differently, without all your unsecured debt you are more likely to qualify for things like home and car loans. Historically, our clients who make enough money to buy a house are usually able to close a home purchase within two years of the completion of their bankruptcy. Assuming you have income, you will get credit card offers and be extended credit right after the completion of your bankruptcy. There are also creditors that will lend to you while you are in bankruptcy.

You will lose everything you own.

Not True. In probably 95% of the Chapter 7 cases we file on behalf of clients, nothing is lost. In virtually all of the remaining 5% of cases, our clients know going into the process that some particular piece(s) of property will be surrendered either to the Chapter 7 Trustee or to the secured creditor. In fact, one of the frequent advantages of filing bankruptcy is that you can surrender a piece of collateral to the secured creditor and be done with that debt. In contrast, if a car lender repossesses a car outside of bankruptcy, that lender will still have a claim against for borrower for the difference between the amount of the outstanding loan and the value of the repossessed car. And that difference is often quite a high dollar amount.

Both you and your spouse have to file bankruptcy together.

Not True. You can file separately and the Bankruptcy Court will not require joinder of your spouse. In most cases it makes sense for husband and wife to file together, but in some instances the spouse might not want or need to file. This is absolutely fine and definitely allowed by the Court.

You can’t get rid of back taxes in bankruptcy.

It depends. We can usually tell you at the initial consultation whether your particular back taxes will be eliminated as a result of your bankruptcy filing. If Chapter 7 would not discharge/eliminate the taxes, we may be able to pay them through a Chapter 13 plan.

You can only file bankruptcy once.

Not True. You can file for bankruptcy relief more than one time if you meet certain conditions. So that we can advise you regarding the availability of bankruptcy in your particular circumstances, you must disclose any prior filings to us.

Creditors can still harass you if you file for bankruptcy.

Not True. When the bankruptcy is filed, you and your property are automatically and immediately protected from creditors. Creditors are not allowed to contact you for any reason, which includes calling or even billing you. If they persist in harassing you, you do have remedies available through the Bankruptcy Court.

Filing bankruptcy causes more family trouble and divorce.

Generally Not True. Bankruptcy eliminates debt, thereby usually eliminating domestic stress. Filing bankruptcy can be a part of the solution to domestic problems. In any event, you owe it to yourself to consult with an experienced attorney to see how a bankruptcy filing can help you. You can always make the choice not to file if you believe after our consultation that you or a loved one will experience more harm than help from completing a bankruptcy.

J.Stubbs
http://www.parkbankruptcy.com

Bankruptcy reform has made it more difficult than ever for people to file bankruptcy and enjoy being able to just get rid of credit card debt when they cannot afford it. However, this increase in difficulty when it comes to debt relief has led to credit card companies that are more aggressive than ever before. There is a great debate among the ABA, or American Bankers Association, about who is to blame for credit card debt and so many bankruptcy cases being filed. The lenders blame the consumers, while some blame the creditors for being too aggressive.

There will never be a definitive answer as to who is at fault. However, in order to make sure that consumers are safe no matter what creditors are doing, it is important to be informed. It IS harder than ever to file bankruptcy if a financial debacle is created. It isn’t hard to find debt relief services or companies that can help with debt settlement. It is the responsibility of the consumer, no matter how persuasive creditors might be, to avoid becoming another statistic of credit card debt and let debt take over their lives.

People should be taking this seriously, and taking the time to educate themselves and their families on the use of credit cards and how to manage credit and debt. Some people will fall victim to the flashy cards and seemingly glamorous offers, while others will be able to be responsible and stick to their budgets. It’s all about putting forth the effort and understanding how you can avoid becoming a victim.

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Well, technically, federal law prohibits any discrimination on the part of your lawyer against you because you have declared or are planning to declare bankruptcy. So, you should not feel concerned about the potential problems with an existing employer. There should be no ill will, negative responses, being overlooked for promotions and certainly not fired over your personal financial situation in regard to bankruptcy. If you receive this type of treatment, your employer is in breach of the law and you could take legal action against him or her.

But what about prospective employers?

Well, when you apply for a job, a company can look at your credit report. This is particularly common for positions that will require you to be bonded, such as jobs in the financial services sector and in areas such as jewellery stores. While having bankruptcy on your record will not eliminate you entirely from still getting the job, you should be prepared for that fact that there is am much slimmer chance of an employer still opting to employ you for such a position knowing that you have bankruptcy on your record.

So consider this another reason to ensure you weight up the benefits and downsides to bankruptcy before just going ahead and deciding to do it. As with anything you do financially, there are bound to be consequences and you have to make sure that you are aware of these consequences and can handle them.

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