For most individuals, bankruptcy is the only option left. I have seen many people who have tried to work with the creditors only to struggle for years and end up owing more than when they started. To them, a bankruptcy may not be the only option but the best option that makes any sense. It helps relieve stress. You really do get a fresh start if you file Chapter 7.
Some may not be able to file Chapter 7 for a number of reasons thus Chapter 13 is another option that can help relieve the pressures of a large debt payment and extremely high interest which only gets you into the deeper hot water.
For many borrowers who now find themselves unable to borrow or repay accumulated obligations, bankruptcy protection will eliminate past debts (school loans, taxes, and others remain unaffected), but the negative repercussion is that it can linger for years.
The good news with so many individuals having to seek this relief in the last couple of years it does not have the same effect on you as it did many years ago, based on some well-known financial planners opinions.
Depending on the state, bankruptcy can be on your credit report for up to a decade and may limit the opportunities available to those who file. But again if you are behind on your bills that will remain on your credit report anyway.
For those suffering the direst circumstances, bankruptcy is necessary to safeguard you and guide you to a fresh start. For most, when they start considering bankruptcy, it is already too late to recover without some legal help. As a bankruptcy attorney, I want to help you through this difficult period of time. I will review your case and provide you with sound advice so you can make the decision on what is your best option based on your circumstances.
Let’s Get Started
I will provide you with the information you need “like it is”. No candy-coated or enticing line to get you to file for bankruptcy. I want you to be able to be aware of both the “good” and the “bad” side of bankruptcy.
Again it is best to talk with a bankruptcy attorney about your situation. I will discuss the different programs – Chapter 7 and Chapter 13. Each has their own advantages and drawbacks. If working with the creditors is possible then we can try that first. I always believe in keeping all options open and providing alternatives that work best for you.
What Are My Debt Relief Options?
Though recent media coverage of debt relief programs tends to put them all together, there’s actually a great difference between the debt relief options. The bankruptcy plan is often used to compare each of them to debt settlement, to consumer credit counseling, and some other limited government programs.
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy should be considered when it is the best option available. Years ago it was only used as a “last resort”. Today, it is used a lot more since the banks and other lending institutions may have cut off funding.
The effect of filing for Bankruptcy protection can be the breath of fresh air you and your family may need. It may be on your credit report for up to 10 years in certain states. It is now important to have an attorney filing the bankruptcy since the rules for filing Bankruptcy have changed. Bankruptcy is up 30% over 2007!
Yes, it is harder than ever to “wipe the slate clean” in some cases. My office can advise you on what options you have and how effective each of them will be. Even if you cannot wipe your slate completely clean you still might be able to get just about all of the major debts relieved where you can easily make your bills again.
Can Debt Settlement be an option?
Yes. Debt Settlement is the fastest and least expensive way to get out of debt. Often referred to as Debt Negotiation, Debt Settlement is a direct and ambitious approach to debt reduction and it is best suited for individuals that have considered filing for Bankruptcy protection.
But with the banks tightening their money due to their own financial situations, they are not willing to release funds as they used to or even relieve you of your credit card debt like they used too. Even when the banks, lenders and credit card companies have agreed to it, still, a very large percentage of individuals end up filling a Chapter 7.
Also called a Consolidation Loan, Debt Consolidation is the replacement of multiple loans with a single loan, The purpose is to give you a lower monthly payment and a longer repayment period. Unfortunately, in today’s credit, markets have tightened to the point that even a very high FICO credit score is not good enough.
Many lenders want FICO credit scores of at least 700 and you must have a high enough income ration to your debt. Many are predicting that Debt Consolidation Loans are going to be severely limited in the future.
Consumer Credit Counseling companies are organizations that operate nonprofit financial counseling programs. Normally they will charge a fee for their services. They will then try to work with your creditors in order to reduce your interest rates and your minimum monthly payments. The problem here is that they normally will not offer you anything substantial. Many of our clients started out this way but tell us they need real relief now.
This is a common approach. Many debtors like you have been struggling along while your creditors are turning up the heat. They are now charging you late fees, penalties and interest. These additional expenses make it impossible to keep your head above water any longer.
You are to the point of either giving them the money and not having a roof over your head or doing nothing. That is when many realize they really do need the relief and the fresh start of filing a Chapter 7 Bankruptcy or in some cases a Chapter 13.
That’s why you started looking for help and to make the tough decision. You also will realize that this may be the only option for you. Another thing you will realize that doing nothing is the worst thing you can do at this point. You will only suffer more.
Changes In Chapter 7 Bankruptcy Laws
Chapter 7 bankruptcy, For an individual there seems like there are a lot of confusing forms and terms they never heard before. Bankruptcy law can be complex at times and you really need an attorney to help you deal with it.
Any mistakes can require you to start the entire process all over or even worse, dismiss or even have to wait 180 days before re-filing We will help guide you through the entire process.
It is very important that all household assets are listed, including vehicles, furniture, entertainment systems, even treasured family keepsakes. Also, you must make an honest estimate of their approximate value if they have to be replaced with another used item.
For most individuals, the used possessions have little worth when calculated using this method. Most debtors are allowed to maintain ownership under an exempt property statute.
This was part of the new Chapter 7 bankruptcy laws. The value of these possessions, the monetary worth of your personal properties is now calculated with regard to replacement costs.
That is the amount it would cost to purchase similar used items. In some cases where there are a lot of valuable assets, it might be better to file for Chapter 13 where the debt and interest could be set at a lower rate.
Chapter 13 Bankruptcy Laws
Chapter 13 is another option that is available under Title 11 of the Bankruptcy Code. After filing the petition for bankruptcy, a hearing will be scheduled. A judge will analyze the worthiness of the request.
With Chapter 13 bankruptcies, and the new changes in the regulations, living expenses are now determined by amounts set by the IRS should they earn more than their state’s median income no matter specific exceptions. The problem with this rule is that many have expenses greater than what the IRS deems reasonable.
This happens when after one period of bonuses or above-average overtime, the government could misrepresent the filer’s income well above actual earnings necessary to qualify. Thanks to Utah bankruptcy attorney Ryan E. Simpson for helping with his article.
It’s important to remember that even bankruptcies can fail. Most of the time it is due to failing to list all of the debts or property or that the person had a bankruptcy before and it has been too soon to file (within the last seven years). Like all legal matters, Bankruptcy laws are there to help the debtors and to protect the creditors from fraudulent attempt to discharge the debt.
I will help guide you in making your choice as to which one is better for you, a Chapter 13 Bankruptcy or a Chapter 7 Bankruptcy.