Types of Personal bankruptcy
There are two basic types of personal bankruptcy, Chapter 7 and Chapter 13. The laws changed in 2005 and now certain conditions must be met before filing for bankruptcy under either chapter. As soon as you file you get immediate protection from the harassing collection efforts of your creditors. This is called an automatic stay.
There is one requirement you must meet in order to file: At your own expense you must complete a credit counseling course from a government-approved organization. See www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm.
The bankruptcy code was dramatically changed in late 2005 to encourage people to file Chapter 13 instead of Chapter 7. Chapter 13 is known as the "wage earner plan." This chapter permits those filers with a steady income to retain certain property, like a home with a mortgage or a car that is still owed for and make monthly payments for part (in some cases all) of the debt to creditors over a 36 to 60 month period. The bankruptcy court must approve the repayment plan. Certain debts like child support and most taxes must be repaid, while car loans and home mortgage payments on cars and houses being retained must also be repaid. Some debts, like student loans, usually cannot be discharged.
Chapter 7 or "straight bankruptcy" allows you to discharge or erase most debts without any repayment. A bankruptcy trustee will collect any non-exempt property, sell it, and pay out the proceeds to your creditors. Certain debts like past due child and spousal support will not be excused and the trustee may even be able to sell property you transferred to someone else if you transferred it in an attempt to avoid losing it. There is no repayment plan to be filed with the court. Additionally, you will not be able to retain vehicles or homes if you owe debt on them unless you can pay the debt, and you may be forced to "reaffirm" (a new legally enforceable promise to pay) the debt if you wish to retain the property.
Chapter 7 and Chapter 13 filings are managed by a trustee appointed by the US Department of Justice. The trustee reviews each debtor's filing information, disburses money to creditors through the debtor's payments (in Chapter 13) or by selling non-exempt assets (in Chapter 7), and oversees a "meeting of creditors" about a month after a case is filed. Each bankruptcy case is assigned a judge.
A lawyer is not required and you can file by yourself, which is known as a pro se filing. However, a bankruptcy filing is complex and requires completion of a lot of paper work, so you may want an expert bankruptcy lawyer to advise you and do the filing for you.
Chapter 7 usually takes about three months to complete but the case stays on your credit report for 10 years. Chapter 13 lasts from three to five years, depending on your circumstances, and remains on your credit record for seven years from when it was filed. Before discharge of the case under either chapter, you must receive certification for a completed course in financial management from an approved counseling agency.
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Choosing a competent bankruptcy lawyer is essential to getting a fresh financial start. Most good bankruptcy lawyers do not charge for an initial meeting. During the first meeting, the lawyer should be able to assess your financial situation, understand your goals & outline options that are available to you. You want to determine if you & the lawyer communicate well. Also, at the end of the meeting you want to have confidence that your case will be professionally handled with care & competence.
Recovering from a bankruptcy takes some time and some work on your part but is easier than you might imagine. After a bankruptcy, you probably think it will be almost impossible to obtain anything on credit or qualify for a loan ever again. The fact is that with on-time payments you can qualify for a credit card or a loan with a reasonable interest rate in as little as 12 months.
Cancer patients frequently endure treatments that dramatically impair their ability to financially support their families. Patients often incur significant medical debts, and they use credit cards to supplement their income and pay for medications. This added financial stress is harmful in their battle to overcome disease
Students from both private and public universities all over the country may also provide low cost or free advice. The sessions will only achieve directing clients to the right legal path in filing the right papers. Note that with the new bankruptcy laws taking into effect making the bankruptcy filing process more difficult than usual, an experienced bankruptcy attorney will be worth your money.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
Americans are now filing Chapter 7 or 13 Bankruptcy to get their debts under control. Bankruptcy in itself is designed for debt elimination. Chapter 7 bankruptcy functions to cancel out unsecured debt such as utility or medical bills, credit card, etc. Chapter 13 Bankruptcy on the other hand is designed to give individuals more time in repaying all their debts.
Filing for bankruptcy is good news whenever you are struggling with your credit card debt, mortgage or medical bills. Bankruptcy laws help families and individuals in their debt struggles. You have two options on how to deal with your debt problems, Chapter 7 (debt elimination) and Chapter 13 (reorganization). Always remember that you can regain credit again after successfully filing your bankruptcy.
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