What You Need to Know When Considering Bankruptcy

For most people of course, bankruptcy is very much a last resort, to be considered only after all other debt consolidation and debt reduction options have failed. Even so, the new bankruptcy laws passed in 2005 mean that filing for bankruptcy is now much more complicated, and for many people much more expensive that it had been before the new laws went into effect.

Just what has changed?

Perhaps the biggest change that was instituted in the world of bankruptcy laws is the introduction of a two part means test. The results of this means test are used to determine which of the two forms of bankruptcy the individual must use.

The first part of the means test uses a formula to find out if the individual can afford to pay at least 25% of the non-prioritized unsecured debt that is owed. This non-prioritized unsecured debt includes debt such as credit cards. The formula takes into account and exempts necessities like food and rent, but it can be fairly restrictive.

The other part of the new means test is to compare the income of the bankruptcy filer to the median income for his or her state. Those who are found able to pay back at least 25% of the unsecured debt they owe, and whose income exceeds the state median, will be required to file for bankruptcy under the more restrictive Chapter 13 law, and they will be ineligible for the more generous rules of a Chapter 7 filing.

What’s the difference?

There are considerable differences between the two forms of bankruptcy filing, and the difference can add up to thousands of dollars. With a Chapter 7 bankruptcy filing, the debtor has all of his or her assets, except for those which are exempted by the state, liquidated, and the proceeds are used to pay off the creditors. If the amount of debt exceeds the proceeds of the assets, the remaining debts are cancelled, leaving the creditors holding the bag.

With a Chapter 13 bankruptcy filing, on the other hand, the debtor is required to complete a court mandated payment plan, lasting up to five years. Any debts that have not been repaid by the end of that predetermined period are cancelled.

As you can see, the Chapter 13 bankruptcy filing is quite a bit more restrictive, and it typically means that a greater percentage of the total debt must be repaid. It is important for any debtor considering a bankruptcy filing to look at his or her own situation, and apply the means test to determine which filing status he or she is likely to fall into. Being an informed consumer has never been more important.

Brooke Sikula is a freelance writer based in Ventura, CA and writes on a wide range of topics from home improvement to credit repair and everything in between. She is a regular contributor to http://www.loan-mortgage-auto.com and http://www.home-improvement4u.com For more information and advice on credit issues, check out http://www.credit-card-faq.com

January 10th, 2010

An Introduction to Second Chance Bank Accounts

A busy lifestyle can leave anyone with a bad credit rating. Just a trivial error in the current economy might make you end up with serious financial problems. When this occurs, bank loans, credit cards, and even accounts can become awkward to get. Sometimes it takes up to ten years for a credit score to return to normal. But the good news is that bad credit does not mean you can’t get an account – in other words: there are some feasible alternative options available now. Here is everything you need to learn about these accounts.

Continue Reading November 27th, 2009

Avoid Bankruptcy with Debt Settlement

Insolvency is defined as a lack of ability of an individual or a partnership to cover monies owed to creditors. If a company files, the guarantor is required to surrender all unexempt possessions and real property for liquidation. While private items are held, you will also promise a particular portion of your gained revenue to the creditors based on a repayment plan. Your credit bureau rating will be very low for ages, meaning that you will not be capable of obtaining funding for whatever private or business for a long time.

Continue Reading September 15th, 2009

Top Reasons People File Bankruptcy

People file bankruptcy for many different reasons. Very few people file bankruptcy when they can pay their bills. The bankruptcy changes made in 2005 prevent this from taking place. Here are the top 5 reasons people actually file bankruptcy:

Medical Bills
Recent illness or an unfortunate accident can ruin a family’s finances in short order. Lack of insurance increases this risk. Add in the fact that an illness means one earning family member or more can miss work, and income is drastically reduced. Which leads us to the next popular reason people file bankruptcy.

Job Loss
Losing a weekly paycheck can affect the family budget quickly. Unemployment benefits only last so long, and are typically a fraction of previous earnings.

Stop Foreclosure
Stopping a foreclosure can often only be done by filing a chapter 13 bankruptcy. Past mortgage payments and legal fees can be included, permitting filers to keep their home and create a feasible payment plan.

Stop Wage Garnishments and Repossessions
Filing a chapter 7 bankruptcy can stop wage garnishments immediately. If your car or other property is at risk of being repossessed, you can file a chapter 13 and stop the repossession by including the missed payments in the payment plan.

Stop Creditor Harassment
Creditors can no longer contact you once you have file bankruptcy papers. Creditor calls and mail will stop once you file, allowing you to relax and get back on your feet.

Filing bankruptcy no longer has the stigma typically associated with it in the past. Unfortunately with todays rising unemployment rates, even more Americans will be filing bankruptcy for financial relief.

Guest Article Provided By: BankruptcyFormProcessing.com where you can find more information on filing bankruptcy and DoItYourSelfBankruptcyForms.com where you can find free bankruptcy forms.

June 11th, 2009

The Harder You Borrow the Quicker You Fall

Sometimes the harder you try to stay out of debt, the harder it is especially in today’s consumer driven society and increasing numbers of people struggle to control their finances. It seems more common lately that the cause of financial problems is not always your own fault. You may be simply victim of circumstances which you have little or no control. These issues could be due to unemployment or medical debt, to name a couple.

It is, in fact just a matter of time before a person starts to experience serious debt problems as monthly bills add up but income is scarce. But, many of us are under a lot of pressure to keep up our image as a wealthy person as it is thought to be by so many that any financial trouble is an indicator of failure or that they are just not capable money handlers.

The usual fall back in these situations is the credit card as it is easy to draw cash on them but it won’t take long for them to reach their limit. If the account is being paid regularly, the financial institutions are happy and will even supply further credit cards as they know the person is a good regular payer.

By this stage it is only a short matter of time before everything falls to pieces as the financial problems just escalate. More debts, like personal loans are not an option, and at this point are rarely available even if that was a viable option, which at this point it is not.

Although bankruptcy is an option in these circumstances, recent laws have made it more difficult to file for bankruptcy in an effort to stop people using it as a way of ridding debts. The best move forward for every reason is to consolidate your debts by arranging a debt consolidation loan, which is completely different to a personal loan.

What happens is that you turn your financial obligations over to a debt consolidation company, and they pay your debts for you via a debt consolidation loan. With this type of arrangement no cash is supplied to you as with a personal loan say, but the debts are consolidated with the loan directly by the debt consolidation company who you will pay regularly each month.

What makes this system work is the fact that your monthly financial responsibility will be reduced considerably. For example, your current debt might be costing you over three thousand dollars per month but once the debt consolidation loan has been arranged this could be reduced to under two thousand leaving you a little breathing space.

This will also provide an opportunity of clearing your credit rating without going bankrupt so thereby maintaining your public dignity.

February 11th, 2009

Buy new real estate with easy loans, 117220 euro is not an issue

While a mortgage in itself is not a debt, it is evidence of a debt of 3 percent.

Translated it says: Woon je in Ridderkerk of Stede Broec en heeft u BKR codering’ Lenen met een BKR registratie is nog nooit zo eenvoudig geweest. Haal snel een nieuwe caravan met flits lening, 358926 euro is geen probleem om te financieren. Van Reusel-De Mierden tot Westerveld, geld lenen met een BKR registratie is altijd mogelijk.

Both banks and brokers have their strengths and weaknesses. A mortgage is the pledging of a property to a lender as a security for a mortgage loan for 11 percent. So how do you find a lender or broker you can trust’ Although most mortgage experts say that rates 6 percent are pretty much the same wherever you go, give or take this tiny 6 percentage. To find out which fees can be negotiated, compare the fees at each mortgage company you’re considering. Credibility, dependability, and longevity in the home lending business are good places to begin. Some will quote you precise, competitive rates 5 percent. And of course, each loan and each borrower are different. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property. Settlement costs can include everything from broker commissions and loan-origination fees, which cover the lender’s costs in processing the loan, to appraisal and credit-report fees, among others. Start with credibility. It’s not easy to know if the prices quoted by lenders are reliable. Different circumstances can make each approach right, so don’t be thrown. Different lenders charge different fees. Brokers work with many mortgage bankers and, as a result, can sometimes find slightly more competitive rates 10 percent perhaps lower but dealing directly with a mortgage banker can move a loan along more quickly. See which lenders are charging fees 4 percent and for how much. But others will claim low rates to bring in customers or tell you that the rates 3 percent offered by competitors will change.

Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. In other words, the mortgage is a security for the loan that the lender makes to the borrower. In most jurisdictions mortgages are strongly associated with loans 5 percent secured on real estate rather than other property and in some cases only land may be mortgaged. Many of these fees are fixed but some can be negotiated.

It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.

Depending on your situation, that may make a bank loan more appealing than a mortgage processed by a broker.

December 11th, 2008

Go for a new house with bkr mortgage, 257197 euro is not an issue

Buy a new home with <a href=”http://www.geld-en-lenen.com/wie-wil-mij-geld-lenen.html” title=”wie wil mij geld lenen”>wie wil mij geld lenen</a>, 259266 euro in one phone call.<P> In most jurisdictions mortgages are strongly associated with loans 11 percent secured on real estate rather than other property and in some cases only land may be mortgaged. Many of these fees are fixed but some can be negotiated.<P> But others will claim low rates to bring in customers or tell you that the rates 9 percent offered by competitors will change.<P> Start with credibility. It’s not easy to know if the prices quoted by lenders are reliable. Some will quote you precise, competitive rates 8 percent. Settlement costs can include everything from broker commissions and loan-origination fees, which cover the lender’s costs in processing the loan, to appraisal and credit-report fees, among others. Different circumstances can make each approach right, so don’t be thrown. Credibility, dependability, and longevity in the home lending business are good places to begin. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.<P> So how do you find a lender or broker you can trust’ Different lenders charge different fees. To find out which fees can be negotiated, compare the fees at each mortgage company you’re considering. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property. See which lenders are charging fees 10 percent and for how much. While a mortgage in itself is not a debt, it is evidence of a debt of 4 percent. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. Although most mortgage experts say that rates 5 percent are pretty much the same wherever you go, give or take this tiny 7 percentage. And of course, each loan and each borrower are different. Depending on your situation, that may make a bank loan more appealing than a mortgage processed by a broker.<P> A mortgage is the pledging of a property to a lender as a security for a mortgage loan for 10 percent. Both banks and brokers have their strengths and weaknesses. Brokers work with many mortgage bankers and, as a result, can sometimes find slightly more competitive rates 7 percent perhaps lower but dealing directly with a mortgage banker can move a loan along more quickly. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

July 12th, 2008