When a consumer is considering bankruptcy, the usual way to file it is to use Chapter 7 bankruptcy but in some cases it makes more sense for the consumer to file under Chapter 13 bankruptcy law. All bankruptcies, regardless of which chapter is filed, are done under the jurisdiction and supervision of the federal bankruptcy court.

The consumer who files under Chapter 13 bankruptcy protection is shielded and protected from creditors who might otherwise file a separate lawsuit against the consumer to collect the outstanding debt owed. When a consumer files Chapter 13 bankruptcy, the debt from all creditors is consolidated into one debt, it drastically reduces and sometimes even eliminates interest payments, and in almost all cases, it lowers the total amount of money that the consumer needs to lay out each month.

One of the beautiful parts about this is that after you have notified the creditors that you have filed bankruptcy, Chapter 13 or any other chapter, they can no longer call you or send you threatening letters, which only serves to increase your stress level anyway. You are recommended to keep a notebook near your phone and note which creditors you told about your bankruptcy, noting date, time, creditor and the name of the person you talked with. If they persist in calling after being notified that you have filed bankruptcy, they are in violation of federal law and you may have the option at that point of bringing a countersuit against them for that violation. Believe me, they are well aware of that and do not want to risk it.

Now by looking at this explanation, if you have been doing research into your bankruptcy options, you may have noticed that Chapter 13 bankruptcy sounds very similar to the process of using a debt consolidation service. You are right, but there are some very distinct advantages and disadvantages of each. For example, a debt consolidation service charges a small fee for their services, where the total amount of that fee would probably be a bit more than you would pay for your Chapter 13 bankruptcy filings and legal fees. But then again, with a debt consolidation service, your credit score is maintained and the fact that you are using a debt consolidation service is frequently not even visible on your credit reports, whereas a bankruptcy filing is a huge neon sign on your credit reports for the next 7 to 10 years. Although everyone’s situation is different, it would seem that a debt consolidation service, even though costing a bit more, would have much fewer long term negatives. You should really compare both options with a good bankruptcy lawyer so you can make an informed decision about what is best for your circumstances.

So the bottom line is that a chapter 13 bankruptcy gives the consumer the opportunity to pay off their financial obligations in a timely manner. The amount that the consumer will pay each month is determined by the bankruptcy court and will be an amount determined by a close examination of the consumer’s sources of income. A trustee is appointed by the court and the consumer’s check each month is given to that trustee. In most cases, this must be a certified check or cashier’s check, so it is going to be a bit more hassle to get that kind of check each month and get it to the trustee.

If you are considering bankruptcy as a consumer, you can either file Chapter 7 or Chapter 13. But especially with the recent changes in the bankruptcy laws, filing bankruptcy is no longer a “do it yourself” process unless you are willing to get very familiar with the bankruptcy laws. Making a mistake in the complex procedures that have been established could easily end up costing you more than a bankruptcy lawyer’s fees.



Thanks to Jon Arnold for contributing this article to our Bankruptcy blog:

Credit Card Debt Settlement

you file bankruptcy, it is a good idea to look into other alternatives if at all possible. New bankruptcy laws make it more difficult to file than it used to be.

Why Has Filing For Bankruptcy Doubled?

From the period of 1994 to 2004, filing for bankruptcy has doubled. Bankruptcy filing has spun out of control with consumers being targeted with easy credit. This has become a major cause for bankruptcy cases.

New Bankruptcy Laws?

There is now a new law for bankruptcy that was passed called the “Bankruptcy Abuse Prevention and Consumer Protection Act”. People struggling to pay their credit debts are now going to have to deal with this new bankruptcy law.

Bankruptcy Can Stay On Your Credit Report For 10 Years

Filing for bankruptcy can be on your credit for up to a decade. It’s a good idea to look into alternatives for bankruptcy. Buying anything on credit can be a real challenge for many years after you file bankruptcy.

Alternatives To Filing Bankruptcy

Contacting creditors is an alternative to bankruptcy. Instead of filing for bankruptcy, you work out payment options with your creditors. In many cases they are very willing to work with you. It’s to their advantage to keep you as a customer. The creditors know the alternatives for bankruptcy will bring them more profits if you don’t file for bankruptcy.

Getting a debt consolidation loan is a good alternative for bankruptcy. Financial services can combine all your debts into one loan payment every month. A consolidation loan as an alternative for bankruptcy, can help pay off debts. For bankruptcy consolidation loans, you can shop online for the best terms and rates. Lenders are very competitive to earn your business online.

You may also consider a debt workout for bankruptcy alternatives. With a debt workout, an attorney contacts your creditors and makes arrangements. In most cases the monthly payments will be less than if the credit account was settled in full. For some cases they want the payment in full, but over a longer period of time than originally stated on the credit agreement.

Bankruptcy alternatives are a good idea to consider, before you rush off to file for bankruptcy. If you look into some of these alternatives, at least you will know you tried your best to avoid bankruptcy. Having bankruptcy on your credit report for 10 years can be a long time.

How To Find A Bankruptcy Lawyer?

If you have decided there is no alternative to filing bankrupty,you may be asking yourself, “how do I find a good bankruptcy lawyer? The best way to find a good bankruptcy lawyer is through referrals. Family members and friends who filed bankruptcy in the past can refer you to a good bankruptcy lawyer. The yellow pages in a phone book is another great place to find reputable bankruptcy lawyers. Another invaluable place to find a good bankruptcy lawyer and services in on the Internet. When you search for a lawyer, try to find a lawyer that deals with your type of bankruptcy. You can get free advice with the first meeting.

Is The Law Firms Bankruptcy Lawyer Experienced?

Find out if your type of bankruptcy case is right for the law firms lawyer. Has the bankruptcy lawyer handled similar cases in the past? Take time to look over the alternatives to bankruptcy with your lawyer. There may be a way out of bankruptcy. A good bankruptcy lawyer can give you free advice on what chapter bankruptcy you should file. Bankruptcy lawyers will have you fill out a bankruptcy evaluation to see what is right for your debt and financial situation. To save yourself from wasted time and frustration, discuss in detail, options available to you with your bankruptcy lawyer.

What Information Will I Need For A Bankruptcy Lawyer?

With your first visit, it’s important to bring everything you can on the first consultation. You will need a list of all the creditors and how much you owe for your bankruptcy lawyer to consider. This includes any insurance, medical bills, auto loans, taxes, student loans and any personal loans. Your bankruptcy lawyer can give you the advice you need with this important information. This will make the filing process easier if you do decide to file bankruptcy.

Thanks to Dean Shainin for contributing this article to our Bankruptcy blog:

Car Loan After Bankruptcy

Though the Connecticut economy has weathered the national financial crisis better than most parts of the country, residents have become increasingly worried about carrying unhealthy amounts of consumer debts in such uncertain times. In the face of ever spiraling credit card balances, too many Connecticut borrowers we have spoken with see no other option beyond bankruptcy protection. To be sure, for the most desperate debtors, Chapter 7 debt elimination may well be the best – or, indeed, the only – option available to clear their accounts and start fresh (no matter how long the process may take). Alas, legislation passed four years ago by the United States Congress dramatically altered both the protections that bankruptcy could offer ordinary individuals and their treatment should Chapter 7 bankruptcy in Connecticut even be rendered available. Much as the federal statutes were changed because of pressure from political action committees bankrolled by the credit card companies, it cannot be said that consumers had not taken advantage of past bankruptcy statutes to exploit the former system. With lenders opening accounts to seemingly every Connecticut borrower looking for an excuse to spend freely and without consequence, too many households found themselves unable to pay back foolish purchases. There’s always been a need for bankruptcy protection in America, but, alongside the new opportunities for credit, consumers – in Connecticut and across the nation – took untoward advantage of the spending freedoms and paved the way for current restrictions.

To be sure, especially for those Connecticut borrowers who’ve faced unusual torments – whether loss of employment or hospitalization or similar unforeseen tragedies – Chapter 7 bankruptcies still serve as a seawall stemming the onrushing tides of debts. Those consumers filing for bankruptcy protection this very moment may have to pay a bit more for credit counseling classes (certificate required before the Connecticut court clerk shall even process the bankruptcy petition), and, given the continually more detailed paperwork involved, experienced bankruptcy attorneys are more important than ever – with prices to match their newfound value. Furthermore, most taxes, all student loans, debts that came as a result of criminal fraud, and all familial obligations from alimony to child support shan’t be touched by any governmental protection. Chapter 7 bankruptcies in the state of Connecticut will not also touch any purchases more than five hundred dollars that had been made in the last three months before the bankruptcy petition is filed. More to the point, the Chapter 7 bankruptcy proceedings – even if the borrowers will successfully argue eligibility to the Connecticut court trustee and genuinely manage to liquidate those debts that would be considered viable under current rules – actively look to take whatever possessions from the filers are open to seizure by law.

Whenever a borrower declares bankruptcy in Connecticut, the individuals retain the option of invoking either federal or local bankruptcy exemption to protect their personal property. As yet another example of the importance of attorneys trained in bankruptcy law, and, considering the current economic problems, law firms have been switching the emphasis of their practices right and left. Every Connecticut debtor should take special care researching their lawyers’ level of experience regarding the matter. Those legal professionals well trained in their craft should be able to guide their clients through the Chapter 7 proceedings with a minimum of loss (though some damages must be assumed, regardless), and, most especially, the attorneys chosen should be more than familiar with the distinctions between the exemptions recorded under Connecticut state law as opposed to the severely more limited options granted by the federal government. These statutes are intended to help borrowers keep hold of their more prized possessions, but, since the equity of all property will be subject to a somewhat arbitrary estimation of their replacement value (as opposed to, in recent years, before the past legislation, the far more forgiving resale value), all borrowers have to consider the potential fluctuations.

Obviously, we cannot list every single Chapter 7 bankruptcy exemption that’s recorded under Connecticut law. Your authors would be remiss, once again, if we pretended to do more than offer merely an overview of the larger guidelines available within the Connecticut bankruptcy code. At the same point, however, every consumer interested in the bankruptcy debt elimination alternative should have some knowledge about the protections available. Nothing’s guaranteed, of course, as long as so much depends upon the whims of the bankruptcy trustee randomly selected by the Connecticut judicial system, but all borrowers may as well have an awareness of what may be seized. Each state, for example, maintains a so-called homestead exemption, and, in Connecticut, the borrowers are allowed seventy five thousand dollars equity of their primary residence whether that may be home, condo, trailer, or house boat. Similarly, fifteen hundred dollars of equity for an automobile or any motor vehicle shall be protected by the state of Connecticut, and, if a married couple files a petition for Chapter 7 bankruptcy jointly, the exemption’s raised to three thousand dollars (the home exemption, alas, is not doubled for spouses).

Further, Connecticut law protects household furnishings – from living room tables to couches to bedroom linens – provided there’s nothing valued above ordinary means. Funds from life insurance benefits granted the filer or filers will be secured for as much as the trustee (based upon the Internal Revenue Service guideline for Connecticut) deems necessary for support. The treatment of retirement plans in Connecticut, on the other hand, varies greatly. Pensions and any dividends from stock market investments or similar annuities could reasonably be expected to be guarded so long as the courts believe the retirement plan to be necessary income. In the same way, all tools and materials related to the trade of the consumers filing – up to a certain amount, depending upon the profession and the objects involved – should not be threatened, and, as long as taxes or familiar support are not already past due, unemployment benefits from the state of Connecticut will continue unabated through bankruptcy. Worker’s compensation and any money due the newly bankrupt resulting from injury shall continue to be paid regardless of debt presuming the attorneys do their jobs properly. Connecticut residents are virtually the only Americans to be guaranteed protection of such debts, and they need to make absolutely sure that their lawyers are certain of all local loop holes. We live in an especially forgiving state, to be sure. Connecticut, uniquely, offers a “wildcard” exemption for their residents petitioning for Chapter 7 bankruptcy protection that vouchsafes personal property of any sort up to one thousand dollars above and beyond the preceding exemptions. While this “wildcard” will still be subject to the whims of the courts, remember that all actual values (even family heirlooms) are based upon governmental oversight. Connecticut debtors truly in need of debt liquidation are certainly better off than their fellow citizens residing in less enlightened states, but the potential disadvantages of bankruptcy must still be kept in mind.

Chapter 7 bankruptcies truly are a last ditch measure for only the most desperate of borrowers. Despite the Connecticut exemptions, potential seizure of assets by the courts to auction with proceeds remunerating lenders remains a constant risk. Much as your authors recognize the current economic difficulties affecting Connecticut and the nation at large, bankruptcy protection’s no longer a catch all for all problems that may affect consumers who’ve spent unwisely or fallen upon hard times. Especially considering the other debt relief options now available to Connecticut borrowers (and the expenses of even an initial consultation with bankruptcy lawyers), only those consumers truly without another alternative should even think about braving the rigors of Chapter 7 debt elimination, but, at the same point, consumers should examine all of the debt management strategies just as thoroughly as they would Connecticut bankruptcy protection. Consumer Credit Counseling, for example, has been largely debunked in the past few years after media watchdogs and governmental investigators discovered that CCC firms – even the ones announcing themselves as non profit – actually take more money from the credit card companies they’re supposedly fighting against than their genuine consumer clients. Similarly, after the implosion of the mortgage loan industry and the falling real estate values throughout Connecticut and all of New England, debt consolidation based upon equity loans should be avoided no matter how supposedly low the interest rates offered or smooth the loan officer’s sales pitch.

The debt settlement strategy, though it may seem faintly miraculous to Connecticut borrowers unfamiliar with the program, isn’t actually that far different from Consumer Credit Counseling or other debt consolidation approaches rather more publicized within the greater Connecticut area. Well trained debt settlement negotiators, generally (since this is a relatively new field) trailing experience in the financial planning or credit counseling economic sectors, who often work in tandem with attorney or economic advisors, argue for surprisingly substantial reductions to their clients unsecured debt accounts and our Connecticut respondents have regularly reported immediate credit card balance cuts of more than fifty percent. To successfully argue their point, the debt settlement firm effectively takes over their Connecticut clients’ accumulated debt loads. Under the new debt settlement plan, you will make regular payments to the firm, which in turn will pay back the creditors until you are completely without credit card and other unsecured debts in less than five years or sixty months. While, unfortunately, not every Connecticut borrower would be accepted into a debt settlement program – not all lenders shall agree to participate in negotiations – the potential for assistance absent the costs and loss of property Chapter 7 bankruptcy now entails should lead every wise Connecticut resident worried about their spiraling debt loads to at least investigate the approach. Every debt situation is different and, without analyzing the borrowers’ specific situation, it would be irresponsible for your authors to recommend one debt relief strategy above another. However, after talking to countless Connecticut debtors who’ve tackled their unpaid loans (both successfully and otherwise), we certainly would hope that appropriate Connecticut residents attempting to eliminate their credit card balances at least look into debt settlement before rushing headlong toward a potentially disastrous bankruptcy solution.



Thanks to Cole for contributing this article to our Bankruptcy blog:

Should I File For Bankruptcy

There are several different types of bankruptcy. The one people most commonly think of is chapter 7 bankruptcy. It can be confusing to know which of the types of bankruptcy is appropriate in your situation. Here is some information on chapter 7 bankruptcy and whether it is right for you.

Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. It will rid you of your outstanding debts, but the court may force you to liquidate some of your assets in order to satisfy your creditors. Chapter 7 bankruptcy will cost you about $299 between filing fees and paperwork, and will take between four and six months to be completed.

Chapter 7 bankruptcy typically only requires one visit to the courts. Most of the time you will be ordered to take a credit counseling course that is endorsed by the United States Trustee. Be aware that the laws concerning bankruptcy and the various types vary from state to state, so make sure you and your bankruptcy attorney are very familiar with the way bankruptcy law works in your state.

Not everyone is able to file for chapter 7 bankruptcy. If you have had a bankruptcy discharged in the last six to eight years, you may not be eligible to file a chapter 7 bankruptcy. The courts will also review whether you might be eligible to file a chapter 13 instead. This is a repayment plan instead of completely canceling the debt. This is based on things like your income, debt load, and expenses.

New rules dictate exactly what guidelines should be used when determining whether someone has enough income to repay their debts or not. If you are a disabled veteran and your debts were racked up during active duty or your financial burdens were due to a business loss, you are more likely to be able to file a chapter 7 bankruptcy.

Chapter 13 bankruptcy differs from chapter 7 bankruptcy quite a bit. Chapter 13 is a reorganization plan for people who want to pay off their debts over a period of three to five years. Usually the people who choose this option are ones who have assets that are not exempt under chapter 7 bankruptcy rules. People who choose chapter 13 must have enough income to cover their living expenses and enough left over to pay on their debts.

Chapter 11 bankruptcy is used primarily by large businesses to reorganize their debts and pay their creditors. The debtor must come up with a plan and get it approved by the creditors. If they cannot get it approved, they can try to force it through the courts anyway. However, the success rate of this type of bankruptcy can be as low as 10%. This is not a bankruptcy option for consumers.

Chapter 7 bankruptcy is most appropriate for those individuals who have overwhelming amounts of debt and do not have sufficient income to repay those debts. You can keep some assets, but some possessions may need to be sold to help pay back your debt. Once you file the papers, the courts will decide whether you are eligible for a chapter 7 bankruptcy or if a chapter 13 is feasible. It is a fairly quick process and will help end collections harassments.



Thanks to Jon Arnold for contributing this article to our Bankruptcy blog:

Filing Bankruptcy In Texas

The New Bankruptcy Laws - Truth about the unconstitutional new BK law changes. On April 20, 2005, George Bush signed the new “Bankruptcy Abuse and Consumer Protection Act” into law.

Bankruptcy Abuse? Do you know anyone personally who has abused the Bankruptcy laws, and are consumers really protected? Or, should this new bankruptcy bill be called the “Abuse the Consumer and Protect the Fraudulent Banks Act”?

We’ll soon see…

In order to understand these unfair new bankruptcy laws, and to help you see that you must avoid bankruptcy, lets cover the original purpose of the BK laws.

According to U.S. Bankruptcy Courts, the primary purpose of the old bankruptcy Chapter 7, bankruptcy Chapter 11 and bankruptcy Chapter 13 laws were: 1) to give an honest debtor a “fresh start” in life by relieving the debtor of most debts, and 2) to repay banks and creditors in an orderly manner to the extent that the debtor has property available for payment.

Apparently the primary purpose of the new credit card bank BK laws is: 1) to repay banks and creditors in an orderly manner to the extent that the debtor has property available for payment.

However, with the new BK laws, giving an honest debtor a “fresh start” in life by relieving the debtor of most debts has been done away with.

The finance companies and credit card banks all blame the necessity of the bankruptcy changes on the .003% of abusers of the old bankruptcy laws.

Sponsors of the bill claim that most bankruptcy personal cases involve irresponsible spenders who have shopped or gambled their money away and now do not wish to pay their creditors so the new BK legislation, will eliminate “filing bankruptcy for convenience”.

There is NOTHING further from the truth then these claims alleged by the credit card banks and finance companies. And, as you dig deeper into these pages, you’ll see who’s really abusing who in America’s credit, finance and banking game.

They claim that bankruptcy costs the credit card banks billions of dollars each year and that those costs are passed on to customers in the form of higher interest rates.

That of course would be true if the credit card banks were actually lending any of their own money, or their customer’s deposited money. For more details, read our page a history of money and banking secrets that banks don’t want published.

And, by making bankruptcy filings harder for those with financial trouble, legislators say that more people will pay their bills, the credit card companies will save billions of dollars, and the resulting savings will be passed on to consumers in the form of lower interest rates.

We’ve never ever heard of a credit card company lowering interest rates voluntarily, and we know they never will.

New Bankruptcy Law Highlights

The key highlights of the credit card banks new bankruptcy laws are:

The new bankruptcy laws apply a means test for people filing bankruptcy. If a debtor has at least $100 per month left over after an IRS determined monthly expense plan, (can you picture that?) the debtor will be forced to file Chapter 13 and pay for five years.

Just imagine life after bankruptcy now.

They will not be able to file Chapter 7 of the Federal bankruptcy code, which would have eliminated all of their unsecured debt.

There are no provisions in the bankruptcy law for debt problems caused by job loss, illness or other traumatic events, despite studies that show that these are the cause of most bankruptcy cases.

Can you say Debt Slave?

With these new, credit card BK laws, attorneys are now responsible for the accuracy of paperwork filed by their clients. So in other words, your attorney must now search your dresser drawers for those hidden family heirlooms.

This will no doubt result in fewer bankruptcy attorneys, with the remaining ones raising their fees in order to cover this additional liability.

With the new bankruptcy laws most consumers are now completely unprotected from losing a job or having medical problems. They can no longer start over by filing for bankruptcy Chapter 7.

They will have less affordable help from capable BK attorneys due to the new bankruptcy law liability stipulation.

Giving an honest debtor a “fresh start” in life by relieving the debtor of most debts has been done away with completely thanks to the new bankruptcy laws.

However an amazing discovery has been made that you cannot miss learning about. Now that you must avoid bk as there is no PROTECTION for consumers provided by the new Bankruptcy Abuse and Consumer Protection Act if filing bankruptcy under the new bankruptcy laws.



Thanks to Mark Cella for contributing this article to our Bankruptcy blog:

Chapter 11 Bankruptcy Plan