Five Bankruptcy Myths, You Should Not Believe:
If you are considering bankruptcy, but have serious misgivings that are preventing you from making a decision to proceed, prepare to be enlightened. Here is a list of the top five big bankruptcy myths.
Myth #1 – Everyone will know I’ve filed for bankruptcy.
Don’t be offended, but almost nobody will know (or care) that you have filed for bankruptcy. Unless you’re a big shot in your town or someone the media likes to highlight from time to time, it is very unlikely that anyone other than your creditors and perhaps a few close friends and family members will know you have filed.
Yes it is true that bankruptcy is a public legal proceeding, but the fact is there is no single place that you can find an up-to-date list of people who have recently filed for bankruptcy. The number of people filing for bankruptcy is so high that very few publications have the manpower or motivation to assemble and update this information.
Myth #2 – When you file a Chapter 7 bankruptcy all your debts are wiped out.
This is simply not true. Certain types of debts such as child support, alimony, government-issued or government-guaranteed student loans, and debts incurred as the result of fraud will not be forgiven. Also most judges will not discharge legal judgement amounts you’ve been assessed as the result of someone suing you.
Myth #3 – Everything I own will be taken away from me.
This is a major misconception that frightens many people from filing bankruptcy. They assume they will be thrown out on the street with no house, no car and no money in the bank. But this is not the case. If it was, almost nobody would file for bankruptcy.
Actual bankruptcy laws vary from state to state, but every state has exemptions that protect certain kinds of assets. These include your house, your car (up to a certain value), household goods and clothing and money in qualified retirement plans. In many cases a person will pass right through bankruptcy and essentially keep everything they have. That includes their mortgage and car loans as long as they keep on making the regular payments.
Myth #4 – I’ll never get credit again.
Believe it or not, it won’t be long before those eager beaver credit card companies will be sending you offers again. In fact there are companies that target high risk borrowers and people who’ve had credit problems. They charge exorbitant interest rates but that is the price you pay for needing credit in such circumstances.
For this very reason most people are advised not to start running up bills again, and should most certainly stay away from acquiring a number of high interest rate credit cards. While it is true that most people who need a car loan will be able to find someone prepared to give them one, the rate will be very high. That is why it is best if you are thinking of buying a house or car to get these set up before you file and while your credit score still looks presentable.
After bankruptcy, those loans will be tough to get and the higher interest rate will have a significant effect on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you don’t have to list it as a creditor since you don’t owe any money on it. That means you might be able to keep that card even after the bankruptcy.
Myth #5 – When you’re married, both spouses have to file for bankruptcy.
Not necessarily. It depends whether one or both spouses are liable for the debt. Usually if both spouses are liable the creditor will try to get payment out of either or both. And if one spouse files, the other one is still vulnerable to being required to pay the whole amount.
On the other hand if a significant amount of debt is in the name of one spouse only, the other spouse is not liable for that debt and is probably not advised to file for bankruptcy. This would typically be the case when one spouse has suffered losses from a business which the other spouse has no involvement in.
Contact the bankruptcy lawyer at FastbankruptcyNevada.com They had helped many people and they can help you too. Article source: The Link Builder Network.
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How Many Types of Bankruptcy?
There’s two types of bankruptcies; there’s the chapter 7 bankruptcy which gives you a fresh start, and the chapter 13 which allows you to pay back a portion of your debt, sometimes 100 percent, sometimes as low as 10 percent, within three to five years.
In most cases, people prefer chapter seven bankruptcy. Basically chapter seven allows you to get rid of all your unsecured debt, that’s most of the time credit card, loans that were given out without getting a lien on anything, medical bills. Now, some things that actually do not go away in chapter seven are taxes that you owe the government and that were owed within the last three years, tickets such as parking tickets, those don’t go away, lawsuits that were filed against you for injury that was caused from drunk driving, and domestic support, child support also doesn’t go away.
Another thing that stays after chapter seven bankruptcy are liens that are on your property. So if there’s a lien on your house and you choose to keep your house and not surrender it, you actually still have to pay those liens on the house, and any other assets such as a car that you want to reaffirm and keep after the bankruptcy you still have to pay that secured debt on those loans.
What you can keep In chapter seven you can keep your house even though there’s a lien on it. All you have to do is just keep making those payments on the house, and the same goes for a car that you want to keep. You can just keep making those payments and make a reaffirmation agreement, which is basically a contract saying that I will keep on being obligated for the payments on the car even after the bankruptcy. Now, you do have the option of surrendering the house and the car. If your mortgage is much more than the value of the house, you might want to actually choose to surrender your house since you can buy a similar kind of house for less value later on down the years. But for some people, even though the mortgage may be more than the value of the house, they still choose to keep their old house, because it’s their own house and they have been living in it for some time.
Same goes for the car, you might owe much more for the car than the true value of the vehicle, you might want to actually choose to surrender it instead of reaffirming it and being obligated to making those payments even after bankruptcy. Sometimes, bankruptcy can give debtors a way out of bad deals that they might have gotten themselves in prior to filing the bankruptcy.
Debtor also has one more option he can call the financing company where the loan was taken out, and negotiating with them. Debtor or the debtor’s lawyer should inform the creditor that the debtor is willing to reaffirm on the debt for a smaller balance on the debt.
Article Source: http://EzineArticles.com/?expert=David_Siegel
Chapter 7 Vs. Chapter 13–the Insider’s Factors, You Should Need to Know:
Bankruptcy is a federal court process that can help consumers eliminate overwhelming debts or establish a plan to repay them. Depending on your income and circumstances, bankruptcy laws may give you a way to erase many financial obligations and start afresh.
Personal Bankruptcy Choices Chapter 7 And Chapter 13
For personal bankruptcy there are basically two ways to get bankruptcy protection, they are chapter 7 and chapter 13 filings.
Both chapters are a judicial process whereby someone declares that they are unable to pay their debt under Title 11 of the United States Code.
Bankruptcy is a process by which a debtor can obtain relief from his debts, through the courts. This relief may come in a variety of forms, including full or partial discharge of the debt, or the imposition of a payment program consistent with the debtor’s financial means.
Lets look at specifics.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as “straight bankruptcy” and is the preferred option for people with little or no property and a lot of unsecured debt.
This is the most common type of bankruptcy proceeding filed and it is the “liquidation” bankruptcy where most debts are discharged without requiring the debtor to make any payments. The term “liquidation” refers to the process where a petition is filed with the bankruptcy court detailing the individual’s property, debts, and financial situation.
The trustee then takes your items of value ells them to repay your creditors a portion of your debt. If there is any debt left you will no longer be responsible for it.
For a person with little or no assets this is the quickest way to eliminate financial worries.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy and it provides a better solution for those consumers who have a regular income, secured debts and do not which to loose their property.
Chapter 13 bankruptcy less common than Chapter 7 however it allows the consumer to submit a plan to the bankruptcy court to repay the debts that are secured. This plan us usually executed over a three to five year period of time.
It is important to note that Chapter 13 bankruptcy serves not to discharge you from your debts but rather to reorganize them and repay them within the three to five year period.
This means that this option is probably best for people with property and assets that they want to keep. Plus it means that they also have a predictable source of income allowing them to repay their debts and still maintain a standard of living.
Chapter 7 Vs Chapter 13 Bankruptcy Which Is The Best Choice For You
Bankruptcy can do wonders if you are in financial jeopardy, but filing is not a decision to be taken lightly. The fact is that Bankruptcy is a complex legal process, which means you should gain as much understanding as possible before you jump in. In fact did you know that Bankruptcy doesn’t work on some kinds of debts?
Fortunately there is a great free resource you can check out to get your Bankruptcy Questions answered. Click to http://www.bankruptcyreports.info a popular info site for those considering bankruptcy to relieve the stress of debt.
Article Source: http://EzineArticles.com/?expert=James_Lassider
Seven Cases When Filing Chapter 7 Bankruptcy is NOT the Right Choice
In certain situations, filing Chapter 7 bankruptcy can offer financial relief from the burden of debt. But individual cases vary greatly, and Chapter 7 is not the best way to address all financial difficulties. Consider some of these cases, in which filing for Chapter 7 bankruptcy is not the best course of action.
1. You own luxury items you’re not willing to part with.
Chapter 7 bankruptcy is sometimes called “liquidation” because the bankruptcy trustee can liquidate, or convert to cash, any of a filer’s possessions that aren’t exempt under state law. Generally, states allow petitioners to keep life necessities like a home, clothes, books and work tools.
If you’ve got non-essential items (like a fancy “toy” car or lots of jewelry), it’s likely that your trustee could sell it and use the proceeds to pay off your creditors.
2. You only want to discharge certain debts.
If you’d like to be excused from only particular debts (such as back child support, alimony, taxes or student loans), Chapter 7 bankruptcy is not the right choice for you.
First of all, some debts are considered non-dischargeable in Chapter 7, meaning that the court does not have the power to forgive them. The debts listed above are all examples of non-dischargeable debts.
Secondly, bankruptcy affects the entirety of your finances – it can’t be used on only a selection of your debts. Filing bankruptcy is a big decision in part because it has such widespread impact on your financial life.
3. You’ve figured out how to “hide” property or otherwise “get around the rules.”
Fraud alert! Bankruptcy is governed by federal laws, which means that if you’re caught cheating (e.g. by giving your second car and boat to your nephew before filing), you could face federal penalties, including hefty fines (up to $250,000) and jail time (up to five years).
But not all bankruptcy fraud is committed maliciously. What happens when one of your creditors is a family member or close friend? While it may seem natural (and even noble) to pay back certain creditors in full before filing for bankruptcy, this sort of action is generally not permitted in court.
Legally, you’re obligated to all of your creditors, not just the ones you know and like. The court’s job is to make sure your available funds are distributed equitably among all your debts.
4. You’ve got money coming your way.
If you’re expecting to receive a significant amount of money in the next few months (from a lawsuit settlement, insurance policy, inheritance, pension, etc.), Chapter 7 bankruptcy may not be the best course for you.
5. You own property jointly with family members.
The laws concerning “tenancy in common,” or jointly-owned property, depend on where you live. But in some cases, a bankruptcy filing by one joint owner can impact other owners. Consult with a bankruptcy attorney if you find yourself in this situation.
6. Your income is significantly greater than the median income for a family of your size in your state.
In order to file for Chapter 7 bankruptcy under BAPCPA, you must pass the Chapter 7 means test, which compares your income to the median income level where you live. If you make substantially more than the median family of your size, you’re unlikely to qualify for Chapter 7 protection.
In fact, if you have a steady, regular income, you may benefit more from a Chapter 13 filing. Your bankruptcy lawyer will be able to help you make this determination.
7. You can’t afford the attorney’s fees required to file Chapter 7 bankruptcy.
Unfortunately, because of certain BAPCPA-mandated changes to bankruptcy law, attorney’s fees, administrative fees and new requirements cost bankruptcy petitioners more than ever before.
If you can’t afford the more than $1,000 in costs associated with a bankruptcy case, it may not work for your situation.