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Get A Fresh Start-----Life After Bankruptcy
Bankruptcy Basics
Bankruptcy is one of the most financially haunting episodes in an individual’s monetary life. Bankruptcy can result in hundreds if not thousands of dollars a year in extra payments and interest charges not to point out the humiliation of getting rejected for credit. The appearance of bankruptcy can also effect in rejection of employment and even housing. Many options are available to get out of bankruptcy and into full financial independence.
There are two types of bankruptcies, chapter 7 and 13. Chapter 7 involves a ruling by a bankruptcy judge to liquidate all your assets and sell them to assure your debt while Chapter 13 allows for a restructuring of one’s finances through a court-supervised repayment plan which may broaden for a period of three to five years. During this time period, collectors are disqualified by law from attempting any collection action. Chapter 13 is the most common because it allows one to maintain their possessions.
The first step toward bankruptcy recuperation is coming up with a solid financial plan. It is compulsory to know where your financial hemorrhage is taking place. Keep a precise log of income and expenses if possible on a spreadsheet. It has been renowned that people spend fewer when they are conscious that a documentation of all their expenses is being recorded.
The second step in bankruptcy recovery is to make an effort to restore your credit. Credit recovery involves acquiring a copy of your credit report and thoroughly checking it for errors and discrepancies and then embarking on a premeditated effort to deal with them. This can be accomplished by either forcing the credit bureaus to correct incorrect items or even eliminate them entirely. This step can have the preferred consequence of boosting your credit score.
A third step to take in recuperating from bankruptcy is to review one’s set of priorities. Many people who plunged into bankruptcy have conflicting to erratic financial priorities and spend their money, time and effort on pursuits that inflict chaos on their finances. Bankruptcy is also a result of low output, ie, spending too much time and energy on activities that are UN-beneficial. Of which include the unwise use of credit cards and payday loans.
Bankruptcy can cause great grief by adding hundreds if not thousands of dollars to your overall cost of life through payments and higher interest rates not to point out that very few financial institutions will be keen to work with you in terms of extending your credit period.
Basic Chapter 7
For the best up to date Chapter 7 bankruptcy information, there's no substitute for seeking the advice of a knowledgeable and experienced bankruptcy attorney. There are various types of bankruptcies that you may be eligible for and a decent bankruptcy lawyer can guide you in the type to choose, the best time to file, and even determining if filing for Chapter 7 bankruptcy is in your best interest. If you've filed for Chapter 7 bankruptcy within the past 6 years, you will not be able to file until later.
Many people with incorrect Chapter 7 bankruptcy information mistakenly believe that filing bankruptcy will wipe out all of their debts. This is decidedly not true. A good bankruptcy attorney can identify for you the debts that will be wiped out and the ones that won't. Also, even though a Chapter 7 bankruptcy is one of the types of bankruptcy that will cancel much of your debt, in return the bankruptcy court may force your to liquidate some of your other assets.
Examples of the kinds of debts that will usually be canceled out by Chapter 7 are credit cards, personal loans, medical bills, and some judgements. Examples of things that are usually exempt from Chapter 7 bankruptcy filings are your home (depending on the amount of equity you have), your car, and most of your personal belongings. Retaining the services of a good lawyer will ensure that you retain as much of your personal belongings and properties as possible.
When you file for Chapter 7 bankruptcy, you will be assigned a bankruptcy trustee. This is an entity or individual who is appointed by the court to represent the interests of the bankruptcy estate as well as the people you owe money to (your creditors). The trustee will itemize all of your property and other assets that are not exempt from the bankruptcy. He will then arrange the sale of those assets and handle the disbursement of the funds received to the creditors.
Not long after claiming bankruptcy and once your bankruptcy filing is approved, all of your known creditors - including the IRS - will be notified of the filing.
When you file for Chapter 7 bankruptcy, the credit scores on your credit reports will be greatly reduced. This will negatively impact you in all sorts of ways such as borrowing money, renting apartments, getting jobs, and so on. The record of your Chapter 7 bankruptcy will remain on your credit report for at least 10 years at which point most of the credit agencies will finally remove it.
Unless there are a lot of complications in your Chapter 7 bankruptcy filing, you can generally expect the entire process to be done with in 6 months or less. You also can expect to have to take only one trip to the courthouse where the trustee will look over your financial transactions to determine which assets will be disbursed and which ones will remain as your property.
As you might expect, you will have difficulties obtaining a credit card after bankruptcy as well as other forms of credit.
Most bankruptcies in the U.S. are Chapter 7 bankruptcies. If you are drowning in debt, treat filing for bankruptcy as a valid financial strategy the same as you would any other financial strategy and get all of the information on chapter 7 bankruptcy as it relates to your area as you can.
Basic Chapter 13 Bankruptcy
1. Chapter 13 Bankruptcy is also known as wage earner’s bankruptcy. Why? It is because one of the main requirements in filing this type of bankruptcy is a stable source of income. A stream of earnings is important since this will ensure that the consumer will be able to keep up with his monthly charges to gradually settle his existing credit obligations
2. Chapter 1 Bankruptcy is also known as Reorganization Bankruptcy. The reason for this is that filers for this type of bankruptcy will be allowed to restructure their debts. Through this arrangement, a consumer will be allowed to use his future income to guarantee the repayment of his outstanding credit balances under the supervision of the bankruptcy courts.
3. Chapter 13 Bankruptcy requires filers to propose debt repayment plans. A filer for Chapter 13 Bankruptcy must come up with a credit repayment plan. Such plan provides information on how the consumer intends to pay off his credit accounts within three to five years. The plan will also feature relatively lower rates of interest to allow the bankruptcy filer to completely retire his credit obligations within the agreed upon period of time.
4. The repayment amount in Chapter 13 Bankruptcy will depend on three major factors. First, it will depend on the monthly earnings of the bankruptcy filer. The consumer must come up with a debt repayment plan in lieu of his monthly income. This way he can pledge a realistic amount that he can afford to pay each month. Second, the total money owed. It is also important to consider the total amount owed by the filer as this will determine the value of his monthly installments, as well as the length of time it will take him to completely pay off his credit charges. And third, a consideration of the unsecured credit accounts that the consumer has incurred. This needs to be carefully considered so that the consumer can meet the requirements of his unsecured credit account providers.
Who Files for Chapter 13 Bankruptcy?
Now let us identify which consumers often file for Chapter 1 Bankruptcy. Actually most filers for this type of bankruptcy are those individuals who do not wish to lose their assets to liquidation. These borrowers would rather pay their debts completely rather than have their valuable possessions taken and sold to pay for their credit balances. So they enter agreements to settle their credit charges under a more relaxed repayment program.
The New Bankruptcy Law also gives important provisions regarding the individuals who are eligible to file for Chapter 13 Bankruptcy. According to the Bankruptcy Act of 2005, consumers who have incurred not more than $1,010,650 in secured debts and $336,900 in unsecured debts are qualified to file for reorganization bankruptcy.
We hope that this short overview helped you see the actual facts that you need to know about Chapter 13 Bankruptcy
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