Bankruptcy - Why People File
Author: David Hoyer
Life is not always fair. Most people that file for bankruptcy do so out of necessity not because they simply want to avoid paying their debts. Of all the people that file for personal bankruptcies, nearly 40% of them file due to some financial crisis outside of their control. In many cases this financial crisis is some serious health issue.
If you do not have health insurance, a catastrophic illness such as cancer, can wipe you out financially. Even for many people with health insurance, the combination of premiums and deductibles, can put a major dent in their finances. Especially hit hard are the elderly and families where a single woman is the head of the house hold. It's frightening to think of just how close many people in this country are to foreclosure, bankruptcy, or financial ruin.
The second biggest reason that people file for bankruptcy is either the loss of a job or divorce. A sudden loss of a job due to company layoffs, company outsourcing, or a company going out of business can easily wreck the financial situation of a household that is heavy in debt and basically living from paycheck to paycheck. A divorce can lead to a situation of having to support two households instead of one and also possibly alimony payments.
Unfortunately, the new bankruptcy law, which became effective October 2005 was basically written by the credit card companies. As you might expect, they changed the law to work in their favor and put in basically no provisions to protect citizens that may have fallen into the above categories.
In fact, under the new bankruptcy law, the more equity you have in your home, the greater the chance you'll have to use it to pay off your creditors, thus increasing the chance that you'll forfeit it through foreclosure. The new changes in the law make filing for bankruptcy more expensive, making it more difficult for the people that really need it to take advantage of it. In addition, the new law, instead of wiping out some debts that would have been dissolved under the old bankruptcy bill, will force the person into a repayment plan.
Other fees also make filing for bankruptcy more expensive. You will be required to attend financial counseling both before and after filing for bankruptcy, which you will have to pay for. The bankruptcy laws are also more complex, which means that your lawyer fees will be higher.
The prior bankruptcy laws were predicated on a belief that a person who had worked all his life, paid his bills on times, and was generally a good citizen, could have a chance to wipe the financial slate clean and start over in the event that through circumstances out of his control, he was unable to pay his bills. Sure, the system was taken advantage of by some, but in a society of laws, that's unavoidable.
And, yes, some changes were probably needed in the old bankruptcy laws as some provisions were archaic and out of date. But making changes should not mean that you take away the safety net for people. Especially when the debt situation that many of these people found themselves in were surely worsened by the outrageous late fees, percentage hikes, and other "profit centers" built into the lending practices of most of the major credit card companies.
Article Source: http://www.articlesbase.com/debt-consolidation-articles/bankruptcy-why-people-file-279884.html
About the Author
David Hoyer is a freelance writer who writes articles relating to bad credit, personal loan, bankruptcy woes and other financial issues.Visit his site at http://www.bankruptcyfocus.com .
what would be the best way to collect money from bankruptcy debtor? Letter of Credit or Certificate of Deposit
I filed bankruptcy last year and it is dismissed. The items still show up on my credit report but with?
bankruptcy next to it. I was told that i can write a letter to the credit report agencies and they can erase each creditor, and i will only show bankruptcy on my credit report but each creditor won’t be listed. How do i write this letter and what should be included in it? Thanks!
Why file for bankruptcy when your credit rating is already bad by not paying up in the first place?
Example: am in debt of £6,000 for about 6 years now, i keep getting letters saying i must pay for 6 years now, but i know my credit rating is bad so what difference wud filing for bankruptcy make, im not too concerned abt getting a loan, card or anything so what shud i do, keep ignoring them or file for bankruptcy?
can i write a letter to credit company to erase bankruptcy?
has anyone written a dispute letter for bankruptcy?
Has anyone been able to get a Bankruptcy off of their credit report?
Besides waiting 7 years for a BK to come off of your record, does anyone know of a way to get it off of your credit? There are several companies soliciting me and telling me that they can remove a BK from my credit report by sending a bunch of dispute letters to the credit reporting agency. Has anyone tried this and if so, did it work and is it legal? Any info would be much appreciated. Thanks!
If the bankruptcy never happened and the information is false, of course you can dispute it. If you really did claim bankruptcy and the information is accurate, then you will have to live with it on your credit report. All you have to do is pull up your credit reports online and ALL three reporting agencies will tell you how to dispute the information.
Late means you have had some problems but are trying. Bankruptcy says you took on the responsibility and in the middle, said the hell with it and walked away.
Bankruptcy is a legal record which cannot be taken off a credit report short of the time allowed by the Fair Credit Reporting Law. You need to check the Law as it was 10 years for the reporting of Bankruptcy and 7 years for suits and collections. You can google “Fair Credit Reporting Law” and read it for yourself
The Companies which take your money and promise to take off negative things from your report normally are unable to do so. If you send a letter of dispute, that letter is sent to the creditor and if the creditor can give evidence (copy of the ledger or signed agreement) that is all that is necessary to prove that the account is really not disputed.
Dismissed means that they did not allow your bankruptcy. I hope you mean Discharged. If you got it dismissed that means you still are liable for any of the debts. Discharged means you have been legally removed from owing the debt.
When you file bankruptcy it does not remove your other accounts. Those will remain on there for 7 years, but they should be listed as Included in bankruptcy and if the debt was discharged it will show a 0 balance. If they do not show this you can dispute it, but they will just change it to show it was in bankrputcy and set the balance to 0. You can attempt to have them validate the debts, and you may get them removed, however if they are ever reverified they will show right back on the report.
Has this person already declared bankruptcy? Are you included in the bankruptcy as a creditor(a person who is owed money to). You may be out of luck, because once the judge signs the bankruptcy order no listed creditor can collect a debt. So you would need to find out the answer to the two questions