Bankruptcy Garnishment Refund

 ... refund/ Bankruptcy+Court

US Bankruptcy Legislation: An Attempt to Individual Debtor’s Civil Liberties?

Author: Esther A.

US Bankruptcy Procedures

Beginning in the late 1800s, bankruptcy legislation in the United States evolved to permit debtors to reimburse their unsecured debts to be exonerated from that liability if they were eager to liquidate asset in order to reimburse certain creditors. Both the federal bankruptcy Act and each state’s laws authorized a debtor’s family to preserve a minimum standard of living. The states’ immunity laws differed in the amount of property it authorized a debtor to keep, but all-purpose was to facilitate debtors to find a ‘fresh start.’

Lawsuit for the collection of debts was practically inexistent. Under modern statutory systems of procedure, lawsuit for the set of sum unpaid may be divided for convenience of debate into several categories, depending on the nature of the liability. If the liability occur out of an ordinary business or commercial transaction, the creditor’s remedy against the defaulter for failure to reimburse is to convey an action for infringe of contract; for certain common forms of infringes of contract, such as the failure to pay a negotiable apparatus or to pay for goods bought, highly simplified actions often are endowed with. When the debt is opened by a credit on the debtor’s property, the creditor’s remedy –when the debtor fails to forfeit a repayment of interest or principal –is foreclosure of the credit. If the money owing, regardless of how it arose initially, is in arrears because of the judgment of a court, the judgment creditor may summon such judicial officers as the sheriff or marshal to assist in collecting the money due from the debtor’s possessions by attachment or garnishment. Incarceration of debtors, once common, is now usually considered too radical a remedy except for where there has been false pretences, fraud, or wilful failure to pay wages, or concealment of assets from pursuit by a judgement creditor.

Under current practices, the Constitution of the United States authorizes Congress ‘to establish uniform laws on the subject of bankruptcies throughout the United States’ (Article I, Section 8). This grant of power to Congress has been interpreted to prevent the state to write their entity bankruptcy laws.

Individual Debtor’s Civil Rights Status under Current Bankruptcy Legislation

US new bankruptcy laws arouse questions as to whether or not individual debtors were subject to inequity and partiality. The Bankruptcy Abuse Prevention and Consumer Protection Act, which is the most recent update to federal bankruptcy legislation, makes it even more difficult for individual debtors to file for bankruptcy under Chapter 7 of the bankruptcy code. This Chapter allows individual debtors to settle or reduce some debts in exchange for paying some properties. Individual debtors wanting to file under Chapter 7 must now meet extra-stringent criteria, which are determined by the median income in the state in which the debtor lives. Individual debtors who fail to qualify for Chapter 7 have no other option than filing for bankruptcy under Chapter 13. This requires refund of debts at a fixed sum per month over a period of three to five years.

The new legislation, which was signed in April 2005 by President George W. Bush, had the support of the credit card and retail industries, but was opposed by several leading consumer groups and bankruptcy attorneys, who argue that the law penalized people facing unusual circumstances. According to studies, most bankruptcy filings under Chapter 7 stem from medical emergencies, sudden lost of a job, or family break up. But supporters of the new law stipulate that it would hold people accountable for their debts and put off misuse by gamblers and obsessive purchasers.

According to critics, the 2005 legislation imposes obligations on bankruptcy attorneys that would result in higher legal fees for those asserting bankruptcy.

The new bankruptcy law requires that anyone in quest of declaring bankruptcy must first take a credit counselling course as this is valuably onerous for low-income homes.

Article Source: http://www.articlesbase.com/bankruptcy-articles/us-bankruptcy-legislation-an-attempt-to-individual-debtors-civil-liberties-1436577.html

About the Author

Esther A. is a specialist in SEO copywriting. She is currently occupying the position of SEO Virtual Administrative Assistant in a US based SEO copywriting company.



Bankruptcy Green Card Application

 ... Preferred Rewards Green Card

Bankruptcy May Not Cover Christmas Credit Card Binges

Author: Tony Bertolino

Does the following scenario sound familiar to you?  The Smith family has had a difficult year financially.  John Smith lost his lucrative career as a result of cutbacks to middle management at a previously thriving construction company and has been working two jobs in retail for several months.  Jane Smith recently re-entered the workforce after twelve years of staying home to raise children in order to help make ends meet.  As the year comes to a close, Mr. and Mrs. Smith realize that bankruptcy is inevitable and decide to have one more wonderful Christmas before confronting the legal steps that will need to be taken.  The credit cards come out of the wallets to make this holiday the best one yet.  Tickets are purchased for the entire family to attend the Houston Texans’ final game of the season.  The girls get new iPods and cell phones.  The Smith’s only son, true to his Texas roots, receives new gear to help him prepare for upcoming tryouts for his high school’s football team and a used truck to drive to the games.

The Smiths have no reason to worry because all of the mounting credit card bills will just be included in the bankruptcy settlement, right?  In reality, this family may learn a hard lesson about the consequences of their spending practices.

If you are feeling overwhelmed by the debt that you are carrying and you believe that bankruptcy is your best solution, please know that some of the credit card debt you have accumulated may not be dischargeable.  Section 523(a)(2) of the federal Bankruptcy Code addresses the problem of credit card binging.  This clause exempts from discharge “debt that was obtained if an individual made material and false representations about his financial condition.” This may mean that a person submitted fraudulent information on the credit card application or knowingly made purchases for which he knew he would not be able to pay.  The latter issue is the more common situation, and the exemption that describes the scenario involving the Smith family.

A credit card company is going to use Section 523(a)(2) to challenge the discharge of your debt if one or more of the following circumstances exist:

  1. An increase in credit card usage shortly before filing for bankruptcy
  2. The use of the card for recent vacations or travel
  3. Using the card while unemployed or otherwise without reasonable ability to repay
  4. A large balance at the time of filing

One specific point in the Bankruptcy Code, Section 523(a)(2)(C), deserves special attention from all of those shoppers who are determined to find the perfect gift regardless of cost.  Consumer debts owed to a single creditor that total more than 0 for luxury goods or services within ninety days of filing for bankruptcy will be considered non-dischargeable.  And, by luxury items the law is not referring to fur coats and yachts.  Instead, luxury goods are defined as “goods or services reasonably not necessary for the support or maintenance of the debtor or a dependent of the debtor.”

What does this mean for people who overindulge with their spending during the Christmas season?  If you spend thousands of dollars in December knowing all along that you plan to file for bankruptcy once the New Year rolls around, your plans for debt relief may be delayed.  If you know that you will not be able to pay for the bills you created during Christmas, you will have to wait at least four to six months into 2010 to file for bankruptcy.  In the meantime, you will be expected to make regular payments to your creditors.  The bottom line is that you should not view an intended declaration of bankruptcy as an excuse to make everyone happy with the expensive gifts under the Christmas tree.

When it comes to issues of bankruptcy, Texans are in a better position than many others in our country.  In 2008, our state ranked forty-sixth in the country for number of bankruptcies filed. While residents of the Lone Star State are proud of being the biggest and best in so many areas, this is one ranking for which we should take pride in being nowhere near the top.  However, this relatively good standing does not mean that there are not thousands of Texans who are struggling to pay their bills every month.  With the pressure to be a good consumer from the moment that the doors open on Black Friday until the exchanges are made and the clearance items are tagged the day after Christmas, the end of the year only makes already difficult situations even worse.

If you believe that you may be a candidate to file for Chapter 7 bankruptcy, which essentially offers a fresh financial start to those who qualify, make sure that you do not at this point begin to create debt that cannot be discharged.  The time to consult with an experienced bankruptcy attorney is now.  You need to receive solid legal advice concerning your financial options and any spending pitfalls to avoid while the paperwork is being drafted.  Once you know where you stand, try to relax and enjoy the rest of the holiday season at home with family and friends and not at the local mall.  Your credit rating and your legal counsel will thank you for it.

Article Source: http://www.articlesbase.com/bankruptcy-articles/bankruptcy-may-not-cover-christmas-credit-card-binges-1641814.html

About the Author

Tony R. Bertolino is the managing partner at Bertolino LLP with law offices located in Austin, Houston and San Antonio, Texas. A member of the Trial and Appellate Litigation Team, Mr. Bertolino’s practice is devoted largely to complex transactions, commercial litigation, business law, entertainment law and family law matters. You can read more about Mr. Bertolino at www.belolaw.com


Declaring Bankruptcy Creditors

 ... Bankruptcy - Forbes.com

Can't Pay Off Debt? How to Legally Avoid Paying Back Unsecured Debt in Full

Author: jerryarcher

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Currently, creditors are very worried about getting their payments as more and more people are not able to pay them off. It has become a great obstacle and they cannot continue their businesses. Some were even on the verge of filing for bankruptcy. These creditors are the backbone of our country’s economy and if they remained in the hole the whole economy would crash down.

In order to help them out, the government provided them with billions of stimulus cash so that they can recover their losses and generate more revenue. This provided them with an ease of accepting lowered amounts of debts in which they still gathered money from borrowers and stopped them for filing for bankruptcy.

On the other hand this provided an opportunity to the borrowers to legally avoid paying back unsecured debts in full if they cannot. All they have to do is to make creditors convince that you have no other mean left to pay off the debt and if you are not granted a waiver you will end up declaring bankruptcy. Creditors take it as a threat because bankruptcy would also cause them losses so instead they agree on accepting decreased amount of debts.

You must hire a debt settlement company to do all the discussions with your lenders on your behalf because only they can get the favorable deal for you. It is also a legal process and you have to appoint a debt settlement company pay their fees and see the miracles they do for you. They are experts in debt management and the more your appointed settlement company is experienced, the more chances are there of getting a good waiver. They know very bit detail about how to handle the creditors and would not like to give up until and unless the deal in settled. A debt settlement company can reduce your debts to even up to 60% and this is not a difficult task for them.

Debt settlement has a lot of advantage like it does not lower down you credit scores as bankruptcy does. It can help you save some money in your accounts and besides getting a waiver, a debt settlement company can teach how to lead a debt free life. So grab the opportunity of debt settlement program as early as you can as it is not going to stay forever. As soon as things will start to get better debt settlement will vanish away.

Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.

Free Debt Advice
contact us for free debt advice = 8886916918

Article Source: http://www.articlesbase.com/debt-consolidation-articles/can039t-pay-off-debt-how-to-legally-avoid-paying-back-unsecured-debt-in-full-2274947.html

About the Author

creditdebtsettlements.com is a matchmaker in the debt settlement industry. They have paired up thousands of consumers up with debt settlement companies who are most likely to get consumers the best deal.
http://www.creditdebtsettlements.com



Bankruptcy Debt Guidelines

Credit Card Debt Settlement ...

Get Out of Debt Fast – Why is Debt Settlement Better Than Bankruptcy?

Author: Christopher Boris

Is debt settlement a better option than filing for bankruptcy? Well, the answer to this question depends on the individual circumstances of the debtor. Bankruptcy is the last resort to get out of debt. Due to the reforms in 2005, Bankruptcy Code now carries more stringent tests for a debtor before letting him through to a bankruptcy filing. Under debt settlement, debtors have the flexibility to operate on their own or through a debt settlement Company to obtain a better discount on their debts. We shall now analyze why debt settlement is a better option than filing for bankruptcy for a debtor who can support the debt to a certain extent.

Bankruptcy Code now has more stringent guidelines which weigh the position of the debtor before letting him file for bankruptcy. Only those who are eligible can go ahead with the filing. For instance, to qualify for a Chapter 13 filing, the borrowers need to comply with requirements such as the required debt limits, repayment capacity and a permanent source of income. For a Chapter 7 bankruptcy, requirements are much more stringent. Therefore, you will not be allowed to file for bankruptcy cover unless you are in a very tight financial position. On the other hand, you also have to get legal advice from an attorney as to how you could proceed with the filing. All these obstacles make it more difficult to file for bankruptcy.

When looking at debt settlement, we do not see so many regulations that restrict the debtor. This means we have the freedom to choose the settlement Company or the settlement program we want. An additional advantage of the process is that it can be carried out by the debtor himself. This minimizes the cash outflow as the commission charged by the settlement Company will also be saved. However, due to the technical nature of the negotiation process, it is highly recommended that you obtain proper credit counseling or debt settlement help before opting for the settlement process.

The settlement Companies, in particular, carry the necessary expertise to offer a great service to the borrower. They can make sure that an affordable repayment plan is in place for the residual debt once a substantial haircut on the original debt is received.

Therefore, when determining the more suitable option, the financial situation of the borrower needs to be evaluated carefully. For a borrower who is in a position to service his debt in some way needs to resort to debt settlement which is the better option.
Debt settlement is a legitimate alternative to bankruptcy and should only be considered by consumers who have at least k in unsecured debt and are experiencing a financial hardship. To compare debt settlement companies it would be wise to visit a free debt relief network that will provide a free debt consultation to determine which option is best for you.

 


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} /** * updates the url for the iFrame * * @param iFrame * @param size * @param clickId * @return */
function leoHighlightsUpdateUrl(iFrame,size,clickId,destUrl)
{ try { _leoHighlightsDebugLog("leoHighlightsUpdateUrl() "+destUrl); var url=iFrame.src; var idx=url.indexOf("&size;="); if(idx>=0) url=url.substring(0,idx); // size=1; _leoHighlightsDebugLog(“leoHighlightsUpdateUrl() size=”+size+” “+url); if(size!=null) url+=(“&size;=”+size); if(clickId!=null) url+=(“&clickId;=”+clickId); if(destUrl!=null) url+=(“&url;=”+destUrl); _leoHighlightsDebugLog(“leoHighlightsUpdateUrl() “+url); iFrame.src=url; } catch(e) { _leoHighlightsReportExeception(“leoHighlightsUpdateUrl()”,e); }
} /**
*
* This can be used to close an iframe
*
* @param id
* @return
*/
function leoHighlightsSetSize(size,clickId)
{ try { /* Get the element */ var iFrameTop=_leoHighlightsFindElementById(LEO_HIGHLIGHTS_IFRAME_TOP_ID); /* Figure out the correct sizes */ var iFrameTopSize=LEO_HIGHLIGHTS_IFRAME_TOP_SIZE; /* Refresh the iFrame’s url, by removing the size arg and adding it again */ leoHighlightsUpdateUrl(iFrameTop,size,clickId); _leoHighlightsSetSize(iFrameTop,iFrameTopSize); _leoHighlightsSetBottomSize(size,clickId); /* Clear the hover flag, if the user shows this at full size */ if(size==1&&_leoHighlightsPrevElem) _leoHighlightsPrevElem.hover=false; } catch(e) { _leoHighlightsReportExeception(“leoHighlightsSetSize()”,e); }
} /** * Start the popup a little bit delayed. * Somehow IE needs some time to find the element by id. * * @param anchorId * @param size * * @return */
function leoHighlightsShowPopup(anchorId,size)
{ try { var elem=_leoHighlightsFindElementById(anchorId); if(_leoHighlightsPrevElem&&(_leoHighlightsPrevElem!=elem)) _leoHighlightsPrevElem.shown=false; elem.shown=true; _leoHighlightsPrevElem=elem; _leoHighlightsDebugLog(“leoHighlightsShowPopup() “+_leoHighlightsPrevElem); /* FF needs to find the element first */ _leoHighlightsFindElementById(anchorId); setTimeout(“_leoHighlightsShowPopup(‘”+anchorId+”‘,’”+size+”‘);”,10); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsShowPopup()”,e); } } /**
*
* This can be used to close an iframe
*
* @param id
* @return
*/
function leoHighlightsHideElem(id)
{ try { /* Get the appropriate sizes */ var elem=_leoHighlightsFindElementById(id); if(elem) elem.style.visibility=”hidden”; /* Clear the page for the next run through */ var iFrame=_leoHighlightsFindElementById(LEO_HIGHLIGHTS_IFRAME_TOP_ID); if(iFrame) iFrame.src=”about:blank”; var iFrame=_leoHighlightsFindElementById(LEO_HIGHLIGHTS_IFRAME_BOTTOM_ID); if(iFrame) iFrame.src=”about:blank”; if(_leoHighlightsPrevElem) { _leoHighlightsPrevElem.shown=false; _leoHighlightsPrevElem=null; } } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHideElem()”,e); }
} /**
*
* This can be used to close an iframe.
* Since the iFrame is reused the frame only gets hidden
*
* @return
*/
function leoHighlightsIFrameClose()
{ try { _leoHighlightsSimpleGwCallBack(“LeoHighlightsHideIFrame”); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsIFrameClose()”,e); }
} /** * This should handle the click events * * @param anchorId * @return */
function leoHighlightsHandleClick(anchorId)
{ try { if(_leoHighlightsIsFrame()) return false; var anchor=_leoHighlightsFindElementById(anchorId); anchor.hover=false; if(anchor.startTimer) clearTimeout(anchor.startTimer); /* Report the click event */ leoHighlightsReportEvent(“clicked”, window.document.domain, _leoHighlightsGetAttrib(anchor,’leohighlights_keywords’),null, _leoHighlightsGetAttrib(anchor,’leohighlights_accept’), _leoHighlightsGetAttrib(anchor,’leohighlights_reject’)); leoHighlightsShowPopup(anchorId,1); return false; } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleClick()”,e); } } /** * This should handle the hover events * * @param anchorId * @return */
function leoHighlightsHandleHover(anchorId)
{ try { if(_leoHighlightsIsFrame()) return false; var anchor=_leoHighlightsFindElementById(anchorId); anchor.hover=true; /* Report the hover event */ leoHighlightsReportEvent(“hovered”, window.document.domain, _leoHighlightsGetAttrib(anchor,’leohighlights_keywords’),null, _leoHighlightsGetAttrib(anchor,’leohighlights_accept’), _leoHighlightsGetAttrib(anchor,’leohighlights_reject’)); leoHighlightsShowPopup(anchorId,0); return false; } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleHover()”,e); } } /** * This will handle the mouse over setup timers for the appropriate timers * * @param id * @return */
function leoHighlightsHandleMouseOver(id)
{ try { if(_leoHighlightsIsFrame()) return; var anchor=_leoHighlightsFindElementById(id); /* Clear the end timer if required */ if(anchor.endTimer) clearTimeout(anchor.endTimer); anchor.endTimer=null; anchor.style.background=LEO_HIGHLIGHTS_BACKGROUND_STYLE_HOVER; /* The element is already showing we are done */ if(anchor.shown) return; /* Setup the start timer if required */ anchor.startTimer=setTimeout(function(){ leoHighlightsHandleHover(anchor.id); anchor.hover=true; }, LEO_HIGHLIGHTS_SHOW_DELAY_MS); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleMouseOver()”,e); }
} /** * This will handle the mouse over setup timers for the appropriate timers * * @param id * @return */
function leoHighlightsHandleMouseOut(id)
{ try { var anchor=_leoHighlightsFindElementById(id); /* Clear the start timer if required */ if(anchor.startTimer) clearTimeout(anchor.startTimer); anchor.startTimer=null; anchor.style.background=LEO_HIGHLIGHTS_BACKGROUND_STYLE_DEFAULT; if(!anchor.shown||!anchor.hover) return; /* Setup the start timer if required */ anchor.endTimer=setTimeout(function(){ leoHighlightsHideElem(LEO_HIGHLIGHTS_IFRAME_DIV_ID); anchor.shown=false; _leoHighlightsPrevElem=null; },LEO_HIGHLIGHTS_HIDE_DELAY_MS); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleMouseOut()”,e); }
} /** * This handles the mouse movement into the currently opened window. * Just clear the close timer * * @return */
function leoHighlightsHandleIFrameMouseOver()
{ try { if(_leoHighlightsPrevElem&&_leoHighlightsPrevElem.endTimer) clearTimeout(_leoHighlightsPrevElem.endTimer); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleIFrameMouseOver()”,e); }
} /** * This handles the mouse movement into the currently opened window. * Just clear the close timer * * @param id * @return */
function leoHighlightsHandleIFrameMouseOut()
{ try { if(_leoHighlightsPrevElem) leoHighlightsHandleMouseOut(_leoHighlightsPrevElem.id); } catch(e) { _leoHighlightsReportExeception(“leoHighlightsHandleIFrameMouseOut()”,e); }
}
/** * This is a method is used to make the javascript within IE runnable */
var leoHighlightsRanUpdateDivs=false;
function leoHighlightsUpdateDivs()
{ try { /* Check if this is an IE browser and if divs have been updated already */ if(document.all&&!leoHighlightsRanUpdateDivs&&!_leoHighlightsIsFrame()) { leoHighlightsRanUpdateDivs=true; // Set early to prevent running twice for(var i=0;i0) url=url.substring(0,idx); /* Append the text to the end */ url+=”#”+encodeURI(txt); /* Set the iframe with the new url that contains the hash tag */ topIFrame.src=url; } catch(e) { _leoHighlightsReportExeception(“leoHighlightsSetExpandTxt()”,e); }
} /*———————————————————————-*/
/* Methods provided to the highlight providers… */
/*———————————————————————-*/ /** * This will set the expand text for the Top window */
function leoHL_SetExpandTxt(txt)
{ try { _leoHighlightsDebugLog(“leoHL_SetExpandTxt() “+txt); _leoHighlightsSimpleGwCallBack(“LeoHighlightsSetExpandTxt”,”expandTxt”,txt); } catch(e) { _leoHighlightsReportExeception(“leoHL_SetExpandTxt()”,e); }
} /** * This will redirect the top window to the passed in url * * @param url * @param parentId * @return */
function leoHL_RedirectTop(url,parentId)
{ try { try{ var domain=_leoHighlightsGetUrlArg(window.document.URL,”domain”) var keywords=_leoHighlightsGetUrlArg(window.document.URL,”keywords”) var vendorId=_leoHighlightsGetUrlArg(window.document.URL,”vendorId”) leoHighlightsReportEvent(“clickthrough”, domain,keywords, vendorId); }catch(e){ _leoHighlightsReportExeception(“leoHL_RedirectTop()”,e); } _leoHighlightsRedirectTop(url); } catch(e) { _leoHighlightsReportExeception(“leoHL_RedirectTop()”,e); }
} /** * This will redirect the top window to the passed in url * * @param url * @param parentId * @return */
function LeoHL_RedirectTop(url,parentId)
{ leoHL_RedirectTop(url,parentId);
} /** * This will redirect the top window to the passed in url * * @param url * @param parentId * @return */
function leoHL_RedirectTopAd(url,parentId)
{ try { try{ var domain=_leoHighlightsGetUrlArg(window.document.URL,”domain”) var keywords=_leoHighlightsGetUrlArg(window.document.URL,”keywords”) var vendorId=_leoHighlightsGetUrlArg(window.document.URL,”vendorId”) leoHighlightsReportEvent(“advertisement.click”, domain,keywords, vendorId); }catch(e){ _leoHighlightsReportExeception(“leoHL_RedirectTopAd()”,e); } _leoHighlightsRedirectTop(url); } catch(e) { _leoHighlightsReportExeception(“leoHL_RedirectTopAd()”,e); }
} /** * This will set the size of the iframe * * @param url * @param parentId * * @return */
function leoHl_setSize(size,url)
{ try { /* Get the clickId */ var clickId=_leoHighlightsGetUrlArg( url,”clickId”) var gwObj = new Gateway(); gwObj.addParam(“size”,size); if(clickId) gwObj.addParam(“clickId”,clickId+”_blah”); gwObj.callName(“LeoHighlightsSetSize”); } catch(e) { _leoHighlightsReportExeception(“leoHl_setSize()”,e); }
} /** * This will toggle the size of the window * * @return */
function leoHl_ToggleSize()
{ try { var gwObj = new Gateway(); gwObj.callName(“LeoHighlightsToggleSize”); } catch(e) { _leoHighlightsReportExeception(“leoHl_ToggleSize()”,e); }
} “);
]]>[removed]

Article Source: http://www.articlesbase.com/debt-consolidation-articles/get-out-of-debt-fast-why-is-debt-settlement-better-than-bankruptcy-2942744.html

About the Author

www.debtsquashers.com is a matchmaker in the debt settlement industry. They have paired up thousands of consumers up with debt settlement companies who are most likely to get consumers the best deal.

http://www.debtsquashers.com

contact us for free debt advice = 8883613619



Consumer Bankruptcy

National Association of Consumer Bankruptcy Attorneys Logo by Damon Duncan

The Difference Between Chapter 7 and Chapter 13 Bankruptcy

Author: Benjamin Yrungaray

Most consumers know bankruptcy can eliminate some types of debt, but they are unsure which type of bankruptcy to consider.  There are two types of consumer bankruptcy.  Chapter 7 bankruptcy is a type of personal bankruptcy and can be referred to as straight bankruptcy.  Chapter 13 bankruptcy is another form of personal bankruptcy and is often referred to as reorganization bankruptcy.  While the purpose of both Chapter 7 and Chapter 13 is to help the debtor get back on their feet, each form of bankruptcy accomplishes this in very different ways.

Chapter 7 Bankruptcy: Eliminate Qualifying Debt

In 2005, the United States Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) which changed the eligibility requirements for Chapter 7.  The most significant change resulting from BAPCPA is the Means Test.  To qualify for Chapter 7 under the Means Test, a person’s income must be less than the median income for their community.  The easiest way to qualify for Chapter 7 bankruptcy under the Means Test is if your average income over the past six months does not exceed the median income for your location.  Contact a qualified attorney to determine whether you qualify for Chapter 7 bankruptcy.

Chapter 7 will not, however, discharge the obligation to pay secured debt.  To keep property where there is an outstanding loan on that property, the bankruptcy candidate  must complete a reaffirmation agreement.  For instance, many clients have a car payment and do not want to give up their car.  By reaffirming the debt, they can keep the car but must continue to make payments on the loan after discharge.  The same principle applies to real estate property.  Chapter 7 bankruptcy will not eliminate the responsibility to make monthly mortgage payments.  However, many indi viduals can save their home by eliminating credit card debt in order to afford mortgage payments.

Chapter 13 Bankruptcy: Reorganizing Debt

Chapter 13 bankruptcy is designed for individuals with large amounts of debt who do not qualify for Chapter 7.  The distinguishing feature of this type of bankruptcy is the Chapter 13 plan.  The debtor and his attorney develop a Chapter 13 plan and the trustee and creditors approve the plan.  Under the plan, the Chapter 13 debtor must pay back a portion of outstanding debt over a 3-5 year period.  During this time period, creditors cannot contact or harass the debtor.  Once the debtor has completed the plan, the court will grant a discharge of some or all of the remaining debt.

To qualify for Chapter 13, an individual must have unsecured debt below $336,900 and secured debts below $1,010,650.  While Chapter 13 does not eliminate secured debt like Chapter 7, it has the added benefit of modifying or stripping down certain secured assets.  For example, if the individual owns a home with both a first and second mortgage and the value of the first mortgage exceeds the current value on the home, you may be able to strip off the second mortgage.  Such a strip down is one of the features of Chapter 13 to consider when determining which type of bankruptcy is best before filing.

Both Forms of Bankruptcy Provide Relief

Contact an attorney to discuss your options and determine which type of bankruptcy, if any, is right for you.   If you wish I can be reached at http://www.firstsourcelaw.com for a free evaluation of your situation.

Article Source: http://www.articlesbase.com/bankruptcy-articles/the-difference-between-chapter-7-and-chapter-13-bankruptcy-1730502.html

About the Author

Benjamin Yrungaray handles bankruptcy and loan modification cases at First Source Law. He is a member of the state bar of California (#256224), Pennsylvania (#208558), and New Jersey (pending). He lives in Orange County and works for Higbee and Associates law firm.