It seems as if not a day goes by that the credit industry does not try to make people who file bankruptcy appeared to be some form of deadbeat; that they are somehow trying to take it an edge of the system and of the many other hard-working American. Besides, as far as they are concerned no one could ever fail to pay legitimate debts. The truth of the matter is though, that many people find themselves in a position beyond their control which makes it impossible for them to pay off all their debts.
The choice of declaring bankruptcy should only be left for the those who need it the most though. It should be nothing less than the last resort possible for anyone to choose. When you become overwhelmed with way too much debt and you have no other option left, then and only then should you ever consider actually filing.
All across the nation the number of bankruptcies each and every single gear have increased. Many people will insist that this increase is because of people who are wanting to take advantage of the system; but this is not the case. Honest families all over the country continuously find themselves being unable to pay off their debts and have found no other possible solution to their financial.
Every once in a while somebody maybe each attempting to take advantage of the system, but this is a rare occurrence. Most of the hype which has been built up over the years has been built by the crediting agencies who stand to lose the most amount of honey in the event of a bankruptcy.
It may not be the right decision for you, but it will help you to start off with a clean and fresh slate. You just have to take the time to make a proper decision for the simple fact that you will be affected for many years to come should you choose to file for personal bankruptcy.
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Find out more about declaring personal bankruptcy and what are the considerations you should take note of.
There are a number of reasons why people decide to declare personal bankruptcy. Of course, they all come down to being in a situation whereby even with significant changes in spending habits, the people in question are still in over their head with debt. This article examines the four biggest reasons that people decide to declare personal bankruptcy in the USA.
1. To avoid losing their home to foreclosure. Chapter 7 bankruptcy has the potential to eradicate many debts altogether but absolutely does not guarantee that you will be able to keep your assets. However, if your debts are unsecured debts, the homestead clause protects your home from reclaim. However, if it is a debt secured against your house that you are behind on, such as your mortgage most commonly, then you might be required to file chapter 13 to arrange a payment plan, as chapter 7 will not eradicate this type of debt.
2. To avoid losing their car. Very much as with your home, if you have a car loan, this loan is secured against the car. It is wise here again to declare bankruptcy of chapter 13 in order that you can formulate a repayment plan to enable you to keep your vehicle.
3. To pay medical bills. It is becoming increasingly common for people to declare bankruptcy as a result of medical bills they simply cannot afford to pay. If you find yourself with an unforeseen medical emergency, particularly if you are under insured or even not insured at all, you can find yourself in absolutely abominable financial circumstances.
4. Unemployment is at a record high and not having a job, therefore not having an income, is a very common reason for people deciding to declare bankruptcy. And unfortunately, this reason is becoming ever more common in the current recession with unemployment rates soaring.
Want to know how to manage your debt without losing control? Get the right information on Declare Personal Bankruptcy before you make the important decision. To get the facts on bankruptcy, simply Click Here
Find out more about declaring yourself bankrupt and what are the considerations you should take note of.
Before you make the decision to declare personal bankruptcy, there are a number of things you should familiarize yourself with and take into consideration. For example, ask yourself prior to your decision to declare personal bankruptcy, whether you have absolutely any viable alternatives. If you do not have any other way to resolve your situation, then you should probably go ahead.
However, you should note that in 2005 there were some fairly controversial changes made by Congress to bankruptcy law. These changes were brought about by extensive lobbying by the credit industry. While many people who were eligible before the changes still are, it is now substantially more complicated to declare personal bankruptcy than it was. Essentially, the changes have been designed to really make absolutely certain that anyone filing really has a genuine need and definitely cannot afford to repay debts, before allowing them to declare chapter 7.
Chapter 7 bankruptcy is what most people consider to be ‘bankruptcy’ whereby many debts are simply wiped out without any need for a repayment plan. The changes of 2005, however, mean that before you will be able to declare, your income will be considered. If your income is below the median for the state in which you are filing, you should be granted declaration. However, if your income is higher then you will be required to go through a complex and detailed means test to document your finances in full detail.
If your means test deduces that you are not in full need of chapter 7 bankruptcy, then you can be ordered to file chapter 13 bankruptcy, which essentially works out a repayment plan for you for the outstanding debts you have. And though this will often mean an eradication of outstanding service charges and a lower interest rate, you will still have to pay back outstanding debts.
Before you declare yourself bankrupt, you should take time to carefully consider all of your options as there may be better alternatives in your situation. You may be able to pay off your debt over time by bringing in additional income, or you can try working with creditors to reduce your overall obligation.
Even something as simple as transferring your credit card balances to another card with a lower interest rate can be quite helpful. Before you take this strategy, however, you should be careful since this is just another loan that you have to worry about. It will not solve your problems by itself, and if you continue with your current spending habits you could find yourself in an even deeper hole. Transferring to a lower interest rate can bring some relief, though, as part of a more comprehensive debt reduction program.
After going through all the alternatives, you may come back to bankruptcy as the best or only option for you in your current circumstances. This may be a bit discouraging for you, but it should not be a reason for despair. You do need to make sure that your decision has been well researched and that you understand the basic process.
You need a good lawyer to help you with your case because the process has become more complex with the recent changes in the bankruptcy code. There are also various laws which vary by states, even though there are Federal laws that provide some uniform standards. For example, declaring bankruptcy in California may not be the same as declaring bankruptcy in Texas, especially when it comes to your homestead exemption.
The homestead exemption, by the way, protects your house from creditors if you file for bankruptcy. For example, if you’re trying to get rid of tens of thousands of dollars of credit card debt, your creditors cannot go after your house if your state has a homestead exemption. Of course, you still have to pay your mortgage, and you may still have to deal with foreclosure if you don’t pay your lender for your house payments.
Bankruptcy is the debt resolution of last-resort in the UK, and still carries with it a stigma. It is also the debt solution that has the most devastating affect on your ability to get credit or a mortgage in the future. It is difficult to separate fact from fiction in the area of bankruptcy, so what happens if I declare myself bankrupt?
It is important to note at this point that declaring yourself bankrupt is not something that you should do lightly, and you should seek qualified advice.
A very important point concerns your home if you own it jointly. There may be steps that you can take to sell your share of your home to your partner/another family member which would remove the risk of it being sold. Get specialist advice on this.
You will need to get a form from your local court that you will have to present when you declare bankruptcy. You should also check at this point what the current fees are for declaring yourself bankrupt (485 at the time of writing, or possibly 335 if you are on income support). This form will need to be filled in before you petition for bankruptcy.
Before visiting the court you need to be aware that any bank accounts that you have an interest in will be frozen. You therefore need to make sure that you have enough cash to provide for your basic needs until you are next paid.
You would normally make an appointment at the court to declare yourself bankrupt. In actual fact if you turn up with the correct forms and the payment without an appointment during normal court hours you have to be seen, but normal practice is to make an appointment. You will need to take the bankruptcy fees in cash (no cheques accepted). The court appearance will normally be a formality, and you will then be free of your unsecured debt immediately.
After you are declared bankrupt your bank accounts will be frozen and you will need to attend an interview to discuss your financial situation and the reasons for your bankruptcy. The insolvency service will want to find out whether you have any assets that can be sold to pay money into your bankruptcy. Also, they will go through your budget to see if you can afford to pay any money from your earnings towards your bankruptcy. All of this detail needs to be discussed with a qualified adviser, but it is worth pointing out one key fact. If you are part of a couple, then the insolvency rules do not apply to your partner, i.e. they cannot insist that your partner pays anything towards mortgage/rent or utility bills etc. This is very important since if you fill in the forms showing that you pay half of the mortgage/rent this may result in you having a monthly excess. If so, you will be ordered to pay some of this money to your creditors for up to 3 years (continuing after your bankruptcy is discharged). If you don’t have any excess then you will be relieved of any responsibility for paying your creditors when you are discharged, which could be after only 6 months but certainly within a year.
The insolvency service will want to know if you have any assets that can be sold. They will only be interested in high value items such as your home, cars, boats etc. Current practice in the UK is that bankrupt’s homes are very rarely visited to assess whether there are any personal items that can be sold. The time and effort is simply not worth the small amounts of money that would be raised (unless your home is full of antiques).
Your car may be at risk of being sold unless you can prove that you NEED it for work (i.e. you cannot travel to work by public transport).
If you live with a partner/family and own your own home (and haven’t already taken steps to sell your share to someone else) then the insolvency service will not sell it for at least a year from the date that you are declared bankrupt. This can give time for your partner or another family to buy back your share.
Once your bankruptcy is discharged (normally in less than a year) you will be free to start re-building your life debt free. You will probably find it almost impossible to get unsecured credit for a number of years. Mortgages are more available, but the rates will be higher. It pays to shop around, because the rates on adverse credit loans can vary widely.
If you want more free information then visit my Debt Advice Free blog for advice on debt from someone that has been in a debt crisis situation and is now debt free. Would you declare bankruptcy? If so, visit my site to see what other options are available to you.
