Stopping Foreclosure

Foreclosures are regulated by state law in every county and parish within the U.S. The process is always similar. Each mortgage holder must receive notice of the intent to foreclose and has a right to bring payments current. The typical notice period is 30 days, and notices are published as a public record. In the past, mortgage companies typically filed notices automatically once a homeowner slipped three months past due. You may have less time today.

Dealing with a foreclosure notice strikes fear in the hearts of homeowners. Your future is uncertain, you must find a place to live, or alternatively find a way to make past due payments. In most cases, payments would not slip past due if homeowners have funds available. For many people, this unfortunate situation is best resolved through filing bankruptcy. Filing will save your home.

The U.S. Bankruptcy Code, in 11 U.S.C. Section 362, contains a powerful provision creating an automatic stay of proceedings. A stay is similar to a federal injunction that prohibits all creditors, in all bankruptcy chapters, to collect debts. The stay also specifically applies to foreclosure sales. Once a case is filed, your mortgage company cannot proceed with foreclosure once receiving notice that you file. Written notice of filing provided by certified mail is sufficient and indisputable, even though a call providing oral notice is also acceptable.

The automatic stay is not a permanent injunction. In Chapter 7 cases, a mortgage holder must bring payments current or the court will entertain motions to lift the stay. The motion will be granted and foreclosure resume if you do not make all payments that are due. In Chapter 13 cases, past due payments are included in a proposed plan. Once included in a plan, payments are assumed current and the stay will remain in place. When filing a Chapter 13 case, you must make a proposed plan payment to the assigned trustee within 30 days. If this payment is not made, the stay may lift and the case is subject to dismissal.

The best time to plan a bankruptcy case is before receiving a notice of repossession, foreclosure or eviction. By allowing more time to plan, the benefits of filing multiply exponentially. You may optimize the means test result with only a few extra months. This test determines if you qualify to file Chapter 7 and the amount of your trustee payment if selecting Chapter 13.

Planning bankruptcy does not require that you retain an attorney. Most attorneys provide only one free initial consultation. Your means test however changes each month. You may compute the means test yourself, each month, and save $400 per test. To do this, you must use a customized form to maximize your results. The official form is cryptic at best and provides little meaningful guidance for individuals who want to file Chapter 7.

Bankruptcy Strategies

The election of Chapter 13 increases options available when filing bankruptcy. In exchange for at least partial payment on all debts, the added benefits in Chapter 13 frequently make it the best choice. You may include back taxes, past due mortgage payments and a wide variety of priority debts in the plan. The partial payment required may be minimal. In many cases, the percentage payment on unsecured debts is less than 5%. For a minimal payment, you may avoid tax seizures and home foreclosure.

Each person who is experiencing financial difficulty presents a unique set of challenges. Income, goals and necessities vary in each situation. Nevertheless, a solution exists for all financial problems. You may avoid filing bankruptcy if acting early. You may settle unsecured debts easily for less than 50 cents on the dollar without filing. You may need to file at some point in the future to gain the protection of the automatic stay. Keep your options open.

All people must pay income tax in all situations. The IRS receives a super-priority. These important debts may lead to the seizure of assets, including exempt property, if taxes remain unpaid. Chapter 13 is unique in that past due taxes are considered current when included in the plan. All tax seizures and levies must stop and the IRS must accept the plan payment. You may spread payment over five years.

Additionally, each person has a right to convert a Chapter 13 case to Chapter 7 if qualifying under the means test. This option becomes quite valuable if taxes are repaid and only unsecured debts remain in Chapter 13. In addition, during the time a Chapter 13 cases is pending, each debtor has power within their grasp to make small changes in their lifestyle. These changes may influence the means test result and later qualify any debtor to convert to Chapter 7.

You have an amazing variety of options and alternatives provided by law. The secret for using them wisely is to become familiar with each option. When you compare the real cost and actual benefits of each option, in a side by side comparison, you may be shocked by your potential results. Misinformation regarding debt relief options is common. The only way to know, with certainty, the value of your options is to compare them over an equal time period. You must use actual costs and realistic assessment of available benefits. Not all people qualify for all options.

This comparison is far easier than most people realize. You do not need an account or financial analyst to help you. You do not need an attorney to calculate the means test if you use a well prepared custom form. You could perform these calculations within the comfort of you home with the next few days.

How to Succeed

Geographical Interpretations

Australia

Continued

There are normally two principal sources from which funds can be realised, viz. the assets and wages of the bankrupt. However, the bankrupt is granted the facility whereby certain assets are set aside and their value cannot be realised. These are referred to as "protected assets", and include such items as furniture and appliances used in the home, as well as tools associated with the bankrupt's trade together with vehicles up to a certain value. Apart from these items, all other assets with a material valuation will be sold. On the other hand, should a house or car be deemed to have a value above a certain level, then the bankrupt has the right to purchase the interest receivable from the estate and so be able to retain the asset. However, should the bankrupt not take advantage of this right, then the interest income will reside with the estate. In this case, the trustee will now be in a position to assume possession of the asset and duly sell it in order to realise its value.

Should the bankrupt's income exceed a certain level, then it will be necessary to make appropriate contributions to the Trustee. This income threshold is indexed and as such, the level is revised biannually in March and September. Whether or not the bankrupt has any dependents will have a bearing on the final valuation. The method for determining the extent of the income contribution is based on 50% of the difference between the bankrupt's income and the value of the threshold above which contributions are payable. Should the bankrupt fail to maintain his contribution liability, then the Trustee is empowered to issue a notice by which such contributions may be deducted directly from the bankrupt's wages. However, should this course of action fail to materialise, the Trustee may register an Objection to Discharge by which the term of the bankruptcy is extended by a further five years.

The normal term of a bankruptcy is three years. However, a bankruptcy can be set aside prior to this period should all the debts be paid off in full. Should a bankrupt be able, during the normal term, to raise additional funds from some external source, then it would be possible for the bankrupt to make an Offer of Composition to all of the creditors. The advantage of such a proposal is that all of the creditors would receive a defined percentage of the outstanding debt owing to each. On this basis, should all the creditors accept the terms of this offer, then the bankruptcy can be annulled once the agreed funds have been received by all the creditors.

Once the bankruptcy has been annulled by one of the methods previously stated, or the bankrupt has been automatically discharged, then the status of the bankrupt's credit report will display the classification "discharged bankrupt". As in the case of credit violations, this classification will remain on the bankrupt's credit report for a specified number of years. The actual term will be solely dependent on the company issuing the report. However, once this term has elapsed, this particular classification will revert back to the standard form of reporting.

By viewing the ITSA website, a certain amount of information may be found relating to Bankruptcy Law in Australia.

Bankruptcy - How To Succeed

Peter Radford writes Articles with Websites on a wide range of subjects. Bankruptcy Articles cover History, Role in Europe/US, Types, Prevention.

Credit Card Harassment?

Once you retain the services of any attorney you have the right to tell your creditors that all further communications are to go through your attorney. If you also write a letter to your creditors advising them all further communications are to go through your attorney and send it certified, return receipt through the United States Post Office or other mailing service in which you have proof an agent of the creditor received the letter, then, if the creditors continue to call, you have a cause of action against the creditor and its agent. This is one of the benefits of hiring an attorney to prepare and represent you in a bankruptcy.

You are not alone in the financial stress you are experiencing. Research by the Federal Reserve indicates that household debt is at a record high relative to disposable income. Many households have experienced a reduction in work hours, thus a reduction in income. In fact, the American Bankruptcy Institution statistics show that in second quarter of 2008, 32,387 bankruptcies were filed in the State of California. In the second quarter of 2009, 53,505 bankruptcies were filed in the State of California. That is more than 60% increase in filings.

Your credit card debts are discharged through a bankruptcy, as long as there is no fraud involved. You may be forgiven of all the debt through a Chapter 7 or for a percentage of the debt through a Chapter 13. See previous blogs to understand which Chapter you qualify for.

Can Bankruptcy

Student loans are non dischargeable, generally. To discharge a student loan obligation through bankruptcy you must file a complaint requesting that your government-owned student loans be discharged pursuant to section Bankruptcy Code Section 523(a)(8). The standard for the Court to determine your student loan obligation discharged was set in the case Brunner v. New York State Higher Education Services Corp. in 1987. This means you need to satisfy the so-called "Brunner Test" and the court is to consider: (1) you current level of income and expenses, and determine whether you can maintain a minimal standard of living for you and your dependents if you are required to repay the loans; (2) whether there are additional circumstances suggesting that your current financial condition is likely to continue for a significant portion of the repayment period; and (3) whether you have made a good faith attempt to repay the loans.

The "Bruner Test" is a very high standard and basically, unless you care for or are suffering from a disability that will continue for your lifetime, that prevents you for earning sufficient income to support you and your family and you have made a good faith effort to repay your loans, you will be unable to discharge your loan debts through a bankruptcy.

Testimony in the Con¬gress hearings in 1998 intended undue hardship claims to be considered in light of "the availability of various options to increase the affordability of student loan debt, including deferment, for¬bearance, cancellation and extended, graduated, income-contingent and income-sensitive repayment options." H.Rep. No. 750, 105th Cong. 2d Sess. 408 (1998).

There are other options to consider on your student loans. One such option is through the United States Department of Education, William D. Ford Federal Direct Loan Program ("Direct Loan"), offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan (the "ICR" plan). Essentially, once a loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. The maximum repayment period under an ICR plan is twenty-five years. Direct Loan provides a handy calculator for ap¬proximating ICR plan pay-ments.

Chapter 12 Bankruptcy

There is a tendency to throw all the varied kinds of bankruptcy into one pile when considering whether it may be appropriate to file for bankruptcy protection. This is a dangerous misconception because there are many important differences from one chapter of the United States Bankruptcy Code to the next. Moreover, certain forms of bankruptcy are reserved for individuals and others are reserved for businesses. The failure to properly choose the right form of bankruptcy protection for your specific situation can have an adverse effect on not only the approval or rejection of your claim.

It can also result in the unnecessary loss of assets and may require you to pay more to your creditors than you would if you had pursued the most fitting type of bankruptcy for your circumstances. For family farmers, ranchers, and fishing companies the best option in the face of serious financial distress is typically Chapter 12. Chapter 12 was introduced into the Bankruptcy Code in 1986 as it became increasingly apparent that economic circumstances had made the prospect of maintaining fiscal solvency increasingly grimmer for small family owned farming operations.

Features of Chapter 12 Bankruptcy

The primary distinguishing features of Chapter 12 bankruptcy are those that are designed to restrict its provisions to parties that are actively engaged in small scale agricultural endeavors. For example, the debts that are included in a proposed bankruptcy plan must have been at least 80 % attributable to the operation of the farm. Additionally, to establish that the farm is the primary source of a filing party's income, more than half of the income in the previous year must have been gained through revenue generated by the farm.

There are a number of reasons that you may prefer the specific provisions of Chapter 12 bankruptcy to the others for which your claim may be eligible. Some of these are:

• The lack of a means test (such as that required for Chapter 7 bankruptcy)
• No credit counseling is mandated for a filing party
• Assets are not compelled to be sold to satisfy debts outstanding to creditors
• Disclosure statements do not have to be filed

Buy Bankruptcy

Bankruptcy auctions are filled with terminology and procedures somewhat foreign to the average investor; however, with a basic knowledge of the industry, a first time buyer can not only reduce risk but also close a phenomenal deal.

In United States bankruptcy cases, a sale of an asset of a bankruptcy estate requires a court order. A trustee files an application with the Bankruptcy Court, asking the court to order the sale of the asset. When the judge signs the order, the noticing period-or period of time that the asset must remain accessible for public viewing prior to the sale-begins. The noticing period varies in length, but lasts on average 20-30 days.

As a buyer, the noticing period is an often under-utilized tool. This is the optimal time for buyers to perform their due diligence, by researching the asset on their own. Most bankruptcy assets are sold "as is, where is," and "with no warranties implied or stated." This means that the seller, trustee, and bankruptcy estate are not responsible to the buyer for the property in any way, except to provide a deed, bill of sale, or assignment. Because of this, trustees rarely order title searches on real property, and often go off of the "Schedules" (or list of debts and assets provided by debtor) to determine and disclose any liens against the property. The disclaimers can often deter more apprehensive buyers while creating the opportunities for epic deals.

Most bankruptcy asset auctions in the United States are in person auctions. However, it is possible to follow auctions on the Internet. Many in person auctions even have Internet or phone bidding. Some bidders find it helpful to watch online auctions and attend in person auctions in the beginning, to get comfortable with their surroundings before rushing into a bid.

When bidding, have a plan. Its easy to get carried away and outbid not only your competitors but also your budget. Know which assets interest you, what you are willing to pay, as well as the value of the asset before you bid. Make sure that you have the funds in hand, should you win the auction. An auctioneer acts as a middleman between the trustee and the buyer, so when the auction ends, stay in contact with your auctioneer. Occasionally, property transfer in bankruptcy can be a bit tricky, and open communication and cooperation with your auctioneer helps moves the process along.

Remember that your auctioneer knows what sales are coming up, even before the noticing period. Seasoned investors in bankruptcy assets know to register for auctioneer mailing lists, and check in from time to time to scoop their competition and get a head start on an upcoming auction.

Calculating Monthly

After the passage of bankruptcy reform in 2005, all debtors filing bankruptcy are required to calculate their average monthly income. The average monthly income is calculated using the income earned during the six months before filing bankruptcy. For example, if you filed bankruptcy in October, you would need to calculate your average monthly income for the period of April through September. For debtors who work as W-2 employees and receive regular paychecks, this can be achieved easily. But for the self-employed, calculating the average monthly income for bankruptcy will require a little more work. Here's how you can do it:

First, debtors considering bankruptcy need to gather their profit and loss statements and bank statements for the past six months. Unfortunately, many self-employed people do not create profit and loss statements each month, therefore they will need to create them using their bank account information, receipts or any other information that will help them. You can find many sites online that will give you example profit/loss statements.

After you have created a profit and loss statement for each of the previous six months before filing bankruptcy, you will need to attach a corresponding bank statement. The bank statement and profit and loss statement must be reconciled. Once you put together all of your necessary information, you can work with your bankruptcy attorney to calculate the average monthly income. Remember, if you fail to calculate your average monthly income or fail to provide supporting documentation (P&L and bank statements), your bankruptcy case may be dismissed.

Filing Bankruptcy

No one wants to have to file for bankruptcy. It can be a depressing and humiliating experience. But it does not mean that you are beaten. Sometimes bankruptcy is just the best option to eventually help you get back on your feet and you shouldn't feel bad about having the courage to take the steps to repair your financial standing. Here are a few guideline to help you when filing for bankruptcy.

Filing bankruptcy first starts off with gathering information. This is not meant to be exhaustive or ridiculous, it is just meant to make the whole process easier either for you or your lawyer. First of all you should document all of your income for the past nine months. This would include any tax refunds, dividends, paychecks, gifts, annuities, and interest. This is meant to help calculate the reasons why you are filing bankruptcy. Your amount of income will help to determine what chapter of bankruptcy that you can file for.

Next you need to gather a list of your possessions and assets. This would include any mortgages, cars, jewelry, valuable household goods, clothing, stocks or bonds, bank accounts, checking, savings, cash, CD's, annuities, retirement accounts, and anything else that might have value. This helps the state determine what can be saved and sold at auctions to help pay off your debt. Many times however the items hold no real value on the market and you are able to keep them and do what you will with them.

Bankruptcy in Texas?

The burning question in most potential bankruptcy debtors' minds is "What can I keep?" You're understandably worried about losing everything, but let me just put your mind at ease. You're definitely not going to lose everything. In fact, most people keep everything. Bankruptcy was created specifically to help consumers sinking under the waves of financial overburden, and both state and federal law provide for property exemptions. In other words, the law sets out a list of items that you can keep even after the bankruptcy process ends.

Texas allows consumers to choose to use either the federal exemption guidelines or the Texas exemptions. The federal exemptions allow you to keep:

• Your home up to $20,200
• Life insurance payments for individuals you depend upon for support
• Life insurance policy with loan value up to $10,775
• Unmatured life insurance contract, excluding credit insurance policy
• Alimony and child support used for support
• Pensions and Retirement Benefits, ERISA-qualified benefits needed for support
• $525 per item in household goods for a total value of up to $10,775
• Health aids
• Jewelry up to $1,350
• Lost earnings payments
• Your motor vehicle up to $3,225
• Personal injury compensation payments up to $20,200, wrongful death payments, crime victims' compensation, public assistance, social security, unemployment compensation, and veterans' benefits
• Tools of trade up to $20,200
• Wild Card - $1,075 of any property plus up to $10,125 of any amount of unused homestead exemption

The Texas exemptions allow you to keep:

• Your home, if not more than 10 acres in town or 100 acres out of town (200 acres for families)
• $30,000 worth of personal property ($60,000 for head of family), including one two-, three- or four-wheeled vehicle; two horses, mules or donkeys and a saddle, blanket and bridle for each; 12 head of cattle,; 60 head of other livestock; 120 fowl; pets. Athletic and sporting equipment, home furnishing, family heirlooms; food and clothing; jewelry (but not to exceed 25 per cent of total exemptions); tools of your trade
• Burial plots
• Health aids
• Unemployment, disability, veterans', workers' compensation and social security benefits
• Alimony and child support
• Retirement plan and life insurance proceeds
• Business partnership property
• Farming or ranching vehicles and implements

Also, as long as you keep up the payments on mortgages and deeds of trust, you'll be able to keep all your property that you're still paying on. And with bankruptcy to help give you the financial breathing room you need, that shouldn't be a problem. Lenders use foreclosure as a last resort, so they want you to make your payments just as much as you do.

HA Mortgage Program

One of the popular choices for those who need it is nothing other than the simple and basic FHA mortgage program. Way back in the 1930's, the FHA was already the best option for low income families as well as those who were borrowing money for the very first time. But as the years passed, a lot of additions and expansions to the FHA program envelopes almost all types of people who need to borrow money.

Right now, there are roughly 30 million clients. This is undeniable proof that applying for their loan programs is really beneficial. So what are the advantages of applying for this federal program?

- This type of loan will give you leeway to purchase a house with a miniscule down payment. Future homeowners will only need to shell out a down payment worth 3% of their entire home purchase value. There are also some instances when the down payment can be given in gift form. One must be aware though that aside from the down payment amounts there are usually other fees to take care of such as insurance and processing.

- FHA loans are unlike the mortgages that have taken over the market during recent years, and these are the very loans with hidden triggers high interest rates and that inevitably caused the wave of foreclosures. A loan from the FHA will not contain any such traps hidden within the terms and conditions. The consumer can rest assured that there will be no predatory payment increases.

- A lot of lenders and banks who give out mortgage loans are very careful with screening. They sometimes need proof that the applicant has money. What this usually means is that one will need thousands stored up beyond the down payment amount just so that they could qualify for the loan. FHA mortgage program does not have this difficult requirement.

- Sub-prime financing can be replaced by an FHA approved loan. And what is good about this is that FHA rates are much lower compared to those of sub-prime mortgage. Also, one does not need to shell out for pre-payment and FHA mortgages have a secured, fixed rate.

- Those who are troubled with bankruptcy and foreclosures should look into what the FHA has to offer. Unlike with non FHA approved lenders, the Federal Housing Administration give loans to people after three years for a foreclosure, a year past bankruptcy chapter 13, and two years for a chapter 7 bankruptcy.

- A potential borrower can apply and get an FHA mortgage program by providing repayment capacity, cash to close, credit history, and collateral. However, for those who do not have conventional credit, other documents such as rental payment slips, utility receipts, and car insurance receipts.

- With this type of loan, one may be able to get a lot more money than in conventional loan packages since the qualifications are very liberal. It is very similar to loans given to first time borrowers. One can get as high as 43% of one's monthly paycheck.

Making a Decision

For many people, it's no big secret that declaring personal bankruptcy is not necessarily good news, that it definitely is not easy and that it comes with consequences. So as well as considering whether you have alternatives to declaring bankruptcy before you decide to do so, you also need to familiarize yourself with the potential harmful consequences and make sure you know how you will deal with them.

First of all, your financial reputation will be tarnished. Your credit record will carry information ascertaining to your declaring bankruptcy for around ten years. This is going to make it very, very difficult to obtain any kind of finance and in situations you find you are able to get credit, you will find yourself on the receiving end of very high interest rates. You can rebuild good credit, however.

You may also find that your family members and close friends have little sympathy. Many people, particularly those of an older generation, a generation before hire purchase and when everyone only bought what they had the cash for, struggle to understand credit, excessive finance and thus bankruptcy. You may also feel embarrassed about declaring personal bankruptcy and feel that relationships are strained with those who feel let down by this.

You should also bear in mind that declaring personal bankruptcy is a matter for public record. Everyone can find out this happened to you. Of course, it's probably only a real issue if you live in a small town where everyone seems to know everyone else's business thanks to issues like this being posted in the local newspaper. It's highly unlikely that such a public announcement of your bankruptcy would take place if you live in a large city.

Finally, this may affect job applications negatively. While there is law in place that stipulates discrimination to be illegal, certain jobs do require you to pass a credit check.

Guide to Bankruptcy

Bankruptcy is the final solution to dealing with your financial issues - it is the measure of last resort and should never be undertaken lightly nor without professional advice and assistance. In a nutshell, bankruptcy is where all your assets are liquidated and sold with the proceeds being distributed to your creditors; after a period of supervision, which is 12 months in the UK, you are now free and clear to restart your life without the burden of your debts.

The devil is in the detail - "all of your assets are liquidated and sold", and this includes your home, your business if you are self-employed, your vehicles and your investments as well as any savings if you have them.

The most common factor is of course, losing your home and having to move your family to usually, rented accommodation.

You can be made bankrupt in two different ways - voluntary bankruptcy is where you file your own petition with the court to have you declared bankrupt and involuntary bankruptcy, which is where a creditor who you owe more than £750 files to have you declared bankrupt.

The process is started by filing a petition with the High Court in London or if you live out of the London area, with your local county court. The Official Receiver, a court officer who is appointed by the Secretary of State, will then advertise the bankruptcy in the London Gazette which is a publication dealing with legal notices. They are responsible for acting as your trustee in bankruptcy and are required to oversee the liquidation of your assets and the fair distribution of them to your creditors. They are also required to ensure you are honest in your dealings and are not concealing assets from your creditors. In addition, they are also responsible for making sure the bankruptcy notice is distributed to the various agencies involved and who have an interest in any bankruptcy order such as HM Land Registry, bailiffs, other courts handling your financial issues, and HM revenue and Customs.

An Insolvency Practitioner may be appointed as your trustee in bankruptcy as an alternative to the Official Receiver. An Insolvency Practitioner is a qualified professional who is authorised to act as your trustee in bankruptcy and do all of the functions normally performed by the Official Receiver. They will also perform the supervision of your finances for the next 12 months until you are eligible to be discharged. Discharge is usually granted after the 12 month period and you are now a discharged bankrupt and free to pursue your life without any financial supervision or restraint though the fact you have been declared bankrupt will be recorded and obtaining credit and a mortgage to buy a home may be more difficult.

Bankruptcy may be a simple and relatively quick method of clearing your debts but it is not suitable for many people; indeed, there are a number of other methods for dealing with your debt situation which do not include losing your home. It is absolutely vital that you seek professional and independent advice at the very earliest stage - the sooner you seek advice then the quicker and easier it will be to come up with an alternative that falls short of losing your home and assets.

Bailout Program

It seems with this financial crisis everyone is getting a bailout. The banks, wall street, car manufactures, even the postal service needs help, how about the average guy? Explore why bankruptcy is one form of a bailout for the average person.

Why Bankruptcy?

The bottom line in today's financial system for a person who is deep in debt without hope is bankruptcy. The number 1 thing that holds people back from dealing with this issue is fear, lack of understanding. It's true, this is not a pleasant subject to talk about, but faced with legal ramifications due to debt problems it's an option you must consider.

Historically bankruptcy is as old as man himself. Debt is not something new, in fact going back there was debtors prison where jail was an option for non-payment. Now compared to that system bankruptcy isn't so bad. It doesn't seem right that a bank could go out make risky loans, make billions of dollars, sell them off to the Feds and start all over again, but they do. That's the way the system works, bankruptcy is what's provided for the average person.

Debt causes emotional stress, this makes your thinking cloudy. Out of all the debt help programs bankruptcy is the only option that provides legal protection. You know there are 2 types for personal use, there's chapter 7 and 13. If you qualify for chapter 7 you'll have a full discharge of all qualified debt. The downside is you can't file again for 8 years and it's on your credit report for 10 years. The upside is your pretty much debt free, this is a fresh start.

The quicker you get past the stigma of the word bankruptcy and your concern of what other people think, the quicker you can look objectively at what's best for you.

Nothing to Fear

When people with debt trouble turn to the bankruptcy options -- either Chapter 7 bankruptcy or Chapter 13 bankruptcy -- they are often intimidated by the prospect of having to be subjected to a bankruptcy means test.

Ensure Eligibility

In reality, it seems the Chapter 7 means test is meant to ensure people with debt trouble do not file for the wrong type of bankruptcy protection. For many, being able to retain control and ownership of valuable and necessary assets, such as a home or vehicle, is vitally important. The Chapter 7 means test, therefore, aims to promote Chapter 13 bankruptcy as an alternative to a liquidation under bankruptcy.

Median Income

As well, the Chapter 7 means test will evaluate an applicant's ability (or lack thereof) to repay debt. The Chapter 7 means test will measure an applicant's income against state or regional median income levels. When actual income far exceeds median levels, the Chapter 7 means test will need to be met another way.

Approved Exemptions

In realizing the intention of the Chapter 7 means test, many people then become fearful that they will not "meet" the standards, particularly if their income exceeds the median income or if their expenses outweigh those maximum exemptions permitted by the IRS. With this in mind, applicants are given multiple ways to meet the Chapter 7 means test. In some cases, applicants will need to provide additional information.

Do Not Fear The Chapter 7 Means Test

As outlined above, the intention of the Chapter 7 Means Test seems to be to ensure applicants are filing for the right type of protection. In that sense, the means tests is really to protect applicants and, specifically, their rights to retain specific assets in bankruptcy.

Applicants are encouraged to familiarize themselves with the different forms that comprise the Chapter 7 means test.

Bankruptcy Lawyer is Needed

One of the biggest challenges of the average consumer today is how to budget his money wisely. Because of the rising costs of many commodities as well as other financial obligations, it isn't a surprise that millions of Americans are facing a crisis. People fall into huge amounts of debt, businesses fail, and payables remain unpaid. When worse comes to worst, there may be no other way but to file for bankruptcy. If you find yourself in such a situation, then it is high time to get the help of bankruptcy lawyers.

Bankruptcy lawyers may also be considered under the category of family lawyers, since they help settle family-related matters that involve the use of money and properties. Depending on your current financial status, a bankruptcy lawyer can determine your best ways of settling with the parties you are indebted to, or how you can pay off your debts. Take note that not all dire financial situations call for the filing of bankruptcy. Bankruptcy lawyers make it possible for you to assess your current standing, and assist you in getting back on track to a better financial status.

When a client files for bankruptcy, the lawyer represents you in a meeting where all your creditors are involved. Such companies that may be represented are your mortgage firm, your credit card company, auto loan provider, and others. If a client does not have enough to pay such debts, bankruptcy lawyers will negotiate the best ways for all parties to be appeased. When the court has determined that the client in question is unable to pay for his debts, he will be declared as bankrupt. Under this condition, a client cannot apply for loans and other restrictions will be imposed. After a period of five years, bankruptcy may be lifted, and the client has options for rebuilding his credit.

Do I Need a Bankruptcy Lawyer?

It takes a great deal of consideration and thought before anyone is able to make the decision to go through with filing bankruptcy. If you have taken all the time you need to make this decision, than it is time to move forward. There is nothing more important than making sure that the bankruptcy process goes smoothly and every done according to the bankruptcy laws. In order to do this you are advised to hire a bankruptcy lawyer. Only a qualified professional can make sure your bankruptcy case is smooth and successful.

What you may be wondering now is how you are expected to afford to hire a bankruptcy lawyer when you are clearly in financial distress. This is often decided between the court of bankruptcy and the lawyer you hire depending on the seriousness of your case. You will find the more you learn about bankruptcy the more you will begin to see that it is nothing like a simple call and debts are eliminated and you can start over. There are many steps which need to be completed and not every bankruptcy case works the same.

The first part of a bankruptcy case you may not be aware of is choosing which chapter of bankruptcy to file. There are 6 different chapters but the most common ones filed are chapter 7 and chapter 13. There is no one better to decide which chapter your situation falls under than a bankruptcy lawyer. The process of bankruptcy from here can be more than overwhelming. You will be inundated with paperwork and documentation to prove your income, your debts, your spending and your banking information to state just an example. It is at this point in the bankruptcy stage people either panic and cancels the entire thing because they do not know what they are being asked to do and they do not understand the process or they hire a bankruptcy lawyer to clarify everything.

Once you have decided to hire a professional they will guide you through the next steps which almost always include meetings with your creditors. During this stage of the process creditors as well as the bankruptcy court will try to organize a payment schedule to pay off your debts instead of liquidating your assets; if this can be avoided. Having a bankruptcy lawyer at your side during these meetings can really take a load of your mind and help you understand what is happening and what is best for your situation.

Many people assume once they reach the point of declaring bankruptcy, there is nothing anyone can do and it is nothing more than saying "I am bankrupt". However, there is a great deal more to the process and there is no better step you can take than hiring a bankruptcy lawyer to guide you through to the other side. Don't try to go through bankruptcy alone, you will find nothing but more stress, confusion and paperwork. It is a great deal of work so why not rely on a professional to help you cope?

Declaring Bankruptcy

With so many things to consider about declaring bankruptcy out there, it's easy to get lost without the help of a bankruptcy lawyer. But when you're in a financial crisis and you're paying someone to give you financial advice, it's easy to wonder whether the advice you get really is honest. Will the lawyer convince you to file for bankruptcy simply because it means more money for him?

Here are some ways to make sure you're getting the best help your money can buy. First, you can pay for the initial consultation. This way, you'll be more likely to get honest and objective advice on how to pay off your debts. There are also lawyers who offer free consultation, and only charge legal fees once you decide to file for bankruptcy.

To get the best deal out with your lawyer, pay the consultation fee so that he'll be more willing to give you honest advice whether or not you'll ever file for bankruptcy.

Getting the best lawyer in this business can be quite challenging. You need to find a lawyer who specializes in bankruptcy, and is up-to-date with the recent changes of the bankruptcy code. The changes made in the recent bankruptcy code have made it even more difficult to comprehend, so find a lawyer versed in the code. Laypersons rarely succeed in filing bankruptcy alone.

If the lawyer tells you that your case is ordinary and easy to deal with, you might need to turn to another lawyer for legal advice. Remember that there is no such thing as a "standard" bankruptcy case, and yours is a special one that should be studied very closely.

Finding a credible lawyer is always your priority. You don't want to go through the process yourself and fall short -- you'll lose even more money that way. Make sure that all your options have been exhausted before you consider filing for bankruptcy. Once you've made the decision, your lawyer should help you through the process efficiently and smoothly.

Do You Really Need a Lawyer?

Filing for bankruptcy is not easy, so you might be tempted to try doing so by yourself to save cash. Since you're declaring bankruptcy, it's probably hard to spend more money on legal fees. Can you risk going through the process without consulting a lawyer?

The answer is: No. Bankruptcy is a complex matter that was made even more difficult because of recent changes to the bankruptcy code. The new bankruptcy law has additional challenges for those trying to get away from their debts. Although filing for bankruptcy is still a choice for many, the process is more difficult now than before.

One of these new changes includes a "means test." This test will determine your capability to pay your debts. If you have a salary lower than the median income in your state, then the test is unnecessary. But if your salary is higher than the median income, then you're required to undergo a more demanding process before you can clear off your debts.

You'll need to confirm your inability to pay by showing all your financial documents that show your income and expenses. There will be lots of technical details involved in this process, so you'll want an appropriate professional helping you understand the proceedings.

You may have friends or family members who managed to go through personal bankruptcy without an attorney. But it's likely they went through the process more than a few years ago. Since the passing of the new bankruptcy reform act in 2005, things are a little different - more difficult, to be specific.

Hiring an attorney who specializes in bankruptcy is still a better idea than going through the proceedings alone. It's a time-saving option that will help your financial life get back on track much, much sooner, making it an investment worth making.

Bankruptcy Without an Attorney?

When you're seriously thinking about declaring bankruptcy, chances are you're pretty deep in debt. You're probably buried under credit card bills, medical expenses, mortgage payments, and other looming financial obligations. In this situation, we're tempted to cut back on every possible expense -- including legal fees.

You may be thinking about declaring bankruptcy without hiring an attorney. However, this is never advisable.

A few years ago, declaring bankruptcy on your own was doable. You may have met people who have done this successfully. Today, though, the best thing you can do for yourself is get professional help. A lawyer make the whole process easier for you, as well as help you avoid mistakes.

The Bankruptcy law was overhauled by Congress in 2005. It is called the Bankruptcy Abuse Prevention and Consumer Protection Act. The new law is even more complex than the title implies. This is the very reason why you must seek legal help when filing for bankruptcy -- you'll be committing financial suicide when you don't.

Many concerned consumer advocates are not happy with the new law. They call it the Bankruptcy Abuse Reform Fiasco -- BARF for short. The intention of this article is to make you understand that the new law is complicated -- whether it was changed for the better or worse is a totally different topic. The new law is extremely complicated -- even bankruptcy lawyers are having a hard time dealing with it. Most of the time they still need to ask the courts to interpret and make sense of this new law. It is next to impossible for the average person to keep up with all the developments.

Attempting to handle your own bankruptcy case just to save some cash is a bad idea. This new law has made it impossible and impractical. Bankruptcy remains a practical option to many people, but it's still best to have professional help at your service.

How to Minimize Attorney Fees

If you're going through terrible financial problems right now, then it's likely you've thought about bankruptcy. It's a pretty good choice to make when things are extremely bad, but there are also disadvantages to declaring bankruptcy. One such disadvantage that discourages people from this option is the price of lawyer's fees.

Primarily, filing for bankruptcy will help you get rid of certain financial obligations. When this happens, it will be easier for you to pay your attorney's fees. Bankruptcy protection freezes all of your obligations, and it also prohibits your creditors from getting in touch with you.

When declaring bankruptcy, you will go through the bankruptcy process with your lawyer, and you won't have to worry about your payments until after the case is decided on. In successful cases, the judge may decide to discharge most of your present debts, making it easier for you to settle legal fees. You may also devise a friendly payment scheme with your lawyer to make it even easier.

One more thing you should consider when filing for bankruptcy is to minimize your legal fees. Declaring bankruptcy gives you some breathing space to afford legal help, but it's still better to lower the cost of your legal bill.

Before getting any legal help or legal consultation, study and research about the process to get a better understanding of it. This way you can find out who's qualified to help you understand the different types and consequences of bankruptcy protection. Prepare all necessary financial statements, including tax returns, credit card payments, and other pieces of documentation related to your earnings and expenses.

You'll cut down on a lot of paperwork this way, and you'll also minimize the work your lawyer has to do. Your lawyer may also charge you a smaller fee since you've already done some of the work. Who knows? With the research you do, you may even decide not to declare bankruptcy in favor of other, more practical options.

Bankruptcy Protection Laws

While there are a lot of advertisements for bankruptcy protection, not many people truly know what takes place or what their rights are. There are a lot of television commercials and billboard advertisements that show that you can simply walk away from your debts and from your worries. But as everyone knows, if it sounds too good to be true then it probably is. Even though personal bankruptcy is ideal for some people, there are still many things that need to be understood in order to make sure that a person is really making the right decision for their financial situation.

The first thing to remember is that you should always retain an experienced personal bankruptcy lawyer so that your case goes through without a lot of problems. It is vital to make sure that your case is presented to the court that handles your specific financial situation in the right manner. If the case is not presented in the right light your bankruptcy request could be denied and the money you spent filing is wasted. Once the court approves it, you are now under the protection of the bankruptcy laws.

The bankruptcy protection laws are meant to protect the person filing so that they are not harassed, sued, or in any way asked for money. In the beginning stages, until the bankruptcy is discharged the creditors are not allowed to call or collect on the debt they with the person, even if it is a case of Chapter 13. There are laws in place that state that a person who filed a personal bankruptcy is not allowed to receive phone calls asking for money or have legal action, such as law suits or judgments, filed against them.

All collection efforts must cease until the bankruptcy courts say that it is okay to resume. This could be a few months from the date of filing to a couple of years. Every situation is different so there is not a clear-cut answer for how long a person will have the protection around them. The various factors include the bankruptcy chapter filed, the state in which the filing is done, the disputes of creditors and other issues that could arise.

The best thing to do when thinking about filing is to have a free consultation with a personal bankruptcy lawyer. He or she will be able to walk you through the steps. After the attorney reviews your bills and your debt, they can give a rough estimate of the timeline you will be looking at. Other services they would provide should not be dismissed, such as advising what options you may have, and steps you may want to consider taking if you do indeed decide to file.

By understanding what to expect, you can better protect yourself and understand what you will be facing. Also make sure that you learn how the laws are in your favor and what you can do if you continue to receive harassment from a creditor after they have been notified that you have filed personal bankruptcy. The laws of bankruptcy protection are there for you to make sue of so make sure that you know what your rights are.

File Bankruptcy Without the Hassle

The question of how to file bankruptcy is something that is on the minds of many people these days, and if you are considering what this option might meant to you, you'll find that there are certain steps that you should take. Filing for bankruptcy is something that can be a very important decision that will affect almost every aspect of your life, and when you are dealing with something this momentous, you'll discover that you need to make sure that you go through it correctly. Doing it wrong can have some severe repercussions, so keep a few key steps in mind.

The first thing that you need to do when you want to know how to file bankruptcy is to hire a professional. Make sure that you do not move forward without consulting with a bankruptcy lawyer. The truth of the matter is that bankruptcy is a highly complex legal proceeding. Just like you wouldn't defend yourself in court by yourself, you'll find that you will not want to move forward without the aid of a good bankruptcy lawyer. Remember that as an individual, there is a good chance that you will be filing for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Do you know which one you are qualified for?

The problem is that many people do not realize what a hassle bankruptcy can be. It is a proceeding where all of your financial affairs are going to be scrutinized with a fine tooth comb. Consider what assets you have and what might happen to them if the courts were to decide that they could be seized to pay off your debts! You'll discover that a bankruptcy lawyer can be instrumental in protecting your interests and helping you get out of the issue with as much of your dignity, your assets, and your money as possible. Bankruptcy does not necessarily mean starting over from scratch and a lawyer can help you ensure that.

When you are considering how to file bankruptcy, remember that you are going to be dealing with paperwork, credit consultations, deadlines and many other issues. This is when you need to think about hiring a professional to guide you through these waters. Remember that if you are going through a bankruptcy that you are not necessarily going to be in the best of shape. This can be an emotionally exhausting, draining time, and if you are left to your own devices, it is very easy to let things slide longer than they should. Getting a professional to help you out can be a terrific way to alleviate some of the stress.

When you want to determine how to file bankruptcy, and how to do it in a way that will leave you as intact as possible at the end of it, take the time to seriously consider hiring a good and qualified bankruptcy lawyer to get you off on the right track. It is never too early to get started, and when you are facing things like credit consultation and the thorough investigation of your affairs, you'll find that this is something that can be amazingly helpful, if not vital. A good lawyer can let you know what your options are, which may not include bankruptcy. A bankruptcy evaluation will tell you where you stand, and if you have a good idea of where you are financially, you are in a good position to understand your available options.

When to File Bankruptcy

When you are thinking about filing bankruptcy you want to make sure that you have enough debt to file. When your monthly expenses are more than your income, you should really consider filing bankruptcy, the alternative is to try to pay off all of your debts yourself and if you are not making enough money to do this then you will only continue to gather more negative marks on your credit as time goes on and your credit will continue to get even worse. Once you get in that downward spiral it can be nearly impossible to pull yourself out of it. The great thing about bankruptcy is that it allows you to focus on the future and begin working toward it.

Bankruptcy will show up on your credit report, but it will be one mark, as opposed to the dozens of numerous marks you had on it before. It also stops the debts from accruing. It will squash them and give you the ability of bringing yourself to just having your current bills to pay, such as your utilities. When you file bankruptcy you may think that you won't be able to get anything financed or receive any credit, this is not true. Many companies will excuse a bankruptcy much easier than they would someone that has a lot of bad marks on their credit.

Bankruptcy will also stop you from getting those harassing phone calls from your creditors. From the point that you file your bankruptcy they will not be allowed to call you and if they do then you will just tell them that you filed and they are required to stop calling you. The harassing phone calls can be very stressful and ending them is another great advantage of filing bankruptcy.

Bankruptcies Are on the Rise

According to recent news articles, bankruptcies are at their highest level since October 2005, with an average of 5,945 filings per day during the month of March. Adding to this the fact that 663,000 Americans lost their jobs last month, indications appear to be that this number will only increase during the coming months.

While this is a shame, all too many people file bankruptcy when it is not their best financial option.

Bankruptcy comes in two versions that apply to most consumers. Chapter 7 is a near total liquidation of assets and near total elimination of debts. Chapter 13 is basically a negotiated repayment plan, with terms set and monitored by the courts.

Certain items cannot be discharged in bankruptcy; notably any tax liabilities for the past three years, federal guaranteed loans (i.e. student loans), and any debts incurred as a result of fraud. Other exceptions vary by state, including what assets can be exempted from bankruptcy. As each state sets its own rules in addition to the federal guidelines, I will not get into that discussion here.

The key point to realize is what exactly is being protected by filing bankruptcy. If no one is suing you or threatening to take anything away from you, then you do not need bankruptcy protection. Filing bankruptcy is a move that shields your assets and income from attachment by creditors. If creditors are not filing lawsuits or taking repossessive action against you, then you do not need to file.

Now, what if you do find yourself facing multiple lawsuits and foreclosure actions? Well, take a moment to evaluate your situation. If you are facing the potential loss of your home, take a look at the numbers before you.

If you only have a first mortgage, and the property value is under water, you would likely be best served to either attempt a loan modification with your lender or walk away from the property. Many states are non-recourse states, meaning that the holder of a first mortgage who repossesses your property cannot come after you for a deficiency balance. If you have an equity line or second mortgage, you could find yourself liable for these after a foreclosure as well.

Should someone file bankruptcy to hold onto their car?

Probably not. If you are holding onto a car which you cannot afford, then you do not need it. You can try to negotiate new terms with the lender, and I can guarantee that you will face a lawsuit for any deficiency balance on the sale. You would be better off to sell the car short, and then try to make up any difference. An attorney retained prior to a repossession order would likely be a good investment.

OK, so we try to hold onto the house, and we let go of the car. Now what do we do?

Next, take a look at that stack of bills that you cannot pay. If no one is actively suing you, let them sit for now.

If creditors are suing you, then take a look at what you have at risk. If you have no equity in your house, you won't lose anything there. If your car is secured by a loan, other creditors can't touch it. Your personal property along with any property that you use in your business, trade, or profession, is off-limits in most states also.

That leaves your bank accounts and your paycheck as the primary avenues of recourse for a creditor's attachment.

If you know that judgments exist against you, keeping as little money in the bank as possible should be a given. As far as your paycheck goes, part of your pay is exempt. This varies by state, but you are protected to a minimum of $5.15 (Federal minimum wage) x 30 hours per week. This money cannot be touched.

After that, depending again on your state of residence, only 10% to 25% of the remaining Net Pay can be attached for ALL of your garnishments. It does not matter how many judgments or garnishments you may have against you, the limit is what it is.

Keep in mind that if you work on commissions as an independent contractor or are otherwise self-employed, the rules are different for you. That discussion may follow in a later article.

Generally, Social Security Payments and retirement annuities are off-limits to garnishment up to a certain threshold, which may vary by state.

Many Chapter 13 bankruptcy plans and many plans negotiated by CCCS for their "clients" require payments that can be much higher than that amount. You likely pay more than that now for your unsecured debts, if you are actually in financial trouble.

The problem comes when people facing hard financial times ask a bankruptcy attorney what they should do, and never consult anyone else. Now, I don't want to upset the legal establishment, but I would venture to guess that at least one bankruptcy attorney out there recommends bankruptcy as the answer almost every time.

Just consider how it is they earn their living: If you file, they get paid. If you don't file, they don't get paid. What would you recommend in their position?

Some items are not subject to the previously quoted exemptions. They include back taxes owed to the IRS, Federal Student Loans, spousal and child support, and some others that may vary by jurisdiction. However, bankruptcy won't protect you from these either, so you are stuck with them.

By all means, if you are having financial difficulties, you should consult an attorney. You should also consult an accountant and a financial planner. I would avoid Consumer Credit Counseling Services (CCCS), as they work for your creditors' interests, and not yours.

Other ways out of a financial crisis include loan modification, debt negotiation, and debt settlements. You can do an Internet search to get information on these types of programs, and I will caution you that a great number of people and companies are employed in these areas of expertise, and not all of them are trustworthy. Tread carefully, and try to deal with reputable firms and organizations for this type of help.

As with any advice you may read in articles, and especially online, keep a discerning eye out for your own best interest.

Nothing herein should be regarded as legal advice, and it is not intended as such. Should you need any legal, accounting or financial planning advice, seek the counsel and recommendation of a competent, licensed practitioner in your area.

Chapter 7 Bankruptcy Procedure

Chapter 7 bankruptcy law is also known as liquidation. It allows the debtor to pay off debts by selling his assets and dividing the proceeds among his creditors. A special court officer known as a trustee is appointed. In the states of North Carolina and Alabama, he/she is known as the bankruptcy administrator. These two have the same responsibilities of monitoring the filed cases and supervising the activities of the debtor and the creditor

Cases under this chapter begin with the debtor filing a petition in court. They must also submit financial records to back up the need of filing a petition. These records include a current balance sheet, an income statement and a financial statement. They must also submit a summary of tax payment to the trustee.

The court, once a petition has been filed charges some fees. These fees are paid to the court clerk once the petition has been filed. However payment may be paid in not more than four installments and the full amount should be completed by the end of four months. These fees are meant for paying the trustee's surcharge, miscellaneous court charges and also the filing fee. In cases where the debtor is not in a position to pay the fees even in installments, the court may decide to waive the charges completely.

Once the court charges have been fulfilled, one has to fill out a form. This bankruptcy form shows a list of creditors, the amount and frequency of the debtor income, a net amount of living expenses and assets that the debtor has. They are what determine the kind of ruling the jury will give.

Chapter 7 Bankruptcy Law Review

Chapter 7 bankruptcy law is also known as the liquidation law. It gives provision for the debtors properties to be sold and the proceeds shared among the creditors. In this case, it begins with a petition being filed by the debtor in the bankruptcy court. Together with the petition, he must submit the business income statement and the balance sheet. The latter documents will enable the court to decide if the debtor is suitable to file the petition.

Before the court can start the bankruptcy case, the individual must undergo counseling with an expert of financial management. This way, the debtor is in a better position to manage debts whether or not he comes out of the current situation. The court in the United States appoints a trustee, a private individual responsible of liquidating the debtors nonexempt assets. He is also responsible for selling off the property and sharing the proceeds among the debtors. In Alabama and Carolina states, a bankruptcy administrator is appointed. This is a court official who supervises and administers such financial cases.

A chapter discharge may be issued to both the debtor and the creditor. This serves as a no go zone meaning that the property belongs neither to the debtor nor the creditor. This means that the debtor is not personally liable towards the debts. Again, the creditor will not be in a position to collect the debt directly from the debtor. This protects the debtor from harassment.

It is normally rare for the court to fail to grant the debtor a chapter discharge but it may do so in case the debtor fails to produce financial books of the past years of operation. The court may do so in case it finds out that the debtor fails to disclose financial crimes committed in the past.

Causes of Bankruptcy

With the discovery of the credit card, people prefer paying their small bills with them. What most people do not understand is that they end up paying more than they would have otherwise paid in cash. This has been known as one of the major causes of bankruptcy. The interests charged on the credit cards continue to accumulate as more items are bought using it. As the interest accumulates, it reaches a point where one is caught up in paying the interest accumulated.

Insolvency is also caused by the small loans that people acquire to buy items. As they do this, interest charged on the card keep escalating. This way, the buyer ends up paying for what he bought years back as opposed to saving for the future. This, to many is referred to as a snowball since the accumulated debt continues growing big due to interest charged. This habit in the long run becomes an addiction leading to some to be declared bankrupt.

Another reason for this is illness, especially where the individual or a family member has a chronic illness which requires hospitalization and expensive drugs. This leads to high medical bills due to long periods of time spend in hospital. This mostly occurs to those with no medical insurance.

It is advisable for one to consult a financial expert on financial matters as a way of avoiding bankruptcy. A financing option may seem a cheap way to go, but it ends up being costly in the long run. Worse still, it may end up becoming an addiction which may cause an individual more harm than good in the end of it all.

Bankruptcy Procedure

Filing for bankruptcy is not an easy task. It involves a lot of commitment and legal proceedings must strictly be adhered to. There are a number of laws relating to bankruptcy. It should be in your own interest to understand them since you never know when you find yourself in insolvency.

The rules that outline the procedure for filing a bankruptcy petition fall in five chapters, commonly referred to as chapter 7, 9, 11, 12 and 13. You are therefore required to be aware of the kind of petition you need to file so that you do not find it complicated in the process. Normally, if you are an individual who is no longer able to pay creditors, you are advised to file your case under chapter 7 or 13. The procedure follows that you should look for an attorney who will assist you with that filing process.

What follows is that your creditors have to be notified of the fact that you have declared your financial incapacitation to pay them. This will stop them form pursuing you further as they try to recoup what you owe them. Consequently, you, your lawyer and your creditors will have several meetings, trying to agree on how payment will be done. Normally, this happens in court, in the presence of the jury.

The procedure is relatively the same for businesses that have gone bankrupt. On the other and if your creditors file a petition before you declare insolvency, you will still need to look for an attorney to represent you as you appear in court for the charges. It is highly recommended that you attend counseling classes before all the proceedings take off.

Avoiding Medical Bankruptcy

Being unable to pay your medical bills on the agreed date could land you into medical bankruptcy. And in fact, the amount need not be thousands of dollars. Statistics show that majority of the people who file for medical bankruptcy owe their debtors figures that fall below $5,000. The simple reason behind this is that their health insurance policies may not be able to cover their bills at that particular time.

This said, medical insolvency caused by one's inability to pay their creditors, who in this case happens to be the health care provider. In most cases, the creditors file for a petition long before you are aware that you are insolvent. It is not uncommon to hear that a person has been sued by a hospital for failing to pay at the slightest indication that they may not be able to do so.

Once your creditors have filed a case against you, you can, as soon as you can, file a petition against the case. However, you need to be able to prove that you are not as bankrupt as the creditors may want to portray you. You must also be able to demonstrate how you plan to settle the bill.

If your creditors have not sued you yet but you are already feeling overwhelmed by the amount of medical debt you owe, please consider all the available options that you have before filing for insolvency. For example, you could try writing to the hospital and explaining how you plan to settle the bill in monthly installments. Alternatively, you could choose to sell off some of your assets and use the proceeds thereof to pay your creditors.

Bankruptcy Law

Chapter 11 bankruptcy law applies to partnerships and corporations. It calls for the general reorganization of the business to keep it alive in an attempt to pay creditors to the business. This chapter, just like any other, does not work in case the debtor has willingly skipped court proceedings even after being summoned. It also calls for the debtor to undergo proper counseling on how to handle credit and debt management.

Before any court procedures there must be legal fees paid to the court clerk. This is inclusive of$ 1000 filing fee and $39 miscellaneous administrative fee. There is an allowance for the fees to be paid in installments. This chapter recognizes that the individual and the assets in the business are separate entities. This means that the business debts will only be covered by the assets of the business without recouping the individuals' personal assets. Under this chapter a petition for bankruptcy may be voluntary or involuntary.

In case of a sole proprietorship, the law does not recognize the individual as a separate entity from the business' assets and as such, personal assets may be recouped in the debt recovery process. However, in some cases where partnership is involved in the bankruptcy case, individual assets may be recouped in the process of paying off the debt.

For a complete court procedure, a reorganization plan must be filed in court together with a written disclosure plan which shows what the business has in terms of assets. It may at times include the individuals' assets as well in case of corporations. The disclosed information is thereby treated with confidentiality.