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.