Settlement Attractive

Why do we need to compare debt settlement and bankruptcy in the first place? A personal can never be at an advantageous position if he is bankrupt. If you do not have any money left in your account then you have to declare this fact. By declaring bankruptcy, investors will stop coming your way. Similarly, organizations do not trust the employees who have been declared bankrupt at any stage of their professional careers. Debt Settlement and bankruptcy are compared when we loan takers are looking for a suitable way to reduce their credit card bills.

Unsecured liabilities and recession problems

Getting financial assistance without depositing any assurance is the key definition of the term unsecured liability. It is quite simple to understand this point. Why does the bank give you a credit card without taking any collateral? This is because credit cards have restricted spending limits. The loan taker does not decide how much he can spend. The bank has a close look at his financial state and then decides his spending limit. For instance, a marketing manger will have a spending limit of one hundred thousand dollars. However, a clerk will not be able to spend such a high sum on credit.

As you do not need to deposit anything for a credit card, you do not have the fear of losing anything. However, you are always concerned about the secured payables. This is because you have deposited a guarantee. This guarantee will only be returned to you if you pay the bank on time. Delays will spoil the situation. It is always important to compare debt settlement and bankruptcy.

The recession situation and unsecured payables

Have you paid your credit card installment? Do you have a record of the payment that has been made and the amount that is left unpaid? Most of us do not maintain such a record because we do not expect any problems to be created. When it comes to debt settlement and bankruptcy, even a small wrong move can push you towards a zero balance. Even your settlement company can accuse you that you have not paid your bills. How do you prove that you have cleared all your dues? You need to maintain your payment receipts so that you do not face problems.

Are you confused about what to choose between debt settlement and bankruptcy? If you are thinking intelligently then this confusion should not be there in the first place.

Eliminate Debt

If you are a small business owner, you should acquire as much knowledge as you can about small business bankruptcy. If you find yourself in debt, overcoming it can be a huge challenge. Good news however is that various debt relief services, debt relief experts and online debt help advice, recommended by the professionals, will provide you with whatever assistance you require. Different avenues to seek debt relief are:

Forums- There is many forums and communities online, which aim at running small businesses. If you follow theses forums, you will come across s a lot of information that is exchanged. What's more, you might find official debt relief services online in these forums. These are information specific to your cause and how small business bankruptcy can be avoided, because they come from small business owners like you.

Business forums that focus in small businesses only can be easily found. You can browse most of such forums without creating an account, however joining the ongoing discussion is always better. So, take out your time to create a free account. The message boards mostly have specific folders for each topic. You can find debt relief services as a separate folder or in any Finance related folder. There will be posts that will list the companies that help prevent small business bankruptcy. If unable to find such posts, you can create a message asking for guidance.

Networks- These are debt relief organizations with the sole purpose of helping people with different debt relief services. These organizations are mainly founded for consumers, but can also help small business owners like you. These networks are valuable as they provide debt help tips and recommend professional companies and programs against small business bankruptcy.

The debt relief networks recommend programs that focus on consolidation or settlement. A company is minutely tested and its dealings monitored, before being recommended by a network. Thus you have the peace of mind that you are dealing with a legitimate organization.

Debt settlement is much more desirable than going bankrupt. Maximum consumers can wipe off at least 60% of unsecured debt and at the same time avoid the undesirable consequences with bankruptcy filing. If your unsecured debt is $10k or more, you can opt for a debt settlement, and can opt to fight against small business bankruptcy, especially if you have a thriving business.

Eliminating credit card debt has never been so easy for consumers with balances over $10,000. A professional debt settlement company will be able to eliminate credit card debt by 60% on average. They also provide free debt counseling. Try the following link to locate legitimate debt settlement companies in your state and see how they consistently eliminate consumer credit card debt.

Recovering From Bankruptcy

Having to file for bankruptcy is not a walk in the park or a fun thing to do. It is a long process and usually occurs after months and even years of hardship. Constant struggle with debt, trying to pay bills, trying to improve income, or whatever other reasons have occurred that led to this point. The process isn't impossible to do on your own, however hiring a lawyer to make sure its don't correctly would not be a bad idea.

Another thing you should consider is how you will recover. Bankruptcy is a way of starting over, or at the least trying to start over. First you have to try and improve your financial situation, mainly income versus cost. If you file for bankruptcy and your cost are still greater than your income then you have a serious problem.

Hopefully its not long after you file for bankruptcy that you are able to start the road to recovery, managing to pay your regular bills on time and even start saving. Eventually, and especially after you are out of debt, you want to try and re-establish your credit. This is very important; unfortunately it is also very difficult to do. You can start out with a low balance credit card, if you can get approved for one, use it on some cheap items, and pay the card on time. This process could take a year or even longer until your credit is repaired. Another idea is to use a credit repair company. They do all the work for you and within 6 months your credit will be fixed.

The road back from bankruptcy requires a lot of work, patience and a smarter route than what got you in trouble in the first place. Many people don't think of it but credit repair is one of the most important parts of starting over after bankruptcy, you should look into it.

Filing Bankruptcy

If you are in a financial situation where you cannot afford to pay off your debt, and you are struggling financially, you might find yourself asking the question, "Can I file for bankruptcy for free?"

Filing for bankruptcy is an expensive process as there are three main fees you need to pay. The first fee is for credit management classes. The new bankruptcy law states that if a person wants to file for bankruptcy they must first go to financial management classes to try and sort their finances out without having to declare bankruptcy. The second cost involved is paying for an attorney. This can be very expensive and is probably the most expensive cost involved regarding bankruptcy. The last cost is the filing costs that you need to pay to the court. These fees are usually around $300.

Corporations have to have an attorney when filing for bankruptcy but individuals do not. The problem with representing yourself is that if you make a mistake like forgetting to submit a document then you could affect your rights as a debtor. It is always recommended to have legal assistance. If you cannot afford legal advice you should contact your state and local bar office as they might be able to offer pro bono services to you so you will not have to pay.

The classes for financial management cost around $50 and this is very difficult to get around, however it can be done.

The main fee of filing for bankruptcy can be avoided, but it is only waived for a very small percentage of people. Your financial status will be interrogated before they will make a decision. There is a section in the bankruptcy code that allows these costs to be waived. If you want to request a free filing you can do so by filling out the applicable forms that can sometimes even be downloaded off the internet from your state and local agencies.

Keep in mind that filing for bankruptcy can have a negative effect on your credit rating, but this may be your only option. You will need to rebuild a new credit rating from the ground up. Steer clear of services that offer to remove your bankruptcy filing from your credit rating, this may be illegal and could have severe consequences.

So yes it is possible to file for free. The process is difficult and you should really try and get free legal assistance if you cannot afford it.

Bankruptcy Loans

Bankruptcy is the single worst type of indication to have on your credit record. When you file bankruptcy, you are basically saying to the financial world that you are more than willing to run away from the financial and contractual obligations of your loan agreements and leave them standing, holding the proverbial bag. For the most part, your credit is shot for the next seven to ten years when it comes to borrowing money in the conventional and traditional fashion. However, there are lenders who have a different mindset about loaning money to those who have recently been discharged from bankruptcy proceedings, and they are writing loans for these folks in record numbers - not long after the smoke settles and your previous lenders are counting their losses.

Your New Appeal To Lenders

While many lenders think it is just good commonsense to avoid lending to the post bankruptcy crowd, others see it as a golden opportunity, especially if you have a history of working in one place for a long period of time, or in a particular field with very few breaks in employment. The reason for this is that you are prohibited from filing bankruptcy for a number of years, and if you are working, the lender assumes that should you fail to repay the loan that is extended to you, a simple default judgment is all that would be needed in order to garnish your paycheck. Lending to you is less risky to some lenders than loaning money to someone with slightly damaged credit.

And best of all, you are a borrower that has no other debts, which strengthens the belief that the lender has that you will repay your loan because you have little or nothing else to do with your disposable income. Short term loans, therefore, are pretty easy to obtain in the months following bankruptcy; you can make your application look even better by pledging collateral in the form of a lien against your home or vehicle, or by applying with a cosigner backing you up and agreeing to pay if you do not.

Tips For Post Bankruptcy Loans

So while it may be possible to take out loans in the immediate period following the discharge of your bankruptcy, it is always wise to start small. Borrow only a few thousand dollars or less, and make your payments on time. You certainly want to avoid over-extending yourself financially while you are attempting to improve your credit, and you do not want to appear to be applying for too many loans at once. It is best to approach a lender who has a record of loaning to people whose credit situation is just like yours, like those online lenders who specialize in post bankruptcy financing. That way, turn downed or not, you will not inflict too much damage to your already fragile credit report just by applying for a loan.

Settlement Market

Laws are made to protect the rights of everyone. This is how a balance in a society is maintained. A law which helps one party while putting the other in jeopardy makes it an imbalanced law. Same is true with the bankruptcy laws. Previously the law supported the debtor which in many cases if not proven a fraud would end up with the creditor losing. The amendments in chapters 7 and 13 of the bankruptcy code have brought about changes as to how things will be interpreted in the future. This is how new bankruptcy laws has led to a massive debt settlement market.

The changing economic situations in USA led to the revision of the bankruptcy code. Many people got away from paying even a single cent to their creditors and got to keep their assets as well. The current wave of economic entrenchment raised the concerns for the safety of the financial institutions as people suffered losses due to recession and in return they simply filed insolvency. This completely shifted the financial burden on to the banks while the debtor walked away clean to get a fresh start.

The changes in the code now clearly mentions that no matter if you file a bankruptcy under chapter 7, 11 or 13, you will be liable to pay at least some part of the debt to your creditors with an exception of a few rare circumstances. The amendment also has a clause that you might be declared bankrupt and still be made to pay the entire amount even after all your assets are liquidated.

This is how new bankruptcy laws has led to a massive debt settlement market. People have realized that getting a poor credit rating for filing insolvency and still having to pay the debt is a cost too high to pay. On the other hand it is very convenient to get a debt settlement. Those who play it right get huge reductions in their accumulated credit card bills and also get to save their credit score from a major damage. This step is also favorable for the banks as the processing time for a settlement is shorter in comparison to a bankruptcy case and they do get something to continue business as usual. With mass awareness and better information masses are turning towards debt settlements to get financial freedom.

Basics of BAPCA

BAPCPA, or the Bankruptcy Abuse Prevention and Consumer Protection Act, was passed by the US federal government in 2005. The purpose of this act was to reduce the number of Chapter 7 bankruptcy filings and increase the number of Chapter 13 filings. The reason creditors prefer Chapter 13 over Chapter 7 is that debtors have to partially repay their debts before they are discharged; whereas, with Chapter 7, all debts are discharged.

Presumed Abuse

BAPCPA was created in order to reduce the possibility of bankruptcy abuse. Prior to BAPCPA, anyone could file for Chapter 7 bankruptcy and have their debts discharged. Only an officially appointed trustee could determine "abuse," which, if discovered, would disqualify a bankruptcy candidate. Because officials feared that too many people were abusing the system and eliminating debts that could have been taken care of, all candidates with primarily consumer debts are subjected to a "mean's test" to determine their eligibility.

BAPCPA Amendments

The BAPCPA amends many parts of the US bankruptcy code. The most significant changes follow:

• A "means test" is now used to help determine whether or not a bankruptcy candidate is eligible to file for Chapter 7
• Chapter 7 filers are now subjected to random and scheduled audits to ensure that their financial documents are legitimate
• All bankruptcy candidates are required to attend credit counseling prior to filing
• All filers are required to attend financial education programs before their debts are discharged
• Filers are now subject to new fees, including: filing fees, attorney liability, increased debt repayment, and increased compliance requirement costs
• Exemption rules and requirements are more strict

What Is the "Means Test?"

The means test analyzes a bankruptcy candidate's income to determine their eligibility for filing for Chapter 7. If the means test determines that a debtor's income is greater than the state's median income, after certain deductions, then they are considered abusive under the BAPCPA, and will be ineligible for Chapter 7. Instead, they may opt to file for Chapter 13, which will require them to repay part of their debts before they are discharged.

It is important to note that only candidates with primarily consumer debt are subjected to the means test. If an individual's debt is from other sources, such as medical expenses, they are not suspect.