Personal bankruptcy can be used to obtain relief from excessive debt. However, this option should be used as a last resort because it is expensive, time-consuming, and causes substantial damage to credit scores which can prohibit debtors from obtaining credit for several years.
Many people file personal bankruptcy to avoid foreclosure. Others are overwhelmed with credit card debt or medical expenses. The economic recession has left millions of U.S. citizens facing financial ruin due to long-term unemployment and loss of investment portfolios. People often feel bankruptcy is the only option available to help them overcome mounting debts.
Salt Lake Bankruptcy Attorney, Los Angeles Bankruptcy Attorney, Los Angeles Bankruptcy Attorney,
Two chapters are reserved for personal bankruptcy and include Chapter 7 and Chapter 13. Chapter 7 allows debtors to liquidate assets to repay creditor debts. This might include returning real estate or personal property that is secured with a loan. Any remaining loan balances are written off; allowing debtors to obtain a clean financial slate.
Chapter 13 allows debtors to retain valuable property by establishing a creditor payment plan. Chapter 13 payments usually extend for 2 to 3 years. Debtors submit payments to the U.S. Trustee who distributes funds to creditors.
The amount of debt to be repaid through Chapter 13 is determined by the 'means' test. This financial tool was introduced when the Bankruptcy Abuse Prevention and Consumer Protection Act took effect in 2005. BAPCPA requires debtors who earn more than their state's median income to establish a Chapter 13 payment plan, while those earning less may qualify for Chapter 7.
BAPCPA also requires debtors to obtain credit counseling through a designated agency. Once completed, debtors submit a credit counseling certificate to the court. Personal bankruptcy petitions will not be approved without the certificate.
Due to the complexities of the new bankruptcy laws, debtors should retain the services of a qualified attorney. It is best to consult with three or more lawyers to determine which is best suited for their needs. Personal bankruptcy can be emotionally difficult and embarrassing. Hiring an attorney whose personality is compatible can make the process more tolerable.
Debtors should compile financial records prior to meeting with attorneys. Bankruptcy lawyers will want to review wage earnings, bank statements, tax returns, and expenses including home loan or rent payments, property taxes, insurance premiums, loan payments, and credit card debts.
When debtors qualify for Chapter 7 they must relinquish property to the bankruptcy Trustee who will either return property to creditors or sell property to pay outstanding debts.
When debtors are required to file Chapter 13, they must submit their proposed payment plan to the bankruptcy judge. Upon approval of the payment plan, debtors are required to submit installments to the Trustee. Debtors are usually allowed to submit payments on their own, but there are instances where courts will garnish wages until debts are fully paid.
If debtors are financially incapable of submitting required payments, creditors can request the bankruptcy petition be dismissed. When this occurs, debtors fail out of bankruptcy and are responsible for paying the full amount of debts. Once bankruptcy petitions are dismissed creditors can take legal action against debtors and proceed with collection activities.
It can take several years to recover from the financial fallout of personal bankruptcy. Debtors will have difficulty obtaining credit of any kind. If they can obtain credit chances are they will pay substantially higher rates of interest.
Bankruptcy is reflected on credit reports for up to 7 years and may affect employment opportunities. Debtors should investigate bankruptcy alternatives such as debt consolidation, debt settlement, or credit counseling. These options may provide the same results without the consequences associated with personal bankruptcy.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Attorney Tampa
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment