Bankruptcy advice can come in many forms. Television sets that feature economists or personal finance experts can often be filled with advice.[1] But this particular advice has gotten more liberal over the years due to changing laws. In order to avoid scores of debtors flooding onto the streets with no property and nothing left to live for, the laws have changed to allow debtors to keep certain property, despite filing for bankruptcy.[2] This is why advice given to you must contain not only what to expect, but also what kind of troubles it may bring about and how to deal with them. Bankruptcy is about fresh new starts, and that is what this article is about, how to make the most of that new start.

The most difficult questions are actually the most important questions because they help answer how bankruptcy will have an effect on particular people.[3] Bankruptcy advice needs to include not only what to expect, but also what kind of problems it may cause and how to deal with them. The hardest questions to answer are the ones that pertain to how it will affect certain individuals.[4] Bankruptcy advice is readily available and there are several companies that can give you a helping hand through the whole process.[5] The advice has to include not only what you should be expecting, but additionally what kind of challenges it may possibly bring about and how to take care of them.[6]

Bankruptcy law is tricky enough that you need someone with actual legal knowledge to advise you as to your particular situation. You are better off paying an attorney for a consult (most charge for a consult, some do not) than to get advice that will get you jailed or thrown out of bankruptcy court.[14] Bankruptcy could be of various types such as chapter 7 bankruptcy, chapter 13 bankruptcy, etc. Before filing for bankruptcy, a debtor can also opt for some alternatives such as IVA, debt consolidation loan, debt management and so forth.[15] Bankruptcy remains on your credit for up to ten years and it could result in the inability to retain any other type of credit until it has been removed or several years have passed. [16]

Bankruptcy is sometimes erroneously seen as the best way to get out from under the stress of excessive debt and insufficient income or resources to pay off that debt.[10] Bankruptcy is an occurrence that can happen to anyone. While this state of affairs can be stressful there are things that you can do to alleviate this problem.[11] Bankruptcy Code section 109(e) prohibits use of Chapter 13 by individuals with debts that exceed specified limits. The adjustments are required by 104(a) of the code and an adjustment is due this year.[12]

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight.[13] Bankruptcy usually lasts for twelve months. Many of our clients at Help With Debt are now being discharged in 6 months.[7] Bankruptcy is not the end of the world (as considered by many) but it is a chance to make a new beginning. It is a merciful process by which even a severely indebted person can disentangle himself from all of his obligations.[8]

Bankruptcy is an option to help stop repossessions, wage garnishment, lawsuits and foreclosure.[17] Bankruptcy is almost like a 4 letter word and the sound of the word can often have an emotional impact on hearing it.[18]

Bankruptcy is too drastic of an option to be your first choice. If you have little income and no assets, for example, you may be "judgment-proof," which means creditors cannot take meaningful action against you and that bankruptcy might be unnecessary. Bankruptcy is the process where a person legally declares himself or his business unable to pay outstanding debts. Depending upon the type of bankruptcy filed, one meets with a judge to determine a payment schedule, or have a legal bankruptcy discharge most, if not all, debts. Debts are prioritized, and secured creditors get paid first. Remaining disposable income goes to pay unsecured creditors, in a hierarchy established by the Bankruptcy Code. Debtors should inquire about such additional costs when contacting an attorney about bankruptcy.

A debt consolidation program is favorable for those who are looking to reduce their monthly outgoings and save dollars. This is where you will have a debt consolidation company or law firm negotiating with your creditors or collection agency in order to lower your interest rates and reduce or eliminate late fees or over-limit charges. Debts that are not eligible to be discharged include child support payments, some taxes, and student loans. Car loans, house mortgages, and other secured debts are also not discharged.

Bankruptcy consists of several different mechanisms for addressing financial problems. For individuals, the choice often comes down to Chapter 7 or Chapter 13 of the Bankruptcy Code. Bankruptcy is the single worst thing you can do to your credit scores, the three-digit numbers lenders use to gauge your credit worthiness. That means, for a short time at least, it will be more difficult and expensive for you to get credit. Bankruptcy is a somewhat complex procedure, and even more so now with the new Bankruptcy laws in effect, making it harder for people to abuse filing for Bankruptcy. Particularly because of the fact that many people look at Bankruptcy as a "get out of jail free" card.

Chapter 7 bankruptcy involves the liquidation of assets to partially or fully pay off the creditors. There are cases in which there may be no assets to liquidate, but if there are, then the individual may lose some of their property. Chapter 13 allows you to keep some of your assets, as long as you repay them on a payment plan. It will also allow you to discharge some of your debt, but not all of it. Chapter 7 cases, whether dismissed or not, remain on your credit file for 10 years. Successful and unsuccessful Chapter 13 filings stay on your reports for seven years.

However, if someone inquires about whether you have filed bankruptcy at any point, ever, and you don’t own up, it is considered criminal fraud. Chapter 7 personal bankruptcies normally include liquidation and seizing of assets which are bonds, valuable property, stocks and real estate. Once the assets are liquidated then the proceedings are utilized for paying off the number of creditors you owe.

Bankruptcy should be the last thing on your mind, and only considered after you have exhausted all other ideas to repay your loan amount. Only when you find no other way to get out of your debts, may you file bankruptcy. Bankruptcies are a net positive for the economy because more productive competitors are rewarded by opportunities to buy up remaining assets at bargain prices to strengthen their operations. In an economy that allows this kind of growth and change, any jobs lost by bankruptcy are soon replaced by new ones as the most efficiently managed businesses gain access to more assets and expand. Bankruptcy is a pretty good deal for many of those who are in debt of 30k. Slap down $1,500 and your debt is, more or less, wiped clean.

Bankruptcy is not something recommended any more than someone would recommend divorce. Are there times when good people see no way out and file bankruptcy? Yes. But bankruptcy is a particularly irrational choice for high-income individuals who can afford their monthly payments. They would still have to repay the written down part of the mortgage balance out of income earned for up to five years, to the extent possible, after paying back the secured debt. Bankruptcy is for when your assets are tied up and you cannot pay your debts. There are a number of different bankruptcies that are open to individuals.

Bankruptcy does not prevent anyone from living within their means and saving money. Bankruptcy is at an all time high, so please do not play around with debt. Bankruptcy is not a get out of jail free card and it will leave a huge mark on your credit score that will likely be permanent.

Bankruptcy may be the immediate solution but that can prove unsafe in the long run. Bankruptcy stays on your credit report for 10 years so until after that you will face difficulty in getting a loan and purchasing or leasing anything as your credit score goes down due to filed bankruptcy resulting in a 160-220 point deduction on their credit score. And, if a delinquent account is added to the individuals credit file, 70-120 points are subtracted.

Bankruptcy is important when there is a major medical crisis and other real-life crisis situations. But if it is just the latest in a string of poor money management decisions, then I think of the insanity quote: "Insanity is doing the same thing over and over again and expecting a different result". Bankruptcy is not an option for you unless you are unable to work hard to repay your obligation. If you are capable of working a decent paying job, you will regret bankruptcy for the next seven years or longer.


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