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Steps to filing for bankruptcy

August 20th, 2010

Filing bankruptcy is a long process and usually is best handled by legal experts in the field. However, these too can be expensive and as a consumer, there are ways in which you can do it yourself. It will take a great deal of effort, patience and reading up.

The first step to filing personal bankruptcy yourself is to decide under which chapter you want to do so. Chapter 7 comes with no debt restrictions and almost everyone is eligible for it. Chapter 13 requires a bit more work. This is where a repayment plan has to be put in place depending your financial activity for the month.

If you decide to file under Chapter 7, then the first step is to get a bankruptcy kit. This will include some legal forms and guide to using them. Your local library will be a great resource place for material to read up on.

Once you have picked up all the resources you need, spend some time diligently in increasing your knowledge on bankruptcy and how to go about it. Next make a list of all your creditors. This basic outline will help you decide all you need.

1 The name and the address of creditor (include information on the Collection Agency involved or a representative attorney, if you have it.
2 Their basis for claim and account number.
3 The time when the debt was incurred.
4 Outstanding claim amount.
5 Name and address of co-debtor, if any.

Once you have done this, the next step is to gather all the necessary information for yourself and note it done. This can get difficult and you have to be patient about it.

1  Name, address, contact number, social security number, age and tax ID number should you have it.
2  Your spouse’s name, address, and the same details as above.
3  If you have filed for any bankruptcies within the last six years, then the details of filing them.
4  Income from employment or business for both debtors.
5  Payments made to creditors so far.
6  Suits, garnishments, executions and attachments.
7  Repossessions, Foreclosures and returns for one year after bankruptcy.
8  Gifts more than $200.00 to family members and more than $100.00 to charities.
9  Payments in connection debt counseling or bankruptcy for preceding year.
10 Details on all property transfers.
11 Safe deposit boxes and their details.
12 Set-off’s made by creditors for a period of 90 days.
13 Control in somebody else’s property.
14 Details of all residences that have been changed in the past two years.
15 Detailed personal income
16 Expenses for the month.
17 List of assets.

Al the information furnished has to be accurate before you decided to file for a court date.

Debbie Joneta also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and Types of Bankruptcy.

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Filing bankruptcy as a last option

August 20th, 2010

For those you have a lot of financial debt sometimes the end never seems near. At times like these filing for personal bankruptcy seems to be the only option. While in some cases it does make sense as the only solution, you have to understand that it can have devastating effects on your credit history as well as your stand in society. There are several reasons why you may feel that bankruptcy is the only solution. But each of them need to be evaluated as a third person would. Perhaps then you would understand that it is better to give alternate options a chance.

One of the most common takeaways from declaring bankruptcy is that it will help you start afresh. Remember that when you are filing under Chapter 7, all your non-exempt property will be handed over to the court to liquidate and pay of your creditors. Under Chapter 13, you will have a 3 to 5 year repayment plan in which all your disposable income will have to go. All this doesn’t work towards a fresh start.

Bankruptcy under Chapter 13 may be opted for to prevent a foreclosure on your car or home. What it effectively does is take that debt and put it into the repayment plan. Should you miss even one of these installments, your repayment plan will no longer be in effect and you could end up with a bigger problem.

Nobody likes being harassed for money, whether it is from the creditors themselves or from agencies. This does not mean you file for bankruptcy to end the problem. Debt settlement companies will help you reduce your credit burden. But if you want to get rid of the annoying calls, then you will have to approach credit counseling organizations. They will get rid of the calls without you having to file for bankruptcy.

Filing for bankruptcy may prevent the utilities from being shut off, but rest assured that the cost will be included in the repayment plan. Keep in mind that most utility companies go a long period before actually cutting off utilities for non-payment. This should ideally give you enough of time to save up and make your payments.

Before you file for bankruptcy, you should sit back and assess what your reasons are. More often than not, you will save yourself from taking the escapist route.

Debbie Joneta also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and How to Declare Bankruptcy.

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Exemptions for filing for bankruptcy

August 20th, 2010

When you file for bankruptcy, you have certain exemptions. What this essentially means is that the legal system allows a certain amount of your assets to remain untouched, thereby giving you the ability to start over again without getting caught in the debt trap. When a bankruptcy exemption says “home exempted up to X dollars” it means that if your home is exempt up to $25,000, then anything above that value, you will have to sell to clear your debt.

If for example your state homestead exemption is $20,000 and your home equity is $100,000, you would then be forced to file for bankruptcy under Chapter 13 or you would have to sell your home. In the sale, you will be able to keep $15,000 and the rest will go towards clearing your debt. There are some states that allow you to federal exemption. There are

1  Arkansas
2  Connecticut
3  Washington D.C.
4  Hawaii
5  Massachusetts
6  Michigan
7  Minnesota
8  New Hampshire
9  New Jersey
10 New Mexico
11 Pennsylvania
12 Rhode Island
13 Texas
14 Vermont
15 Washington
16 Wisconsin

The states that can be considered as having the best bankruptcy exemption systems are Texas, Florida, South Dakota, Iowa, Oklahoma, and Arkansas. Married couples filing for bankruptcy can double their exemptions. The value of the exemptions is changed every three years on April 1st to match current Consumer Price Index.

There are some federal non-bankruptcy exemptions as well and these can be filed under only your own state’s exemptions. They cover pensions of the likes of Civil service employees, Foreign Service employees, Military Medal of Honor, Military service employees and Railroad workers. They also include a range of public benefits like death and disability benefits of government employees. The same with longshoremen and harbor workers, social security, veteran’s benefits and so on.

There are also exemptions on homestead sales or lease proceeds in the case of Indian lands. Klamath Indian tribe benefits for those in Oregon State, military deposits if you are stationed permanently out of the country, seaman’s clothing and insurance as well as railroad workers unemployment insurance.

These exemptions are in some cases only and it should be taken for granted that you will automatically be eligible for them. In most cases you may not be.

Debbie Joneta also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and Types of Bankruptcy.

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Alternatives to filing for bankruptcy

August 20th, 2010

Before you consider filing for personal bankruptcy, there are alternatives that you could evaluate for yourself. The first would be a debt settlement. In this option you hire negotiators from a company to deal with your creditors and reach an amicable decision on lowering the debt owed. This is a good option for those who are unable to manage even their minimum amounts due each month. It is also an ideal option for those who don’t have equity in the form of a home, land or other assets. It is considered the fastest and cheapest way to becoming debt free that declaring bankruptcy.

In the credit counseling option, you discuss with the creditors and negotiate a lower rate of interest. This reduces the burden substantially. Though safer, it can get considerably expensive. On an average, the debtor is able to become free of his debts within a 5 year span.

Declaring bankruptcy under Chapter 13 will have you on a repayment plan. A court appointed official will take control of your disposable income and this is channeled into your various debts. This can take up to 5 years. This is a good option to relieve you of secured debts like car or housing loans. This is not a good idea for credit card holders as it can turn out to be a much more expensive proposition. Chapter 7 on the other hand is a severe and last ditch option. In this case, you will be relieved of all your unsecured debt such as credit cards, medical bills etc. But you will have to surrender your fixed assets to be sold and the proceeds distributed between your creditors.

For those who own a lot of property, liquidating your assets would be a good option to declaring personal bankruptcy. This can also be done in the case of filing under Chapter 7. Based on exemptions and possible surplus that you may have, it’s best to sell your assets and clear off your debts rather than declare bankruptcy. In all cases, you will have to have an experienced debt lawyer with you. Make sure you hire the services of a company or individual that comes well recommended.

Debbie Joneta also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and How to Declare Bankruptcy.

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Reasons to avoid filing for personal bankruptcy

August 20th, 2010

It is a common belief that filing for bankruptcy is a way of eliminating all your debts. While in a miniscule number of cases, this is true, more often than not, you will have to pay back at least a part of that debt. Added to this bankruptcy can also completely destroy your credit rating for a period of 7 to 10 years. Working on getting a semblance of it back can be a big deal. A part of prudent financial planning would be to know that situations where you get the worst part of the bargain when it comes to filing for personal bankruptcy.

Find out what are the earnings of an average individual in your state. If you make more than that,  chances are you will have to file for bankruptcy under Chapter 13. This means that a repayment plan will be put in place for you. What happens here is that all your disposable income will have to be handed to a court appointed authority who will look into its dispersal. You will have to give up on several luxuries and the courts are quite strict about that. Missing even one payment can have you in contempt. You can end you paying the whole amount upfront as penalty.

If you have a car and own a home along with some other equity and these are not exempt in your state, the legal machinery can force you to sell your assets to make up for the debt. The same goes with any of your investments, second homes or cars. The best way to assess this is to get in touch with a bankruptcy lawyer who will do the legwork for you. Some states have exemptions like in Illinois, where a percentage of the value of the home, car and a limited value of general items is allowed.

Another reason you should avoid bankruptcy is when your creditors have proof that you are fraudulent and never had intent to pay. This will ensure that you have will have bankruptcy slapped on you along with a bad mark on your credit history. Having such proof can also give your creditors the ability to petition against your filing for bankruptcy.

Debbie Joneta also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and Do it Yourself Bankruptcy.

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