Should You File for Bankruptcy

May 12, 2012 by  Filed under: Bankruptcy 

Deciding whether filing bankruptcy is a good decision for you can be frustrating and really difficult. Many consumers find themselves wondering if bankruptcy is even an option for them, or if it is something that they would benefit from. My understanding, after interviewing many possible candidates for bankruptcy, is that they all seem to fear the same things.

For example, they are afraid that their credit score may be damaged forever. They are also afraid that they may not be able to keep all their property and/or assets.

The reality of filing bankruptcy is that most consumers that qualify for Chapter 7 and/or Chapter 13 are able to keep most of their assets, if not all of them. They are also able to discharge most of their unsecured debts.

What consumers need to know is that filing bankruptcy is a legal right. Congress passed the Federal Bankruptcy Code (United States Code Title 11) to allow consumers in financial distress to seek relief. Creditors have been very effective at disseminating misinformation and making consumers feel they are a failure if they seek the protection of the code.

I am not suggesting that a consumer should feel proud of filing a bankruptcy. Nevertheless, I am suggesting that consumers should not stop and base their financial life on a number (credit score) or an opinion from a bank or creditor. We must remember that banks and big corporations have been bailed out by tax payers. If you need a bail out, the United States passed the US Bankruptcy Code and the United States President has signed it into law.

Bankruptcy can help you get on your feet. Chapter 7 can discharge most of your unsecured debts and allow you to start building credit as soon as you are able to establish your credit worthiness again. To do that, you can establish credit by having a history of complete and timely payments. It is nothing more than a myth for consumers to believe that they cannot access credit or they are going to be unable to borrow money because of a bankruptcy filing.

As a matter of fact, most consumers after filing bankruptcy (even before the discharge is granted) start receiving many credit card offers and loan applications. Typically, I discourage my clients from entering these kinds of transactions or to look for credit again because these offers and terms are usually not very good. They typically have higher interest rates, high penalties, and/or application fees.

The number one alternative to bankruptcy which consumers can seek is some sort of debt consolidation plan. There are very few reputable companies that can help a debtor properly consolidate their debt. Most debt consolidation firms will also preach and teach that a consumer should consolidate so they avoid filing bankruptcy. The problem with their system is that they typically advise the consumer to get behind on your payments so they can have more leverage to negotiate your debt.

You must understand that under the Bankruptcy Code there is no negotiation. Either the debt is discharged or it is undischargeable. In other words, the creditor has very little power to determine the outcome of the bankruptcy. If a creditor does not want to take terms or does not want to negotiate with the debt consolidation firm, then they will simply not take any of your proposed terms. They are very tough and very difficult to deal with. However, under bankruptcy terms, they must comply. This is one of the main advantages of filing bankruptcy.

It is crucial that you talk to a bankruptcy attorney if you are in a situation where you feel that you cannot sleep at night, or your debt is affecting your health, family relationships, and feel like you are running out of options. However, talking to a bankruptcy lawyer to determine if a filing is an option for you is sound advice.

Most bankruptcy lawyers will give you a free consultation to sit down with you and look over all of your finances and determine whether you are a qualified candidate. You lose nothing by contacting an attorney. If bankruptcy is not an option for you, for whatever reason, then at least you know where you stand.

Hector Quiroga is a Bankruptcy attorney in Spokane with interest in personal injury, contracts litigation, and bankruptcy filings. Hector enjoys learning and writing about the law, Colombia, Spokane, the internet, and photography. Many of his articles are aimed to help consumer protect their interest and defend their rights. They are also aimed to help consumer make educated decisions regarding products and how to solve disputes with retailers and sellers.

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Should You File For Bankruptcy?

October 3, 2009 by  Filed under: Bankruptcy 

Filing for bankruptcy is often used as the last resort, but how exactly will you know that it is the time for you to use your last resort? Most people wish that filing for bankruptcy is an option which they would not need to consider in the future, but due to mounting debts, this can be inevitable. Because of the financial crisis that even the worlds’ economies are suffering from, it is important for every person to know about bankruptcy and its pros and cons.

Before you find a lawyer who will aid you in filing for bankruptcy, you first have to get as much information as you can about bankruptcy to see if this is really the best course of action to take. Read a lot of different resources available online and offline. You can also ask a lawyer about it, since they will be able to give you the necessary information that you need, hence assisting you in making the right decisions. But then, remember that most lawyers charge for an hourly rate, so if you cannot afford one, better do the research by yourself.

In filing for a bankruptcy, remember that you have two bankruptcy options, the chapter 7 bankruptcy and chapter 13 bankruptcy. The main difference is that in chapter 7, you get to eliminate almost all of your debts, but you also have to sacrifice much of your assets. On the other hand, chapter 13 bankruptcy will let you keep all your assets, but you have to pay your creditors for a reduced amount. Most people opt for chapter 7, though the new bankruptcy laws have made it harder for people to avail of the chapter 7 bankruptcy plan. Learn about the laws in your state and find a bankruptcy lawyer that could help you.

Your lawyer will help you prepare your bankruptcy documents. He will also help you decide which assets you want to protect based on the exemptions allowed in the type of bankruptcy that you chose. You will then need to submit your documents to the bankruptcy court, and all collection activity will be commanded by the court to stop immediately.

You and your lawyer will meet the creditors within 20 to 40 days of your filing for bankruptcy. This meeting usually lasts for just a few minutes, and this is a requirement for you to be able to complete your bankruptcy filing.

Since you already have segregated your exempt assets from your non-exempt ones, you have to sell your non-exempt assets to be able to pay your creditors for your outstanding balance. This usually happens 30 to 60 days after you have filed your bankruptcy. After paying all your debts according to the terms of your agreement, you will then be discharged by the court and all your former debts are erased. You now have a clean financial slate once again.

Every state has its own rules and regulations with regard to bankruptcy, so you should familiarize yourself with Phoenix bankruptcy rules if you are from Arizona. Also, Arizona bankruptcy lawyers can help a great deal in dealing with your bankruptcy problems.

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