Should you file for a Chapter 13 bankruptcy?

When considering different debt repayment solutions, Chapter 13 bankruptcy often attracts people as a relatively safe solution. But with this type of filing, specific goals must be met. As one of the top reasons to avoid Chapter 13, these conditions often go unnoticed in the investigation stage. Taking a deeper look into Chapter 13 bankruptcy allows us to determine whether it is the right avenue.

When weighing the options that the different types of bankruptcies can offer, understand that debt counselors will recommend Chapter 13 to anyone who owns a leverage asset, such as a home. As well, for a debtor with back taxes or assets that have a lower value that what is owing against them, Chapter 13 will also be the avenue of choice. Typically, Chapter 13 allows the debtor to repay a portion of the debt, rather than the debt in full, provided the debtor can prove sufficiently that he cannot repay the full amount.

Chapter 13 allows debtors to keep an asset that does not come under exemption. You can file chapter 13 every four years. In return, you have to come up with an acceptable debt repayment plan that aims to repay loans through your income. Chapter 13 is in force for a period of three to five years, during which you must make regular payments toward clearing the debt. Creditors must forfeit the remaining amount once chapter 13 payment plan ends. Until chapter 13 is in force, your creditors cannot hike interest rates. Sounds too good to be true? It probably is.

One of the top reasons to avoid Chapter 13 is that debtors must meet certain eligibility requirements. This begins with having a steady income, which excludes people who might really benefit but who are currently unemployed and having trouble making ends meet. Often, people with this type of debt problem had arrived there as a result of the lack of income. The irony is that most debtors with a steady income would have repaid the debt in full. More interesting is that the Chapter 13 means test requires that a debtor’s income exceed certain thresholds in order to be eligible for this option. Go figure.

Another one of the top reasons to avoid chapter 13 is that it can bring your lifestyle under a court mandate. While many people are okay with that kind of regulation over their lives if it helps those clear debts, some debtors feel hopelessly trapped when told where to live, how to travel, what food to eat… Remember, once you file for chapter 13, the court and trustees have the right to look at the minutest details of your income and expenses and order changes that they deem fit.

What often discourages debtors from filing Chapter 13 is that they quickly realize they are practically prohibited from substantially improving their financial condition over the course of their plan. This means that any unexpected gains and even an inheritance could be surrendered to the trustee and funneled to the outstanding debt. More intrusive however is that the debtor’s spouse can often be required to submit evidence of assets, income, and expenses, even when a filing was submitted jointly.

Before considering Chapter 13 bankruptcy, debtors are wise to consider creating their own debt repayment plan, particularly if they have the means to repay their debt. Two of the biggest benefits with of a Chapter 13 bankruptcy include keeping the debtor’s financial circumstances out of the public domain while simultaneously improving credit rather than ruining it.

What Is bankruptcy? What does it mean to declare bankruptcy?

Bankruptcy is a legal process available to consumers or businesses seeking federal protection from creditors when the borrower is unable to repay their debts.  Declaring  bankruptcy is the legal filing with a court of a person’s or company’s inability to repay debts. It is intended to afford the debtor with a legal fresh start by “wiping the slate clean” of debts.

The ability to file for bankruptcy and obtain a fresh start is an important and long-standing part of American law. The right to file for bankruptcy protection is guaranteed under federal law and the U.S. Constitution  (Article I, Section 8, of the United States Constitution).  Prior to 2005 it was a relatively simple process which enabled many people to easily walk away from their debts.

Why were changes made to the bankruptcy law?

In 2005, mostly at the prodding of the credit card industry, Congress made some significant changes to bankruptcy laws . The main purpose of these changes was to make it harder to file for bankruptcy. Nonetheless, the ability to file for bankruptcy and obtain a fresh start is an important and long-standing part of American law and people who need bankruptcy relief can still get it.

The bankruptcy laws have made it more difficult to file Chapter 7 as the government would prefer that everyone meet their financial obligations. The eligibility requirements for Chapter 7 or Chapter 13 are based on your income, living expenses, and debts. A bankruptcy lawyer will help you determine which option is best for you.

What are some of the more important changes to bankruptcy laws?

* Higher income filers must file for Chapter 13
* Filings are more closely investigated and more documentation is required
* Credit counseling and  financial budget counseling is required
* Property must be valued at replacement cost, instead of a “fire sale” cost
* State exemptions are not available to new state residents in order to prevent debtors from moving to a state with more liberal exemptions.
* Residency requirements have been tightened to prevent people from moving to states that allow a person to protect more equity in their personal residences.

What are the types of bankruptcy available to individuals?

There are two basic types of bankruptcies for individuals: Chapter 7 Bankruptcy and Chapter 13  Bankruptcy.

Chapter 7, also known as a liquidation bankruptcy or no asset bankruptcy, is a bankruptcy procedure designed to eliminate your debt. One of the advantages of Chapter 7 is that it immediately stops creditors from collecting or attempting to collect any of your debts the moment you file the bankruptcy petition with the court. This is done by filing a Suggestion of Bankruptcy document with creditors. The other advantage is that at the conclusion of the process you are immediately provided with a discharge of debt without having to pay any of your debt and you have no monthly payment plans. Both individuals and businesses can file for Chapter 7 bankruptcy.

Most individual bankruptcies are Chapter 7. It is relatively fast and simple. Typically, a case is opened and closed within three to six months. Local bankruptcy lawyers in your area are available for Chapter 7 bankruptcies filings and consultations.

There are numerous reasons why people elect a Chapter 7 bankruptcy over a Chapter 13 bankruptcy. Most people who chose Chapter 7 do so because they have large debts that they cannot manage to pay down, such as credit card bills, hospital bills or legal judgments.

A Chapter 13 bankruptcy, also known as a wage earners bankruptcy, is different from Chapter 7 in that it does not completely eliminate your debt. Instead, it gives you the opportunity to pay off some your debts over an extended period of time through a court-approved, court-supervised, and court-enforced payment plan.  Chapter 13 bankruptcy filers are given from three to five years to pay off their debts. You make one monthly payment based on how much you can afford for 3 to five years. Most creditors will not be paid in full, however, and unpaid balances are discharged, subject to some exceptions, at the end of the three to five year period.

Who can file for bankruptcy?

Generally, almost anyone can file for bankruptcy. If you are a person who simply cannot afford to pay your bills, regardless of the reason, you probably can qualify for bankruptcy, either Chapter 7 or Chapter 13. If you have filed a previous bankruptcy, it could limit the options that may be available to you. For instance, if you have previously filed for a Chapter 7 bankruptcy, you cannot file another Chapter 7 for eight years.

You will not, however, be permitted to file for bankruptcy to in order to beat your creditors. If you know you are having financial difficulties, you cannot deliberately max out your credit cards just to beat the system by filing bankruptcy. At the very least you could find your bankruptcy filing dismissed and wind up being stuck with all that debt. You could also find yourself filing your next bankruptcy petition from a prison cell.

There are numerous documentation requirements. You will need to provide an inventory of everything you own. You will need to provide your personal tax returns, proof of income for six months prior to filing along with a list of your spending, and a certificate showing that you took a mandatory credit counseling class.

What is the actual bankruptcy process?

There are eight basic steps in obtaining your bankruptcy. Your bankruptcy attorney will guide you through the entire process which takes about 3 to 6 months on average.

* Attending a credit counseling course at an approved credit counseling agency.
* Meetings with your bankruptcy attorney to draft copies of your paperwork.
* Providing proof of income for the previous six months in order to determine eligibility.
* Determining with your attorney which assets are safe in a bankruptcy.
* Filing the paperwork with the bankruptcy court.
* Attending a short meeting with the bankruptcy trustee.
* Attending an additional personal financial management class.
* Obtaining the final discharge of debts from the bankruptcy court.

Credit counseling

Before you can file for bankruptcy, you must first have a consultation with a nonprofit credit counseling agency that has been approved by the United States Trustee. The purpose of this consultation is to see whether there are any alternatives available to you other than filing for bankruptcy protection.

You must meet with the counseling agency within the 180 day period prior to filing your bankruptcy petition. The agency will probably try to work out a repayment plan with you and your creditors. You do not, however, have to agree to any repayment plan. You will still receive a certificate from the agency stating you have received the counseling. And you need to submit their proposed repayment plan to the court along with the rest of your filing.

After your bankruptcy has been completed, but before your debts are discharged, you will also be required to attend a personal financial management class. A certificate will be given to you after completing your course.  This certificate must be submitted to the court. This is the last step of your bankruptcy.

Can I keep my house and my car?

Bankruptcy courts are aware of the importance of keeping your home and car. There are certain rules that may allow a person to keep their home or car under what is called a “Homestead Exemption” or “Automobile Exemption.”

Homestead exemptions vary by state and marital status. The concept is very simple: if your home has more equity in it than the amount of your state’s homestead exemption you will be forced to sell your home to pay off your other debts. If your homestead exemption is higher than the amount of equity in your home, you may be able to keep your home even after you file for bankruptcy.

For example, if you have $25,000 in equity in your home, and your state’s homestead exemption is $50,000, you may be able to keep your home. If your equity is $150,000, the court will force the sale of your home in a chapter 7 bankruptcy proceeding. However, you could file Chapter 13 bankruptcy and still keep your home.

Automobile exemptions work very similar to homestead exemptions. However, if you are behind on car payments in a Chapter 7, your car may still be repossessed by the creditor in the bankruptcy proceeding if you do not pay your back payments. However, Chapter 13 could provide you an opportunity to prevent the repossession of your car even if you are behind on the payments.

Personal property exemptions and other assets

When you file for bankruptcy, the court will allow you to keep certain personal items of low value. Every state has different laws regarding what you can keep. But in general, you can keep a small amount of jewelry (ranging from $2000 to $7000), health aids, animals, crops, appliances, furnishings, books, musical instruments, and various other inexpensive items of property.

Personal luxury items such as expensive watches, furs, paintings and jewelry must be disclosed and will probably be sold by the trustee.

Pensions are generally exempt from bankruptcy and so are ROTH IRAs and Keoghs. Insurance benefits are also usually exempt, as are tools of your trade.

Do I have to pay my credit card bills if I’m bankrupt?

Credit card debts can be completely forgiven in bankruptcy as long as you did not run up your credit cards just prior to filing for bankruptcy protection.

After you file for bankruptcy, it is against the law for credit card companies to contact you. They must stop calling you, cannot file a lawsuit against you or proceed with a lawsuit they previously filed; they cannot record liens against your property; they cannot report your payments to the credit reporting agencies; and they cannot seize your income, bank accounts, or property.

When you file for bankruptcy, something called an “automatic stay” goes into effect. The automatic stay usually prevents most actions from moving forward against you. No more harassing phone calls or letters, and no more threats from lawyers.  The “automatic stay” will also temporarily stop a foreclosure, but only for the very short term until the bank goes into court and gets the stay lifted.

Will my other debts be eliminated in bankruptcy?

You may have all types of debts that are weighing heavily on you. Most of these debts are dischargeable in bankruptcy, but there are a few exceptions.

The most common dischargeable debts are credit cards, medical bills, obligations under leases and contracts, personal loans and promissory notes.

The most common debts that are not dischargeable are student loans, alimony and child support payments, certain tax debts, and criminal fines and penalties (like parking tickets or moving violations) imposed on you by the courts.

The most common debts that are sometimes dischargeable are student loans, some IRS income taxes, and debts from prior lawsuits. The term “sometimes” is used because it depends on the circumstances of the debt. For instance, while generally non-dischargeable, if your student loans are causing a tremendous burden and you have made a good faith effort to pay them back, they may be discharged. In regards to regular income taxes, if the taxes have been owed for more than three years, and the IRS has not reassessed the amount in the last 240 days, they may be discharged.

Since each individual’s situation is unique, you should discuss with your bankruptcy attorney all of your debts to determine whether or not they can be discharged in bankruptcy.

I am married. Do married couples have to file bankruptcy together?

Many married couples often feel they are legally responsible for each other’s debts. This is simply not so.

While you are responsible for your own debts, these debts may or may not include your spouse’s debts. It depends on whether you have co-signed any debts together. For instance, if you bought a car together, you may both have signed for the loan. Also, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse are jointly responsible for each others’ debts incurred during marriage, even if you did not “co-sign” for the loan.

In order to file a joint bankruptcy petition, you must be legally married. Living as co-habitants does not allow you to file joint bankruptcy. Most states do not recognize common law marriages or same-sex committed relationships as valid marriages.

It costs about the same to file a joint bankruptcy as is does to file individually

What are the alternatives to bankruptcy?

Bankruptcy may not always be the best solution for many reasons. You might still have to give up your non-exempt assets. Your debts may be non-exempt and non-dischargeable, or you may not be eligible to file.

You might want to take other steps first. You could try to sell whatever assets you have to pay off your debts. If you own anything valuable, such as jewelry, cars, or watches, you may want to consider selling them first to try to pay off your debts. Another option may be to approach family and see if they are willing to help you. Of course, many people prefer not to involve family, especially if they can qualify for bankruptcy.

Transferring credit card debt to a lower interest credit card will only solve your problems temporarily. Oftentimes, the new credit card companies will fight to collect their money if you file for bankruptcy after transferring large debts to a new card.

Refinancing your home if you have equity is an unattractive alternative, as is a home-equity line of credit. You want to make absolutely certain you can afford the payments because if you can’t, you risk losing your house because you have turned your unsecured and dischargeable credit card debt into a lien on your property. You must be very cautious about trying to pull equity out of a house to pay creditors, especially if bankruptcy could provide a way to preserve your equity and still eliminate your debt.

Do debt consolidation services work?

If you can find a debt consolidation service that isn’t an outright scam you will find a plan that is similar to a Chapter 13 payoff plan. They get the credit card companies to  lower their interest rates and your payments. You make one payment a month to them for years and after they’ve taken their cut they give the rest to your creditors. After you have completed the plan the credit card companies wipe out your remaining balance and consider you paid up. They report it to the credit reporting agencies as a “negotiated settlement” which puts another dent in your credit score and then promptly send a 1099 to the IRS reporting the “forgiven amount”.  The IRS comes looking to you for taxes on the “forgiven amount”.  With few exceptions, whenever you settle a debt with a creditor for less than you owe, you are liable for taxes on the balance you didn’t pay. Simply stated, if you owe the bank $10, 000 and they agree to take $6,000 as a settlement, you now owe taxes on the $4,000 you didn’t have to pay. Depending on your tax rate, you could owe Uncle Sam $1,000 in taxes. And he will want it all right now. If you think the credit card companies were annoying when they didn’t get paid, just wait until the IRS comes after you!

What are the long term consequences of filing for bankruptcy?

Without a doubt bankruptcy will have the worst possible effect on your credit score.  Credit reporting agencies will report information about your bankruptcy for as long as 10 years. If you’re thinking about filing bankruptcy this may be of little consequence since your credit score may already be so low that it would take that long to rebuild your credit anyway. Having a bad credit score doesn’t necessarily mean you can’t get any credit, it just means that you will have to pay a lot for it for years to come.

The credit cards and other accounts that you listed as part of your bankruptcy will definitely be canceled by the issuers if they have not already suffered that fate.  Oddly enough, you might be surprised to find that you can still get new credit cards and other loans, and you will probably start receiving offers in the mail for them soon after you file for bankruptcy.  The offers you will get will be for accounts where the credit line will be small and the interest rates will be much higher than on regular credit accounts. Since after bankruptcy you have no debt and can’t file again for 7 years you’re a actually a better credit risk to the card issuers than before your bankruptcy.

If you had any loans before bankruptcy that had co-signers, your obligation to repay will be wiped out. Instead, your co-signer will get stuck with them.  So if your parents co-signed a car loan for you they will continue to be fully responsible for the loan.

Tapping into your retirement plan is oftentimes ill-advised. The reason is because pension plans are generally safe from bankruptcy. You will be able to keep your pension or retirement money, unless you borrow against it. If you borrow against it, your creditors can attack your pension or retirement money during bankruptcy and you will have to pay income tax penalties on an early distribution.

Conclusion

Deciding to file for bankruptcy is not an easy decision. While you can file bankruptcy without a lawyer, doing so should not be undertaken lightly. There are simply to many pitfalls that need to be avoided. Even if you don’t want to hire a bankruptcy lawyer, at least talk to one before you file. Most will give you a free consultation and many will keep the cost down by letting you do some of the grunt work yourself if you decide to file for bankruptcy.

The bankruptcy process is daunting, and most filers focus completely on getting the bankruptcy process completed. But life goes on after filing for bankruptcy, and it is important to start immediately working on rebuilding your credit score.

If you have filed for a Chapter 7 bankruptcy, this will stay on your credit report for 10 years. None of the debt amounts or details will be listed on your credit report, but it will state that the filer’s debts were “discharged in a Chapter 7 bankruptcy.”

Chapter 13 bankruptcies are somewhat different. This type of bankruptcy remains on your credit report for seven years. This seven-year period begins after the Chapter 13 payment plans have been finalized. The amount of time it takes to complete this debt payment plan is about five years on average. Therefore, you cannot expect to have a Chapter 13 bankruptcy removed from your credit report for about 12 years.

It might seem like a long time before a bankruptcy will be cleared from your credit record, but it is important to immediately begin trying to rebuild your credit score. One of the first things you can do is apply for a secured credit card. Secured credit cards have a yearly fee and also require that the card holder make a deposit equal to the amount of the credit card’s limit.

While this may not really seem like a credit card, and may appear to be a bit of a hassle, the secured credit card will appear on your credit report as any other type of credit card. Making on-time payments and not having a balance on this secured card will have a positive impact on your credit report. In fact, you may see an improvement in your credit score in as little as six months. Non-secured cards can be applied for about a year after filing for bankruptcy if your credit score improves. In addition, if the filer qualifies for a car loan or perhaps a furniture loan and continues to make on-time payments, the credit score will continue to improve.

The good news is that if a filer who works to rebuild credit can see their credit score rise up to between 650 and 680. As more negative items, such as late payments, begin to disappear from the credit report, this score will continue to rise.

Credit reporting agencies focus on the most recent three to five years of credit history. By establishing a recent, positive credit history as outlined above for three to five years, the older bankruptcy history will have an increasingly lessened affect on the filer’s credit score. It is a good idea for a bankruptcy filer to check his credit report once a year to ensure that it is correct. Often debts that should have been discharged in bankruptcy are not listed as such and should be corrected by contacting the credit reporting agency.

If a bankruptcy filer also has a foreclosure on his credit, it will make it more difficult to get another mortgage. A foreclosure will stay on one’s credit for seven years. However, the older it is, the less likely it will affect one’s ability to obtain a mortgage. A good mortgage broker can typically shop many banks to find a lender that is willing to offer a mortgage to one with a prior foreclosure on his credit. Often, a bankruptcy filer who also has a foreclosure on his credit will qualify for a mortgage within three or four years of the date of the foreclosure, as long as it has been approximately two years or more after filing bankruptcy.

Stephen Trezza has effectively handled thousands of cases, including many Arizona bankruptcy cases. For further information regarding Tucson bankruptcy court, visit the FileBankruptcyinArizona site now.

Declaring bankruptcy is something we generally should avoid at all cost. however, it is sometimes necessary to fall back upon it when no other solution is available. It is important to be aware of the consequences and results that will affect you, if you are considering filing Chapter thirteen bankruptcy. The law that governs such claims is on the Federal level, therefore filing a Sacramento bankruptcy is basically claiming a Philadelphia bankruptcy. However, the single difference being the special exemption given to a state. Yet for the majority the process and procedure remains the same through out the nation.

The “wage-earner’s bankruptcy” is usually what Chapter 13 is referred to. People who are in constant debt, yet still manages to generate a decent salary, are capable of claiming Chapter 13. Decent salaries according to the cour is determined by the average income of those living in a specific area. For instance, in Sacramento a given family generate around $ 50,000 a year. If anybody falls under this category, then they are eligible for “wage-earner’s bankruptcy” and is granted a relief of blame from any collector’s agencies or debtor. However, a repayment plan which may last a couple or more years depending on the ration of the amount of of money you owe debtors and the amount of money you earn every year.

This may sound at first like a negative refinancing plan with bad impact on your credit, however claiming chapter 13 provides essential breathing room for the debtor. In addition, while under effect of Chapter thirteen, all attempts from debt collectors to repossess or collect will cease, and practices such as garnering of wages cannot be administered to the person. In other words, declaring Sacramento Ca bankruptcy will give you a much needed chance to pace the debts, so that even though your credit will stay negatively effected for a number of years you are on the right track to removing your debts.

Bankruptcy filed under Chapter 13 gives people a range of advantages over liquidation under a bankruptcy filed under Chapter 7. Maybe most significantly, chapter 13 provides folks a way to preserve their homes from foreclosure. By filing under this chapter, individuals can halt foreclosure proceedings and may remedy past due mortgage payments over time.

Nevertheless, they will have to still make all mortgage payments that come due during the Chapter 13 plan by the due date. Yet another advantage of chapter 13 is that it allows people to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.

Chapter 13 bankruptcy also has a specific provision that protects third parties who are responsible to the debtor on “consumer debts.” This provision might shield co-signers. Finally, bankruptcy filed under chapter 13 acts like a consolidation loan under which the person makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chap 13 protection.

Virtually any person, even if self-employed or operating an unincorporated business, is qualified for bankruptcy filed under chapter 13  as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are altered regularly to reflect changes in the consumer price index. A corporation or partnership may not be a bankruptcy filed under chapter 13 debtor.

Individuals cannot file under bankruptcy filed under chapter 13 or any other chapter if, during the former 180 days, a previous bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover assets upon which they hold liens. In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days prior to filing, received credit counseling from an accepted credit counseling agency either in an individual or group briefing. There are exceptions in emergency circumstances or where the U.S. trustee (or bankruptcy administrator) has identified that there are inadequate permitted agencies to provide the needed counseling. If a debt management plan is created in the course of required credit counseling, it will have to be filed with the court.

If you’re considering bankruptcy, talk to a local bankruptcy attorney about your options. An experienced  debt attorney can provide you with which options are right for you.

It’s quite easy for you to go about claiming bankruptcy. If you don’t know what to do, then we have some help for you. Read this article and you will know what you need to do in order to claim bankruptcy to get you out of debt. Here is what you need to know.

Now, the first thing anyone would tell you is that you should look into getting a lawyer. While there are many who file for bankruptcy everyday, it’s not all that easy. They can help you to make the decisions as well as help you to learn how much you can expect to pay.

Now, you can do this without a lawyer. Your first step will be to decide which chapter you should file. Each of the three chapters that individuals can file for offers other things. For instance, Chapter seven can help you by putting everything in the courts hands. They tell you how much to pay after you have sold the items that you are asked to sell. Then, there is chapter eleven, where you acknowledge your debt and create a plan to pay them back. Then, there is Chapter thirteen where you get a percentage taken out of your checks to go towards the costs.

The next thing is to look at the things you own. You need to create a list of all those assets that you have as well as all the different liabilities that you have as well. When you know this, you will know where you stand as to what you can sell and keep as well as what you owe. This is something that the courts will ask for.

From there, you will then have to file with the courts. Something that you will have to do is list all of your assets. You also have to list all of your liabilities. The reason you do this is because you learn what you have to sell and what you get to keep. This is how you get the money to pay off some of the things you owe. You sell some of your assets. A lawyer can help you to learn what you are entitled to keep.

The last thing you have to do is file a petition with the court. This will tell you if the courts accept the terms and will allow you to file for bankruptcy. This is the longest part as it can take up to six weeks before you can expect a response from them.

Once you have all this taken care of, you are ready to go through bankruptcy. It might be a lengthy process, however, this is needed in order for you to get out of debt. While many are unsure of this as this stays with you a long time and might hurt your credit, it’s one way to get a clean slate. See if this is for you.

Enrique Castillano also writes about Bankruptcy and Credit issues including Filing Bankruptcy Online and Do it Yourself Bankruptcy

When you are about to lose your home, you don’t care about anything else. It consumes your every thought. The only way you will be able to relax is to get the foreclosure called off so you can go back to enjoying your home and your life. Well, as a last ditch effort there is a method available to stop foreclosure on your home.

[I:http://talk-about-bankruptcy.com/wp-content/uploads/2010/07/GingerTaylor8.jpg]Filing for bankruptcy is bad for your credit, but sometimes it can save a home from foreclosure. Under chapter thirteen of the US bankruptcy code, debtors are allowed to submit a plan for repaying their debts. The foreclosure process is halted as soon as you file for chapter thirteen. However, your repayment plan is subject to review by creditors and must be approved by the bankruptcy court.

Before you file for bankruptcy, you will be required to attend a credit counseling session. This can help you determine whether you really need to file for bankruptcy or if your debts can be repaid in some other way. If the credit counseling agency prepares a debt repayment plan for you, it must be submitted to the court along with your bankruptcy filing.

Within fourteen days after you file for chapter thirteen, you must file your repayment plan. This is usually done at the same time as the original filing, but it can be done later if you are not quite ready yet, as long as it is on file with the court within fourteen days.

You will be required to attend a creditor’s meeting, and all of the companies and people you owe money will have a chance to ask you questions. The purpose of this meeting is to give your creditors a chance to object if they do not feel you will be paying as much as you possibly could under the proposed plan.

After the creditor’s meeting has been completed, your repayment plan will be reviewed by the court to make sure that it meets the requirements set forth in the bankruptcy code. It can take up to 45 days for approval, but you have to start making payments according to the terms of the agreement within 30 days.

The downside to using bankruptcy to avoid foreclosure is that sometimes it only postpones it, and then you end up with both a foreclosure and a bankruptcy on your credit. It is often difficult to stick to the repayment plan, and if you fail, you can still lose your home. But before you file chapter thirteen bankruptcy explore all possible options, talk to an experienced loan modification attorney first.

Call janian and associates for a free consultation with a loan modification attorney.

When your considering your debt relief options you may have looked into several ways to cut down debt and boost up your savings.  You may have considered everything from a do it yourself option to debt counseling.

However in this article I’m going to discuss another option to help you get debt free.  In this article I’m going cover three reasons why using an attorney based debt settlement firm might be the way for you to go.

Cutting Principle And Interest Payments

The first thing that a typical debt negotiation company like freedom debt management can do for you is work to cut principle and interest payments.  They do this by working with your creditors and negotiating a lump sum payoff.

The cost do something like this will usually run around a $100 a month plus a monthly fee to handle the monthly transactions.

Credit Negotiations

The next thing a debt settlement attorney can help you do is improve your credit.  They will be able to get a copy of your credit report and look for mistakes that could be fixed to help you improve your score.

However things that are on your report like bankruptcy and foreclosures that have come from mistakes that you have made cannot be erased or changed, only mistakes can be fixed here.

Bankruptcy

Finally, a debt settlement attorney can walk you through the process of bankruptcy such as a chapter 13 or chapter 7.  However bankruptcy should not be looked as a one step fix all plan.  It is something that should be considered very carefully.

The cost of a bankruptcy will usually run around $2000 plus filing fees, and credit counseling fees.  However this is just a rough estimate and fees can depend on a persons situation.

Final Thoughts…

Of the options I have given you take the time to research each and everyone before you make a decision. Making a bad financial choice could take you a second to destroy everything you’ve worked for and a lifetime to rebuild.

Those who are thinking about filing for bankruptcy in the state of Michigan might be wondering what they can expect out of the process. While bankruptcy is not a cure-all for financial problems, it is sometimes the best option. Here is some handy information about how one qualifies for and goes about filing for bankruptcy.

Firstly, it’s important to recognize that not all debts will be wiped out through this process. In Michigan, some debts will remain afterward, including taxes, criminal and traffic fines, back child support, most student loans and anything not specifically on the list of debts to be discharged.

Also, credit counseling is mandated by state law before filing for bankruptcy. Debtors must either contact creditors to obtain a workable payment plan or seek a debt consolidation loan within six months prior to filing. After the documents are filed, completing a financial management course is also required.

It’s important to understand the differences between the two bankruptcy types. Chapter 7, the discharging of debt while keeping a home or property not in default, and Chapter 13, a repayment plan that usually allows the debtor to keep a home, automobile and certain other property even though the loans for such properties are in default.

Michigan bankruptcy filings require extensive and often complex paperwork, including a two page petition and a list of all the debts to be discharged and property to be excluded. Deeds or titles of property owned and verification of income, expenses and financial transactions for two years prior to filing are also needed. The fee for Chapter 7 filings is $299, while Chapter 13 is $274.

Fortunately, once the paperwork is filed, the harassing phone calls from creditors can be stopped. In fact, creditors are required by law to cease contact once advised of the bankruptcy, but the court may not inform them for several weeks. To speed along this process and cease the calls, debtors should let creditors know of the filing right away and supply a case number.

The proceeding itself consists of a short meeting (called a 341 meeting) with a bankruptcy trustee. This individual may ask some questions in regards to financial status to clarify matters. The debtor is sworn under oath to answer. The debtors’ attorney and creditors can also attend this meeting.

Those considering this option will be relieved to know that bankruptcies don’t end up in court unless a debt or its discharge is disputed. Creditors have 60 days after the 341 meeting to challenge any debts included. Should there be no dispute, the process is generally finalized in three to six months.

Since there are so many steps involved in filing a Michigan bankruptcy, it is recommended that those considering this debt relief option contact a local attorney that specializes in bankruptcies for further assistance. The right attorney can be an invaluable asset, protecting your property and your interests to the full extent of the law during an emotional and difficult time.

If you’re thinking about filing for bankruptcy in the Detroit area, contact Michigan bankruptcy attorney A Better Way Bankruptcy. With nearly three decades of collective experience, their friendly, helpful and compassionate attorneys and professionals can help you obtain relief from debts, stop calls from creditors and get the fresh start you need.