Posted: Thu Apr 08, 2004 4:10 am Post subject: How to get debt-free with Bankruptcy
Paying off debts often becomes a major problem for most consumers. Almost every consumer wishes to free himself from the clutches of debt irrespective of whether he is in serious debt problems or making minimum payments towards a small amount of debt. But when consumers fail to pay their credits due to increased amount of debts, they generally consider filing for a bankruptcy case.
But does bankruptcy really help you to get out of debt?
It is a general conception that bankruptcy may be helpful as it makes one debt free within a few years or helps a debtor clean up his debts at a single chance. But what about its affect on the individual's credit report that can prevent him from getting loans in future. Bankruptcy is not the only way to get out of debts, rather it should be considered when all other plans fail to work out. Moreover, it isn't easy to file bankruptcy now since the new bankruptcy law will be coming into effect. Filing for bankruptcy makes one go through a complex legal process that has an adverse effect on his credit rating.
Bankruptcy is a legal procedure by which the individuals and business houses can pay off their debts under the supervision of a bankruptcy court (Chapter 13) or wipe off their debts altogether (Chapter 7). It prohibits your creditors from debt collection actions without the court's approval.
In case you intend to file bankruptcy, you can approach the court and file the list of all outstanding debts and assets. But you can only sell off those assets which are non-exempt, that is, which can be used for the repayment of debts. However, under the new Law, it is not that easy to qualify for bankruptcy. This is because the new law would require a debtor having salary above the median income level to undergo credit counseling at least 180 days prior to filing for bankruptcy.
The credit counseling services check out whether debtors can pay at least 60% or more of their debts so that they don't have to file bankruptcy. Moreover, those opting for bankruptcy will have to go through a Means Test which can determine the type of bankruptcy that he should file. When you qualify through the Means Test, the court appoints a bankruptcy trustee to supervise the payment of your debts. Usually payments towards secured debts like mortgages are given priority over unsecured debts during a bankruptcy case. Otherwise the lender may take away the property acting as collateral for the secured debt.
Generally, debtors go for any of the two types of bankruptcy - Chapter 7 and Chapter 13. Under Chapter 7, your non-exempt properties are sold off to clear your dues but debts including child support, student loans and taxes are not payable under this form of bankruptcy. In such cases, you can file Chapter 13 which allows them to restructure your debts and pay them off with a suitable repayment plan within a few years.
There are two ways to declare your bankruptcy. First one file a petition to voluntarily go bankrupt. This is more common. Another way which is not used often is for creditors to ask the court to make a order to that the person is bankrupt.
Posted: Thu Nov 17, 2005 9:58 pm Post subject: RE:
Hi,
Welcome to MortgageFit Forums,
Once you are in MortgageFit you need not worry.
Your spouse will not get affected if he or she is not responsible for any of your debt.
But in community property states either of the two (husband and wife) can contract for a debt without the signature of his or her partner on anything. Like day to day debts do not require both spouses to have signed. Still there are exceptions to it like sale and purchase of real estate will require signatures of both spouses.
Your attorney can help you in a better way in this regard.
Posted: Tue Nov 22, 2005 10:09 pm Post subject: will my debts be wiped out.
I am bankrupt and i am about to file bankruptcy but i want to know that whether all my debts be wiped out once i file bankruptcy?? and if not what are those debts?? any feedbacks are appreciated.
Posted: Tue Nov 22, 2005 11:18 pm Post subject: RE:
Hi Dylan,
Welcome to MortgageFit Forums.
As jerry said there are some debts that do not gets wiped off even if you file bankruptcy like back child support, certain kind of tax debts and alimony.
Student loans will also not get discharged unless you are able to show that repaying the loan will be a undue burden. And believe me this is a very tough standard to achieve.
Posted: Wed Nov 23, 2005 11:52 pm Post subject: Step by step synopsis of the bankruptcy process
The New Bankruptcy Law requires a debtor to attend credit counseling sessions for 6 months before filing a petition. The bankruptcy lawyer assists the debtor in finding out a suitable credit counselor.
Steps in the bankruptcy process:
The debtor files a petition, that is, either Chapter 7 or Chapter 13 with the bankruptcy court. A stay order is issued by the court so that all collection actions by creditors are stopped. The wages of the debtor cannot be cut down and no legal action can be taken against him.
The clerk informs the creditors that the debtor has filed bankruptcy.
At least 7 days prior to the 341 meeting, debtors must provide the trustee a copy of a tax return for the time period for which the return has been due most recently.
The creditors and the debtors attend a meeting with the court (341 meeting), although it is not mandatory for the creditors to participate in the meeting.
In case of Chapter 7 bankruptcy, the trustee sells off the non-exempt assets of the debtor for paying off the creditors. Whereas with a chapter 13 bankruptcy the court reviews a repayment plan for debtors.
The debtors provide a statement of intent regarding secured property within 30 days after the completion of the first creditors' meeting. Failure to redeem the property or reaffirm the debt within 45 days after the 341 meeting makes the automatic stay order ineffective. Creditors can now take back the assets from the debtors under the provisions of the law.
Creditors of unsecured debts should file their claims after the 341 meeting.
The bankruptcy lawyer recommends a financial management course for the debtors so that they are eligible for a discharge.
In case of Chapter 7 filing, the court issues a Discharge Order within 60 to 90 days from the meeting of the creditors. But in case of Chapter 13 bankruptcy, the debtor is discharged only after he pays off his debts through a repayment plan approved by the court.
Posted: Tue Nov 29, 2005 11:05 pm Post subject: 341 meeting
Hi,
You all must have noticed that Caron has used a term as 341 meeting. I would like to explain this in detail.
In 341 meeting a creditor questions a debtor under oath by creditor or a trustee about his or her financial affairs. It is mandatory for the debtors to appear in the meeting but it is not so for creditors. If debtors don?t turn up for the meeting their case may be dismissed.
An 11U.S.C 341(a) meeting of creditors gives the opportunity to creditors and other interested parties to enquire about the debtor's financial condition.
Posted: Tue Dec 20, 2005 1:50 am Post subject: Preventing debt collection after bankrupty filing
If your creditor attempts to go for debt collection although you have been allowed an automatic stay, then you should inform him about it. You should also state in writing that you have filed bankruptcy. Also, give him the case number, filing date and a copy of the petition that can prove that you have filed the case.
If the creditor still continues to do so, then the debtor has the right to take legal action against the creditor. He can obtain a specific order from the court prohibiting the creditor from taking any further collection action. And if the creditor is willfully violating the stay, then the court may hold the creditor for contempt of court and punish the creditor by fine or imprisonment.
Such legal action brought against the creditor will be complex and will generally require representation by a qualified bankruptcy attorney.
Posted: Sat Jan 07, 2006 11:47 am Post subject: Facing Bankruptcy dismissal
Hi! Filed Chap. 13 Oct. 2003. My attorney died April 2004. HIs former partner agreed to watch over his cases. My employment changed but I kept making payments, though the date I paid monthly changed a few times. I was told this didn't matter as long as I got the payment in within each month. Because the office delays posting payments upto 3 days, some months didn't show as being paid, which promted a review of my account. They say over the life of the case there is a $1500 shortfall of what I should have paid in vs. what's been paid. My date to appear is 1/11/05 and I only have $800 of the $1500 needed by Wed. My next payday is on the 15th (13th due to the holiday). Do the courts judges ever show any leniency or will they allow the case to remain open and let me pay the balance a few days later? What recourse do I have if they throw it out? (The case would be complete by Novemebr 2006 if allowed to continue) I'm so stressed...HELP ???
Sam
