When Someone Should Consider Filing for Bankruptcy

When faced with foreclosure, some homeowners get affected emotionally and this leads to irrational decisions as to the timing of bankruptcy filing. Knowing when to file for bankruptcy can change the game plan for you. In some scenarios, filing for bankruptcy before foreclosure, is recommended while in others, filing for bankruptcy after the foreclosure is complete can be the best option for you. Knowing the pros and cons of each approach can be an eye opener and certainly an advantage to you.

Filing for Bankruptcy

Understanding Bankruptcy Discharge and Automatic Stay

An automatic stay immediately goes into effect the moment you file for bankruptcy. The stay freezes any collection activities that may be initiated by your creditors against you. During this period, the creditors cannot take your property or money and any law suits are paused.

When at the conclusion of your case, a discharge is entered by the court, the stay is then removed and any lenders whose debts weren’t wiped out by the bankruptcy can restart the collection process. It is important to know that bankruptcy does not eliminate all debts, but can take off quite a huge chunk.  Luckily, deficiency is among the debts bankruptcy discharges.

Scenario 1 – Filing for Bankruptcy before Foreclosure

Before foreclosure, you can file for bankruptcy and this has its unique advantages. Below are some of the situations when you should consider this option.

Loan Modification Purposes

Quite a number of clients in foreclosure want to strike loan modification agreements with their banks. If you happen to file for bankruptcy during the early stages of the foreclosure process, the foreclosure sale will be temporarily stopped by the automatic stay.

When the bankruptcy case is concluded and the court wipes out your debts, the foreclosure will then resume, but at this point, you will have ample time to negotiate with your bank for a loan modification before the foreclosure process is complete. The advantage of filing for bankruptcy early enough is that some of your debts will be discharged and this means chances of your bank approving the loan modification are high.

Relief and Peace of Mind

In case you are not interested in keeping your home, filing for bankruptcy before foreclosure sale will remove the lingering deficiency balance and this means you won’t need to worry about it once the foreclosure goes through. Even if your attempts at loan modification do not succeed, you are free to proceed with life knowing that there is nothing you owe.

More Time to Spend in Your Home

Filing for bankruptcy before a foreclosure sale brings into effect an automatic stay which prevents the progression of the sale process. This effectively lengthens the time the lender will take to sell off your house and certainly give you more time to organize yourself and spend in your house.

Chapter 13 Bankruptcy

This enables you to have an arrangement with your creditors where you remit periodic payments to them over duration of 3 to 5 years. In exchange, you keep the property. The advantage of Chapter 13 bankruptcy is that it gives you the opportunity to re-service your mortgage on a new repayment plan. This is an opportunity you will not have had if you had filed for bankruptcy after the foreclosure sale.

Scenario 2 – Filing for Bankruptcy after Foreclosure

On the flipside, it may also be advantageous for you depending on your unique situations to file for bankruptcy after the foreclosure sale goes through. Below are some of the situations where adopting this approach is recommended.

Condominium or Homeowner’s Association Dues Payment

If your condominium or Homeowner’s Association dues are assessed prior to filing for bankruptcy, you are not liable for payment. This means filing for bankruptcy after the foreclosure process is complete puts you in a safe position with regard to the payment of dues assessed after the filing. This is because the property does not any longer appear in your name. The dues assessed before you file will be effectively discharged.

Filing for Bankruptcy to Avoid a Deficiency

If your motivation for filing for bankruptcy is mainly to get away from your mortgage deficiency, filing before the foreclosure sale may not be helpful to you. Inasmuch as the bankruptcy discharges your liability to mortgage deficiency, there are situations where you may still avoid deficiency liability without bankruptcy.

For instance, some state laws bar mortgage lenders from initiating legal charges against previous homeowners for deficiencies on specific types of loans. You may also benefit from waiver of deficiency particularly if you have an attorney fighting for foreclosure or you lodge a short sale application.

Foreclosure is certainly not a situation anyone would want to be in. In certain cases a short-term solution like a payday loan can help obtain financial relief and avoid default without necessarily enlarging your debt cycle. Payday loans by their very nature ought to be paid within a short duration and this can tremendously boost your credit score thus putting you in a better position when negotiating loan modifications.

Some Advice for Those Considering Bankruptcy

When you or your business is facing mounting debt, it can sometimes be hard to look at the problem head on. Other times, you’ve taken all the necessary steps like cutting down on your bills and outgoings, but it still isn’t enough. Once you believe that you’ve done everything that you can to mitigate your debt problem, your only option may be to declare bankruptcy.

Check that you fulfill the criteria for somebody that should declare bankruptcy. The American Bankruptcy Institute suggests that people who have experienced wage garnishing should file. Also, those people who have unsecured debts on credit cards should consider. As well as those who are suffering harassment by debt collection agencies or are subject to legal action. For more advice head to http://dovebankruptcylaw.com/.

So what advice is out there?

Evaluate Your Financial Situation

The first thing that you need to do is take stock of exactly where you are financial. Bankruptcy should be a last resort, so it’s worth checking whether there is anything you can do right now to pull back from the brink.

Even if you can’t resolve the problem because the debts are too big and the income too small, you can try to find out what went wrong in the first place. Was it just frivolous spending? Have you not effectively budgeted for unforeseen expenses?

Get A credit Report

If you go to www.annualcreditreport.com you can get a report on who you owe what money. Remember, bankruptcy doesn’t actually clear the record of debts itself even if creditors are no longer contacting you.

And here’s the problem. If you begin the process of filing, but don’t include all your creditors you won’t clear the debt and you’ll have to restart proceedings. Bad news.

Tell Your Creditors You’re Filing

When you file you should inform all your creditors of your decision. Tell them the name of your attorney and the district in which you’re filing.

The law requires that they stop all forms of debt collection correspondence with you if your petition is successful. This includes phone calls, letters, and emails.

Go For Credit Counseling

In the US, it’s a legal requirement for those filing for bankruptcy to undergo credit counseling. This is usually with a government-certified counseling agency. A good idea is to do this sooner rather than later so that you don’t hold up bankruptcy proceedings. Most people try to do this about six months before their day in court in order to prevent any legal hurdles.

Plus, it’s usually a good idea to find out what the original problem was. Perhaps the reasons were purely financial. Perhaps bankruptcy was the result of addiction or some other compulsion to spend. Getting to the bottom of the problem means that you’re less likely to suffer in the future.

Find A Legal Representative

Finding the right person to represent you in court is important. It’s risky to file for bankruptcy on your own. They will be able to take you through all of the costs and benefits, and tell you when is the best time to file.

To Go For Debt Settlement or File Bankruptcy – What To Choose?

Today, there are many alternatives available to replace the process of filing bankruptcy as an answer to eliminating an oversized quantity of debt. One of the alternatives is the debt settlement process. Debt settlement may be a method of reducing your debt amount to a final amount that is to be paid for settling a debt, once and for all. Over the past few years many have tried to make use of debt settlement as a way out and to avoid filing bankruptcy. There are pros when it comes to bankruptcy filing process, however there are cons too.

Most people who use debt settlement may assume hypothetically that their debts will not ruin their credit. But, here’s the thing if a person is already tapped out on all their market credit, their debt ratios become bad and it will scale back their credit score by a huge margin.

To file or not file for bankruptcy

Sometimes there are some quite advantages of filing bankruptcy for the individual’s personal scenario. There also are times when the bankruptcy lawyer can tell the person that bankruptcy isn’t a viable option for them. The choice to file bankruptcy may be a serious one and might impact one’s future if it’s done without the situation really warranting it. In most cases, for somebody that encompasses a bit of debt it’s far better to settle the balance and lower it down with the creditors than to file for bankruptcy.

There are many alternatives that are doing the rounds in the market for people attempting to pay off their debt. Some firms are getting to find you defaulting on their loans or their credit card accounts. This does not just ruin their credit rating however it also can cause a lot of trouble for themselves with many pending lawsuits.

Proper debt settlement is the key

You can try a lot of options available out there but be warned that it might even lead you farther into debt. The most rational and practical approach in this situation is get all of help you get. A professional debt settlement company can actually assist you with this method.

According to Top Ten Reviews, these settlement companies will be ready to discuss the terms and conditions with tough lenders or creditors and create a reimbursement set up that will work with both the parties. You may not be an expert and it isn’t advisable to settle your debts by yourself without taking a professional help because, this will only lead to further problems and monetary complications for you.

This method will definitely help you to scale back the debt that went out of control. You can be free for any debts once and for all. When you think that your debts have gone out of hand and you can never be able to manage it by yourself without some professional intervention like the debt settlement companies.

Some of these firms are allowing to do your payments for each and every month however not all of them are onboard with this plan. You can estimate a settlement deal however it should be that they need to come up with the complete balance before the set cut-off date. Firms that are already defaulting on loans and alternative payments won’t typically have the complete balance.

Every debt settlement company can work with every one of the company therefore it becomes necessary that they properly comprehend each and every debt they need. They have to understand to which creditors you owe debts and the way several accounts they need with them. They will have to perceive each and every bill that is in collections whatsoever.

Finding the right debt settlement company

Many times, according to Top Ten Reviews, the debt settlement companies can estimate deals that are pretty reasonable for you and your interest. These professional companies also assist you through the entire method too. Debt settlement is a great concept; however you must know how to use the process to your strength.

Some of the look on this might need cutting several of the expenses that a corporation has. If they are paying for services that are inessential, they will actually get to cut the unwanted expenses. Settling the debts for your company is nothing different. You just have to go for professional help and follow their lead as to how to settle the debts that can prove to be advantageous for you.

There are several things that have to be considered before you even try thinking of settling your debts with the help of a professional. Most are still in the denial stage like they don’t accept the fact that settling the debt is actually beneficial not it’s opposite. The debt settlement companies constantly watch the changing trends for debt settlements while being operational at the same time.

This can be extraordinarily necessary as a result of they need to be ready to cut back on their debt too. Debt settlement negotiation goes to be one thing that’s tough to grasp for a few individuals.

How To Avoid Bankruptcy When You've Run Out Of Options

how to avoid bankruptcyEven though American consumers may believe that they have run out of options, there may be a few left that they haven’t considered. It would be to their advantage to look into these other options because bankruptcy can have a devastating affect on their credit. Once the bankruptcy is on their credit reports, they will feel the effects for at least seven years.

Sell Personal Items Online

Obtaining a payday loan may help some people, but it might not be enough to cover the entire debt. If this is the case, people have many ways in which to sell things that they no longer need in addition to obtaining a payday loan. Several auction websites allow people to place their unwanted items for sale to the public, or they can choose to write a description for the online classified ads. They will empty their living spaces of clutter as well as earn money they desperately need to avoid bankruptcy.

Negotiate with Creditors

Creditors don’t want their clients to file for bankruptcy. If they do, these creditors’ accounts may be discharged, and their clients won’t be required to pay back these debts. This gives these clients an opportunity to negotiate with their creditors so that the debtors’ monthly payments can be lowered. Once these creditors understand that their clients are experiencing financial difficulties, they may agree to lower the interest rate so that the payments can be lower.

Seek Credit Counseling

Sometimes, it doesn’t work to suggest that bankruptcy may be in the future. Creditors can still refuse to work with their clients to find an equitable solution. In this case, these consumers can enlist the help of a credit counselor. Credit counselors have a vast amount of experience in negotiating with their clients’ creditors, and they will have a better chance of succeeding at easing their clients’ debts.

Obtain a Payday Loan

Instead of rushing to to the nearest bankruptcy attorney’s office, lenders like Power Finance Dallas among others are available to help those with poor credit history. Such companies understand that people in need don’t necessarily have the best credit histories, so they never ask to do a credit check. Applicants can receive as much as $1,000, and they will know whether or not they have been approved in one minute. If your situation makes it difficult to get a bank loan, you might need to look into getting a payday loan San Antonio TX for short-term financing.

How to Create a Long Term Debt Management Plan

Paying off debt can seem like a losing battle, but it doesn’t have to be. Student loans, credit cards, car loans, medical bills, old debts and home mortgages can all be paid off within a reasonable timeframe. The trick is knowing how to do it and figuring out what works best for you. There may be a little bit of trial and error involved, but the key factors to remember are to keep track of your income, manage your expenses, cut back where you can and put your surplus cash towards your outstanding debts.

Create a Long Term Debt Management Plan
Create a Long Term Debt Management Plan

Income

The first thing you have to do to create an effective debt management plan is to figure out how much income you or you and your spouse bring in per month. The reason for this is simple. If you don’t earn more money than you need, you will never get out of debt and may even end up falling further behind.

The easiest way to calculate your income is to figure out your average take-home check and multiple it by the number of times you get paid every month. This is more accurate than taking your salary and dividing it by 12. If you get paid biweekly, two months out of the year, you get paid three times which skews your average monthly income and doesn’t include the taxes that are taken out of your check each pay period which can drastically alter the amount of income you think you have available to pay off your debts.

For example, if you make $25,000 a year that averages to $2,083 per month, but that’s not your take-home pay, and it doesn’t give you your average monthly income if you get paid biweekly. If your overall tax rate is 23 percent, you are actually taking home $19,250 a year. That translates to $370.19 per week or $1,480 per month with biweekly pay periods. That’s quite a bit less than $2,083 per month.

Expenses

Once you’ve figured out your average monthly income, start calculating your bills including groceries, work lunches, out to eat expenses and gas for the car. Also include any habits that you regularly spend money on such as smoking, drinking, shopping and miscellaneous expenses. Add all those expenses together then multiply them by 10 percent to give yourself a monthly buffer in case you spend unintentionally overspend. Your final total represents all your monthly expenses.

Once you have your income and monthly expenses, subtract your expenses from your income. This will tell you how much money you have leftover every month to pay down your debt.

Cutting Back

If you’re in the red, or you don’t have a lot of extra income, think about ways you can cut back. Would it be cheaper to take your lunches when you go to work? Can you stop eating out altogether? Do you really use your gym membership? Can you cut back on your gas expenses and household energy expenses? Do you really need full coverage car insurance? Once you figure out what you can live without, cut those expenses and put the extra income towards paying off your debt.

Paying Down Debt

Once you know how much money you can put towards your debts, figure out how you want to pay them off. Do you want to start with the smallest balance first? Do you want to start with the largest balances first? Do you want to pay down the bills with the highest interest rates first? No matter which way you decide to start paying down your debts, stick with it. As you pay off more and more accounts, you’ll have more and more money left over to pay down your remaining accounts.

Rebuilding Your Finances Post-Bankruptcy

Bankruptcy not only affects your finances but also your credit score and we can’t deny the fact that almost everything from jobs, insurance, purchase of a home and cars to even apartment rental depends on your credit score and bankruptcy can put your credit score in very bad state. A bankruptcy will remain on your credit report for up to 10 years and can keep your FICO score low until you improve your credit score. But don’t worry, after bankruptcy, there are some real ways by using which you can improve your credit score.

Post Bankruptcy

Some of the ways to rebuild your finances after bankruptcy are:

Examine your credit report:

The first thing you need to know is about your financial condition according to your credit report.  Obtain a copy of your credit report and check for flaws and inconsistencies. Try to find out how it breaks down and identify any loopholes. You can get a free copy of your credit report every year from Equifax, Experian and Transunion.

Make payments on time:

The best way to improve your credit score is to make payments on time as most of the credit report includes information your payment history

Opt for secured card:

Getting a secured card for which you need to keep a security deposit with the issuer can help to improve your credit rating even if you don’t carry any balances on your card.

Take a loan:

After completing a year or two, post-bankruptcy, it will be better to apply for a car loan or a line of credit and repay the loan amount successfully. Getting a loan can cost you high a rate of interest to start off with but repayment will effect positively to your credit score.

Research properly before using credit repair services:

There may be the chance that some credit repair services approach you with an offer to repair your credit. Carefully examine and do research about the credit repair services before hiring them as their fees can be very expensive.

Know your credit card limits:

It will be better to know your credit cards limits and to keep your expenses below them. There are chances that you may have very low credit limit because of your credit score. Use your credit card wisely and make payment on time.

Avoid long-term loan:

Never opt for a long-term loan while improving credit score as these loans can put you in debt for a longer period and inability to repay can affect your credit score badly. In case of financial emergency opt for short term loans such as payday loans which you have to repay on your next payday.

Don’t close your accounts:

Closing of your accounts and credit card will not improve credit; instead it is going to damage your credit score badly as it decreases the amount of credit available to you.

What is Bankruptcy

Bankruptcy in simple terms means a person or organization is insolvent or is in a state of insolvency. Insolvency means the person or the organization is not in a position to repay the debts it owes to its creditors. This is mostly imposed by a court order which is being initiated by the debtors.

Let us delve a bit deeper and try and understand the origin of the very word “bankruptcy”. It is derived from the Latin word “Bancus “(which means a bench or a table) and “ruptus” (which means broken). Earlier banks referred to a bench, which the initial bankers had in the public place on which they tolled their money and wrote their bills of exchange. When a banker failed he broke his bank to advertise to the public that the individual or the organization to which the bank belonged was not able to continue the business and thus originated the word bankruptcy.What is Bankruptcy

In ancient times in countries like Greece, bankruptcy was treated very differently and if a man owed and could not pay, he and his wife, children or servants were forced into debt slavery, until the creditor recouped the losses with their collaborative physical labor. In ancient Greece debt slavery was limited to a period of five years, but the servants of the debtor could be retained beyond that stipulated time by the creditor.

As a modern legal system

Bankruptcy is a complex legal system which serves to give individuals a “fresh start” from debt. Bankruptcy not only removes the burden of excessive debt, but also helps to keep credit flowing in the economy. In most bankruptcy cases a trustee is appointed who administers the bankruptcy case by reviewing the debtor’s documentation, and attempts to sell any non-exempt property to pay off the creditors. The trustee also has to be vigilant about fraudulent conduct of business or failure to disclose relevant information on the part of the debtor and has a duty to collect as many assets as possible to pay creditors. The focus of modern insolvency legislation and debt restructuring does not aim at elimination of insolvent entities but instead focuses on remodeling of the financial and organizational structure of the debtors experiencing financial distress to aloe rehabilitation and continuation of the business.

Liquidation is by far the most common bankruptcy situation and is appropriate for individuals that cannot opt for payment plan system. However in the modern system the aim is to provide a chance to debtors to repay his debts over a period of 3 to 5 years and involves a complex reorganization of debt.

What is meant by Bankruptcy Fraud?

Bankruptcy Fraud is a white-collar-crime and involves concealment of assets, documents, conflicts of interest, fraudulent claims, false statements or declarations, and redistribution arrangements.