Chapter 11 bankruptcy
Thanks to the new bankruptcy reform laws, many Americans who are overburdened by their credit card debt will no longer qualify for Chapter 7 bankruptcy protection. However, consumers need to know that an alternative exists for people to walk away from 100% of that debt, without bankruptcy, consolidation, or refinancing. The program is applicable to all major credit cards, unsecured lines-of-credit, and signature loans. The process that is used to discharge debt is based off of US Supreme Courts decisions, Title 15 United State Code (USC) section 1692, the Fair Debt Collections Practices Act, section 1601, the Fair Credit Billing Act, the Uniform Commercial Code (UCC), section 203, and numerous Banking
The first but definitely not the easiest thought that comes to most people when they are neck-deep in debt is to file bankruptcy. Filing bankruptcy seems to be the last straw left in the deluge of unpaid bills and abusive creditor calls. The situation is somewhat like this. You buy whatever catches your fancy and you thank yourself you had the blessed credit cards. It’s good as long as you are spending. When it’s bill paying time, you realize your misdoing. Abusive creditor calls may be robbing you of your sleep.
Have you been through a bankruptcy? Have you wondered whether you could possibly refinance your mortgage loan or obtain any mortgages after bankruptcy? You will be pleased to learn that there are mortgage lenders that will help you obtain a mortgage loan and even save you money by lowering your monthly payments. Local mortgage lenders are ready to help you find the best refinancing package available for your special circumstances. Having to file a bankruptcy does not have to mean you are stuck with a high interest rate and less than desirable mortgage terms.
A law that provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors is called Bankruptcy. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. The new bankruptcy law is now in effect, the landscape has changed for those who are considering bankruptcy. All debtors will have to get credit counseling before they can file a bankruptcy case.
Understanding bankruptcy laws
Many people who have filed bankruptcy in the past apply for credit the wrong way. They fill out a credit application and hope for the best. Best case, they probably end up paying a lot more in interest and finance charges – hundreds or even thousands of dollars more, depending on what they’re buying. That said, in this article we are going to talk about the RIGHT way to apply for credit and loans.
So what is it? There are three steps: 1) Learn how to increase your credit score 2) Know the credit approval process 3) Know how to apply for credit.
Are You Thinking About Filing For Bankruptcy Protection?
Bankruptcy, when you come right down to it, is the process that enables those who are unable to pay their debts get a fresh start. It allows for some or all of these debts to be discharged or reorganized. Individuals or businesses may file bankruptcy.
This enables you to clean the slate and get a 2nd chance with your finances. In most instances, bankruptcy provides a fair method for compensating your creditors as well.
The bankruptcy process need not be your worst nightmare. However, there are certain requirements that must be met. You will be required to file a list of all of your outstanding debts and a complete list of your assets. This is done with the help of your lawyer thru the Federal Courts.
To make this process easier to understand, your “Assets” fall into two categories.
They are: Exempt and Non-Exempt
Exempt assets are the property or belongings that you do NOT have to use to pay off the debts you have incurred.
In other words, exempt assets are off the table, (not in play) and may not be touched by your creditors. In most instances this includes a certain amount of equity in your home, and some of the equity in a vehicle. For the most part, your clothing, and other personal items are deemed exempt. This does not include the expensive jewelry, furs and the big boys toys.
Next, you will be assigned a “trustee” by the Federal Bankruptcy Court to administer the payment of your debts. Your debts also fall into two categories. They are: Secured debts and Unsecured debts.
A Secured debt is one in which the creditor retains a “security interest.” Most often it is the same property that was purchased with the credit that creditor extended. Secured debts occupy the first position. This means they enjoy priority over non-secured debts, and must be satisfied first.
If you are unable to pay off secured debts, the creditor has the option to repossess that property and sell it. If there is any “short fall” that remaining debt is now considered unsecured. It doesn’t go away, it has only changed from secured to unsecured.
Once you have filed for protection, the court will issue an “automatic stay”. This stops your creditors in their tracks. They may not take additional action against you beyond the bankruptcy.
This allows you to avert impending repossessions and foreclosures.
In Chapter 7 Bankruptcy you are in fact liquidating your assets. This means that you are only permitted to keep “exempt” property. The remaining non-exempt property will be sold to the highest bidder. The proceeds of the sale are applied to the outstanding debt. The shortfall or amount left unpaid by the sale is then discharged.
In Chapter 7 Bankruptcy there are a few debts that are not dischargeable. They include taxes, back child support, DWI fines and student loans.
In Chapter 13 Bankruptcy you are trying to regroup, recoup and get back on track. It is commonly known as the “reorganization bankruptcy for individuals.”
Individuals who want to pay off their debt over a period of three to five years file Chapter 13 bankruptcy.
Chapter 11 Bankruptcy is commonly used as the reorganization tool for businesses. This kind of bankruptcy is attractive if you own “non-exempt” property that you want to protect. Chapter 11 will also help you to catch up on bills that have fallen into arrears. It effectively blocks an impending repossession or foreclosure.
Not everyone is eligible for a Chapter 13 bankruptcy. You must have a reliable source of income that is sufficient to pay your reasonable everyday expenses and still have an amount of positive cash flow with which you begin paying off past due bills.
If you file a Chapter 13 you are required to submit a plan to repay your debts that includes a set timeframe and set amounts to be repaid. Upon approval of the bankruptcy court, both parties (debtors & creditors) are obliged to accept the terms of the order
What To Do Now
Choosing your bankruptcy lawyer is an important decision.
This beginning process allows you to evaluate and determine your best course of action. This discussion is also your opportunity to satisfy yourself that the sponsoring attorney’s fees are reasonable for your type of case.
Am I Making The Right Decision?
In all likelihood you are stressed and feeling the pressure to seek professional help with your finances. Your decision to look for an experienced bankruptcy attorney may be the best financial decision you have made in a long time.
Even taking the beginning steps to consult with an attorney takes enormous courage. You may even be thinking about struggling through all the mess on your own. That could be a very lonely path.
Before you make the decision to go it alone, ask yourself a few questions. If two or more of these are you, then it could be the perfect time to seek the services of a bankruptcy professional.
receiving harassing or threatening phone calls from people you owe?
paying the minimum payment possible on your credit cards?
taking out Payday Loans?
begging for loans from friends and family?
about to lose your job?
behind in your taxes?
receiving foreclosure notices?
behind in child support or alimony?
gambling to try and make ends meet?
sick and unable to even go to work?
If your answers indicate that you are in financial deep water, bankruptcy may be your best solution, but you will never know for sure until you get the advice of an attorney.
How Will Bankruptcy Effect My Life? Your Bankruptcy Attorney will be able to explain some other very important considerations.
What happens after bankruptcy?
What will my life be like?
Will I ever be able to get credit again?
How do I live within a budget?
How do I start all over?
How do I rebuild my credit?
If these nagging questions are on your mind, then a bankruptcy attorney is right for you.
It is true. A bankruptcy can be a persistent source of blemishes on your credit report for up to 10 years. The good news is you are able to start re-establishing your credit the moment your case is closed.
How good is your present report? It is probably already suffering the consequences of late payments, delinquencies and every other known credit report disorder.
Think about this. Your credit score could actually improve due to the elimination of most of your debt. Lenders actually believe that you are a better credit risk now since they know that you may not file bankruptcy again for another six years.
At about 18 months to 24 months into your bankruptcy you will even be able to qualify for a new home loan if you are able to come up with a minimum down payment backed up with proof of income that supports the debt service.
Auto loans are available to individuals upon discharge of your existing debt. And believe it or not you will start receiving offers for credit almost immediately. But “caution” is the watchword at this critical point in time.
The offers of credit could have been what got you into trouble in the first place.
If you have a recent bankruptcy but need an auto loan, you may be surprised at how easy it still can be to get approved for an auto loan. Because the bank can protect themselves by using the vehicle as collateral for the loan, it’s much easier to get vehicle financing with past credit problems than it is to get a new credit card or another kind of unsecured loan. There are many finance companies online competing for your business, to finance your vehicle. Just beware of unethical lending practices. People with bad credit are often prey to lending scams. Bad credit borrowers have fewer lending options than other borrowers
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Filing bankruptcy is a stressful time in a person’s life. Along with discharging your debts and gaining a fresh start, you may wonder if you will be able to buy a home after a bankruptcy. The answer is yes! Mortgage companies and online lenders are now offering home loans for those who have a bankruptcy on their credit report. Some lenders will even approve your loan as soon as one day after your bankruptcy has been discharged. Buying a home after bankruptcy is no longer impossible.
Many people who have filed bankruptcy in the past apply for credit the wrong way.
They fill out a credit application and hope for the best. Best case, they probably end up paying a lot more in interest and finance charges – hundreds or even thousands of dollars more, depending on what they’re buying.
That said, in this article we are going to talk about the RIGHT way to apply for credit and loans. So what is it? Well there are three steps:
1) Learn how to increase your credit score
2) Know the credit approval process
3) Know how to apply for credit and loans
Now, you want to get all three of these steps right. Not just one or two, but all THREE! See if you miss one, or don’t do it just right, you can end up paying $100s, $1,000s or $10,000s in additional interest and finance charges, depending on what you’re financing.
Here are the three steps in more detail…
Step One: Learn how to increase your credit score.
Increasing your credit score is a key factor in lowering the interest rate you pay on loans and getting approved for them as well. Unfortunately, there are a lot of myths out there that can actually hurt your credit score.
There a number of ways to increase your credit score. One way is to watch your credit card balances. Lenders don’t like to see them go above 50% of the available credit limit.
For example, if you have a credit limit of $3,000 and you’re current balancing owing is $1,800 (60%) that can hurt your credit score. In this situation, there are two ways you can fix the problem.
First, of course, is to pay the balance down so that it’s less than 50% of the credit limit. The other way is to get a credit limit increase:
If you can get a credit limit increase to $5,000 that will means you will be at less than 50% of your credit limit ($1,800 balance versus $5,000 credit limit). And you didn’t have to pay down the balance by a penny!
Another way to increase your credit score is to add years of positive credit history to your account. Most people don’t know about this and it’s 100% legal. But that’s another article in itself.
The point I am trying to make is that there are a number of strategies you can use to increase your credit score. Best of all, many of them can be implemented quickly and easily.
Step Two: Know the credit approval process
What do potential lenders look for? Here you need to know the questions to ask. For example, do they work with people who have had a bankruptcy in the past? What is the minimum credit score they want to see? These are just the initial questions.
There are a number of other questions. There are also a number of items that send up red flags if a lender sees them on your credit application – ones that could jeopardize your chances of qualifying for the loan or cost you more money in interest.
Another factor when applying for credit and loans is timing. You don’t want to apply for credit and loans until you’ve increased your credit score (most people make this mistake).
That brings us to step three…
Step 3: Know how to apply for credit and loans.
Knowing which lenders to approach and how to negotiate with them is also really important.
Apply for a loan or credit with the WRONG lender and you’re practically guaranteed to be turned down; or, you end up paying a pile of interest.
Then there’s there is the negotiation process. This especially important when you’re buying a car – for example, people will spend a lot of time negotiating the price of the car they’re buying and the value of their trade in (if they have one) – and STILL be taken advantage of. They don’t know how to REALLY negotiate for a car.
Think about it. How often do you buy a car? If you are like most of people it’s probably once every so many years. Now, how many times a day do you think a busy car dealership negotiates with buyers? Multiply that by weeks, months and years and you can see that they have slightly more experience.
You should now have an idea of the RIGHT way to apply for credit after bankruptcy. Though I wasn’t able to go into detail on ALL of the strategies you can use to increase your credit score and qualify for credit and loans at more reasonable rates this should at least give you a starting point.
An Attorney Can Help You Save Your Home
It is never the wish of home owners to face foreclosure. The pain of losing your home can be utterly traumatizing. In order to retain your property, you ought to act swiftly. You need to seek the assistance of a foreclosure attorney as soon as possible. Your attorney shall help you follow the legal procedure that can save your property. So what does a foreclosure attorney do for you? Or better still, how does a real estate lawyer prevent foreclosure? These are some of the key questions that individuals always ask before deciding to hire an attorney. Consider hiring a lawyer for the following reasons.
Brokering Negotiations On Your Behalf
You may need to negotiate with your lender to save your property. For this reason, you ought to know if you are eligible for negotiations before your home is taken away from you. A knowledgeable lawyer will exhaust all the possible options to make certain that a solution is found. Let someone who is skilled in this field guide you through the whole process. He/she will make an excellent intermediary between you and your lender. With proper negotiations, you stand a higher chance of saving your home.
Protecting Your Legal Rights
Fighting foreclosure may end up in court. Sadly enough, there is a high chance of you losing if you do not seek the help of an attorney. Your lawyer will ensure that your legal rights are not violated in any way throughout the hearing. You also need to be provided with the legal defense needed to see you through this complex procedure. You can also count on him/her for moral support as you fight to retain your property too. Many people who face foreclose feel fear and shame. Since they are being overwhelmed with worry and distress, the need for emotional and competent legal support is critical.
Better Understanding Of Mortgage Terms
Most home buyers may not be conversant with mortgage terms. This is why you need an individual who is experienced in this field to guide you on what to do. Lawyers are an excellent source of information concerning foreclosure. You may confirm from them any contentious issue during this trying moment. Getting legal advice from a skilled individual will guide you along the right path when your home is threatened by foreclosure.
Countering The Attorneys From Your Lender
This Attorney Won’t Stop Until You Settle Or Lose
Your lender will definitely hire lawyers to face you in court. Be assured that lenders hire some of the best lawyers money can buy. You also need to hire a legal representative with adequate experience to counteract them in court. Since you can never beat a legal dream team from your lender, your only chance for a fair fight is by hiring an experienced legal adviser. You greatly increase your risk of losing the case if you decide to face this matter alone.
Avoiding Unnecessary Implications
There are numerous things that may go sour during foreclosure. In addition to losing your property, you may also end up soiling your credit rating. This greatly depends on the laws of your state. Being that your lawyer has been handling such cases for numerous clients, he/she must have adequate knowledge on how to handle the whole situation. You can also avoid being sued with the assistance of a legal adviser.
Finding Other Alternatives
You may have other alternatives that you can explore to avoid foreclosure. Some of these alternatives exist but you can never know unless they are explained to you by your lawyer. There are options like restructuring the mortgage, engaging in a negotiation process with your lender, declaring bankruptcy or arranging for a short sale. All these are options that you may explore but only with the help of an expert. Your lawyer will help you pick the one that best matches your case.
Slowing Down The Whole Process
Help with foreclosure can come in different ways. The process can be slowed down to give you enough time to see what you can do next. Lawyers are very tactical when it comes to identifying ways that work perfectly in delaying the whole process. With an appropriate consultation, you can come up with a more comprehensive solution to the foreclosure, such as debt re-negotiations, debt resettlement plans, interest rate modifications, or changing the terms of your mortgage.
Understanding Foreclosure Laws
States have different foreclosure laws. Your lawyer will teach you the specific laws that apply to your state. This will also serve to give you a rough idea of the whole procedure. In general, the assistance of a foreclosure lawyer is a must. He or she can help you avoid the numerous frustrations that stem from this scary time.