New Bankruptcy Vs Debt Settlement
Personal bankruptcy is a legal procedure meant to give people with overwhelming debt a fresh start. Certain forms of debt, such as student loans are not forgiven through bankruptcy, but most unsecured debt is forgiven. This is of course more difficult to accomplish since the new bankruptcy laws were passed. Today, the court's presumption is of Chapter 13 instead of Chapter 7.
Bankruptcy's Impact on Credit
The impact of a bankruptcy to the consumer’s credit report and credit score is tremendous. Bankruptcy will often remain on one’s credit report for as long as 10 years. During this time it can be difficult or next to impossible to obtain loans or any form of credit. If you are able to find a lender who will do business with you, you can be sure that due to your bankruptcy and subsequent low credit score you will pay the highest possible interest rates allowed by law. Lawyers are eager to suggest bankruptcy, but do not always divulge how damaging it is down the line. Why would they do this? The answer is simple. If you don’t file bankruptcy, the lawyer can’t make any money. That is why we caution people to obtain independent information if they are even remotely considering bankruptcy. This way they can become informed in an unbiased manner, and not allow a bankruptcy attorney to “convince” them that they need to file bankruptcy now.
Chapter 7 Bankruptcy
There are two ways to go about filing for bankruptcy. Chapter 7 is the traditional or "straight" bankruptcy, which entails liquidating all of the consumer’s assets, depending on which state they live in. A court appointed trustee then sells the property or it is simply returned to the creditors.
With the passage of the new bankruptcy laws, the presumption by the court is of Chapter 13 bankruptcy, and not the Chapter 7 that most people prefer. The credit card companies are a very powerful lobby in Washington D.C., and they spent millions of dollars to create laws favorable to themselves in the arena of credit and consumer finance. They've purchased the United States Judicial System, through their lobbyists, to act as their debt arbitrators in bankruptcy cases.
Much More Required Documentation
Consumers who have fallen into debt are now required to submit an even more detailed income and expenses report, which includes statements, tax returns, pay stubs and even a statement regarding any anticipated additional income. The burden on the consumer filer to gather documentation necessary to file for bankruptcy had increased hugely. Further, if the documents are not filed within a 45-day period following the filing of the petition, the case is automatically dismissed.
Since the discharge of your debts through Chapter 7 bankruptcy may no longer be an option, then the Chapter 13-repayment plan may be the consumer’s only hope if considering bankruptcy. BAD IDEA.
The Debt Settlement Alternative
We have an idea for you. The Chapter 13 is a payback plan, but it will carry the same negativity as any bankruptcy filing. We invite you to become acquainted with our debt settlement program. Through our debt settlement and debt arbitration techniques, we can settle your debts for less than a Chapter 13 payment plan would cost, while at the same time saving your credit report and your credit score from the most negative mark it could possibly have. We think that after speaking with one of our counselors, you will find that our Debt Settlement program is the only logical alternative to bankruptcy.
The History of Bankruptcy
The first bankruptcy law was enacted in 1800. The Bankruptcy Reform Act was enacted in 1978. Title 11 of the United States Code is dedicated to bankruptcy in all its varied flavors. The new bankruptcy laws in the US were put into place in order to reorganize debtors in financial trouble.
Bankruptcy
Chapter 7 of the Bankruptcy Code allows for liquidation proceedings to be administered by the bankruptcy section of the courts. This means that debtor turns over all non exempt property to a case trustee assigned by the court. The case trustee then sells and converts all the properties to cash and pays back the creditors.
Subchapter 1: Defines the election procedures & duties of a trustee & creditors Committee.
Subchapter 2: Describes the relevant provisions on Collection, Liquidation and distribution of the estate, treatment of certain liens, and disposition of certain properties.
Subchapter 3: Describes the relevant provisions on Stockbroker liquidation.
Subchapter 4: Describes the relevant provisions on Commodity broker liquidation.
Subchapter 5: Describes the relevant provisions on Clearing Bank liquidation.
Chapter 7 Bankruptcy Filer Exemptions
- A chapter 7 Bankruptcy cannot be filed by anyone who has been granted a Chapter 7 within the last 6 years.
- chapter 7 Bankruptcy cannot be filed by anyone who has completed a repayment plan under Chapter 13.
- chapter 7 Bankruptcy cannot be filed by anyone whose bankruptcy filing was dismissed for cause within the last 180 days.
- chapter 7 Bankruptcy cannot be filed by anyone who tries to hide, transfer or destroy his properties in order to defraud his or her creditors or the court trustee assigned in the chapter 7 case.
- chapter 7 Bankruptcy cannot be filed by anyone who is not truthful about his financial condition or business transactions.
- chapter 7 Bankruptcy cannot be filed by anyone who defies the orders of bankruptcy court or doesn't answer questions asked to him.
Chapter 7 Bankruptcy Debt Exemptions
Not all debts are dischargeable by a Chapter 7 Bankruptcy. The following debts are not dischargeable under a Chapter 7 Bankruptcy:
- Child support
- Taxes
- Liability for injury or death caused from driving in an intoxicated state
- Student loans
- Criminal fines or penalties
- Non-dischargeable debts incurred from a previous bankruptcy.
Chapter 7 Bankruptcy Attributes
- Chapter 7 Bankruptcy Stops Collector Harassment:
After filing bankruptcy under Chapter 7, the court usually notifies your creditors. The collectors cannot keep on calling or contacting you after this. However, if this continues, the Creditor may have to take up the liability for court sanctions & attorney fees.
- Chapter 7 Bankruptcy Stops foreclosure:
Chapter 7 filing allows one to prolong a foreclosure of agreement for home mortgage, until the discharge from bankruptcy is received. The lender can also apply to the Court & request for relief from automatic stay. The best way however is to make a personal deal with the lender to keep such assets.
- Chapter 7 Bankruptcy Removes Lien:
There are provisions for removal of certain liens under Chapter 7 bankruptcy. However, bankruptcy court order is needed for such removal. Under Chapter 7 one can get rid of debts for federal income taxes only if the following conditions are met:
- No tax lien is recorded against your property by IRS.
- The tax return must be due for at least 3 years.
- The tax return should have been filed at least two years prior to the filing of bankruptcy.
- There should not be any record of fraudulent activities on your part.
- You should not have records of skipping tax payments.
- Chapter 7 Bankruptcy Removes Community Debts:
This is applicable for divorcees. Removal of dischargeable community debt, however, doesn't mean that you are cleared of the debts. This implies that the debt is transferred from your account to your ex-spouse's account.
Discriminatory & Legal Actions Based on Bankruptcy Prohibited
According to the bankruptcy laws, any debtor applying for protection under bankruptcy cannot be fired from his or her job on the basis of a bankruptcy procedure. This discrimination is prohibited by U.S. Code, Sec. 525. This protection, however is not applicable if your creditor is your employer.
Chapter 7 Bankruptcy can in no way cause you to become imprisoned. There is no "debtor's prison" in the United States. The filing of a bankruptcy is a serious financial decision and should not be considered lightly. It is always advisable to consult an attorney if you are seriously considering a bankruptcy.
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