The New Bankruptcy Laws Usher In New Challenges

The New Bankruptcy Laws Make it More Difficult to File Chapter 7 Bankruptcy

The most recent changes to bankruptcy laws might cause it to be more difficult for you to file bankruptcy. If you're in a higher income bracket you'll no longer be permitted to utilize Chapter 7 bankruptcy.  Rather, you'll have to file under Chapter 13 bankruptcy and pay back at least a few of your creditors. If you would like to file bankruptcy, you must participate in credit guidance prior to filing.  You're likewise required to go to further counseling in the discipline of budgeting and debt management.  The additional counseling is a prerequisite to receive a discharge of your debts. And, since the law imposes new requirements on attorneys, you might have a more difficult time finding a lawyer to take on your bankruptcy suit.

Modified Eligibility for Chapter 7 Bankruptcy

Under the old bankruptcy laws, you were allowed to choose the type of bankruptcy that looked best for you.  In virtually all cases that would be a Chapter 7 bankruptcy liquidation rather than a Chapter 13 bankruptcy repayment. But, if you're in a high income bracket, the new bankruptcy laws won't allow you to utilize Chapter 7 bankruptcy.

To check out whether you're able to file Chapter 7 bankruptcy under the new bankruptcy laws, you must first assess your "current monthly income" against the median income for a family of your size in your state. If your income is lower than or equivalent to the median, you'll be able to file for Chapter 7 bankruptcy. If it's more than the median, however, you must pass a new test to file for Chapter 7 bankruptcy.  The new test is called "the means test."

The purpose of the means test is to verify whether you have sufficient available income, after deducting certain permitted expenses and mandatory debt payments, to make payments on a Chapter 13 plan. To ascertain whether you pass the means test, you take off particular permitted expenses and debt payments from your current monthly income. If the money that's left after these computations is under a certain amount of money, you'll be able to file for Chapter 7.

Counseling Requirements

Before filing for bankruptcy under either Chapter 7 or Chapter 13, you must attend credit counseling with an agency approved by the United States Trustee's office. The reason for this counseling requirement is that it assists you in discovering whether you actually need to file for bankruptcy or whether an informal repayment plan will help you regain your financial stability.

Counseling is essential even if it's obvious that a repayment program isn't workable for you.  You're expected only to participate in the counseling.  You don't have to go along with any repayment plan the agency offers. Even so, before you'll be able to file bankruptcy, you'll have to deliver any repayment plan the agency offers along with a certificate evidencing that you finished the counseling.

Toward the conclusion of your bankruptcy lawsuit, you'll have to attend a different counseling session.  This counseling session is fashioned to teach you personal financial management skills. You can't obtain the discharge that wipes out your debts until you give proof to the court that you accomplished this requirement.

Lawyers Might Be Harder to Hire -- and a Lot More Pricey

The new bankruptcy laws do add many complex requirements to bankruptcy filings. Some of these brand-new requirements impose more obligations on lawyers resulting in bankruptcy cases being more time-consuming. Among the leading new demands on attorneys is that they must now personally vouch for the truth of all the information their clients give them.  That extra demand means that lawyers must spend lots of time on every bankruptcy suit.  Therefore, they'll charge more to take every bankruptcy suit.   The new bankruptcy law demands have in reality forced a few bankruptcy attorneys out of the field completely.

Many Chapter 13 Filers Will Learn to Exist on Less

When you filed Chapter 13 bankruptcy under the former bankruptcy laws,  you had to pay all of your spendable income to your repayment plan.  The old bankruptcy laws defined spendable income as that which you had leftover after paying your actual living expenses. The new bankruptcy laws have modified this computation.  While you still must turn over all of your disposable income, if your income is larger than the average in your state, you don't get to figure your spendable income based on your actual expenses.  Instead, you have to work out your spendable income using permitted expense totals defined by the IRS. And these permitted expense amounts must be deducted from your median income during the six months prior to filing bankruptcy, not from your earnings every month.

Additional Changes

There are additional changes that can impact you negatively if you're filing or looking at filing bankruptcy.  For plain-English guidance in the new bankruptcy laws, get a copy of The New Bankruptcy: Will It Work for You?

Is Bankruptcy the Right Option for You?

Current economic conditions are causing a lot of people who have never before thought about filing bankruptcy to now view it as a potential solution to their financial problems. The problem is that not everyone can be helped by filing bankruptcy.  So, if you're one of those individuals who has never, until recently, given thought to filing bankruptcy, you need to know whether bankruptcy will help you or not.

Should You Even Be Considering Filing Bankruptcy?

As crazy as it sounds, there's no general test you can take to discover whether bankruptcy is appropriate for you.  You don't need a particular level of debt.  You don't need to make less than a certain amount of money. And, you don't even need to be in arrears in payments to your creditors.

Bankruptcy isn't a decision you make by checking off boxes on a flow chart.  Bankruptcy is a individual decision.  But, it's a individual decision that's founded on specific  factors in your life.  They are some of the things you need to look at before deciding one way or the other about bankruptcy.

1. Are you in financial distress?  You may be in financial distress if you're having difficulty paying the minimum payments on your credit cards.  And, if you're scarcely able to keep necessaries like food, clothing and shelter you're probably in financial distress.

2. Do you live paycheck to paycheck?  If you had even a moderate health problem, would it place you in a financial crisis?

3. Are you judgment proof?  Put differently, do you have no assets that can be seized and sold to pay off your liabilities? You may not need to file bankruptcy if you're judgment proof.  Then again, judgments do stick around for a while.  Each state's judgment rules vary on exactly how long a judgment can hang around.  But, what you need to consider is that your current bad situation may, and in all likelihood will, get better in the future.  If it does, those judgments that were of no interest during your financial crisis will concern you because you could face the seizure of your future assets.  Most lawyers will give you a free bankruptcy consultation.  You should use it to discuss this particular issue.

4. Are creditors and collection agents harrassing you?  Bankruptcy is one choice to end that harassment.  But, you may also halt it with a letter writing campaign under the federal Fair Debt Collection Practices Act and associated state law fair debt collection laws.   But, bankruptcy is in all likelihood the easiest choice if you're getting harrassed and you're in financial distress (see #1).

5.  Are you facing foreclosure? You'll be able to block a foreclosure by filing a Chapter 13 bankruptcy.  Chapter 13 allows you to restructure your debts and pay your mortgage arrearage over time.

Will Bankruptcy Help You?

Bankruptcy won't give you more income. So, if you don't earn enough money to support your lifestyle, bankruptcy isn't your solution.  You either need to lower your expenses or increase your income.  You may even need to do both.  But, you don't need to file personal bankruptcy.

Bankruptcy also won't help if your big debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not.  The following is a concise list of several non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.

* Recent taxes and government penalties
* Child support
* Criminal fines or court ordered restitution
* Personal injury awards where the debtor was intoxicated at the time of the incident
* Debts that aren't listed in the bankruptcy filing schedule
* Student loans (there are exceptions but it's almost impossible to meet the prerequisites for them.  So, it's better to view student loans as non-dischargeable)
* Debts that were part of a preexisting bankruptcy case but weren't discharged

Concluding Considerations for Personal Bankruptcy

Making Up One's Mind whether to file bankruptcy isn't an simple decision.  But, it's a decision you'll be able to make if you adopt a reasoned and well-balanced approach to it.  As part of your consideration, you'll need to weigh your emotions, your background, your spiritual beliefs and your values.  So, consider the following:

1. Do your own research.  Read everything you can about bankruptcy.  A wonderful resource for training yourself on bankruptcy law is the book The New Banktruptcy:  Will It Work for You?

2. Keep your future in mind. Consider of how you'll feel when the case is all over and you're out from under a mass of debt.  How will you feel about yourself in 6 months or a year?  Will you be pleased with your choice to either file bankruptcy or not file bankruptcy?

3. Find the right bankruptcy attorney for you.  A good spot to find bankruptcy attorneys in your area is Legal Match.  Virtually all bankruptcy attorneys will give you a free bankruptcy consultation.  Use that free consultation to question the lawyer.  But, when you begin interviewing bankruptcy attorneys, don't base your ultimate hiring decision totally on fee.  It will be tempting to employ the most low-priced. After all, you're in a financial crisis so the cheaper the better, right?  That's not always the case.  Interview the lawyer first.  Be sure you're a good match with that attorney.  Your bankruptcy lawyer will be working for you so you need to be comfortable with the general approach to your case.  You need to feel good about the interactions you have with the lawyer and staff.  You want a bankruptcy lawyer who will assist you through this crisis in a positive mode.  You don't want to feel judgment or disfavor from either the lawyer or the staff.

4.  Filing bankruptcy is a moral decision.  Don't kid yourself into thinking it's not.  But, you do have to make the decision that's best for you and your family.  So ask yourself:  "Is it more honorable to push a losing financial battle that puts your family's future at risk in an effort to pay back old debt?"  Or, is it more honorable to recognize you did your best, you couldn't make it work and you need a clean start that will allow you to devote your personal time and effort into activities that will more than positively affect your family's future?"

Only you can answer that question.  Take your time.  Make the proper decision for you and your household.  Once you've reached that decision, trust in your ability to make the proper choice.  Then, move ahead knowing that your financial troubles will soon blow over.

Facing Foreclosure? What Do You Do?

Debt management

No one wants to face foreclosure, however there are some instances where it cannot be avoided. When facing this particular financial issue, there are a few things that you can do. Budget mismanagement and buying a home that cannot be reasonably afforded are some reasons people face foreclosure, along with other financial difficulties such as a job loss, accidents or loss of a family member.

Debt Consolidation

Facing it however does not mean you are in it so there are a few things you can do to help yourself out and be able to keep your house. First look at what can be done at the purchase of a house to prevent this situation from occurring. Payment insurance is one option. The mortgage payment is covered in the event of injury, loss of life, or financial difficulties up to a certain point. Like home owner insurance, the payment insurance is an added expense, but it can save you a lot of hassle in the long run.

{Steps to Take}

If you find yourself with the possibility of foreclosure exists after the purchase of your home, then it is necessary to consider the various options available to you. Looking over the household budget and considering where you can reduce spending is the first option. Things like subscriptions to mail order online movie rental sites, subscriptions to cable or Satellite TV provided you are not on a contract should be canceled. The added money can be enough to keep your head above water and the roof over it while you work on more permanent solutions to the problem.

Sell things off, you might be surprised what you can get for normal household items you do not even use. See what you can find when you clean out the attic, garage, or storage unit. You may find enough to make yourself a decent take on a garage sale or EBay. Contact your student loan holders to check if you qualify for deferments. The money you save from these payments can affect a big difference when facing foreclosure.

Second jobs are always an option as well if you have the time. Helping other people with errands, mowing lawns, and babysitting are ways for teenagers living at home with you can help out c. If you qualify, apply for government assistance to help with food expenses. Based on your income level, you may qualify for temporary assistance if there is any in your area. These are all things you can do when facing foreclosure.

Credit Counseling

Filing For Business Bankruptcy

All people should be aware of the abundance of information regarding filing for chapter 13 bankruptcy, and especially if you hold a business or even if you are just planning to start up a business in the near future, this information is beneficial to you.

Chapter 7 bankruptcy information would also apply here, but the chapter 13 bankruptcy information is going to be particularly important for you to be familiar with.

Things You Should Know

When talking about chapter 13 bankruptcy filing procedure information, this refers to the law that allows a borrower with a limited amount of debt and a stable income to pay off their bills under a court approved repayment schedule over a 30 to 60 month period. So from this chapter 13 bankruptcy information we can denote that only if you have a little amount of debt will you be able to go through under the chapter 13 bankruptcy law.

If you are in terrible financial trouble on the other hand, then you will need to research what your other options are since you may not be accepted for this. The plan is that you would be able to pay off all your debts under a 90 month period, and so if you owe hundreds of thousands of dollars clearly you are probably not going to be able to do that.

After looking at some of your financial records and depending on how willing you have been to pay your bills in the past the court will make a decision. They will take all of this under consideration and use it to establish whether or not they want to agree to put you on a repayment plan.

Another important piece of chapter 13 bankruptcy information involves what chapter 13 enables, and this is that it enables individuals with a regular income to develop a schedule to repay all or part of their debts. It offers numerous advantages, especially over liquidation under chapter 7. Perhaps most significantly of all, chapter 13 provides you the chance to save your home from foreclosure. This is especially important if you have a family, as you have probably lived in your home for some time now and undoubtedly want to stay away from foreclosure on the home.

One more major advantage of chapter 13 is that it will allow you to defer secured debts and extend them over the life of the chapter 13 schedule.

Although bankruptcy can undoubtedly be a blessing in some instances, you should recognize that it is not just a golden ticket out of your financial despair. You may not have to deal with all the debt and creditors as you once did, but you will acquire a giant hit to your credit and you could have most if not all of your nonexempt assets liquidated, and this includes any businesses that you may have and any credit cards that you may have. It will also remain on your credit report for up to ten years.

Legal Helpers vs Transforming Debt Into Wealth Course - A review of two popular debt elimination programs

Transforming Debt Into Wealth Review

A person deep in difficult financial situation and is desperate for a solution tends to grab the first option that is offered. This may be true but in most cases, doing so could lead to more financial disaster than a lasting solution to the problem.  A wrong choice could end up giving more headaches and stress than before.

There are many firms that you can find in the internet offering their exclusive services to help people get out of their debt.  Depending on the type and amount of debt you have some of them promise to do the job in a short time like 3 to 5 years or even a little more.

There are those who espouse the idea that you need a third party entity to help you understand the convoluted ins and outs of debt negotiation. They offer an easy and almost painless way of managing your debt for you so they are the ones to deal with your creditors instead of your self. While this maybe applicable to some, there are those who believe that with a little help from them, you could do your own negotiations and obtain favorable results.  John Cummuta and Legal Helpers are two firms that offer different solutions to the same problem.

Transforming Debt Into Wealth Review

John Cummuta is a personal finance advisor who is offering a self-help program to help you to get in charge of your life towards paying off your debt. He believes in building wealth through accelerated debt elimination. In his program called "Transforming Debt Into Wealth" he will teach you to focus on getting out of debt in 5 to 7 years and stop wasting your energy and transform spending lifestyle to that of gaining wealth instead. He challenges his clients to dream of a life without debt where they own everything, their home, their cars and everything because they are free of debt, mortgage or rent payments, car loans, and credit card payments. He wants to help you to own your life starting the moment you accept his offer.

LegalHelpers Review:

If you have no other alternative but to file for bankruptcy, Legal Helpers is one company that has experienced bankruptcy lawyers who can protect your rights. They are one of the largest consumer bankruptcy firms in the country that helps people to file for bankruptcy relief under the bankruptcy code. Legal Helpers is focused on helping consumers file for bankruptcy as stated in Chapter 7 and Chapter 13.  

This focus assures the clients that their cases are being handled by the most experienced bankruptcy attorneys in the country. The firm's reliable teams of bankruptcy lawyers can give their clients immediate protection from debt and help them find their way towards true financial stability. They can assist you in stopping those inconvenient garnishments, foreclosures, repossessions, creditor harassment and long drawn lawsuits while allowing you to keep your precious home, your car and your wages.

Read about more debt elimination plans.

These are only two viable solutions but whichever you decide to go with, make sure that you read and understand all the documents related to the procedure you are asked to undergo.  Whether you decide to do it on your own or get professional help, never let your guard down because you need to be aware of the details that can make the difference between making you pay more in interest payment over the original cost of the loan.

The Words Of Wisdom - How To Avoid Personal Bankruptcy

It is clear that almost all people would ideally like to live a life that is debt free. Debt not only affects your life it also has a major effect on your mental state. In this regard, receiving advice on how to avoid personal bankruptcy is easily the best advice someone can give.

Knowing how to avoid bankruptcy is a good way to go about your life. Being young, you often times take your financial responsibilities for granted. if not given the tools to gain knowledge early, you will soon come to realize the realities of debt and what it can do to you. It takes a small step to learn how to avoid personal bankruptcy, which is that you need to avoid debt at all costs. What this means for you is that you must always save as much as you can and avoid luxeries you know that you can pass on.

It is difficult to accept that saving small in the beginning and avoiding spending all your money will help you avoid personal bankruptcy in the future. It must be the thought of sacrificing what seems like the present time good time.

Avoiding Personal Bankruptcy to Relieve the Emotional Strain

Being sensible is the best way to avoid personal bankruptcy. This means that you should aim not to fall into the trap that is debt. The best way to do this would be to keep a monthly statement of your income and outgoings. You will be very surprised to see just where your money is going and how you can avoid spending more.

It is also a very sensible way to be in this day and age as the world economy is never stable and this will have an effect on your life in some way or the other. Personal bankruptcy can have a huge impact on your life so avoiding it will help you on the right track in life.

Already debt will have eroded your emotional self-esteem and the personal bankruptcy statistics wont do anything to comfort it either. It is never easy to say no to the things that we want and when you work hard you feel that a little treat is in order so that you can truly have some quality of life. Spending much more than you are saving will easily lead you to debt and eventually personal bankruptcy so think carefully about just where your money is going and what you are spending it on and save for the future when things may be tough.

Your Alternatives When Looking For Bankruptcy Advice

credit restoration services

Given the economic downturn, there is a flood of Americans in search of bankruptcy advice. The creditors are calling and they are at their wit's end. Many people already have destroyed credit, so they're looking for any ounce of relief to help them start over again. Since bankruptcy law is a complex web, there are many misconceptions about it.

First, let's look at some of the misconceptions that come out of bankruptcy advice. Some believe that you must be flat broke to file for bankruptcy, but the only requirement is that the debtor cannot pay the bills as they are due. Another misconception is that those who file will not be eligible for credit in the future, when in reality, the listing will be on your report for 10 years, limiting your access to credit but not outright destroying your chances at redemption. In actuality, creditors will know that you cannot file for bankruptcy again for another six years, so you're less risky than a borrower who has a low credit score from arrears accounts in collections.

When you're seeking advice about bankruptcy, be sure to double-check what can and can't be discharged. For instance, you'll still have to pay off Uncle Sam if you owe taxes for the past three years. However, if you have personal income taxes over 3 years old, then you can discharge them through bankruptcy. Fiduciary taxes cannot be discharged, nor can most student loans and liens. If you owe child support or alimony, you will still have to pay up. If you don't list debts on your bankruptcy petition, then they will not be covered. If you have debts from drunk driving or other "willful and malicious" harm, you'll still have to pay your dues. However, there are many things that can be removed when you file for bankruptcy, such as all unsecured credit card debt, wage garnishments, utility termination, fraudulent credit claims and foreclosure.

After you receive bankruptcy advice, there are a few things to consider before you file. First, be sure you can't negotiate with your creditors, reduce your balances with a settlement letter or arrange a monthly payment plan. Generally speaking, if you can only afford minimum monthly payments on your bills and cannot pay off all your balances in five years, then you should file for bankruptcy and then focus on credit restoration services.