Many people are not sure if they should file bankruptcy or allow a foreclosure. This is not a decision which can be made easily, and is really not a straightforward case. A mortgage lender will file a foreclosure action when it is not paid its monthly mortgage payments. The only way to stop this from occurring is to pay the mortgage lender.

Understandably, most people do not want to have their car repossessed, so they make their car payments on time every month. If a person does not make their mortgage payments, they face the loss of their home through foreclosure.

Bankruptcy is a legal action filed by someone who cannot pay his debts. This action stops all civil proceedings against the debtor while the debtor is in bankruptcy. As a result, the mortgage lender is incapable of immediately continuing their foreclosure, or any other legal action. On the other hand, a mortgage lender can get around this by filing for a relief from automatic stay and proceeding with their action once the stay has been granted. Essentially, bankruptcy will not stop foreclosure, and will not allow anyone to keep a home without paying the lender. Slowing down the legal process is all that bankruptcy can achieve.

Occasionally, however, foreclosure is prevented through bankruptcy, as the latter gives person additional time in which to pay the lender and usually makes the paying easier. Bankruptcy makes a mortgage lender pause in their foreclosure efforts, and a debtor has a little extra time to raise the money.

Through bankruptcy, many unsecured debts are eliminated completely, and a person who is in debt will frequently find that they have money to pay their mortgage payments with that they didn’t before bankruptcy. A chapter 13 bankruptcy allows the debtor to pay the mortgage over a period of time through a court ordered payment plan.

However, not everyone qualifies for filing of bankruptcy in the first place, and those that do must pay sufficient legal fees. Legal bills can be quite high, and high enough that they outweigh the costs of catching up with the mortgage. Anyone considering bankruptcy to prevent foreclosure should discuss it with a lawyer. No one should attempt a complicated legal process like bankruptcy without legal aide. This article is only intended to give general information, so for more detailed information, contact a lawyer in your state.

A bankruptcy lawyer is there to represent and protect his client during the bankruptcy process which can be an extremely stressful time for many people. As the changes in the law have meant that filing for bankruptcy is now more time consuming, it means that a number of people have found themselves struggling with the process. Although the amendments to the bankruptcy law are designed to eliminate the time wasters, no other real changes have been made.

Some States also have additions to the federal code but your bankruptcy lawyer will be able to inform you about these and how they will affect your bankruptcy period. The Insolvency law is designed to protect certain things like your house and car. Very soon after you have filed for bankruptcy, you will begin to get credit offers and you will want to exercise great caution in deciding which offers to accept, and when to accept.

You will notice within a short period of time after your bankruptcy has been filed that applications for credit are already forthcoming.. What this means is that within a relatively short space of time after you become bankrupt you will start receiving credit applications but at this stage you must be very careful. This is the reason why not long after you have been made bankrupt, a whole host of companies offering credit will start contacting you, but you must be very careful at this time.

To prove this point, your lawyer should warn you about certain financial companies that contact bankrupt people and offer credit. Extreme caution is required here.

It is not because the individual is a failure looking for an easy way out of his debts as the credit companies would like you to believe. Bankruptcy is generally seen as a last resort, but as legislation continues to add changes, it will become harder for individuals to apply for bankruptcy. While there are obviously some people that want to take advantage of the bankruptcy protection system, your bankruptcy lawyer will assure you that you are just a victim of bad luck who is being given a second chance.



Thanks to Miarti Tal for contributing this article to our Bankruptcy blog:

Auto Loan After Bankruptcy

Choosing the Right Debt Settlement Company

A Google search for “Debt Help” will generate page after page of financial service companies offering different solutions to help you get out of debt. The various “Debt Help” options are generally Debt Settlement, Credit Counseling, Debt Consolidation, and Bankruptcy. In this article I will focus on Debt Settlement and what you can look out for in the consultation process to help you make your decision with confidence. For more information on Debt Settlement and how it works, please visit www.selectdebtrelief.com

Most Debt Settlement (also known as Debt Reduction) companies follow a similar process in qualifying and enrolling their clients into the program. I will break this down into 5 steps:

1. Initial Contact: Many customers will find a list of “Debt Help” companies by typing phrases into search engines such as Credit Card Debt, Get out of Debt, or Debt Relief. The initial contact will be initiated by filling out a form or calling the company directly. This first call will give you the most clues on what kind of business you are dealing with. The most important thing to remember is that Debt Settlement does not work for everybody. If a Debt Consultant makes the program sound like everyone gets accepted, you do not want to go with that organization. The only way a company can successfully reduce your debt is if you are in a financial hardship. Basically, if you don’t need the help, the program will not work because the creditors will have no reason to lower your debt amounts. If you’re current on the bills you still might qualify for debt reduction but only if you are struggling to make the minimum payments. If a Debt Consultant neglects to ask about your state of affairs and pushes you to send in your credit card statements, hang up and call a firm that cares about your specific predicament. An ethical Debt Consultant representing a reputable firm will discuss all the aspects of Debt Settlement, both positive and negative. Remember If it sounds too good to be true, it is. If the initial phone conversation is going well and you have a general understanding of how Debt Settlement works, then it is time to have the company review your credit card/loan statements or a credit report.

2. Submission of Credit Report or Statements: If a company approves you without reviewing your statements, this is a bad sign. Reputable Debt Reduction services will want to review your statements or a credit report to do a comparative analysis. Having the company review your information is part of the approval process and in no way should commit you to anything. This part of the process is crucial because the specific creditors that you are indebted to historically settle at different amounts. The amount by which a creditor will reduce your debt will vary depending on the debt settlement company, financial hardship, creditor collection practices, and credit card delinquency. The job of the Debt Reduction Company is to take everything into account and give you the most accurate quote possible. If you speak with a Debt Relief company and this step is missing, I would not recommend taking the process any further.

3. Underwriting: The underwriting (also known as approval, qualification) process is designed to ensure that only qualified applicants are being approved for the program. This is an extremely important step to a reputable Debt Settlement firm because it’s a system intended to help ensure that approved applicants make the transition to satisfied clients with the highest rate of success possible. If a company is letting everyone in the door, chances are many of these clients are getting settlements rejected by their creditors because they are not qualified to have a Debt Reduction.

4. Approval: If you are approved for a Debt Settlement program the consultant will be able to tell you how much your monthly payment is and for roughly how long it will take for you to be debt free. In the field of Debt Settlement the successful programs are usually not more that 3-4 years in length. Every creditor has a window of opportunity when they are willing to accept settlements and the vast majority will be approved within 3 and 42 months. If a company says that they can reduce your debt by fifty percent and offers you a 5 year program, be cautious. In Debt Settlement the creditors will be paid off one at a time and the possibility of legal action from the creditor increases as the debt becomes more delinquent.

5. Agreement: If the approval is within range and you would like to move forward the next step is to look at the agreement. The agreement should clearly state your monthly payment and fee schedule. Make sure to read the entire document and write down any extra questions that come up. You should be able to cancel the Debt Settlement mid-program if needed, without being responsible for future monthly payments. Of course nobody enters a Debt Settlement Program intending to cancel 10 months down the road but if something unexpected happens to your income, you need to be able to sever the relationship. If you read the agreement and it seems the opposite of what your Debt Consultant explained to you, it is not a wise idea to sign up with that company.

Now that you have found the best company for your needs focus on your new monthly payment. If you ever can afford to pay above your minimum monthly, I highly recommend doing so. Remember, the goal is to pay off this debt as fast as possible. Stay in communication with the customer service department and refer communication from your creditors to the Debt Relief Company. Before you know it the debt will be showing $0 balances and you will be on the road to financial freedom. If you ever get discouraged in the program and the anticipated 2-3 years to pay off the debt, just remember the alternative of making minimum monthly payments or the financial position you were in before the program started.



Thanks to Adam Jasa for contributing this article to our Bankruptcy blog:

Auto Loan After Bankruptcy

The term Bankruptcy means the legally declared inability of an individual or an organization to pay their credits. Involuntary bankruptcy is the situation in which the creditor may file a bankruptcy petition against a debtor to recover a portion of the amount dues him. Generally in a majority of cases, bankruptcy is initiated by the debtor known as “voluntary bankruptcy”. Bankruptcy in the United States is placed under ‘Federal jurisdiction” by the United States Constitution that enacts “uniform laws on the subject of bankruptcies throughout the United States’.

Bankruptcy cases are always filed in the U.S.bankruptcy court-an adjunct to U.S. District court. Bankruptcy cases with respect to validity of claims and exemptions are highly dependent upon State laws and therefore in many bankruptcy cases, it is often impossible to generalize bankruptcy laws across state lines.

There are six types of bankruptcy under Bankruptcy Code of the U.S code.

Chapter 7: Basic liquidation for individuals and business.

Chapter 9: Municipal bankruptcy.

Chapter 11: Rehabilitation by business debtors and also by individuals with extensive debts and assets.

Chapter 12: Rehabilitation for family farmers and fishermen.

Chapter 13: Rehabilitation for individuals with a regular source of income.

Chapter 15: Ancillary and other international cases.

The most common types of personal bankruptcy for individuals are chapter 7 and chapter 13. In chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who liquidates the property and distributes the proceeds to the debtor’s creditors. In exchange for this, the debtor is entitled to a discharge from debt unless the debtor is not guilty of certain types of inappropriate behavior like hiding records concerning financial conditions. Many individuals who are bankrupt own only exempt property. The exempt amount varies from state to state. Chapter 7 relief is available only once in any 8 year period.

In chapter 13, the debtor retains ownership and possession of all his or her assets but must devote a part of his or her future income to creditors over a period of 3 to 5 years. The amount and period vary depending upon the value of debtor’s property and the amount of debtor’s income and expenses. Secured creditors are entitled to greater payment than unsecured creditors.

There are many types of proceedings that fit under bankruptcy. Chapter 7 liquidation involves the appointment of a trustee who collects the nonexempt properties of the debtor, sells them and distributes the ties proceeds to the creditors.

Chapter 9 is a form of bankruptcy available only to municipalities.

Chapter 11 involves allowing the debtor to keep a portion of his or her property and use the future earnings to pay off creditors.

Chapter 12 is similar to chapter 13 but available only to family farmers and family fishermen in certain situations.

Chapter 15 deals with foreign companies with U.S.debts.

Bankruptcy crimes: Bankruptcy fraud is filing a bankruptcy petition in a bankruptcy case to attempt to execute or conceal a scheme or pretense to defraud. Bankruptcy fraud also means making fraudulent representation claim or response in connection with a bankruptcy case. Bankruptcy fraud is punishable by a fine or by up to 5-year imprisonment or both. Bankruptcy crimes are prosecuted by the United States attorney after a reference from the U.S trustee.

Banks and other deposit institutions, insurance companies, railroads and certain other financial institutions regulated by the federal and state governments cannot be a debtor under the bankruptcy code. Instead, special state and federal laws govern the liquidation of these companies. It is erroneous to refer to a bank or insurer as being “bankrupt’. “Insolvent”, “in liquidation” or “in receivership” would be fitting under some circumstances in the U.S context at least.



Thanks to Lesley Lyon for contributing this article to our Bankruptcy blog:

Cost Of Filing Bankruptcy

Can you answer newyorkqueens23’s question about Bankruptcy?:

When you declare in bankruptcy could your wife’s credit history be affected?
Is it only personal or affect the whole family?

Auto Loan After Bankruptcy

Can you answer canionboyd’s question about Bankruptcy?:

My family, along with their company, is being sued for nearly $2M. We, along with the company, will have to file for bankruptcy. Does bankruptcy protect some of our cash to live on, and what assets do courts typically expect to be sold off to pay the lawsuit assuming all other debts are paid?

Have you claimed your Genesis site?