The thought of personal bankruptcy is very frightening, however over 5.4 per 1,000 people have filed for bankruptcy last year, and this rate has been growing at an average of nearly 7 percent. Researchers have determined that the primary cause of personal bankruptcy is uncontrollable levels of consumer debt oftentimes coupled with an unexpected event, such as a major medical expense not covered by insurance, the loss of a job, divorce or death of a spouse. According to economists’ surveys, the classic bankruptcy filer is a blue collar, high school graduate who is the head of a household in the lower middle-income class with heavy use of credit. In order to protect both debtor, and creditor, laws were enacted to provide equal, and fair measures to satisfy the objectives of all parties. The primary purpose of the laws of bankruptcy are: (1) to give an honest debtor a fresh start in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment. There are two types of structured plans for filing for personal bankruptcy, Chapter 7 or Chapter 13. Over two-thirds of personal filers choose Chapter 7 bankruptcy. Basically Chapter 7 requires the debtor to liquidate all non-exempt assets, and have them distributed among creditors. Some examples of exempt assets include equity in a primary residence, and a retirement program. On the other hand, Chapter 13 does not require liquidation, rather a debtor agrees to a specific payment plan, whereby a portion of any unsecured debts is paid, and the balance is forgiven. It must be stressed, that under both plans, certain debts are ineligible for bankruptcy protection. These debts include government student loans, child support, alimony, and income tax debt. These must be paid back in full. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. In an attempt to reverse the increasing trend in personal bankruptcy, the federal government has recently implemented sweeping bankruptcy reform legislation. On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. On April 20th, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Act of 2005). This act makes filing for bankruptcy more difficult through income-means testing, tougher guidelines for the homestead exemption, increased lawyer liability and required credit counseling.
Is bankruptcy an option? This is something that you should really only consider as a last chance option. Although it is possible to declare bankruptcy and still rebuild your life afterwards, you need to know the full truth before you make any solid proceedings in this direction. Bankruptcy should never be a first option for anyone looking at debt and credit problems, it should always be a last option. And even then you need to be completely certain that you are willing to take that last step and deal with the consequences that will follow. So, now that I have hopefully given you an idea of how serious you need to be to even be considering bankruptcy as an option, we can take a look at it with due seriousness. Bankruptcy What does bankruptcy mean, and how does it affect you. Well, to begin with, you need to find out the pertinent details about bankruptcy in your own area/ state/ country. The laws change from place to place, and before you look to file bankruptcy proceedings, you should ideally check things over with a lawyer or other such professional, to find out where you will stand after filing for bankruptcy. The long and short of it though, is that once you file for bankruptcy, your creditors etc, will not be able to ask you for monies, or otherwise, owed to them. This is generally know as a ‘stay’, as in a stay of all proceedings against you, which means that your creditors cannot take action against you. Once proceedings have moved along and you have been declared bankrupt according to the laws of your state or country, matters will then depend on what type of bankruptcy was declared to begin with. As I said, all laws regarding bankruptcy vary from place to place, but the there are generally two different forms of bankruptcy filings available to individuals, families etc. For businesses, the forms of bankruptcy and the outcome of what they have to do, is different. You should ideally check with a qualified person dealing with bankruptcy for more information on these. You will have been required to declare at the time of filing for bankruptcy, your debts and any assets which you posses. Generally, you will find that once you have been declared bankrupt, you are discharged from most of your debts, however, some debts will remain depending on the type of debt it is, for instance child support. Your assets, those which are not exempt from being liquidated that is, will be sold off to discharge your debts. And depending on the state/ country etc, you will not be able to file for bankruptcy proceedings again for a certain number of years. If you are thinking seriously about filing for bankruptcy, you should really get in touch with someone who knows what they are doing on this front, and get some qualified professional help to get you through the entire procedure. Remember that you need to have everything in order, and that you cannot be found to be ‘concealing’ any debts or things, as this can be constituted as fraud. There are many things that you should learn about, before you file for bankruptcy, the least of which, is what happens to you after you have been declared bankrupt.
It might seem that the hardest thing in the world to do is to secure a loan after having been declared bankrupt. In fact, there are options available to bankruptees, and those who have recently come out of that status. But when applying for a post bankruptcy personal loan, there are certain issues that need to be addressed.
There is no point in denying that bankruptcy does not have a negative effect on the status of loan applicants. Lenders are more cautious about submissions from them, but it is worth noting that they are interested mainly in understanding the reasons for bankruptcy rather than the fact itself. That is why loan approval after bankruptcy is possible.
So, what are the points to consider and factors to pay most attention to when seeking a personal loan in these circumstances? Few are really any different to normal, but qualifying for the loans in the first place usually requires some extra effort if lenders are to trust your commitment to repaying a loan is intact.
Your Negative Image
In truth, that image of irresponsibility is the first matter that needs to be addressed before applying for a post bankruptcy personal loan. While lenders are willing to hear applicants out regarding the reasons for filing for bankruptcy, they are still concerned that that route is seen as an easy option when things get difficult.
When assessing your application, lenders will take a careful look at why bankruptcy was sought, and this can affect their impression. For example, if there was a history of purchasing, it suggests a foolish attitude towards money. But if there was an unexpected redundancy, then it suggests bad luck. The latter reason is most likely not to impede the quest for loan approval after bankruptcy.
Also, setting about improving your credit rating before submitting your personal loan application can play a big part in getting the green light. This can be done by taking out a small payday loan and repaying it immediately. These are indicators rather than any grand gestures.
Other Moves To Improve Credit Rating
The issue with bankruptcy is that it effectively bans the bankruptee from securing credit deals for a period of time – usually 2 years. However, the stigma remains for up to a decade, so there is a challenge in securing a post bankruptcy personal loan.
The only reason that a payday loan might be secured is that it is granted on the back of an upcoming paycheck, with payments taken directly from the bank account of the borrower. It means the chances of default are extremely low. But there are other steps that can help to secure approval after bankruptcy.
For example, take out a secured credit card. This is easy to get as the card limit is covered by a deposit, so banks are willing to grant them despite bankruptcy. Repaying the interest every month without fail also sends the right image, thus helping when it comes to applying for a personal loan. Opening a savings account and making deposits in it regularly is also a good idea.
Use A Cosigner
Finally, arguably the best thing to do to convince a lender to grant a post bankruptcy personal loan is to find a cosigner. This is someone who promises to make repayments if the borrower is not able to make it, so there is a guarantee that the repayments will be made without fail.
If the cosigner qualifies for approval – with an excellent credit history behind them and a good income – then it is easy to secure approval after bankruptcy. However, it is essential that the right person is found – and this can be the challenge. But to get a personal loan under the circumstances, it is the best bet.
It is always a little misleading to claim that any loan application can be guaranteed approval. In truth, no loan can be guaranteed since lenders generally assess applications on their own specific merits. But there is no doubt that a loan application can be made difficult to turn down – even applications for post bankruptcy personal loans.
The fact that someone with bankruptcy on their recent credit record could secure a loan is unexpected. We are led to believe the stigma that comes with such a black mark sticks, so we have little or no loan options for at least 2 years. But getting loan approval despite bankruptcy it is possible if the right boxes are ticked.
In fact, applicants that have recently come out of their bankruptcy term actually have an advantage over other applicants. So, qualifying for and securing a personal loan is nothing to be shocked about – as long as some compromises are accepted, of course.
Qualifying For A Loan
So, how is it possible to qualify for a post bankruptcy personal loan? It is actually a lot easier than people think. For a start, as with all loans, the credit history of the applicant plays a minor role in an application process. More realistic issues take precedence.
Getting loan approval despite bankruptcy comes down to confirming a secure employment status and providing proof that the loan can be repaid. What problems there may have been to justify bankruptcy is completely irrelevant. So, if the applicant has held a full-time job for a period of 6 months prior to applying, and the income is large enough, then approval chances are strong.
Once an ability to make repayments (basically, that they have a reliable income) is confirmed, then there is little reason to deny the application for a personal loan. Besides, there is a hidden advantage that makes approval very likely.
The Hidden Advantage
It is something of a shock to know that someone who has emerged from bankruptcy can possibly have an advantage over those who have not. After all, bankruptcy effectively means that the obligation of repaying debts in full was sidestepped. But getting a post bankruptcy personal loan is arguably easier to get approved.
The reason is that because all debts have been wiped out as a result of bankruptcy, there is no existing debt to consider. It means that the debt-to-income ratio is extremely strong, and all credit commitments can be focused on the new loan. So, getting loan approval despite bankruptcy is somewhat logical.
Still, lenders are no fools, and know they can take advantage of the situation. So, despite the lack of existing credit obligations, and therefore a smaller chance of defaulting, they will still charge higher interest rates on a personal loan.
Terms To Look Forward To
So, what kind of terms can an application look forward to when seeking a post bankruptcy personal loan? The interest rate will be higher, and the size of the loan itself is usually small – usually between $3,000 and $5,000.
But it is possible to get larger loans, on condition that some security is provided. It may be provided through a type of collateral, or it could be provided as a result of a cosigner being added to the application. Whatever its form, it makes getting loan approval despite bankruptcy practically guaranteed.
It is also possible to improve personal loan terms by providing signs of credit score improvement. For example, take a deposit credit card. It is easy to get since the card with granted on the back of a cash deposit, but it helps to establish a new credit history if the interest is paid every month on time.
How To Go Bankrupt
Wondering how to go bankrupt?
This guide explains all the steps you will need to take to apply to go bankrupt.
Step 1: Make sure bankruptcy is the right option for you.
Step 2: Find out which Court you have to apply to.
Step 3: Get the bankruptcy fee and deposit together.
Step 4: Complete the bankruptcy forms.
Step 5: Take your bankruptcy forms to Court.
Step 6: Attend your bankruptcy hearing.
Step 7: You are declared bankrupt.
Step 1: Make sure bankruptcy is the right option for you
Bankruptcy can be an effective way to solve personal debt, however it should ALWAYS be considered as a LAST RESORT, and the Court will expect you to HAVE considered any alternatives that you may qualify for.
Making yourself bankrupt is a big step to take and requires expert debt advice.
If you haven’t already received advice from a bankruptcy expert and are considering how to go bankrupt, make sure you get a free and confidential assessment of whether you qualify for bankruptcy and what impact it will have on your current situation.
Step 2: Find out which Court you have to apply to
You cannot choose the court where you declare yourself bankrupt. You must attend the court within the district where you have lived for the greater part of the last 6 months. Unless you live in London, this will be your local County Court. If you have a business, or had one within the last 6 months, you will need to apply at the County Court in the area where you traded.
To go bankrupt you will first need to complete the following forms. You can get the forms, free of charge, from a local court that deals with bankruptcy.
If you live or trade in London the Court you need to use will depend on how much your debts are:
If you owe less than £100,000 you need to apply to the Central London County Court
If you owe more than £100,000 you need to apply to the High Court
Step 3: Get the bankruptcy fee and deposit together
This might sound ridiculous, but applying to go bankrupt is not cheap.
You have to pay the Official Receivers deposit of £525 and £180 Court fee. So the total you have to find before you can go bankrupt is £705.
If you have a low income or receive benefits you may be exempt from the court fee, allowing you to go bankrupt for £525.
Step 4: Complete the bankruptcy forms
You need to complete two forms to go bankrupt:
The bankruptcy petition (Form 6.27) – this form is your request to the Court for you to be made bankrupt and includes the reasons for your request.
The statement of affairs (Form 6.28) – this form shows all your assets (anything that belongs to you that may be used to pay your debts) and all your debts, including the names and addresses of the creditors and the amount you owe each one. on oath before an officer of the court or a solicitor.
You can get the forms, free of charge, from any court that deals with bankruptcy. You can also complete the forms on-line.
If you are dealing with a county court, the court will need the completed forms and 2 copies of each before it can accept your petition for bankruptcy. If you are taking your petition to the High Court, you won’t need any extra copies.
Step 5: Take your bankruptcy forms to Court
Now you’ve completed the forms you’ll need to take the forms to the bankruptcy court, along with two copies of each, the bankruptcy fee and the Official Receivers deposit.
When you get to court, you need to hand the forms to the bankruptcy clerk, who will check all the paperwork has been completed correctly.
The court will then either set a date and time for your bankruptcy hearing, or hear your case straight away.
Step 6: Attend your bankruptcy hearing
At your bankruptcy hearing, a District Judge will consider the bankruptcy petition to decide whether to reject your application, or to make a bankruptcy order. The court may reject your application if, for example, it thinks there is a better solution to your debt problem.
Step 7: You are declared bankrupt
If the court accepts your bankruptcy order, you’ll be officially bankrupt.
Need Bankruptcy Advice?
If you haven’t already received advice from us and are considering how to go bankrupt, you can use the online bankruptcy advice tool, which will provide you with a free and confidential assessment of whether you qualify for bankruptcy and what impact it will have on your current situation.
What happens next?
You’ll get a letter from the official receiver within 2 weeks of the court making you bankrupt. The official receiver is an officer of the court who will manage your bankruptcy at this stage.
Read this guide to what happens at the official receiver to see what happens once you are bankrupt.
If you are one of the people who are having difficulty in making ends meet such as settling bills and everyday expenses, consider declaring bankruptcy. Nonetheless, filing for one is a complicated process, so you will need the assistance of a Baltimore bankruptcy lawyer to help you go through the steps.
There are different categories of bankruptcy, hence, identifying which category suits your case is essential. If you are experiencing the following, call a bankruptcy attorney in Baltimore immediately:
– No cash flow (from your main source of income)
– Can’t pay the ongoing bills, and you are carrying a high credit card balance
– Creditors and debt collectors are calling you more often
– Your checks are starting to bounce, and you are starting to borrow from your retirement plan
– You are close to panicking on how to handle increasing debt
When to Choose a Chapter 7 Bankruptcy Attorney
If you are personally filing for bankruptcy and cannot repay your debts over time, hire the services of a Chapter 7 bankruptcy attorney. In exchange for some of your personal assets, this will give you a fresh financial start. If you are running a business and if turning it over to creditor is the only option to clear your debt, a Chapter 7 bankruptcy lawyer can be of immense assistance in this matter.
When to Hire a Chapter 11 Bankruptcy Lawyer
In comparison to a Chapter 7 bankruptcy attorney, hiring the services of a Chapter 11 bankruptcy lawyer is ideal if there are other options left aside from turning over your personal properties or businesses. This type of bankruptcy lawyer can help you create a negotiation plan with creditors on how you can pay your debt. The same goes if you own a business, because the lawyer can help you have the time to restructure your business while reorganizing your debt to be paid later in time.
Do I Really Need a Bankruptcy Lawyer?
If you are filing for bankruptcy as an individual, having a lawyer to represent you in court is not required. However, businesses with partnerships or corporations need a bankruptcy lawyer throughout the process. As a rule of thumb, employ the services of a bankruptcy attorney if you find the procedures in bankruptcy filing complicated. Moreover, a professional and seasoned bankruptcy attorney can help you protect your rights as a debtor.
Things to Expect When Working With a Bankruptcy Lawyer
It all depends on the type of bankruptcy you file. A bankruptcy lawyer can lower, settle, or reorganize your debt so that you can pay when you are able to. Usually, creditors will rather obtain a lower amount than none, so they are more than willing to provide discount from the original amount you owe them. If you are a business owner filing for a commercial bankruptcy, however, there is a chance that you will lose your business.
If you want to have a smoother process, a Baltimore bankruptcy attorney can be of immense help. He can carefully evaluate all aspects of your situation, recommend the bankruptcy type you must file and help you every step of the way.
Many debtors have the common misconception that filing for personal bankruptcy is the worst thing that they can do to their credit score. This is not the case. Your score will be substantially lower if you continue to juggle payments that you cannot afford. The late payments on multiple accounts will cause more damage than bankruptcy.
For many people, bankruptcy is the final option. However, a lot of people don’t even bother to ask bankruptcy lawyers Las Vegas for help. If you have a strong network, they can definitely help you out. Make sure you have a solid understanding of which debts can be eliminated by bankruptcy, and which ones cannot. Debts like student loans, child support or alimony payments, and taxes, are generally not discharged through bankruptcy. Bankruptcy can help if your wages are being garnished or if you have large unsecured debts, like, credit cards and utility bills.
According to the bankruptcy lawyer Las Vegas trusts, always be honest in reporting all income, assets and debts when filing bankruptcy. If you hide any financial information, whether it is intentional or accidental, you run the risk of being barred from filing bankruptcy on those debts listed in your original bankruptcy petition in the future, which means you will have no relief from your financial burdens.
You should look into and understand which debts are eligible to be written-off under bankruptcy. There are certain loans, such as student loans, that do not qualify. By understanding which debts you can write-off, you can make a better decision when trying to figure out if bankruptcy is the right choice for you.
Look for a bankruptcy lawyer in Las Vegas that belongs to the NACBA (The National Association of Consumer Bankruptcy Attorneys). When you are filing for bankruptcy, it is essential that you hire the services of an experienced and reputable bankruptcy lawyer in Las Vegas. Attorneys that are members of the NACBA, are also, members of a well-respected consumer bankruptcy organization, so you can be sure that you will be getting the best legal advice available.
If you are currently preparing for bankruptcy, you should get a copy of your credit history from all three of the credit bureaus. From there, you can make a list of all debts that you currently have. Also, make note of any debts you know of, which have not yet appeared on your reports. This list will be necessary when it comes time to file.
Ignore the people who put you down for declaring yourself bankrupt. These people cannot possible know the troubles you’ve experienced. By filing for bankruptcy you, are taking control of financial future and dealing with the mistake of your past. Remember, for every person that looks at you with disgust, there is another person looking at you admiringly.
Do not attempt to squeeze out a luxury item or vacation for yourself out of the bankruptcy process. Your debts will get looked at line by line. Anything considered a luxury purchase like jewelry, or a cruise will be something you are still left hanging with. Many folks have tried to game bankruptcy laws before. The laws are now in a place that prevents such abuse.
A good strategy from bankruptcy lawyer Las Vegas is to be cautious while filing for bankruptcy when there is an inheritance involved. The law stipulates that any inheritance is subject to the bankruptcy, if it falls within a certain range of time. Be aware of this so, that you don’t lose what’s been given to you.
Do not try and transfer assets, when you are preparing to file for a bankruptcy. Many people try to gift property to friends, and relatives to avoid losing them. This is not a good idea. You will be asked about this, and any gifted assets will have to recover.
When attempting to get a loan post-bankruptcy, the bankruptcy lawyer Las Vegas make sure for you to obtain a current copy of your credit report. Yes, your credit score will be lower following a bankruptcy discharge, but your bankruptcy should be listed on your credit report. What this does show lenders is that you do not have an outstanding credit balance, which actually makes you less of a risk when it comes to lending.
If you are trying to rebuild credit after filing for bankruptcy, you should apply for secured credit cards. The bankruptcy lawyer Las Vegas advises that these can help you establish credit, but you have to make sure that they are one of the companies that report to the major credit bureaus, since all of them do not.
Put the date for your 341 meeting with creditors on your calendar as soon as you get it, so that you don’t forget this meeting. You need to attend the 341 meeting and answer all of the trustee’s questions as honestly as possible, in order to get your debts discharged.
The bankruptcy lawyer Las Vegas goes to for service makes you understand that income tax should not be paid on any sort of debt discharge. This will save you a lot of money when it comes time to pay your taxes. Be sure to check with a tax specialist before you submit your taxes, in order to; make sure you’re within the legal boundaries.