When To File For Bankruptcy

Nobody wants to make the decision of when to file for
bankruptcy, but at some point it may come up. Bankruptcy
has a bad effect on your credit amongst other
ramifications.


Filing bankruptcy should only be a last resort when all
other options have failed you. But when should you consider
filing for bankruptcy?

You find yourself constantly borrowing from one source of
credit to pay off another. You have begun taking cash
advances greater than $500 to pay for living expenses.


You borrow to meet regular expenses like food and utility
bills. You have stopped answering your phone because the
only calls you receive now are from creditors.


Creditors are threatening to sue you, or a suite has
already been started against you. These are signs that you
are indeed in some serious trouble. These are signs that
you may want to consider filing for bankruptcy.


Then it comes to the decision of what sort of bankruptcy
you need to file for. The most common are chapter 7 and
chapter 13. Chapter 7 has the advantage is wiping the slate
clean and setting you on a fresh start immediately. Chapter
13, you will be making payments for three to five years.


But, as stated before, you should only consider filing for
bankruptcy when you have exhausted all other avenues. There
are many various alternatives out there to be considered,
but if none are practical for your situation, then speak
with a professional bankruptcy lawyer to learn what your
choices are.

What Is The Bankruptcy Means Test?

Some people are afraid of filing for bankruptcy because of the way many of the laws have changed the processes for filing for bankruptcy, unfortunately they do not really know what they can expect from filing for bankruptcy anymore. What you should know about the affects of some of these new bankruptcy laws is that mostly it just will mean that the actual processes are more time consuming and can be much more difficult than before. As if it were not difficult enough already I know, but laws change and we have to abide by those laws. It can be frustrating when thinking about it but it really may not be as bad as you might have thought.



With the most recent of the new bankruptcy laws, most people are quite scared of this horrid means test. The new means test is only a way for them to determine which type of bankruptcy the debtor should be attempting to file for. The test requires you the debtor, to be matched up against the median state income of the state in which you will be filing for bankruptcy in. The debtors who are in fact go over this median state income would have a more difficult time in filing for a chapter 7 bankruptcy, which would put the debtor not having any other choice but to possibly have to file for chapter 13, which means that the debts have to be paid back in monthly installments as the courts see fit. Usually people will find that they are under the state median income and in this case this new law really does not affect them in any way at all.



If you are considering the possibilities of filing for bankruptcy, do not let these new laws change your mind just because you are afraid. What you should do is simple, speak with a bankruptcy attorney and he/she will be able to give you advice on the regulations and laws of your state and if you may be in any ways affected by any of these new laws when thinking of filing for bankruptcy. This law was not put into affect in order to prevent you from being able to file for bankruptcy like some people may think, it is just a little something they are trying to do to prevent bankruptcy abuse from happening.



Filing for bankruptcy is not your only option as most of you already know. Consider all of your other options before making any quick decisions on filing for bankruptcy. Some may choose to get assistance by going to a credit counselor for helpful advice on reorganizing their financial status. Others may just choose to consolidate all of their debts into one monthly payment. It does not matter how you choose to better your current financial standing, as long as you are taking the initiative in correcting these problems that are keeping you entirely too stressed out and causing you too much unnecessary mental anguish.

Types of Bankruptcy

Bankruptcy is a procedure that is designed to relieve debt

to consumers who have fallen on hard financial times and

cannot afford to pay their existing debts.



While there are many types of bankruptcy out there, the

most commonplace are chapter 7 bankruptcies and chapter 13

bankruptcies of the bankruptcy code.



Chapter 7 is the most common for the individual. It is the

complete erasing of qualifying debt. The debtor is then

released from all repayment obligations. But chapter 7

bankruptcies are not to be taken lightly.



While giving you an immediate fresh start in repairing your

finances, it remains on your credit report for 10 years.

You will be looked at as a high credit risk and financially

irresponsible.



Chapter 13 is less harmful to your credit. Though there are

still marks against you, since you will be working to repay

your debts on a payment plan, you do not look like you are

financially irresponsible, though you are still considered

a slight credit risk. Also, your qualifying assets will not

be sold with the chapter 13 bankruptcy like they would in

the chapter 7.



In 2005 an act passed legislation that now makes it more

difficult for individuals to receive a chapter 7

bankruptcies. There are now terms to be followed such as

pre-filing credit counseling and post-filing financial

education.



So when considering your file for bankruptcy, it is

important to weigh the sides between chapter 7 and chapter

13. Which one will do you more harm than good when it comes

to solving your financial problems?

Tips To Avoid Bankruptcy

When individuals or businesses cannot meet with their

financial obligations, many make the assumption that the

only solution is bankruptcy. That is not always the case

though.



If the right steps are taken from the beginning, you can

keep yourself and your family out of financial trouble and

away from bankruptcy.



First off, start by educating your children. Many of us

growing up weren’t presented with the tools and knowledge

to establish and maintain good credit and keep away from

the scare of bankruptcy.



Parents need to be honest with their children about

finances. Teaching children that hard work, no matter the

job, has its rewards and if you spend on a budget, there

will never be a fear of bankruptcy.



Establishing a budget is also key in the prevention of

bankruptcy. You cannot spend what you don’t have. Many

people today have multiple credit cards and are in essence

spending money they don’t actually have, plus more for

interest.



So much so that people are paying off credit cards with

credit cards and causing a terrible chain reaction. Spend

what you can afford, after the bills are paid.



But you will want to make sure you have something socked

away for an emergency. Something along the lines of two

thousand dollars is a good base to have stored away for an

emergency.



It is another step to take to keep out of financial

trouble. Probably the most important thing though is to

watch your bank account. Don’t get yourself into a

situation where you are overdrawn.



The fact is more than a third of adults rely on their banks

overdraft to keep them going on a month-to-month basis.

Such actions are ones that lead individuals on a path to

The Blame Game With Bankruptcy

Having to file bankruptcy is something that many people are faced with considering at one point in their lives. It is not something that can always be avoided unfortunately. The first thing that many people end up doing is pointing their fingers at who may to blame for this dreadful event that is happening. The debtors are blaming the creditors and the creditors are blaming the debtors. The fact of the matter is that there are many different reasons as to why someone may have to consider filing for bankruptcy and it does not really matter who is to blame, it is here and it is happening.



With it being so easy for some people to obtain credit, now wonder they are ending up in such huge amounts of debts that they are now faced with having the inability to pay off. For instance, I was in college, 18 yrs old, no job, got a phone call one day, it was a credit card company offering me a $500 credit limit with their company, woohoo I said, I took it without even thinking twice, it was that easy! Or, some may say, people today just have no means of self control whatsoever! This is very true in many cases, no doubt about that. They say we get ourselves into these situations by adding on debts left and right, knowing in the back of our minds that we really are not sure of how we will ever have the ability to pay these debts off. It just sounds good at the moment.



Some people may unfortunately lose their current jobs, which may lead them to having to consider filing for bankruptcy. Many people with really good jobs, raking in lots of cash consistently, end up spending lots of cash consistently and when that cash flow is no longer available, the ability of paying these debts is no longer an option. Many of us are guilty of living way beyond our means, never considering what we may do if we ended up with no job and all of this debt. Most of the time when these kind of things happen the person is faced with having to file for bankruptcy in order to relieve them of these financial strains they have gotten themselves into, without thinking.



When someone has to file for bankruptcy, no matter what the reasons may be, you know how you got in that position and you are the only person that can decide what is best for trying to improve your current situation. You can blame the creditors or your boss or the guy next door but in the end it really does not matter as long as you are now working to improve your finances. Filing bankruptcy is not your only option so make sure you think long and hard before making a decision such as this. Get online and do some research on different types of ways to help you get yourself out of the situation you are currently in, there are several different things that you can do, you just have to find the right place to look for it to get started.

Student Loans And Bankruptcy

When someone files for bankruptcy they will have the ability in clearing up most of their debts, however, most student loans will have to be paid back, even after filing for bankruptcy. These types of loans are very difficult to get out of having to pay. In order to do so, you would have to be able to prove that your finances are not substantial enough to ever make a payment and since you have filed for bankruptcy, most of your debts are paid, so this would be very difficult when trying to prove such a thing. There is almost no way out of having to pay these off.



Once you go to court about filing for bankruptcy and everything is laid out on the table, the judge is truly the only person that can decide whether or not a student loan would have to be paid off or not. It would basically boil down to his own opinion of you and your current situation, he will just use his best judgment when determining this kind of decision. If you can prove beyond a shadow of a doubt that you have always made every possible attempt in trying to take care of these payments but just absolutely do not have the funds available in doing, so then he just might, MIGHT, let you off without having to pay off a student loan. It would not be something that I would hold my breath in happening though. Most of the times, the judge will decide that this is your responsibility and some form of payment arrangement will have to be made and you must continue paying this loan until it is paid in full or atleast half, if he chooses.



In most cases when you are having difficulties paying on your student loans you could just simply talk with your lender and in being honest with them, come up with some sort of solution in getting it paid when possible. They will work with you, if you do not avoid them and if you can let them know that you have all intentions on attempting to pay them off and are willing to work with them by any means necessary. They are much more courteous than many other bill collectors that are out there. Student loans are hard to get out of paying off when filing for bankruptcy but they are one of the easier ones in getting them to agree on a payment plan that would be best suitable for your available finances.



Many people may choose another path instead of filing for bankruptcy to get out of their student loans, which normally does not work anyway. Some may choose a loan consolidation. They will have many options available to you in planning a payment arrangement of some sort with them. You may be able to pay as little as fifty dollars a month, every single month until it is paid in full. This will normally take atleast ten years or so to completely pay off. Another kind of loan consolidation would take longer, possibly up to thirty years or more. Now, imagine the interest on that sort of loan agreement, I do not recommend choosing this extended arrangement, however, some people may not have a choice other than to do it this way. Either way it goes, they will work with you, if you work with them.

Some Things You May Not Know About Bankruptcy

More people that you can imagine have had to or will have to file bankruptcy unfortunately, at some time in their life if they can not get their finances in the proper order. The rich and the poor have had to file bankruptcy, it is not just someone with no financial stability having to file for bankruptcy. It happens for many different reasons and everyone should take the time out and do the proper research on filing bankruptcy and if you are needing advice on it that your research is not helping you with, ask a bankruptcy attorney to give you the information that you are wanting in gaining knowledge on the different types of bankruptcy and helping you decide which one might be better suited for your purposes.



Some of you may be able to find the information about filing bankruptcy in libraries, researching it on the internet, asking around or they even have self help books available for helping you solve financial instabilities you have gotten yourself into one way or another. You do not have to jump into filing bankruptcy just because you are at panic as to what to do with the amount of debts you owe the creditors. Take the time to look at all other possible options before deciding to file for bankruptcy, you may find another way to get your finances back on the right track.



Keep in mind that there are different laws that apply to filing bankruptcy, depending on which state you live in or even which country you live in. Gaining the proper knowledge you will need in learning more about filing bankruptcy is very important so that you do not end up making the wrong move. Filing bankruptcy is not the end of the world, however, you can expect it to follow you for several years along the way. Unfortunately many people may judge you because of having to file bankruptcy in the past. Even if your time has passed and you are trying to regain your financial status.

Many people may not want to give you loans, fearing that because bankruptcy existed in your past that you may encounter some problems when it comes to keeping your debts paid on time.



Sometimes you may have no other option but to file for bankruptcy and if that is the case, try not to let it get you down for too long and remember their are bankruptcy lawyers out there, available for your purposes and can take care of everything for you, relieving you of some of the headaches and stresses of trying to take on all of it on your own. Doing that can just be too difficult and you may not have the proper knowledge about it and end up making a big mistake in choosing the wrong type of bankruptcy that could be available for your needs. It is important to know what you are getting yourself into and having the peace of mind in knowing someone else who is educated on it is the one taking care of it all. It is far too important for you to take a chance one doing something you may regret in the end.