March 5th, 2007
In order to begin your bankruptcy petition you will need to have many types of information readily available and organized in one place. The following checklist will give you a good start as to what you will need when you sit down to fill out the paperwork either by yourself or with the help of a paralegal or bankruptcy attorney.
- Copies of your federal and state tax returns for the past two years
- Copies of your last two paycheck stubs
- Your Social Security number
- List of all the bills you owe, a recent statement from each creditor would be best
- History of residential addresses for the past six years
- Copies of the deed or mortgage papers for any real estate you own
- Appraisals of any property you have including non real-estate items like jewelry, furst, etc
- List of all your bank accounts including a recent statement from each
- Safe deposit box information if you have one
- All insurance policies including homeowners and life
- Information regarding all of your investments including stocks and bonds
- Copies of any leases or other promissory notes from the past three years
Posted in Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy | Comments Off
March 5th, 2007
You may be considering protection under chapter 7 or chapter 13 of the United States Bankruptcy Code but have you considered the alternatives to bankruptcy? Depending on the depth of your financial bind, there may be a viable alternative to filing for bankruptcy. The first and most commonly considered alternative to filing for bankruptcy is non-profit credit counseling.
You may ask what credit counseling is, it’s really quite simple, you work one-on-one with a credit counselor to pay off all of your bills with a single monthly payment that is distributed among your creditors. A non-profit credit counseling organization usually has a working relationship with most of the nation’s creditors and can work to reduce or even stop your interest rate during the repayment period. When you meet with the credit counselor you will have a plan laid out from the beginning that shows your monthly payment, how it is disbursed among the creditors, and the amount of time you will be in the program. If you complete the program successfully at the culmination of the counseling period you will be debt-free. There are some negative aspects to credit counseling such as the fact that you will usually have to close any of your credit card accounts; it likely stays on your credit report for an extended period of time, and others. It is imperative that you completely research the pros and cons of a non-profit credit counseling service.
Another alternative to filing for bankruptcy is to secure a debt-consolidation loan. If you are a homeowner this usually comes in the form of a home equity loan or a home equity line of credit. The financial institution will determine your creditworthiness and ability to repay the loan in determining approval. If you are approved the financial institution will pay off the debt that you have listed and then you only have one payment to make. As with non-profit credit counseling there are also some downsides that you will want to research thoroughly. You will be taking unsecured debt and making it secured debt, placing your house up as collateral. You will also be extended the repayment period as most home equity loans are for a period of ten years, fifteen years, or even longer.
Not an ideal option, but another alternative is transferring all of your unsecured debt onto one credit card with a balance transfer option. Depending on the amount of your debt, the line of credit you have available on a card and the balance transfer options this may be ideal for you. Many credit card companies are offering a lifetime fixed low balance on balance transfer offers. However this option usually does not reduce your monthly debt burden but it can lower your overall interest rate plus it gives you an instant snapshot of your debt as it’s all in one place.
Posted in Bankruptcy Alternatives | Comments Off
March 5th, 2007
Filing a bankruptcy under chapter 13 of the bankruptcy code allows for individuals to undergo a financial reorganization which is supervised by a federal bankruptcy court. The purpose of a chapter 13 bankruptcy versus a chapter 7 bankruptcy is it allows an income-receiving debtor to keep some assets that would be liquidated under a chapter 7 bankruptcy. Individuals who are earning a regular income and have less than $250,000 in unsecured debt and less than $750,000 in secured debt may be eligible to file for chapter 13 bankruptcy.
A chapter 13 bankruptcy usually includes a repayment period of 36 months. The court will determine the amount of your payments and you will make that amount to the trustee every month for that entire period. It is imperative to understand that if you miss even one payment your bankruptcy will be dismissed and you will no longer be protected under the laws of a chapter 13 bankruptcy. At the end of the 36 month period your unsecured debts will be discharged, regardless of the remaining balance. A benefit of a chapter 13 bankruptcy over a chapter 7 bankruptcy is it is typically removed from your credit report more quickly; seven years after you’re initially file versus ten years for a chapter 7 bankruptcy.
Posted in Chapter 13 Bankruptcy | Comments Off
March 5th, 2007
Let’s start off with discussing what a Chapter 7 bankruptcy is. A chapter 7 bankruptcy is basically a liquidation proceeding. The debtor will turn over all of their non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the various creditors listed in the bankruptcy paperwork. Bankruptcy laws do vary by state so please be sure to check with a licensed bankruptcy attorney in the state in which you will file.
In order to file for a chapter 7 bankruptcy you must reside, have a place of business, or property in the United States plus you must not have been granted a Chapter 7 discharge within the past six years or have completed a chapter 13 repayment plan. Additionally you must not have had a bankruptcy filing dismissed for cause within the past six months and you must pass a means test.
So now that you understand what a chapter 7 bankruptcy is and what qualifications you must have to file, let’s look a bit more about why people would need to file for chapter 7 bankruptcy. There are many reasons, and they vary by person, but the most common reasons are unemployment, very large medical expenses, marital problems, and any other type of unexpected but large expense.
The bankruptcy laws changed in 2005 and now all petitioners are required to attend debt counseling courses within six months prior to filing for protection under the chapter 7 bankruptcy laws. To find a listing of government-approved credit counseling organizations please visit the US Trustee Program at the US Department of Justice. In addition prior to completion of the chapter 7 bankruptcy proceedings, you will also be required to complete a financial education course. The list of approved providers of personal financial management instructional courses can be found on the US Trustee website as well.
Once you file your petition for protection under the chapter 7 bankruptcy laws many creditor actions must cease and desist. This includes collection calls, foreclosure procedures, and other efforts to collect a debt. At this point having a very knowledgeable lawyer comes into play as it is time to determine what happens to your assets. There are some exemptions; we’ll cover those in our Bankruptcy Exemptions topic.
Posted in Chapter 7 Bankruptcy | Comments Off