Debt Consolidation Loan

IF you find yourself in serious debt and you cannot see a way out then you might eventually begin to consider filing for bankruptcy. Chapter 7 is the most common type of bankruptcy and this is a liquidation process. Each and every one of your non-exempt assets will be taken by the trustee, appraised and sold for profits. These profits will then be given to your creditors to pay them back at least in part for the debt that you woe them. For many people all of their assets are exempt, this is good for them and not so good for the creditors. If you are looking for a fast way to get out from under your debt then Chapter 7 is a good way to go. It is not only individuals that can benefit from filing for Chapter 7 bankruptcy, married couples and even corporations can file for Chapter 7. Do not get the impression that Chapter 7 bankruptcy is all good because it most certainly is not. While you will get rid of the majority of your debt in one fell swoop, you will also have a terrible cloud hanging over your credit report for years to come. You will not get approved for any loans or for any credit for quite some time.

If you don't care about your credit report and you just want to get on with things then you need to know how to go about it. The first thing that you need to do is file the official petition for bankruptcy, along with your schedules and your statement of financial affairs. You will be asked to list both your assets and your debts, this is the part that takes the most time as well. It does not matter how many or what kind of debts you have, they all need to go on that list and they all need to have the proper mailing addresses on there as well. Even the loans that will not be discharged need to be listed. You will be asked to sign the bankruptcy petition and the schedules and other papers. If you lie or mislead with these papers you could find yourself being charged with perjury and that is a very serious offence.

Any debts that you acquire after you file for bankruptcy will not be discharged. And as soon as you file the bankruptcy papers an automatic stay falls into place, this will give you some breathing space because collectors will no longer be able to collect from you.

You need to steel yourself for the first meeting of creditors. You will have to attend this meeting in order to be questioned about all of your assets and your finances. Questions can be asked by the trustee of your bankruptcy claim and by the creditors themselves. Once you have had this meeting the trustee will take the reins. He or she will then take control of any of your assets that are not exempt from the proceedings. The trustee will sell your assets and distribute the money as it is called for.

Once you have filed for bankruptcy, even if you are working the creditors that have dischargeable loans will not be able to garnish your wages. That money is yours. Not all debts are dischargeable. For instance you will not be able to discharge student loans, alimony, child support, taxes and liens.

New bankruptcy laws

There is a new bankruptcy law that has come forth recently and it will change the way we bankrupt ourselves forever.

George Bush's Bankruptcy Abuse Prevention and Consumer Protection Act is going to make it much harder for everyday folks like you and me to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy is the most common type of bankruptcy that there is. This is the type that allows you to write off your debt while keeping your car and your primary residence.

With the new laws you will instead have to file for Chapter 13 bankruptcy, which is a whole different process. With Chapter 13 you will have to pay back most of your debts, the only change they have made to this law is that instead of 3 years you will now have 5 years to get back on track. There is a formula that will determine just how much you will have to pay your creditors.

George Bush's Bankruptcy Abuse Prevention and Consumer Protection Act has most people wondering if they are going to be eligible for Chapter 7. To find out for sure you will have to pass a means test and if it turns out that your total yearly income is greater than the median income of the state that you live in then you will not be able to apply for Chapter 7.

Most of your retirement savings will be safe when you file for bankruptcy under the new law. Your IRAs will be safe up to the one million mark and rollover IRAs do not even have a limit so they are protected as well. You can also repay pension loans. All of this means that you will still have a secure future when you get to retirement age, which is a major concern for all of us.

Your home will be exempt from creditors but this does not mean that you can file away some of your assets in a brand new home. When you file you will have had to be living in your current house for at least forty months or else the amount exempt will be capped at $125,000.

Filing for bankruptcy will also cost you significantly more than it used to under the new George Bush Bankruptcy Abuse Prevention and Consumer Protection Act. And the fees that lawyers can charge you will soar as well. They can actually double. Not only that but you will now have to take part in credit counseling. Before you choose a credit counselor beware, as there are many of them out there that will rob you blind. Checking with your local Better Business Bureau will give you a good idea of which ones to avoid and which ones to use.

How bankruptcy affect student loans

The vast majority of government student loans cannot be gotten rid of easily, even filing for bankruptcy will not resolve these debts. The only way that these types of loans can be taken care of in bankruptcy is if you can prove that they are a substantial hardship on you and your finances and this is a pretty hard ting to do in most cases, especially since the rest of your debts will be taken care of with the bankruptcy filing.

If you do wish to try to get your student loans discharged you will have to prove that there is no way you will be able to pay this debt according to the schedule that has been laid out, that even in time you will still not be able to pay it according to the same schedule and that you have tried unsuccessfully in the past. A good faith effort is necessary. This means that you have not tried lying to your creditors and that you are working as much as you can to get the money that you need but are still coming up short.

What can be discharged and what cannot can also fall directly onto the shoulders of the bankruptcy judge. If you are lucky and you get a judge that allows for these discharges then you might just get away without having to pay off these loans, or at least part of them. In many places it is left up to the judge to go with their own gut feeling.

Keep in mind that while it is true that lenders cannot be sending you bills to pay while you are in bankruptcy, they have to wait until it is over, that does not by any means mean that interest will not be accruing on your loan. And since you do not have to pay, most people don't and once they come out of bankruptcy they find themselves in a whole new batch of trouble than when they went in.

Student loans are flexible loans, they have many more options than some other loans out there. If you find yourself having trouble paying off your student loans let the lender know. Tell them exactly what the problem is and they will most likely be willing to work with you to get around it. If the plan and the schedule that you have set is just not a possible one for you to follow then talk to the lender about coming up with a new one. The thought of contacting lenders scares most people but it works, you are not going to get in more trouble, in fact what you are doing is heading trouble off at the pass. If you have defaulted on your loan you will even find such programs as rehabilitation programs that help you get you out of default. These programs are great, all you have to do is show your good faith effort by paying a lower amount for a set period of time. If you manage to stick to this it will show the lender that you can be depended upon and the lender can take you out of default.

Another route that many people take instead of bankruptcy is loan consolidation. The Direct Loan Servicing Center, working under the auspices of the Department of Education will give you several different options to choose from if you need some help to pay off your loans. Their standard plan is a great one, it is simple and it is effective. All you have to do is pay $50 each and every month until the balance is paid off in full or until 10 years is up, whichever comes first. There is another plan which will keep you paying for anywhere from 12 to 30 years. While this is a great option for those who just don't have much money at all it is one of the most expensive ones simply because 30 years of interest really adds up to a significant amount of money. These are just a couple of the payment plans that you can find available to you. If you are in financial trouble talk to your lender! So you might not be able to resolve your debt completely all at once, at least there are options out there that will give you some peace of mind.

What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy is something that is available to individuals and partnerships as well as larger corporations. This is a form of bankruptcy in which you will be ale to reorganize your debts. It is the choice of most large corporations because there is no maximum amount that can be owed. In Chapter 13 on the other hand you can only owe so much if you want to make use of it, not so with Chapter 11 bankruptcy.

You will not have to liquidate your assets when it is Chapter 11 bankruptcy that you are filing for. You will still be able to stay in control of your business for as long as you follow the plan that you set out on. You will however be watched for the safety of the creditors. In fact you will become a fiduciary for your creditors and as long as you do a good job there will not be a problem. If however you do not then a trustee may take over for you.

When you file for Chapter 11 bankruptcy, the trustee will choose a committee out of the creditors and this is the board with which you will be dealing with on a regular basis. You will have to answer to them in some respects. It is through them that you will find terms that everyone can agree on when it comes to paying off your debt. It is your creditors who will either accept or deny your strategy of repayment. If they find your terms unacceptable then it is back to the drawing board. If you cannot seem to get them to agree with you there are some statutory test that you can use in order to get your particular plan confirmed.

Chapter 11 bankruptcy is a popular one because it is so flexible and easy to work with. It is not a cheap way to go and it can be hard to file for Chapter 11 bankruptcy and succeed in this endeavor.

Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a way that you can get your debt off of your back. You can set up new plans to pay off your loans in a manner that suits your needs. Once your plan is over all of the debts left over will be entirely discharged. Chapter 13 bankruptcy is different from Chapter 11 in that you can force this upon your creditors and any interest on credit cards must stop growing. No longer will they be able to charge their regular interest rates on your debt, no matter how much it is. Chapter 13 bankruptcy is more powerful than Chapter 7 in that many more debt will able to be discharged. Another thing that makes Chapter 13 bankruptcy a nice option is that it will give you the time you need to get it together enough to pay the few debts that cannot be discharged.

Chapter 13 bankruptcy is good for those whose primary debts are those that will not be discharged if they were to file for Chapter 7 instead. These debts include back child support and alimony among other things.  If you have significant liens, ones that actually exceed the amount of the securing assets. You will also want to choose Chapter 13 bankruptcy if you have not filed taxes for a long time and it is also good for those who may be subject to a substantial abuse objection. And one of the main reasons that people file for Chapter 13 bankruptcy is because their assets far exceed their available exemptions.

When you file for Chapter 13 bankruptcy you will not have to pay for the entirety of your debts, the only debts that will most likely have to be made in full are your recent child support payments, alimony and taxes.

Not everyone is eligible for Chapter 13 bankruptcy. Only individuals who have regular income and who have liquidated some of their secured and unsecured debts.

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Is your debt problem pushing you closer to bankruptcy? Have you tried all the possible alternatives? Debt settlement can help you become debt free without filing bankruptcy. Go through the free counseling offered by Debt Consolidation Care and eliminate your debt problem.