Answers To Bankruptcy Questions
Answers to bankruptcy questions are very important for the debtor that is facing the decision of filing bankruptcy. The Internet is a great place to begin the search for bankruptcy facts and the long-term effects that filing can have on the person and his or her financial or credit history. Another important piece of information to learn is how to go about the actual process of filing. Debtors also need to get legal help on matters of debt and any alternatives that may be available. A potential filer should understand how the process works and when to seek filing as a way to end financial problems. The filing process is in no way a quick fix and may have consequences that are devastating to some people, especially when the loss of property is at stake.
One of the most important aspects that should be closely considered before choosing to file is the effects on the filer's financial record. Many people do not realize that filing will be a part of the financial history for several years. The history of any of the chapters filed can last on a credit or financial history for up to ten years. This can be very difficult for an individual seeking large loans for homes, vehicles, and other large prices items that may require a loan. Sometimes, credit cards may even be denied because of the individual's history. This can be very devastating for an individual that needs a loan or financial assistance for any reason. Because of the long term affects of filing, potential filers must be educated about what the chapters can do before making the decision. Utilizing assistance through financial planners or counselors will be helpful in determining if filing is right and will be very helpful in understanding many other bankruptcy facts.
Receiving answers to bankruptcy questions will lead the individual to the various types of forms of bankruptcy. The actual process or procedure of filing is sometimes difficult to understand and can be quite different depending on the situation or circumstances surrounding the person's need to file. Chapter seven can be the most difficult for many debtors to face because the process involves the sell of personal property to pay off loans and creditors. A trustee is appointed to the individuals case to oversee the sell of personal property in turn for money to repay debts. Property that is often used will include homes, cars, boats, and a variety of other smaller items. Chapter 13 is much different because of the basis solely on the income of the individual that has filed. With chapter 13, the debtor has an opportunity to develop an installment plan to pay debts based on wages that are earned through his or her job. Chapter 11, probably the most well known type, are a corporate specific form. Many corporations have been subject to chapter 11 which can be a very expensive and intensive process. Finding bankruptcy facts on these specific types may be possible through legal assistance or through the Internet.
Filers may consider alternatives to filing under one of the chapters. Many options can be found that may be more lucrative for the debtor that is battling with financial problems. One such alternative may be debt consolidation for loans and other types of debt that have gotten out of control. This is a great way to decrease debt in a way that will not ruin the financial history of the debtor. Going bankrupt may actually help increase credit ratings or scores in the future. Also, seeking financial assistance from close relatives or friends may be a way to find help without filing. While going to someone and asking for money may be difficult, this may be the best way to solve the problem.
Answers to bankruptcy questions need to be sought for an individual that is involved with monetary or financial problems. Finding bankruptcy facts can be done through the Internet, legal counsel, or with the help of a financial counselor. Answers to bankruptcy questions on the long term affects of bankruptcy should be sought with care and concern. Debtors should understand that any of the chapters can last on an individual's financial record for many years to come. The process and procedures of filing is another one of the important bankruptcy facts to be educated about. There are two major forms of bankruptcy for personal use and one more form that is useful for corporations. Other than specific answers to bankruptcy questions, the individual should be aware of the alternative options. These options may include debt consolidation or a personal loan. While bankruptcy can be a very devastating occurrence, it has been created as a way for individuals to find some relief from credit problems that may be overwhelming them. Trying to erase debt can be a very humbling experience for individuals to face. The love of God can help anyone persevere in this situation. "Humble yourselves in the sight of the Lord, and he shall lift you up." (James 4:10)
Alternatives To BankruptcyFinding alternatives to bankruptcy and avoiding financial problems altogether should first be the goal for a debtor. A bankruptcy stays on a credit report for up to 10 years. The negative impact lessens with each passing year, but in order to re-establish credit, lending institutions will charge an exceptionally high interest rate. Personal bankruptcies are reaching record levels, which is not surprising, because consumer debt levels are also reaching record highs. Alternatives to should be considered because the FICO score (Fair Issac) is lowered tremendously. How does this affect a debtor? For example: on a $150,000 mortgage, someone with a good FICO score could get an interest rate of about 6% (depending on interest rate levels at the time). Someone with a high FICO score will be lucky to get a 9% interest rate. That works out to an extra $370 a month, over 7 years that equals an extra $31,000 paid in interest charges alone.
The FICO score is used for everything, from home buying and car buying, to insurance quotes, and rental deposits. Keeping a high FICO score by avoiding bankruptcy and instead finding alternatives should be explored. Before opting for giving up, it is recommended that a debtor try to get some help sorting through their options. There is an entire industry built on providing help to consumers who are overwhelmed with their debt. Some of the debt-help businesses are not exactly legitimate. It is advised to only work with debt counselors who have high ratings through a myriad of certified organizations. When alternatives to bankruptcy have been the decided plan of action, meeting with a debt counselor is the first step.
Debtors will lay out their financial situation, and if the debt counselor thinks the debtor can get out of debt within 5 years they will establish a repayment plan. All debts will be gathered together and consolidated, with only one monthly single payment to worry about. There will probably be a monthly fee for the service of repayment planning, but it is a small price to pay. Quite often debt counselors will attempt to lower the balances or interest charges with the creditors, sometimes they are able to forgive the debt altogether. In addition to setting up a repayment plan, they will also discuss programs and classes that can be enrolled in to learn some tricks for better budget and credit card management.
If the debt load is so large that the credit counselor doesn't think the debtor can be debt free within 5 years, then they will probably not offer any alternatives to bankruptcy that include a payment plan. Each creditor will be contacted to attempt a final paid in full balance amount that is a small percentage of what is actually owed. This is the last step and many creditors will opt for the lower percentage than force the debtor to file in which they will get nothing. Another aspect to consider is the effect it will have on the spouse's credit. Ideally, not having both debtor credit scores lowered is the goal. However, a divorce decree will stop any debt collectors from coming after the spouse.
Alternatives to bankruptcy should always be considered first. The financial and emotional impact of it is devastating. Work with a credit counseling agency to devise a plan to pay the way out of a financial hole. There are two types of major unsecured debts. They are credit card debt and student loan debt. It is recommended that a person who wants to declare bankruptcy for student loan debt, instead find alternatives because student loans will not be dismissed with a file for bankruptcy. Unless the debtor gets a court order for a hardship case, which is usually only in the situations of permanent disability, the student loan debt stays.
Alternatives when dealing with student loan debt abound. The student loan industry bends over backward to help find solutions that are manageable. They offer deferments, forbearances, financial hardship, loan consolidation, and a variety of other options that will lessen the burden of high monthly payments. If a home equity loan is an option, it is suggested to consolidate all credit card debt. Home equity loans offer a lower interest rate, much the same way a student loan offers. There are not as many deferment options with a home equity loan, but at least it is secured, unlike credit card debt. Having two flexible repayment plans only, will surely help when trying to manage a financial crisis. It is up to each person to pay off their own debt. A vow to pay a creditor is a vow to pay God (who owns everything). "When thou vowest a vow unto God, defer not to pay it; for he hath no please in fools: pay that which thou has vowed." (Ecclesiastes 5:4-5)