Loan Modification has changed in the last year, and not for the better. A year or two ago, I may have recommended a loan modification for those who are in a temporary situation like a job change or small medical emergency that had adjusted their budget in the short term. But with the latest housing crisis and dismal performance of the loan modification, I’m not sure I would recommend it at all, for any situation. Even the biggest lender in America has only approved 4% of requests – leaving the other 96% to fend for themselves. Typically, you must first fall behind on your mortgage payment to even be eligible for the program. This has led to people purposefully falling behind on their mortgage in order to qualify. Since the waiting line for modification requests is so long, they are often so far behind by the time people are told that they can’t get the mortgage modified that it is impossible to catch up.

On the other hand, Chapter 13 bankruptcy gives homeowners a permanent solution to debt. Despite what it may seem like, many life events are not temporary and are actually the quickest way to find yourself in overwhelming amounts of debt. Even what seems like a small change in your budget could lead you down into the bottomless hole of debt. You may only be able to get out of debt by finding a solution that permanently handles your debt.

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Bankruptcy is a legal option that individuals and business operators run to whenever their debts seemed to pile very high and that their current standing resources are not enough to cover for all the payment and make the company stay afloat. This is definitely the surest thing to occur especially among entrepreneurs who are still starting with their business and whose starting capital was just loaned from a lending company. So when does one declare it and how to file bankruptcy?

Bankruptcy is a process that gives debtors who can no longer pay their debts due to limited monetary resource with two options: elimination of their debts or creation of payment plan, which they will have to pay their debts in parts or whole over a period. It will however appear on ones credit report for 10 years.

However not all credits can be discharged once bankruptcy is filed for loans like student loans, government loans, back taxes and other loans can’t be emancipated. Filing can be done individually though it is advised that one seek help of a lawyer so that every step is taken with proper guidance. Here are steps taken for how to file bankruptcy: 

1. Start filing by deciding first which bankruptcy option fits: chapter 7 or 13. Chapter 7 is also known as straight or liquidation bankruptcy while 13 is the repayment plan for individuals.
2. Choose whether to have a lawyer or not. If you choose to have a lawyer work together with you, then make sure that you directly have contact with him or her. This is to ensure that you can go over and discuss your case anytime.
3. Fees for filing vary and you should know those.
4. Refer creditors to your lawyer’s office. No creditors should be hanging around or contacting you in whatever way once the “automatic stay” takes effect. Violation of which can result to charges against your creditors.
5. Wait and attend meeting with creditors. Your lawyer will send you updates on this.
6. After 60 days from the first meeting that you with the creditors, you should expect a notification of discharge else a lawsuit is filed before this day. Should there be no lawsuit, a discharge notification on a debt will be sent to you and that will free you from any form of payment of that debt.

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Many ask if bankruptcy is the only answer to your financial crises. I just can’t lay enough emphasis on the fact that it should only be considered in the situation where there is no other alternative to the problem. Filing bankruptcy must be the last resort to any one’s financial crises, and all other ways of solving one’s financial situation must be completely tried before thinking about bankruptcy.

I have pondered on this subject long enough and the only upside I can find to filing bankruptcy is that it gives you the release from the harassment by lenders via calls and letters. If you are in severe debt, the only reason you would be thinking about bankruptcy in the first place is that it gives you a chance to start over again with a clean slate and removes all your previous financial life history. If you are filing for a bankruptcy, you probably have hurt your credit score to a point where it can’t be hurt anymore and if it is not that way, then you are making the wrong decision by going for bankruptcy. You should only think about bankruptcy when you are in a state of credit history where it is already too low, and you can’t inflict any more damage on it.

Some say bankruptcy shows on your credit report for seven years, but the actual fact is that it does for ten years. During this time, you are mostly unable to qualify for taking in any more debt, and this is the time where you actually rebuild your finances up by minimizing the spending and getting yourself a better credit score slowly and gradually.

I am sure that these small things I have discussed have actually alerted you of the true nature of filing a bankruptcy, and remember that it could be the best you could do for yourself sometimes because its just not worth it to fight with your debt forever, when you know that nothing else you do is going to help you in your struggle against overwhelming debt. You should also know that you are not alone in filing bankruptcy, as a lot of the successful people you see right now has done it once in their lives. Things happens you know, companies go down, people lose their jobs, medical emergency occurs, and you just end up piling yourself in huge debt.

So again I am going to repeat myself. Do whatever it takes to solve your current financial problems, but if nothing works, you shouldn’t wait more to go for the last resort; filing bankruptcy. You shouldn’t care what other people say, because you are in the situation and you know what is best for you.

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It takes a lot to push a person to such limit that he/she would end up filing for bankruptcy, because it produces such a blotch on your financial history and credit score that you don’t want. This condition is brought on a person due to unforeseen and unexpected changes in the financial condition, probably due to some medical bills, job loss, or divorce. If you are one of those unhappy people, and are thinking about filing for bankruptcy, here are a few facts and fiction on the topic.

A misconception about filing for bankruptcy is that it is really discomforting, and you have to go through a lot of hassle to do that. While this is true, you should also bear in mind that if you don’t file for bankruptcy, you would have even more discomfort due to the continuous harassment by the credit card companies. Filing for bankruptcy is not recommended, but still it is a first step towards gaining control of your financial situation, and it is a positive note on your part because you are actually trying to do something about the situation you are in right now.

A myth connected with filing personal bankruptcy is that if you do that, you would have a terrible credit score for the rest of your life. This is so not true, as when you are done with the whole process of bankruptcy, it clears out all of your credit history so you actually have a chance to start up once again. It’s like being reborn! If you want to verify this fact, you could go ahead and ask any of the bankruptcy attorneys.

Another lie associated with bankruptcy is that you can only file for it once in your life. When you review the facts though, you would come to know that this is not true either, as you have to wait 8 years to file another Chapter 7 bankruptcy, but you can file a Chapter 13 bankruptcy as frequently as you get into the circumstances of it.

Personal bankruptcy is actually aimed at protecting a debtor from loosing all their possessions, while working their way out of all the debt on them. If you acquire the services of a good bankruptcy attorney, they can provide you with all the correct facts and figures, so you can prevent the loss of any of your assets.

Filing personal bankruptcy is not at all difficult, and if you hire a bankruptcy attorney, they can guide you during every step of the way. You just have to make sure that you have researched all possible way-outs of your present financial situation before filing for a bankruptcy, as there are several consequences associated with that, and it is meant to be a last resort for the debtors. But beware just about anyone can find bankruptcy records online will appear on your personal and financial record.

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If you are not earning but spending at a rapid rate, you bank balance will move towards a big zero. In other words, you will approach personal debt bankruptcy. We have been hearing a lot about the negative factors of recession. Personal debt bankruptcy is one of them. This is when you fail to pay your dues in time and then the bank files a law suit against you. There is nothing to be scared of law suits. Most of us get petrified when we come to know that we will be facing the law. Liability problems are very common in the United States and every second person is fighting legal cases. If a legal case is slammed against you? What is the best approach to combat the situation? You just cannot take unplanned steps. You need to prove in the court of law that you are not a deliberate defaulter. In other words, you have not paid your bills due to valid reasons. If you cannot prove this point, then you will lose the case and the bank will get a right to sell your security. This is the worst situation for any loan taker. You can prevent personal debt bankruptcy and go for liability reduction. Now you have a legal way available to eliminate your liabilities. You can get into a settlement with your credit card firm and discuss all the terms and conditions. Problems that can be faced Credit card companies are facing a storm of financial problems. The biggest problem is that they do not have enough money left. Millions of dollars have been taken by credit card customers in the form of spending limits. Do you know that a large percentage of credit card holders in the United States have not paid their bills? Here we are not talking about one or two people but about millions of American residents. As so many people have turned into defaulters, banks cannot slam law suits against all of them. It is simply not possible. A lot of them have declared personal debt bankruptcy.

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Bankruptcy is way of eliminating your debts. If you are heavily indebted, and unable to pay them off, you tend to file bankruptcy as a solution. When you file bankruptcy, the court declares that you are unable to make the payment and then the creditors should make necessary arrangements for you to not to pay the debt. This sounds very interesting at a glance. But once you go to the depth of bankruptcy it is not interesting at all. It entangles you with severe conditions. You are bound to the creditors and they will slightly grab all your belongings. For an example you will not be able to inquire for a loan for considerably a long period. Perhaps more than 10 years. Not sure whether you will be freed even after 10 years, this depends on the amount of the debt and the nature of the company. They will somehow try to collect your money and fill the amount that you owe. Once you are bound to them with a signed agreement you can not leave it half a way. You have to complete the promised time period under their agreement. The next option for eliminating is debt settlement. Debt settlement is often done through a settlement company. Debt settlement is a new trend in the financial field. These companies have the capability of reducing your debt by discussing with your creditor. Note that this entangles you with less condition.

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Bankruptcy is a difficult process, but it can be made easier when you realize that different situations call for different types of bankruptcy cases. If you decide to file without a lawyer you may end up in the wrong type of case, which is a reason to sit down and speak with a bankruptcy attorney before making a potentially disastrous move.
These are six different types of bankruptcy chapters:
Chapter 7 Bankruptcy: This type of case is also called “liquidation” or “straight” bankruptcy. You will receive a discharge of most types of unsecured debts (credit cards, personal loans, overdrafts, medical and dental bills) but some other bills are not going to be wiped out. In return for this discharge of debt you will be required to surrender certain types of property. Most people file for bankruptcy under Chapter 7, but will opt for other solutions if they have debts that would not be wiped out or would lose property by doing so.
Chapter 13 Bankruptcy: This type of case is called “repayment” bankruptcy. You will be required to repay a portion of your debts in return for keeping all of your property. Chapter 13 is most commonly used by people who do not qualify for Chapter 7 or who want to use the federal laws to repay debts such as past-due mortgage and car loan payments over time in order to save their home or automobile. Chapter 13 payment plans last 3-5 years depending on your household income, property and debt levels.
Chapter 11 Bankruptcy: Formerly reserved for big business interests, Chapter 11 is now being used by consumers who would otherwise file for Chapter 13 but do not qualify due to the amount of debt that they owe. Chapter 11 is extremely complex and costly, but can help if you’ve got a debt load above the limits for Chapter 13.

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Filing for bankruptcy can be expensive or it can be downright dirt cheap. In fact, the filing fee for Chapter 7 bankruptcy is $299, and for Chapter 13 $274 (figures are accurate as of this writing). But if you stop there, you may think that filing for bankruptcy can be a walk in the park, money-wise. That’s where you’re wrong. Consider a recent client who filed his Chapter 7 bankruptcy for $299 – the cost of the filing fee alone. No lawyer involved, and he put the documents together without any paid help whatsoever. He did a very good job of it, too. A lot of studying and research on the types of bankruptcy, needed forms and procedures made him confident that he didn’t need to spend any money on a lawyer. After all, he was filing for bankruptcy – how could he be expected to spend money for an attorney? Six weeks post-filing he was in my office because he was being forced to give up his home to the bankruptcy trustee. What happened? This intelligent and well-prepared gentleman has filed a Chapter 7 bankruptcy without hiring or paying for a lawyer in the belief that he could do it on his own. And he could. The problem wasn’t whether he could do his own bankruptcy, but whether he had the ability to make the right choices when taking steps to get out of debt. The end of my client’s story is a happy one, though a painful lesson was learned. He’s going to get to keep him home because we converted his case from Chapter 7 to Chapter 13, which will allow him to reorganize his personal finances and repay a portion of his debts over time. In exchange for making payments, he gets to keep his home.

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If you are planning to file bankruptcy then you need to learn a lot of things about filing bankruptcy. You need to keep yourself informed about various updates in the law of bankruptcy. There are a lot of websites which can indicate you more about bankruptcy and will also help you with the filing for bankruptcy. So getting yourself some help and guidance involves bankruptcy assistance. Bankruptcy involves legal filing to support the claim that your financial liability has gone to a particular point that cannot be solved without the help of a court. So, if you are filing for bankruptcy a person from the court will completely go through all your debts and decide whether some of your debts can be excused and others should be minimized up to a point. The person from the court will also work in line with your creditors in order to cover more of the repayment plan. This whole process will be supervised by the system of the court. Most of the time, the money will be automatically deducted from your payment. You also need to remember the point that not all of your debts will be nullified. The court takes a decision after completely going through your liabilities. Some debts like alimony or support for children can never be nullified at all. You need to pay them even after bankruptcy is filed.

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If you are thinking about filing bankruptcy one of the first things you should determine is if you should hire a attorney. If you have a case that is not complicated then it may be o.k. to have a petition preparer file your bankruptcy instead of a licensed attorney. How do you know if your personal case for bankruptcy is complex or not? Your case is not complex if you are: un-employed, have no assets and no new purchases on credit. This will allow you to liquidate under Chapter 7 Bankruptcy fast. However, most of us will have complex cases. We have assets. We are employed. Plus the last item(s) purchased on credit must be shown, by you, to not have been made with the intention of filing bankruptcy soon after. Seeking our counseling with a bankruptcy attorney is usually the best option. Complex bankruptcies call for lawyers. we will advise you if going bankrupt will actually relieve your debt or not. Our lawyers will help you decide whether to file Chapter 7 or Chapter 13. A bankruptcy attorney will review your case to make sure the bankruptcy is filed correctly so that you do not unknowingly commit fraud. Our lawyers are very familiar with all the court documents and deadline procedures and will make this part of the process uncomplicated for you. Make sure you obtain a good attorney. Make sure the attorneys area of practice or specialty is bankruptcy and that they have several years of experience. The amount of time the attorney spends in bankruptcy counseling with you prior to filing is important because this determines if all your filing and legal decisions go smoothly. Be certain that you select a firm that will meet with you in person and understand your particular case.

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