Chapter 7 Liquidation Bankruptcy Vs Chapter 13 Reorganization Bankruptcy

Chapter 7 Liquidation Bankruptcy

Chapter 7 is named 'Liquidation Bankruptcy' because a trustee is appointed to collect and reduce to money any non-exempt assets for the benefit of priority and unsecured creditors of the estate.

Over 90% of all Consumer Chapter 7 filings are declared 'non-asset cases' because few consumers filing Chapter 7 have assets that exceed any amount that can be protected. Chapter 7 is the simplest, quickest, least expensive and easiest way to discharge 'unsecured' debt.

Debt owed to 'secured creditors' are generally discharged but the secured creditors contractual rights to their 'security' usually remains unaffected. So they must be financially satisfied to prevent them from pursuing their rights to the security after the bankruptcy case is concluded... usually 3 to 5 months after the case was filed.

While Chapter 7 discharges most all General Unsecured obligations, it does not discharge: most tax obligations, debts owed as a result of a Domestic Support Obligation, Student Loans, Fines and some other less common obligations.

It should be understood that in order to receive the benefits of a Chapter 7 bankruptcy the law now requires anyone earning more than their States Median Income to prove they're unable to repay at least 25% of, or $10,000 to, their General Unsecured Creditors over a 5 year period ($167 monthly). However, some skilled bankruptcy attorneys have been able to successfully challenge the 'systems' presumptive position in that regard which has allowed some of their over Median Income clients to still receive the benefits of a Chapter 7 discharge.

You should also understand that it's not unusual for someone to file Chapter 13 and actually pay less per month or even pay less in total to their creditors than what they would have paid had they filed a Chapter 7.

Because Chapter 7 may not be available or because that availability may need to be skillfully challenged and because a Chapter 13 may be more advantageous, it's important to have your financial affairs reviewed by, and for you to be represented by, a consumer bankruptcy specialist highly skilled with Chapter 7 and Chapter 13 matters.

Chapter 13 Reorganization Bankruptcy

Chapter 13 bankruptcy restructures and discharges debt based on a consumers ability to repay over a period of at least 36 months and usually 60 months. Most Chapter 13 Plans primarily call for the repayment of secured and priority creditors and leave little, if anything, available to pay unsecured creditors. It's not unusual for a person filing Chapter 13 to pay less per month and or pay less in total to their creditors than they would have, had they filed a Chapter 7 Liquidation Bankruptcy.

That's because Chapter 7 doesn't have much effect on Secured and Priority creditors while Chapter 13 can restructure those creditors which have a shorter repayment period remaining than the length of the proposed Chapter 13 Plan. This 'restructuring' can modify the rights and status of secured and priority creditors.

As an example the filing of a Chapter 13 can remove a totally unsecured junior (2nd or 3rd) mortgage from their secured position on the real estate and treat it as they truly are... "unsecured". Chapter 13 also can stop foreclosures and design a Plan to cure the mortgage delinquency over the life of the Plan... without allowing future interest on the delinquent amount.

Chapter 13 also stops future interest on outstanding priority tax obligations and can provide up-to 5 years to repay those taxes. It can also reduce interest rates on consumer secured obligations like vehicle contracts when they're in excess of the current prime rate of interest plus 2 or 3 percent.

In some instances, depending on when the debt was made, vehicle contracts and other contracts secured by consumer goods can be treated as partially secured and partially unsecured when the value of the security is worth less than what's owed.

These features are generally not available to someone filing Chapter 7 bankruptcy.

While Chapter 13 can often be more advantageous than a Chapter 7 you must be careful to find and select an attorney willing to file and able to skillfully file, Chapter 13's. Not all bankruptcy attorneys will file them and some of those who do, don't provide the level of expertise needed to take the greatest advantage of the special provisions available.

Larry Loheit is a Consumer Bankruptcy Trustee for over 35 years, who has personally seen and helped ten's-of-thousands of individuals (by helping their attorneys) maneuver their way through the bankruptcy system.

Filing for Bankruptcy - Look Before You Leap

By Tom Dsouza

In the event of unpaid debts, it is advised to call or e-mail law firms, before attempting any desperate measures such as raiding one's retirement plan, transferring property, or transferring credit card balances. One must consult bankruptcy lawyers, before making such hasty decisions.

Make sure that experienced bankruptcy lawyers are contacted if one has been sued or if there remains a pending judgment. Once a judgment has been issued, the underlying debt becomes a secured debt and can be paid off by seizing bank accounts, garnishing wages or seizing property.

Note that bankruptcy is not a good solution if one is elderly and/or has no assets that a creditor could garnish (social security wages, as an example) or seize. Even if one has non-exempt assets and debts such as student loans, an Atlanta bankruptcy attorney always advises not to file for bankruptcy.

It should be known that bankruptcy for individuals if of two types- Chapter 13 and Chapter 7. A Chapter 13 bankruptcy is also referred to as a "wage earner's plan." In this scenario, debts can be paid off over a period of 3 to 5 years by individuals without paying any interest on payment towards debt. One cannot be sued while using the Chapter 13 plan and even does not need to sell its properties or assets to make payments. However, Chapter 7 is a liquidation bankruptcy, which helps the individuals to pay their unsecured debt in an efficient manner. Homes are seized only when it is currently not on mortgage payment, and even then one can work with Atlanta bankruptcy attorney to modify these payments outside of the bankruptcy case.

Filing for bankruptcy is not the only mode of making debt payments. It is important to decide which mode to select, based on one's ability to pay. One of them is loan modification. The bankruptcy lawyers can help negotiate with the lenders, to lower car and home payments, and also prevent foreclosure. Another mode that can be considered is debt settlement. When there is simply not enough balance on one's credit cards or medical bills to cover the cost of bankruptcy, debt settlement is an alternative. However, it is important to be careful of companies that claim to take certain items off one's credit report, as they are scams. Sometimes, debt settlement ends up being ineffective, as one ends up paying a part of the lowered payment to the debt settlement company every month, for "negotiating."

Get consultation from our team of experienced attorneys, lawyers, CPA's and IRS enrolled agents for Bankruptcy lawyers and Atlanta bankruptcy attorney.

Filing for Bankruptcy Before, During or After a Divorce

By Andrew Doktofsky

At certain times in life, one bad thing leads to another. This seems to be the case when it comes to bankruptcy and divorce, with the two sometimes being inextricably linked. Whether it is financial problems that lead to marital discord, or it is the divorce itself that brings about unsustainable financial obligations, knowing what to do in this difficult situation is essential in keeping your current quality of life.

The sad reality is that both have the very real possibility of influencing each other and can present major problems if not approached in the proper manner. Understanding your options before, during and after a divorce can keep you from being dragged into a financial-legal crisis.

Prior to Divorce

In an ideal scenario, the bankruptcy filing will be handled prior to the divorce proceeding. This will enable the two parties to mutually decide how to divide their assets in the most equitable manner possible, while also deciding the debt burden that each is obligated to assume.

As long as the parties are still married, they are able to file a joint bankruptcy petition, even if they are separated at the time. This process will usually only work when the parties are able to cooperate with each other and with their attorney. The most beneficial aspect of filing before is that the divorce can proceed with the issue of marital debt having been fixed. This should allow for a more amicable and fair settlement.

During Divorce

Dealing with the bankruptcy process in the midst of a divorce has the potential to make a complicated process even more difficult, but may in fact be necessary, depending on the situation.

Whether one or both spouses in a divorce should file for bankruptcy depends mostly on the amount of debt in each party's name, along with whose name the marriage assets are titled. These assets include houses, cars and financial accounts. Discharging the debt of one spouse, while saddling the other spouse with high levels of money owed, does not fix the overarching issue of who must pay for the remaining marital debts.

Once the spouse files for bankruptcy, the bankruptcy court will issue an automatic stay. This disables creditors from continuing to try to collect any outstanding debts that have yet to be paid. The automatic stay also prevents the divorce court from moving forward.

Similarly, the divorce court will be unable to divide property between the spouses until the bankruptcy court has made a determination of which assets are exempt from the bankruptcy. It must be noted that exempt property cannot be sold by the trustee to pay off debts.

Post Divorce

Some formerly married individuals may choose to file for bankruptcy after the divorce with the intention of getting rid of some or all of the debts they were required to pay as part of the divorce order. Specific types of debts, however, are not dischargeable in either a Chapter 7 or Chapter 13 filing. This generally has to do with support obligations, which include child support and alimony. These types of obligation MUST be paid.

Property settlements may be dischargeable in certain scenarios. Non-support obligations, like the money owed in a property settlement, are not dischargeable in a Chapter 7 bankruptcy, but may be in a Chapter 13 filing. This is unless the court finds that the money owed is in fact a support obligation.

For those worried that their spouse will file for bankruptcy after the divorce is finalized, there are some protective options that they have in regard to this. These include indemnity agreements, property lien's, support obligations and title changes on joint debts.

With an understanding of what can be done before, during and after a divorce when it comes to filing bankruptcy, you will be certain to approach this complicated situation in the most efficient manner possible.

Andrew M. Doktofsky is an experienced New York bankruptcy lawyer representing clients in Chapter 7 and Chapter 13 filings, consumer law and foreclosure defense. He makes it a priority to help New Yorkers understand the bankruptcy process and determine if it is the most beneficial solution to their financial problems. As a Long Island bankruptcy lawyer, Andrew M. Doktofsky provides an educational and transparent explanation of the pros and cons surrounding the process for consumers.

Rebuilding After You've Filed for Bankruptcy

By Stephen Behm

There are few experiences as traumatic and stressful as declaring bankruptcy. However, bankruptcy is not the end of your financial life; it can also be a new beginning. Though a bankruptcy can result in a bad mark on your credit report, it can also provide the opportunity to rebuild your credit and financial health. Using these steps, you can start anew after bankruptcy and secure for yourself a healthy financial future.

Evaluate How You Got into Bankruptcy
There are many reasons that can cause an individual to declare bankruptcy. Some financial issues might be out of your control, such as medical bills, law suits, layoffs, or divorce. But there other factors that can lead you to bankruptcy or make you more susceptible to bankruptcy that can be managed. You might have to ask yourself some tough questions as you evaluate your path to bankruptcy. Maybe credit card companies seduced you with the promise of easy credit, but then hit you with high interest rates. With the enticement of credit cards and their "easy monthly payments" you can very quickly find yourself in big financial trouble.

Another cause of bankruptcy can be a lack of emergency savings. Many folks fail to create a financial plan that includes setting aside a percentage of their income that can be accessed in the event of a layoff or emergency. Some people get in trouble by buying more house than they can afford, and when a financial crisis occurs, find themselves burdened with a mortgage payment larger than their income. Whatever the cause, take some time to evaluate what happened, and see if there are any steps you can take to avoid problems of the past.

Make a Spending Plan
A spending plan is simply deciding what you are going to do with your money before spending it. By writing down your income and expenses, you can get an idea of where your money is going. That way, you can decide ahead of time whether to go out to lunch or bring it to work with you. On one hand, a spending plan gives you the ability to say "No" to buying something you don't need. On the other hand, a spending plan also gives you the freedom to buy something guilt-free because you know you have the money to make the purchase. And don't forget, when you cash your paycheck, the first person you should pay is yourself. The old adage of saving money for a rainy day has a lot of truth to it. Setting aside a percentage of your pay in a "Just in case" account is a simple and affordable means to be prepared. Bad things happen to good people. And it might have been unexpected expenses that caused your bankruptcy. However, an emergency fund just might help mitigate some of the effects of future emergencies or setbacks.

Rebuild Your Credit
It is no secret that bankruptcy is a black mark on your credit report. But credit scores can be rebuilt. And it is important for your financial future to repair your credit. After you have made your spending plan and know that you can live by it, consider getting a secured credit card. This is a card that is secured by a cash deposit you make. Even though a credit card can get you into trouble, it can also be a tool to improve your credit score. By using this secured card to make small purchases and paying off the balance every month, you will show that you are a good credit risk, and your credit score will start to rise. Even if you plan to never borrow another dollar, you need a good credit score. Your credit score affects things such as your insurance rates, whether you can get a cellular phone, and rental applications.

Ask a Bankruptcy Attorney
As you go through the process of your bankruptcy, speak with your bankruptcy attorney about resources that you can use to get a fresh start.

There are organizations in Mankato, Minnesota that can help you with secure your financial future.

Stephen Behm, bankruptcy lawyer at Behm Law Group in Mankato, MN, has extensive knowledge and experience to guide his clients through thebankruptcy process.

The 5 Stages of Grief When Facing Bankruptcy

By David E Buckley

In the U.S. approximately 1.5 million total bankruptcy filings were reported in 2011. If you were NOT one of those 1.5 million then congratulations! If you were then you are not alone. With people still struggling financially from a down economy and a 7.8% unemployment rate as of Sept. 2012 it's becoming more evident that we still have a ways to go before we see any signs of relief.

Facing bankruptcy can be a stressful experience for any family or business to go through. The emotions and anxiety can be overwhelming. These are all normal feelings and can be defined. The grief that people encounter can de described in stages. While some may grieve differently, it's safe to say that they will experience some of the stages defined below.

They are:

• Denial
• Anger
• Bargaining
• Depression
• Acceptance

Denial

Denial is usually the first stage of grieving. It helps us to survive the loss. In this stage life seems to make no sense, they are in shock or tell themselves this just can't be happening, especially to me.

Anger

Anger is a way to shift the problem by blaming someone something or the system. It is a necessary stage of the healing process. It's vitally important to control your anger. You will get through this. Remember you have options and there is help out there.

Bargaining

Help me God! This is a desperate shout out for the Lords help. Bargaining with the higher power for help and prayer are usually high at these times of hardships. Telling yourself "what if" or if I just did... "I will never do that again" statements.

Depression

Depression usually follows bargaining with a deeper level of grieving and empty feelings. It is a way of dealing with loss. It's important to talk to your spouse and loved ones for support.

Acceptance

Acceptance is a stage that is the reality that we have a problem. We accept it for what it is, learn to live with it. We may still feel bad about the situation, but we move on and take the next step. What to do about it? How do we fix it?

Well rest assure there is hope out there. Finding a qualified and experienced bankruptcy attorney can relieve a lot of your anxiety and can offer hope. There is legislation in place to help people just like you. You are definitely not alone here. Finding a bankruptcy lawyer who is designated by Congress as a debt relief agency offering bankruptcy relief, and protection will give you a clear picture and an accurate assessment of your situation.

A bankruptcy attorney can provide advice on the benefits of filing for relief under the Bankruptcy Code where most, if not all, of the debt may be discharged in as little as four months.

However, being able to petition for bankruptcy is not automatic. The Bankruptcy Code requires that a person, or a couple, filing for bankruptcy meet certain conditions. It is advisable to have an attorney prescreen your qualifications, and see if you may be eligible to file for bankruptcy.

Contact Buckley Law Offices for a free consultation over the phone if you would like more information about bankruptcy.

Attorney Buckley will assess your situation and propose your options.

Office: 603.595.8801 | MA: 978.566.9946

FRE 803(B)(6) and How Can Consumer Prevail in Debt Collection Litigation

By Marcelle J Deflandre

You may have heard of or even know someone who has had their wages garnished by a collection agency; and you may wonder, "Can they even do this?" The answer is yes, but not without a court order. Every year, collection agencies are inundating courtrooms with thousands of lawsuits filed against debtors. This situation is somewhat unfortunate for consumers for two reasons. One, delinquent accounts reach collection agencies because the original creditors have already given up hope of obtaining payments and have decided to abandon them. Two, although collection agencies have purchased the accounts for a fraction of the cost, they are pursuing consumers for the full debt amount. Invariably, they win in court because uninformed consumers do not attempt to fight the claim. They are also unaware that collection agencies are relying, improperly, on Federal Rule of Evidence (FRE) 803(b)(6) to introduce evidence in support of their claim.

First, let's clarify that there are different stages in the process of debt collection. For example, when a consumer stops making payment, the original creditor may initially rely on its internal collection department or may contract with a third-party agency to collect payment on its behalf. In both cases, the original creditor still owes the bad debt. There comes a time, however, when the company will lose hope of obtaining any more payments. It will then make a business decision to close the account and write off the remaining debt balance. When a "charge off" is recorded, the company can claim a tax loss on the unpaid balance and the customer will see a negative notation appear on its credit report, regardless of whether the debt is later paid off or not. Accounts that have been closed are sold to "debt buyers" for a fraction of their value. In fact, it is not rare for collection accounts to be bought and resold multiple times. One must realize that at that point, consumers no longer have any contractual obligation toward the original creditor (who no longer owes the bad debt). However, they are now left to deal with collection agencies.

Of course, "debt purchasers" will go to great lengths to pursue payments. If they believe that customers have funds, they may start legal proceedings to obtain a judgment and a court order for wages garnishment. Be aware that agencies need proof that they properly served consumers. Proper service notifies consumers that a claim has been filed against them so that they can defend it in court. Failure to properly serve consumers will result in a judgment that can later be voided.

Too many times, consumers ignore a legal complaint because they are either scared or do not have the means to hire counsel. And so, they fail to take action, hoping the problem will go away. This is the worst approach consumers can take because collection agencies will automatically win the judgment. So, an answer to a complaint always needs be filled out in a timely manner. As defendants to a lawsuit, consumers should not admit any allegations made in the complaint but instead should request proof of what is being alleged, especially proof that the collection agency now owes the account. After all, consumers never entered into any contractual agreement with the collection agencies. They often don't know which companies have purchased their account, let alone the fact that their account was even purchased in the first place. In addition, as mentioned before, accounts are often sold multiple times; and sometimes documentary evidence of debt assignment may have been lost. This fact alone is sometimes sufficient for collection agencies to drop the lawsuit.

If the case goes to court, consumers should not fear that the burden will be placed on them to answer incriminating questions. Indeed, in our legal system, the party who initiates the lawsuit has to prove its case first. Essentially, the collection agencies need to establish that they are now the party to whom customers owe the debt. So in theory, they would need to present evidence that the original creditor sold them the account, or, if the account was purchased and sold multiple times, evidence of the entire chain of debt assignments. Although business records are hearsay, they can be admitted as evidence - as an exception to the hearsay rule under FRE 803(b)(6) - on the condition that a record custodian employed by the company comes to court, identifies the documents and testifies from them. However, be advised that a record custodian can only testify from records generated by his or her place of employment, and not from those generated by another business entity. Is this important? Absolutely, because it means that the record custodian that will be present in the courtroom cannot testify from documents that have been prepared by the original creditor or the previous collection agencies. When the custodian is not allowed to introduce, as evidence of debt assignment, documents prepared by the original creditor, she cannot prove that the collection agency owes the account.

Although the collection industry is well aware of the limitations of this rule, consumers unfortunately are not.

Hiring a Bankruptcy Attorney Pros and Cons

By Abraham Avotina

A bankruptcy attorney is a legal professional who focuses mainly on counseling and guiding his clients regarding their financial states. He basically plays an important part in giving advice to the person in a financial crisis. The advice and counsel revolves around what type of bankrupt state the person can claim as well as what properties are exempt in this state. The filing of the claim can also be quite confusing for many of those who are not familiar with the terms and the systems that are necessary in doing so in the courts. The lawyer can step in and extend help for those who have some difficulty understanding the system and organizing their thoughts about their financial status. Despite being very good help to those who are in financial crises, there is also a downside to hiring one.

Pros and Cons

The pros and cons of hiring a bankruptcy attorney are various. It should be mentioned, though, that the downside to hiring one is not as heavy as the upside of doing so. One of the good things about getting this type of legal representative is that they actually focus on the different aspects of the state of being bankrupt. They know all about the different other fields of laws that are related to this state and they can advise the client regarding which state is better to claim. In other words, they are experts of this in the financial law concept. In this regard, they know what can be expected if their client pursues an avenue of law that is connected to this. Yet another good thing about hiring these lawyers is that they can actually assess the individual's status and counsel the person whether it is a good idea to declare oneself as bankrupt or to pursue another avenue related to this. The bankruptcy attorney can recommend some actions and alternatives which may prevent the individual from actually declaring this state of financial crisis. There are some ways to actually ask the people who hold the debt to extend the loan or give some kind of consideration to the person who owes money. Some credit card companies allow for arrangements to be set in order for the debtor to pay off the debt slowly but surely.

The downside to hiring a lawyer of this caliber is that they can be an additional cost to the already broke individual. Legal representation and counsel do not come cheap and some of these professionals can ask for top dollar for their services. There are some who allow payment for their services to be broken down but this just means that the person who is in a financial crisis has another additional debt to pay. The bankruptcy attorney might also be in a hurry to file the claim and not assess the case well enough to consider other options. Some of these professionals might take the case at face value and just go through the easiest course even though there are other alternatives.

You are probably very stressed if you are looking for a bankruptcy attorney Birmingham AL. The law offices of http://brentwdavis.com will be sure to treat your case with sensitivity and urgency.

More Reasons To Seek The Services Of A Bankruptcy Lawyer

By David E Buckley

There are many who believe in proceeding with filing for bankruptcy without utilizing the services of the bankruptcy lawyer. This can prove devastating if you are not familiar with the legal processes, documentation and most applicable options for your financial situation. There are many benefits offered when hiring legal representation to assist.

Reason 1) You can save a great deal of time and ensure that all legal matters are attended to according to regulation with legal representation. Many believe that not hiring a lawyer will prove more affordable in such matters. Unfortunately, this is not true as relying on a professional to guide you through the process will actually allow one to get more out of their bankruptcy claim.

Reason 2) Where a large number of assets are under threat, many can be saved with the services provided. Due to the many legal routes one may take, lawyers will be able to advise on which options will best suit your needs. Methods are based on current financial situations to determine whether one will have to liquidate the majority of assets in order to pay off debts.

Reason 3) There is also the option of engaging in negotiations with creditors and working out a suitable repayment plan. It is in this instance that the professional will have the means to work with a trustee in preparation of the necessary negotiations. It is also important to understand that the different approaches to handling this process will have different results when it comes to your credit.

Reason 4) There are specific debts that you will not be able to claim and can be advised upon by the bankruptcy attorney. If you are not clued up with regards to the law in your jurisdiction, you will not have the means to determine which options are available for your needs. The legal process will begin with an analysis of your current financial situation and which methods will help you work towards improving such circumstances.

Reason 5) There is a fair amount of paperwork that will have to be completed according to specific regulations and legal requirements. The good news is most bankruptcy law firm will handle most of this paper work for you. If this is not implemented accordingly, it could simply result in a delay in meeting with a repayment plan. In many cases, one will not need to file as bankrupt and the professional will be able to advise on the suitable strategies for financial freedom.

When selecting legal representation ensure that the individual is qualified, skilled and experienced. Complete a fair amount of research and determine whether they have handled previous cases similar to your own. Lawyers can handle all of the communication between yourself and the courts.

Choosing a reputable bankruptcy lawyer can assist in meeting the requirements to resolve your financial troubles. Hiring legal services can actually prove highly beneficial when it comes to meeting regulations, completing documentation and developing tailored solutions for desired outcomes of the case. Consider the options that are available for your needs, ask for recommendations or professional companies for the contact of experienced and skilled lawyers in industry.