BANKRUPTCY

Most Americans love to have as much credit as possible because it makes life so much easier. Credit is a double-edged sword, however, because it can tempt to people into living beyond their means, and if they amass a lot of debt, and then they lose their job or their revenue source is cut off for any reason, then they start defaulting on their debt repayment plans.

This can lead to declaring personal bankruptcy. As part of the personal bankruptcy process, something called an “automatic stay” is put in place to stop all credit collection proceedings while the person’s bankruptcy and financial situation is figured out.

You may be on the fast track to debt hell and are looking for a way out, which is why credit counseling is now on your mind. This is definitely not a bad route to take if you think that you have little-to-no control over your ability to manage your debt. Many people who file for bankruptcy are required to seek counseling before they can get approved for a Chapter 7 or Chapter 13. On the other hand, taking the steps to get on track on your own is even better.

If you don’t already know what credit counseling is, lets start by understanding what it is…

As much as you may try, sometimes you cannot get a hold of your finances.

It happens. If you feel overwhelmed and credit counseling programs haven’t helped, you might be forced to declare bankruptcy. Declaring bankruptcy is a big step, so make sure you know how it all works before you decide.

We’ve answered a few typical questions about bankruptcy below.

What is Bankruptcy?

The phrase “automatic stay” is synonymous with what occurs after filing a bankruptcy. So if you think that you might want to start the process, it’s good to learn what this phrase means in greater depth, and what your rights are in association with this phrase.

What is Automatic Stay?

An automatic stay is a court order that occurs after filing a bankruptcy. It disallows any creditors that have been summed up in the process to try to collect their debts from you. In other words, after they’ve received the notice, they will be going against court orders if they contact you directly in any way (written or verbally). Most importantly, they are not able to sue you because at that point you are no longer responsible for paying the debt to them.

During bankruptcy proceedings, it is common to hand over rights to property and assets for liquidation; however, depending on what state you live in, you may be exempt from handing over certain items. It’s important to know what the federal bankruptcy rules of exemption are for your state so that as you go through the bankruptcy proceedings you’ll know what you do and don’t have to hand over for liquidation.

What Does Liquidation Mean?

If the process of filing a bankruptcy has left you wondering what all is involved, now’s the time to learn. While the steps leading up to the actual event are rather involved, there are still some bankruptcy proceedings to consider after filing has taken place. Let’s look at what they are:

• Automatic stay. The first step that occurs after filing a bankruptcy is the automatic stay. This is a notice that alerts debt collectors that they are no longer allowed to communicate with you regarding what you owe them.
• Meeting with the creditors. About a month later, the bankruptcy proceedings continue with a meeting with the creditors. During this meeting, you will discuss the filing and confirm that all eligible debts have been included and are valid. The trustee will attend the meeting and look for any discrepancies and inaccuracies that you’ve listed in your total debts owed.
• Property handed over for liquidation. In the meeting, if you have property that you have not listed as exempt, it will be given to the trustee to sell off as a way to pay your creditors. At this time, you will likely be informed that you are not allowed to give away, throw away, or sell any of your property without the court’s prior consent.
• Obtaining a discharge. After filing a bankruptcy it usually takes somewhere between four and six months to receive the actual notification that you have been relieved of your the debts claimed during the bankruptcy proceedings. Until you receive your discharge, you can ask that the entire process be dismissed.

If you’re having debt management problems, did you know there were several types of bankruptcy available to take advantage of? Some are meant for businesses while others were meant for personal finances, but it’s good to know there are last-resort options to help fix money problems.

While there are numerous types of bankruptcy out there, most people and businesses are only eligible for one or two of four options. Let’s look at what they are:

In a sad and historic day for American auto manufacturing, automotive manufacturer Chrysler has announced it will be filing for Chapter 11 bankruptcy. The process is said to be necessary due to its inability to manage insurmountable debt, and according to an administration official, will take between 30 and 60 days to complete. However, it will not affect the company’s day-to-day operations.

For nearly a year, American lawmakers have been struggling to find creative ways to curb the amount of foreclosures that are over taking the country. One such act would be to allow struggling home owners the simple act of being able to refinance their loans more easily, but unfortunately that has not been an easy battle. To force the hand of the lenders to require them to work with borrowers, steps have been made by Congress to allow bankruptcy courts to modify mortgage loans.

Despite previous efforts from the government to stop the amount of foreclosures through the “Hope for Homeowners” program put into effect under the Bush administration, the problem has actually accelerated. The Attorney General believed that by changing the Bankruptcy Code millions of homeowners would be properly assisted and able to keep their homes.

Everyone hopes to never be faced with bankruptcy. In fact, our financial budgeting, responsibilities and everyday behaviors are meant to ensure it never happens. However, all it takes is a lost job or a failed investment and suddenly it’s a slippery slope from cash and comfort to financial disparity.

With a lack of income, yet a need to make payments on everything from mortgage to your mode of transportation, sometimes your final option before foreclosure is to file for bankruptcy.