Jon Arnold asked:




Only a few years ago, Congress made multiple huge changes to the bankruptcy laws which impacted how bankruptcy would be filed, and even who is eligible. For example, no longer can you file bankruptcy just because you are tired of paying your bills, but with the new laws, there is a defined set of procedures that must be followed for each chapter being filed, and your financial status will be evaluated under a microscope, where you must be approved before you can even file.

But one of the areas that was left pretty much untouched by the wide range of changes was Chapter 13 Bankruptcy. This chapter was originally constructed to prevent a home from being put on the foreclosure block. But with the massive number of foreclosures that are happening in the US today, it is unfortunate that many people still do not know that Chapter 13 Bankruptcy filing can still be used to prevent foreclosure on their home.

For the average consumer, there are three different types or chapters of bankruptcy that may be available to them, depending on their specific circumstances. The first one is Chapter 7 Bankruptcy, which is the most common type and is also sometimes referred to as a liquidation. Obviously the reason it is known as liquidation is because most of their debt is discharged by allowing the court-appointed trustee to liquidate all of their non-exempt assets. Even with this chapter, however, be aware that there are certain types of debts that cannot be discharged by going bankrupt.
Although it used more appropriate to be used by either businesses or people with substantial assets and income, another type of bankruptcy available to the consumer is Chapter 11, frequently also known as a business reorganization. This type does not wipe out debts, but rather it allows the person or business to reorganize its debt structure and make revised payments to the creditors, sometimes over a longer period of time, and sometimes also with a reduced interest rate. Creditors usually are willing to do this, since collecting their money over time and with interest is certainly better in their eyes than to have the debt wiped out completely via a different chapter.

The last type or chapter of bankruptcy available to the consumer is Chapter 13, frequently also known as the Wage Earner’s Reorganization. This type is the least expensive to file and is typically used by consumers who still maintain their ability to make their payment obligations, usually within three to five years. The total value of their assets which are classified as non-exempt is used as a basis and guideline for the amount that needs to be repaid over this period of time, as well as considering their level of income and any debts which cannot be discharged.

But what many consumers do not realize is that Chapter 13 Bankruptcy also allows property owners to stop foreclosure proceedings if they are behind on their mortgage payments. While the same can be said for the other chapters of consumer bankruptcy, Chapter 13 is particularly designed to permit the consumer to pay the delinquency in equal monthly payments for as long a period of time as 60 months (5 years). The mortgage lender has no choice but to agree to this, as long as all the other requirements and qualifications of this chapter are met.

The procedure to be qualified to file this chapter is more stringent than the others, since it involves a thorough examination of total debt and total income. No chapter of bankruptcy is any longer consider to be a “do-it-yourself” process with all the new legal requirements in place, so regardless of what chapter you are thinking about, it is strongly recommended that you consult with a qualified bankruptcy lawyer and ensure that both you and your property, combined with your specific situation, actually do qualify.

The biggest benefit that you can have with Chapter 13 bankruptcy, if you qualify and if you are facing foreclosure proceedings, is that it buys you time. That time can be used to make your current financial situation better, or it can also be used to find the right buyer for your property. If you move forward with this, keep in mind that the time you are granted with this is finite, and you need to start planning and take action NOW.

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Tobin R. asked:




It is understandable if you want to bury yourself in a pillow and wish your debt problems will go away magically. I mean who wouldn’t? Aside from the fact that those mounting debts can cause you a lot of stress, you have no peace of mind with all those creditors pressuring you to pay. Worse, you are not sure of where to get money to pay them all in full.

If you think about it, there are actually many options to get away from debts. One is through negotiating with your creditors to get a lower interest rate or perhaps an extension of payment period so your monthly payment will be lesser and more affordable. In this case, you need to be ready to justify you are worthy of a good deal by showing them you good credit standing.
Otherwise, you can opt for a loan consolidation where you take out a loan to pay all your debts on a reduced amount. Just be sure to find a reliable consolidation company who will stand as your mediator to negotiate for a reduced amount to your creditors and pay the loan diligently. If none of these seem to work for your current financial situation, then you can file for bankruptcy and work with Chapter 7 bankruptcy lawyer you who can help you go through the process.

The very first thing you need to understand is you current financial capability. Do you have the capability to take a loan that will pay off all your bills? Do you have enough assets or properties you are willing to attach for an equity loan? Do you have a good credit score that can make your creditors agree when you negotiate with them? Answering these questions is not as easy as you think. It will help you understand the relevance of all these when you have a debt management expert by your side. And if all hope seems to be gone to make things better, consult a Chapter 7 bankruptcy lawyer.

You may think that consulting with a Chapter 7 bankruptcy lawyer will cost you a lot and will turn your financial situation worse but you are wrong. Most lawyers offer free consultations to evaluate if you are truly suitable for this option. In other words, you are actually getting a free evaluation about your status so you will know if you need to file for bankruptcy or not. In this first meeting, you are actually being educated already so you’ll know what to do next.

So if you are really having a hard time managing your finances and dealing with your creditors, approaching a Chapter 7 bankruptcy lawyer may be the best move that you can ever make. The lawyer will help you evaluate your case so you’ll know your options upfront. In the end, you can make informed decision on how you can get away from your financial problem.

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