Tips to Save Face When Facing Bankruptcy

In the ongoing economic downturn, many people will find themselves drowning in debts which they find hard to pay. In years gone by they would have lost everything but these days, a bankruptcy attorney will do his best to salvage the homeowner from this sticky situation. Bankruptcy lawyers will have all the necessary information to help the distressed person to at least keep something.

These days, those with huge credit card debts do not have to go into insolvency proceedings. There is Chapter 7 which will allow the person to hang on to some of his belongings and literally wipe out the credit card debt as long as some criteria are met.

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Bankruptcy Myths

Filing for bankruptcy ruins your credit for 10 years.

Not True. As with any other credit information, the fact of the bankruptcy can stay on your credit report for 7 to 10 years. (Remember, if you are considering bankruptcy it is highly likely that your credit rating has already been damaged, especially for the purpose of obtaining a home loan.) You can start rebuilding your credit, however, even before your bankruptcy is completed. Continuing to make your house or car payment on time can help you reestablish a good credit rating, as can making timely payments on a Chapter 13 plan or on any new loans.

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Do I Even Need an Attorney?

You may have an independent streak in you. There is absolutely nothing wrong with that. When it comes to financial issues though you may not have a choice but to ask for help. Asking for help can be an extremely humbling experience. No one wants to admit that they can no longer take care of their own affairs. The good news is you can still retain some dignity even by seeking the help of an attorney. How can this be? While a lawyer can assist you and inform you, it is still you who are making the choices and you who is going to be responsible for the results. Believe it or not, taking the final step to file for bankruptcy may be the best thing that ever happens to you.

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What Are the Different Chapters of the Bankruptcy Code?

The Bankruptcy Code is found in Title 11 of the United States Code. There are nine chapters of the Bankruptcy Code (Chapter 1 General Provisions; Chapter 3 Case Administration; Chapter 5 Creditors, the Debtor, and the Estate; Chapter 7 Liquidation; Chapter 9 Adjustment of Debts of a Municipality; Chapter 11 Reorganization; Chapter 12 Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income; Chapter 13 Adjustment of Debts of Individual with Regular Income and Chapter 15 Ancillary and Other Cross-Border Cases.

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What Is Bankruptcy and What to Expect From Lawyers?

When debts fall due, and the individual is unable to pay them, one of the options they could pursue is liquidation. After a declaration of destitution, the first time bankrupt will usually be discharged in approximately a year. Although destituteness is publicly advertised, and has a bad stigma attached to it, it must be considered when dealing with insolvency cases of individuals.

Faced with the prospect of liquidation, individuals should immediately look for alternatives. One such alternative could be the IVA or Individual Voluntary Arrangement. For debts that cannot be paid, insolvency is one of the solutions. With repudiation proceedings, you can make a fresh start, freed from the overwhelming debts, provided some restrictions are followed. You also make sure that the assets owned by you are shared equally or fairly among your creditors.

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Common Mistakes to Avoid Prior to Filing Bankruptcy

Filing for bankruptcy protection is an anguishing decision few take lightly. The decision of when to file bankruptcy is often driven by urgent factors beyond one's control, such as a looming home foreclosure, sudden job loss, wage garnishments, or a lawsuit.

But if you have the luxury of time on your side and can do some planning, you can avoid some major pitfalls that can negatively affect not just you but friends and family as a result of your bankruptcy.

1. If you think you may need to file bankruptcy in the near future, STOP using your credit cards! Whether you ultimately file Chapter 7 or Chapter 13 bankruptcy, a legal presumption is raised that you were already insolvent during the 90 days prior to filing bankruptcy. During this 90 days, any new debts you incur, such as new credit card purchases or cash advances, may give the credit card company or other creditor reason to sue you in your bankruptcy case. The Bankruptcy Code gives such creditors the benefit of a legal presumption that new debts incurred to them during the 90 days prior to the bankruptcy filing were incurred through fraud. The legal presumption means that the burden of proof switches to the debtor, who must prove that there was no fraud. If the creditor sues over such new debts, what do they stand to gain? After all, the debtor is already in bankruptcy, right? The creditor stands to have that new debt declared non-dischargeable by the bankruptcy court. Debt that might otherwise be discharged, can be declared by the court to be non-dischargeable, and thus survive the bankruptcy.

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Bankruptcy Myths Busted

Bankruptcy Myths:

Myth 1: The new bankruptcy laws have made it too difficult to eliminate your debt.

False. The new bankruptcy laws only changed the method by which consumers qualify for the different types of bankruptcy. They don't prevent people from filing under either Chapter 7 or Chapter 13 and in most cases people are still able to get the same relief now as before the law changed.

Myth 2: I'll lose everything I have.

Not true. While every state has different exemption laws, In Oklahoma, most people who file bankruptcy do not lose anything they want to keep.This is because Oklahoma has strong exemption laws that protect certain property like your house, your car, household goods, IRAs, retirement plans and a major portion of you personal injury claims from being seized by your creditors. In the rare event you have property that cannot be protected with an exemption you can file a Chapter 13 bankruptcy that allows you to catch up on late payments, puts a hold on spiraling interest rates and enables you to keep your house, car or truck as long as you continue to make the current payments.

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Divorce and Bankruptcy

Divorce and bankruptcy can each create a difficult time in a person's life. Unfortunately for some couples, financial problems are what lead them to divorce. While an impending bankruptcy and divorce can seem very overwhelming, there are a few things to know to help ease the process.

First you will want to decide which comes first. For most people, filing for bankruptcy together works best for them. You and your partner got into financial trouble together, so you should get out of it together. Filing for bankruptcy before divorcing can actually help simplify divorce by settling how the remaining debts will be divided. Also, since you will file together, you will be saving money on one case versus two.

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