File bankruptcy? then rent
How you can file bankruptcy
bankruptcy filings are at an all time high. foreclosures are rampant and the number of homeowners who have already lost their homes has escalated over the months. It gives a very gloomy picture of the economy. And this is the true picture. earlier the economy thrived because of consumers. nevertheless, consumers are the worst affected now and the credit crunch has taken away their peace of mind. the panic stricken debtors are so much in debt that for very few debtors, the bankruptcy alternatives are working. You generally file bankruptcy if the other debt relief options fail to work for you.
the new federal bankruptcy laws were introduced so that the number of consumers filing bankruptcy is minimized. the new laws have however not prevented consumers from filing bankruptcy. earlier you could declare yourself bankrupt quite easily and the norms pertaining to bankruptcy filings were not rigid.
you can file bankruptcy on your own or with the help of a lawyer. It is always better to have someone who is representing you legally. matters get simplified and less complex. under the new law that came into effect on october 17th 2005, you have to take a credit counseling session. the credit counselor has to be approved by the u.s. trustee.
you can file for chapter 7 or chapter 13 bankruptcy. the bankruptcy code is designed in such a manner so that it benefits not only the lenders but also the consumers.
what happens in chapter 7 bankruptcy?
chapter 7 bankruptcy is also known as “liquidation” bankruptcy discharges almost all your unsecured debts. When you file chapter 7 bankruptcy, your non-exempt assets are sold off so that they can be converted into cash to pay off your debts. In case you have no non-exempt assets, your unsecured debts are discharged excluding a few.
As per the new bankruptcy laws, you have to take the means test to qualify for chapter 7 bankruptcy. in means test, your income is compared to the median income of a similar household in the state you live. If your median income is less than the median income you qualify for chapter 7 or else you can opt for chapter 13 bankruptcy.
what happens in chapter 13 bankruptcy?
in chapter 13, you are given a repayment plan and you are supposed to pay off your debts accordingly. You don’t have to lose your assets as your assets are not liquidated to pay off debtors. however, your income should be enough to make the monthly payments regularly.
whether it is chapter 7 or chapter 13 bankruptcy, it stays on your credit report for a period of 7 to 10 years. your chances of getting fresh credit also diminish. there are many employers who don’t recruit candidates who have filed bankruptcy as it reflects financial irresponsibility.
