Philippa Munster

Staying ahead of your financial responsibilities is not always easy; sometimes finances end up leading us rather than the other way around. Bills start to pile up until we get too far in debt. Then, we're forced to stop and ask ourselves how we got in there. Sometimes, the guilt points right back at us. But, sometimes, bad things happen outside our control. When finances are so out of control, filing bankruptcy seems like the more viable solution and a way to get a new start.

Bankruptcy is a way to clear away uncontrolled debts. Each state has its own interpretation of bankruptcy laws and Chapters. Some state laws let you keep your belongings while others take over ownership of everything. According to nearly every state, the minimum time that bankruptcy must remain on credit history is seven years. You have no choice but to have this on your credit report during this time.
Most lenders will not consider offering you a loan until three years after the bankruptcy verdict.

Bankruptcy laws are very complex and come in various forms that follow laws written in bankruptcy chapters. The most common chapter is Chapter 7, which cancels or discharges all financial debts. Still, larger debts like a home loan must be paid off with collateral if possible or given back.
Chapter 13, however, states that you are to consolidate your debts into one payment made to the court for 3 to 5 years.
Many people who file Chapter 13 end up keeping their belongings. The trick to qualifying for Chapter 13 is you must prove that your monthly living expenses do not exceed your monthly income. Other common bankruptcy chapters are Chapter 11 and 12, which are used for corporations and businesses that are restructuring or calling it quits.

Many people assume filing a Chapter is a simple and convenient way to get rid of burdensome expenses. So, why don't more people file bankruptcy? Quite simply, your credit is ruined. For a long time after the bankruptcy verdict, your bad credit follows you around like a dark cloud. Every time you file for a loan, your credit report thunders, "Beware!" and banks won't look twice at you. Even when a creditor eventually offers you a loan, you can expect to pay the highest insurance rates, premiums and interest rates. In many situations, you'll have to take out a second loan just to cover the down payment on the initial loan.
While some people might not find that such a bad deal, these situations often spiral you farther into trouble. Rather than risking these bad offers, you should hold off a few years for your credit history to improve and then approach a better creditor.

Carefully go over any offer to consolidate your loans and debts. While these offers sometimes combine your troubles into one big sum, you should review how your debts would be paid off. The FTC (Federal Trade Commission) contains numerous reports online about scam debt-counseling services that do little more than make your situation worse. Some counseling firms, however, are much better than filing Chapter 13. The American Bankruptcy Institute at http://www.abiworld.org has great reports and reliable information to help you side step and handle bankruptcy issues.

Philippa Munster is the owner of Bay Bankruptcy which is a useful source for information on bankruptcy on the internet. For further details visit her archive of articles here: http://www.baybankruptcy.com/

This article courtesy of http://www.AllGoodLawyers.com/.
You may freely reprint this article on your website or in your newsletter provided this courtesy notice and the author name and URL remain intact.

AllGoodLawyers.com makes no representation, guarantee, or warranty (express or implied) as to the legal ability, competence, or quality of representation which may be provided by any of the attorneys or law firms which are listed herein.
AllGoodLawyers.com shall have neither liability nor responsibility for the results or consequences of any legal representation provided by any of the attorneys or law firms listed in this web site.

Any electronic communication sent to any of the attorneys or law firms listed herein, by itself, will not create an attorney-client relationship.