More often than not, the person who is facing financial ruin files for bankruptcy.

Now, what these laws deal with is settle the debts with those who are owed money, often a small part of the total owed. It also gives the non-payer a second chance since the law frees him of most of the debt that is to be paid. How exactly is this achieved? Well the answer is simple – this is where the distribution of the “non-exempt” assets comes into play. Also, the person going into bankruptcy does not have any control over his available funds.

During the course of the whole action, the person who is in debt is also shielded from further collection action by disallowing the creditors to sue or attempt to collect the entire debt.

However, many often pretend to be in a bad way just to escape paying off the money that is owed, even though one has the means to do so. Another deception would be receiving goods that one has no intention of paying for. Many use loopholes to get their business done that cannot always be declared as illegal but are not exactly legal or ethically right. This is similar to tactical bankruptcy which is used for an individual’s own benefits and which is not against the law specifically, but can prove to be dangerous. Today, people face financial devastation more often than in earlier years. Companies do not make the grade, so they file for bankruptcy. Sometimes these cases are categorized.

Today, however, they are not treated in a different manner. They are not made to undergo intense scrutiny in one area when the reason of the bankruptcy is in a different area. This only results in a waste of time for both the parties.

Don’t file bankruptcy if you are liable because it is the last option. It is always better to hire a financial firm and settle the liability but don’t file bankruptcy.

In the current market and economic situation, the people who are facing huge liabilities are worried because they are not able to pay back the amount on time. Everyday, the interest rate is increasing and it is becoming very difficult to come out of the situation. The people are advised to reduce the liability but don’t file bankruptcy at all. Even if you run out of money and have nil balance in your account, you have to pay back the liability that you owe to the lender. However, there are ways to settle the liability claims if a person is deeply drowned in the burden of arrears.

The financial companies and the banks provide monetary help to the people who apply for the liability relief. The new rules and regulations of the financial relief network is that the people should request for the settlement of liability in an organised manner. Their message to the people is don’t file bankruptcy unless every door has been closed for you. There are certain formalities and paperwork to be completed before approaching the company for the liability settlement. There are many other options to reduce the liability of an individual.

If you don’t file bankruptcy, then your assets will remain safe. You should also be confident about the new loan that the financial firms provide while settling the claims. Avoiding too many expenses as well as maintaining the limit of plastic money will help you to stay away from huge liabilities. The financial firms, banks and the privatised money lenders advise the people to settle the claims rather than filing a case of nil balance. If a person is able to get monetary help from the legal financial companies, then he can easily clear off the dues and arrears.

You can also approach the firms and ask for discounts on the loan against them. However, the settlement company will help you to get the best reduction on the liabilities that you have. If you totally run out of cash and if there is no alternative way left, then you should file liquidation and show the proof through the bank statements. In this way, you can avoid huge liabilities and stay relieved.

If you have over $10k in unsecured debt it would be wise to consider debt settlement. Creditors of unsecured debt are very concerned about collecting on their delinquent accounts and you can take advantage of this. Consumers and small business have never had a better opportunity to eliminate debt through a settlement process. To locate legitimate debt settlement companies in your state check out the following link:

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You must first convince yourself that bankruptcy is not the ideal debt help. For debt help you need to choose other options while avoiding bankruptcy.

After ruling out the option of bankruptcy, you are left with choices like consolidation and settlement for debt help. In the option of arrears settlement, you are aiming to clear the liabilities in a shorter span of time. For this, you talk to a settlement company. This company will conduct talks with the creditors for cutting off a percentage from the arrears principal.

On the other hand, for debt help using liability consolidation, the aim is in reducing the interest rate. You need to calculate and check which of these solutions are better for you. For implementing any of the above mentioned solutions, you have to be the customer of a good firm that is known for settling the problems of its customers effectively.

The success of the company lies in its ability to convince your creditors in a manner that becomes favorable for you. The better the negotiation, the more is the reduction in arrears. After all, customers pay whatever fee the firm demands so that in the end, he gains as much money as possible.

Let us now discuss the impact of bankruptcy. It is true that not all will consider bankruptcy as only those who are having severe liability issues will give it a thought. In actual practice, bankruptcy is not as easy as it sounds to be. It may sound sweet but the person in arrears will actually suffer for a long time. You have to really strive hard to re-build the credit history.

Bankruptcy does not mean that all liabilities are paid off. You will still have more arrears that you need to pay off. The general advice is not to consider bankruptcy as a solution for unsecured liabilities. It is also common knowledge that the person who has chosen to file bankruptcy is diminishing his credit ratings.

Normally, when a person applies for a loan, his credit score is taken into consideration. If the person is having a poor credit score, he will not be considered for loans. As loans are an important part of life, it is better to not reduce the credit score by becoming bankrupt. There is no need for bankruptcy as there are better solutions.

If you have over $10k in unsecured debt it would be wise to consider debt settlement. Creditors of unsecured debt are very concerned about collecting on their delinquent accounts and you can take advantage of this. Consumers and small business have never had a better opportunity to eliminate debt through a settlement process. To locate legitimate debt settlement companies in your state check out the following link:

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With Chapter 7 bankruptcy, the consumer liquidates all of his or her non-exempt assets. The money gained is then used to pay back both secured and unsecured debts. In this way, the consumer is able to receive a discharge of all of the debt he or she had prior to filing the bankruptcy petition. In addition, the consumer may keep certain exempt property, though there is a limit to the value of the items kept. Items that may be eligible include:

Family Home
Car
Household Possessions

By filing a Chapter 7 bankruptcy, the consumer can prevent creditors from calling or from making contact in any way.

With a Chapter 13 bankruptcy, which is sometimes referred to as a “wage earners” petition, the consumer actually repays the debts that were created prior to filing bankruptcy. By using the money he or she earns after the bankruptcy, the consumer generally develops a repayment plan for the next three to five years. After completing all of the scheduled payments, the consumer is granted a discharge. As with a Chapter 7 bankruptcy, a Chapter 13 bankruptcy puts an end to phone calls from creditors. In addition, they creditors may not take any legal action against the consumer.

Just as there are two forms of bankruptcy an individual may file, businesses also have two choices: Chapter 7 or Chapter 11. A good lawyer will work closely with each of their clients in order to help them determine which form of bankruptcy is best for the future of their business. In addition, a lawyer should never never push a business to file for bankruptcy if there is a possibility the business can work with its creditors to restructure its loan agreements. Of course, if bankruptcy is the best option, a lawyer will file the appropriate paperwork on the client’s behalf.

With a Chapter 7 bankruptcy, the company liquidates all of its non-exempt assets so it can pay its creditors. With a Chapter 11 bankruptcy, on the other hand, the business reorganizes its debt and the bankruptcy court supervises the estate. Unlike some other states, there is no trustee appointed to the state when Chapter 11 if filed in Minnesota. A Chapter 11 bankruptcy must be approved by the bankruptcy court during a confirmation hearing and the business is responsible for paying all administrative expenses. In addition, the business is still expected to repay its secured creditors.

Getting Creditors Fair Treatment During a Minnesota Bankruptcy

Services a lawyer can provide to creditors include:

Proof of Claim
Reaffirmation Agreements
Attending 341 Meetings
Filing Motions for Relief From Automatic Stay in both US Bankruptcy Courts and in the District of Minnesota

Your lawyer can also provide creditors with representation when involved in a contested bankruptcy litigation. This includes:

Preferences
Fraudulent Transfers
Adversary Proceedings falling within Bankruptcy Rules 7001-7087

If you think that you may need to declare bankruptcy, it is essential that you contact your lawyer right away to start the proceedings.

You already know that life after bankruptcy would be the same or worse than before filing for bankruptcy, so we’ve compiled everything you need to know on how to avoid bankruptcy altogether.

How to Avoid Bankruptcy – Your Top Choices:

1) Find a Debt Management Solution Enrolling in a solid debt management solution that is very successful can truly help you avoid bankruptcy. Although, there are only a few types. Bank sponsored programs like Debt Consolidation or Consumer Credit Counseling are no better than filing bankruptcy. Debt Negotiation or Debt Settlement should only be used to settle medical, utility, or other non banking type bills. Debt Termination or Debt Cancellation has recently become the #1 proven way to wipe out your unsecured bank loans or credit card debt.

2) Get a Debt Consolidation Loan Most American’s choose this option to avoid BK first if they are still current on existing loans, or are just about to get behind. Most of the time the option is exhausted before anyone even considers alternatives to bankruptcy.

3) Limit Borrowing and Reduce Debt This is a great option to avoid bankruptcy. Of course it’s easier said then done, and that’s most likely why you’re here.

4) Ask Friends & Family for Debt Help Borrowing at zero interest from friends or family if possible is one way to get debt help. Selling off your assets, or bartering something you have or can trade for debt relief to avoid bankruptcy is another option.

5) Get FREE Government Money While this seems to be a highly searched term on the web and sounds very patriotic, it is highly unlikely that Uncle Sam will be giving out Free Government Money that doesn’t need to be repaid, and if he were, we probably wouldn’t receive it in time to save ourselves in the moment.

6) You Can Get Out of Credit Card Debt The number one way how to avoid bankruptcy is to eliminate credit card debt and most other unsecured debt. We know it may sound easier said then done. It is now, in fact, easier to do than you could ever imagine.

How to Avoid Bankruptcy – Banks Do Not Lend Their Own Money

The truth is, banks and finance companies do not lend you any of their own, their depositor’s, or investor’s money.

Once you learn the truth, we know you will be astonished. And no matter what, you will learn how to avoid bankruptcy for the rest of your life, we’re sure that’s worth knowing.

Chapter 7 Bankruptcy Restrictions
The most common form of bankruptcy just got a little more exclusive. Under the old rules people could decide which chapter of bankruptcy was best for them- most choosing chapter 7. However, those with higher incomes must now be aware that they may not qualify to file for chapter 7 bankruptcy and will be forced to file under chapter 13. The gauge they use to decipher “high income families” is to compare your current monthly income with that of the median monthly income of a family of similar size in your state. Another factor to account for is how you current monthly income will be calculated. It is not what you are currently making at the time when you file for bankruptcy but rather an average of your income from the six months prior to making your claim. This poses a big problem for those who are filing bankruptcy after recently losing a job.

Restrictions on Lawyers
Among the new laws lawyers much personally vouch for the accuracy of the information provided. Thus, time spend on each bankruptcy case will increase, in turn driving up your lawyer bill.

Can You Live On Less?
Under the old rules, those who filed for chapter 13 did have to devote all disposable income to a payment plan. The new laws make this a little more challenging. In addition to handing over all disposable income, chapter 13 filers will have to calculate that amount from an expense amount allowed by the IRS- meaning they get to dictate what your living costs should be. Keeping in mind under chapter 13 you are still required to calculate disposable income according to an average of what you had made over the last six months.

Value Your Property at Replacement Cost
In the past heirlooms and other property that a debtor might want to keep were expected to be of little value- deeming them exempt. However, new laws force you to value all property at retail value taking into consideration age and condition- a requirement that, in most cases, will inflate the cost of your property leaving you at risk of losing it.

Don’t Count on State Exemptions
The new rules entail that a bankruptcy filer live in a sate for at least two years in order to gain from a state’s exemption laws otherwise they can only claim those exemptions of the previous state in which they lived. The same goes for homestead exemptions only this requires over 40 months of residency.

When the new bankruptcy law goes into effect it will be harder for anyone to file for chapter 7 and chapter 11 bankruptcy. Filing for chapter 13 bankruptcy will be your most likely option.

What is Chapter 13 bankruptcy? It is an option that is given to those who have any kind of steady income. Basically, anyone who has a job. It is a payment plan and not a way to wipe a way your debt. Which means the days of wiping the slate clean are over. However Chapter 13 does protect your assets. The court devises a payment plan in which you are to pay to a trustee that is appointed by the court. Usually the payments are to be paid off in three years time. There are some exceptions, but that is up to the courts to decide.

So now that the bankruptcy law is changing what are some things people should do to avoid debt?

One very important thing is to never live outside your own means. If you have credit cards don’t use them as if you will have the money every month to pay the minimum balance. Be prepared for the unexpected such as a loss of your job or loss of any other source of income. This is where some people get into trouble. Protect yourself and your assets by being insured. Some people get into debt due to unexpected medical expenses or property damage. When you don’t have a way to help cover these expenses you will find your self in some kind of debt.

Try and keep some money off to the side in case some kind of unplanned expense should arise. Have some kind of back up plan to avoid the need for bankruptcy.

One of the reasons for the bankruptcy law change is because of over use of the system. There are actually some people who pre plan filing for bankruptcy as they abuse their credit cards. It sounds hard to believe, but it is true.

One may ask how this is fair to the people who didn’t do anything wrong and still landed them self in debt? Unfortunately changes in the law aren’t always fair to those who did nothing wrong. As the old saying goes, ” It only takes one bad apple to spoil the bunch”.

The only thing we can do now is become more responsible about our finances. Take more steps to avoid the need to ever file for bankruptcy.

You may have been advised frequently to file for bankruptcy for debt relief. Well let me tell you frankly, it is easier said than done. You need to understand all the NUANCES of bankruptcy before taking the leap. Given below are a few complexities of bankruptcy.

It is a legal procedure.
You need to qualify for bankruptcy.
You will enjoy protection only on exempt property.
Exemptions are laid down by each state and vary drastically.
As per new laws if your income is above the median income level you will no longer be able to take the advantage of the fresh start.
Your advisors on debt relief may not tell you this but let me explain it to you. As per earlier laws you enjoyed two types of protection on bankruptcy. The first is on your current assets and the second on future earnings. Your personal assets that are specified by the state laws are exempt from obligation. Future earnings were also not under obligations so that you could go in for a fresh start after the completion of the proceedings.

Now here comes the caveat as per the new bankruptcy laws. As per the current reform bill if a debtor’s earnings are higher than the median level he will no longer be eligible for a straight bankruptcy. He will have to file for bankruptcy under a new version of chapter 13. Under the new bankruptcy laws the debtor will have to propose a repayment plan using a large proportion of his future earnings to meet his debt obligation. This arrangement will have to continue for almost five years.

So think before you take the leap and file for bankruptcy as debt relief. New Bankruptcy Laws may not be so friendly.

There has really never been a more advantageous time for consumers to try and eliminate unsecured debt. Creditors are very concerned about collecting and most have government money to make eliminating some of your debt financially feasible.

Check out the link below to locate legitimate debt relief companies in your area:

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For businesses, relying on issuing credit, the new personal bankruptcy law is doing great, reducing personal bankruptcy claims from the thousands to double digits.(In the short run).

However, lawyers working with the actual people filing for bankruptcy say that the new law is seriously flawed because it puts more financial burdens on already broke clients and reduces potential debt repayment to small businesses.

And then of course you have the credit card companies charging high interest rates which in quite a few cases caused the bankruptcy in the first place.
According to some financial specialists, much of the debt people accumulate is a result of keeping up with the Joneses and not thinking ahead.

For 80% of clients counseled each month, the debt is credit card related and averages $32,000 – a result of six to eight cards. Consumer credit organizations say the new law provides debt-reducing strategies for those considering filing bankruptcy and curbs abuse.

Under the new law it has become a requirement that the person filing bankruptcy obtains credit counseling both before and after filing for which that person will be charged..

So now the consumer would then know the advantages and disadvantages of declaring bankruptcy. Yet it seems merely another expense for an already financially stressed individual.

People filing bankruptcy in general are not overspenders, but merely faced with temporary financial disasters such as medical costs, layoffs, a divorce, gambling debts or other crises. Before you can file bankruptcy,you are now required to complete credit counseling with an agency approved by the U.S. Trustees office.

This credit counseling is designed to help you determine whether or not bankruptcy is appropriate.

Once you complete your bankruptcy, the law requires you to attend another credit counseling session.

These are new requirements, before this law was passed the law did not require a person to go through counseling either before or after the filing of bankruptcy.

Second, under the old law, a person could decide to file under Chapter 7 or Chapter 13. Under the new law, the court will look at your monthly income and apply a means test relating to the state in which you live. If your income is less than or equal to the medium income then you will be allowed to file Chapter 7 which in effect will give you a clean slate.

This medium income can vary from $28,000 in Missouri to $56,000 in Alaska. If your income is greater, you may be forced to file Chapter 13 unless you can demonstrate you do not have enough disposable income.

Under Chapter 13 you will not get a clean slate but will have to make payments on your debts.

Also, your attorney now has to personally certify that your bankruptcy filing is accurate. This means more work for the attorney, with higher legal fees.

Advantages of declaring Bankruptcy:

Legal protection from creditors
Takes care of all or most debt
In some cases, can keep home and car
May stop complete financial ruin
Provides a fresh start

Disadvantages of declaring Bankruptcy:

Bad credit
May have to repay partial debt load and return collateral to creditors
May lose assets, including house and car (If the house is worth more than a certain amount).
Bankruptcy becomes public record, and
Remains on credit record for seven to 10 years

“In the past, a bankruptcy offered a fresh start for the filer,” said Columbia attorney Gwen Froeschner Hart. “The new federal legislation offers language directed at helping creditors.”

If you analyze credit card expenses for most people you’ll see that they often include medical bills and day-to-day expenses for the elderly or those earning low or fixed incomes. Records show that 50% of credit card holders do not pay their full credit card bills every month.

33% of the population can’t afford medical insurance so have to charge their prescription drugs.
With the recent Medicaid cuts and rigid bankruptcy legislation who knows what is going to happen to these people.

There are some who say consumers are abusing creditors. The irony is that credit card companies are begging for customers and offering large amounts of unsecured credit, yet at the same time, lobbying for stricter debt controls.

In the previous years many financial institutions suffered a heavy loss due to increase in bankruptcy cases. Observing the financial loss the federal government made changes in the bankruptcy law and some are as follows.

According to the new law, consumers have to measure monthly income. The consumer also has to pass a mean test. The purpose is to evaluate the expenditures of consumer’s household and normal life and the amounts of debts consumer is paying monthly. If these all-outgoing amounts are less than your income, then consumer can file for bankruptcy other wise can not apply for bankruptcy and then the only option left is to go for debt settlement.

According to new law some agencies are nominated to evaluate the financial position of the consumer. To apply for bankruptcy, consumer must have to attach the report for that agency. If the agency declares that the person is rich enough to bear his expenditures and debt installments easily then the option of debt settlement will also be ended.

It is quite tough these days to qualify all the steps amended in new bankruptcy law made in 2005. That is why it is observed that the new bankruptcy law is making debt settlement industry more popular. If someone files for bankruptcy and fails then he has to pay forcefully and it will be a bad impact on negotiation deals with the creditor. And these days the lawyers are much expansive to file bankruptcy. Rather than hiring an expansive lawyer for filing bankruptcy, demolishing financial future, passing different tests of qualifying and to present you in front of a court and face questions of court is quite tough. Whereas the process of negotiations with the creditors is quite simple and risk free. So this trend has been seen that new bankruptcy law is making debt settlement industry popular.

If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals. To find legitimate debt reduction help in your state and get free debt advice then check out the following link.

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