HOW CAN BANKRUPTCY HELP YOU.

The U.S. Bankruptcy laws were design to provide relief to individuals and businesses who can no longer meet their financial obligations. Whether the inability to pay ones debts results from a job loss, medical expenses, disability, divorce, or just general mismanagement, the Bankruptcy process can erase or substantially reduce your debt, providing you with the financial freedom to achieve your life goals. It will also prevent foreclosure and sale or repossession of your assets, and will automatically stay (suspend) any law suit or judicial proceeding filed against you. It is essentially a fresh start.

SYMPTONS OF THE NEED FOR DEBT RELIEF.

If you are experiencing any of the following you may be a candidate for bankruptcy.

1) Habitually late in your mortgage or credit card payments.
2) Accessing your savings or retirement plan to pay off debt.
3) Disability resulting in loss of earnings or earning capacity.
4) Defaulting on your credit cards or car loan.
5) Civil law suits to recover unpaid personal loans or credit cards.
6) Failure to pay local and federal taxes.
7) Borrowing from one credit card to pay another.
8) Accident or illness resulting in substantial medical expenses.
9) Notice of foreclosure on your home or repossession of your automobile.
10) Eviction notice for failure to pay rent.
11) Constant calls and letters from debt collectors.

Although considering Bankruptcy is a serious matter, it may well be your best option to save your home, prevent wage garnishment, delay tax assessments, and eliminate constant calls from debt collectors.

BANKRUPTCY ALTERNATIVES

There are many agencies and companies which offer "Debt Counseling/Debt Reduction Programs" as an alternative to bankruptcy. These companies offer to negotiate with your creditors to try to achieve a plan to pay a portion of your debt over a period of years. A typical program of this type is called a "60/60 plan" whereby your creditors agree to reduce your debt (not the interest rate) by 40% with payments calculated to amortize (pay-off) the debt in 60 months. This type of plan may work for the right individual who has a steady stream of income, a moderate level of debt, and has creditors willing to reduce the debt and accept the plan. Unlike bankruptcy, the creditors are not required to accept the plan, which many times makes it difficult to implement. The fees you pay the debt counseling company are generally in the same range as the fees required to file a bankruptcy petition. Your credit will likewise be negatively impacted by the implementation of 60/60 or similar plan.

TYPES OF BANKRUPTCY

There are generally two types of bankruptcy best suited to an individual, while there is a third option for businesses called Chapter 11. Individuals generally either file a Chapter 7 or a Chapter 13 bankruptcy. If you are married the bankruptcy can either be filed jointly or only one spouse may need to file depending on who in the marriage has more debt.

Chapter 7. Chapter 7 is called a liquidation plan. In this type of bankruptcy the individual or business submits all of his/her assets to the bankruptcy court for distribution to their creditors. However, many of your the assets, up to a certain level, are exempt from the bankruptcy including equity in your home, cash in the bank, automobile, personal furnishings and belongings, and retirement plans. In many instances individuals who file Chapter 7 are able to keep all or a majority of their assets while eliminating all their debt.

Chapter 13. Chapter 13 is a plan supervised by the bankruptcy court to pay back a portion of your debt over time. It is similar to a 60/60 plan discussed above except it is a plan, which with the approval of the court, must be accepted by your creditors. It generally has a payback period between 3 and 5 years and will pay back between 10% to 60% of your debt. A Chapter 13 plan may be the only relief available to an individual who has earnings higher than the median income for their household, or has a large equity in their home that would otherwise be available to creditors. Your attorney can advise you as to whether a Chapter 13 plan best suits your circumstances.

Chapter 11. Although available to individuals, this type of bankruptcy is generally used by businesses in an attempt to reorganize their operations. It provides an opportunity for the business to reduce or eliminate a portion of its debt, restructure loan and debt payments, and to terminate contracts and leases which are no longer in the best interest of the business operation.

Each type of bankruptcy is best suited for different sets of circumstances. Which type of bankruptcy filing is most appropriate for you will be determined by a review of your assets, debts and earning capacity. Your attorney will be able to guide you to making the proper decision as to whether or what type of bankruptcy is right for you.

BANKRUPTCY FEES

The cost of filing a bankruptcy petition depends on the type of filing and the complexity of each individual's situation. The more creditors and assets an individual has the more complex is the filing. Our firm is committed to structuring a predetermined flat fee and payment plan which will ensure that any individual in need of bankruptcy relief will be able to utilize our services. The filing fee paid to the court for a chapter 7 bankruptcy is $299.00 while the filing fee for Chapter 13 is $274.00.

EFFECTS OF BANKRUPTCY

The filing of bankruptcy will be reported on your credit report for up to 10 years from the date of filing. Although this negatively impacts your credit rating, generally those individuals filing for bankruptcy have already severely damaged their credit. Re-establishing credit after bankruptcy may be accomplished by obtaining a secured credit card. Also some car dealers will lend you money for the purchase of an automobile or with a co-signer. Making regular timely monthly payments will help restore your credit scores. In addition, the filing of a bankruptcy petition will not prevent you from obtaining student loans guaranteed by the federal or state government. The major effect of bankruptcy is to reduce or eliminate your debt to grant you the financial freedom to dramatically improve your quality of life.