Start A New Chapter In Your Life - Filing Personal|
by Philippa Munster
Which way are your finances leading you? Do you direct your
financial picture or are your debts telling you how to spend
your money? Debt has a funny way of piling up so high that
sometimes you're forced to stop and ask how the situation
got so out of control. While sometimes you can point the
finger at yourself, other times the guilty source is out of
your control. At this point, filing bankruptcy seems a lot
better solution than remaining at the bottom of the pit.
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.
The complexities of bankruptcy are outlined in bankruptcy
Chapters. Chapter 7 generally cancels (discharges) all
financial obligations. However, if a larger debt like a
home mortgage can be paid off with collateral, the person
must do so or give up the property. According to Chapter
13, your debts are consolidated if you can prove that your
monthly income exceeds your monthly living expenses. You
then make a payment to the court for the next three to five
years. Many Chapter 13 filers end up keeping all of their
properties. Chapter 11 and Chapter 12 are other common
bankruptcy Chapters that are reserved for restructuring or
closing corporations and businesses.
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
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
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