Most Common Reasons For Filing Bankruptcy
Monday, September 28th, 2009One of the most debilitating things someone can go through is filing for bankruptcy. No one thinks this possible could happen to them until reality sets in and bankruptcy is the last resort. This usually happens when someone is unable to keep up with their financial obligations such as car loans or credit card payments. Not only is it rough on the debtor (or the person who owes the money) but it is hard on the creditor as well (the person, business or municipality to which the money is owed).
While it is usually the debtor who files for bankruptcy, there are the rare occasions when the creditor might do so. This is called involuntary bankruptcy and generally occurs when the creditor is owed a very large sum of money. Creditors have little comfort when trying to collect debts, and therefore are somewhat relieved when someone files for bankruptcy because, no matter how long it might take, they will get their money back.
When someone files for Chapter 7 bankruptcy, their assets are combined and then doled out to the creditors. This form of “instant gratification” is most favored by creditors since they get their money up front. However, when the debtor files for Chapter 13, the creditors are receiving money on a fixed payment schedule. It may take longer to collect what is owed, but they will get the money. In these cases, bankruptcy creditors are almost like loan sharks; they are always trying to get their money. On the other hand, bankruptcy is frowned down upon by creditors because they are afraid they will never get paid.
The Chapter 7 bankruptcy process is the easiest of all such processes. It’s often referred to as straight bankruptcy. Chapter 7 is a total liquidation process. The debtor will turn over all non-exempt property to the trustee who then will convert it to cash for distribution to the creditors. The debtor will receive a discharge on all debts usually within 4 months. In the vast majority of these cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively new fresh start at life again.
The following reasons are the most common for filing bankruptcy:
Government Grants – Find a Government Grant
Monday, September 28th, 2009Government grants are a way that people can get assistants from the government. There are millions of dollars that are available each year and a lot of that money goes unused mainly because people do not know about it or how to get this money. If you have a business or are having debt problems then you can qualify for money to help you out.
Find Free: Government Grants Now
It is important to know that it is going to take some effort on your part to find a grant that works for your needs. Understand that not all grants are the same and it is important for you to get the right grant or when you apply you could be denied.
Get: Free Grant Money
You want to make sure that when you search for a government grant that you know how much money you are going to need. The best way to do this is to make a list of all the outstanding bills that you currently have and make sure to include everything. Remember that you want to get enough money so that you can pay off all of your debt and by doing this you can achieve having less stress in your life.
Many people are struggling with credit card bills and getting help form the government may be your best option. You need to decide if a debt consolidation loan can work for you but remember that you will have to pay a loan back. Using free grant money will help because once you get the money it is yours.
Remember that getting out of debt should be your number one priority. Finding a government grant to help you to accomplish this is key to paying off your bills and living debt free.
What Does the Ftc Suggests on Debt Relief?
Monday, September 28th, 2009When it comes to such important issues, it is a good idea to use the advice of those who know about the subject. Let’s see what the Federal Trade Commission suggests on this particular topic.
The main thing that the FTC suggests is that you postpone the decision of filing for bankruptcy till after you have analyzed all the other alternatives out there. This is due to the fact that bankruptcy should be considered a last resort and the FTC strongly suggests against taking that path unless absolutely necessary because the detriment that it implies to your financial and credit situations is overwhelming.
Three Options To Obtain Debt Relief
The first alternative that the FTC suggests as means to obtain debt relief, is to talk with your creditors. Sometimes you are entitled to change the terms on your repayment program by the very contract you signed or due to the law. And even if you are not, a lender will certainly prefer to negotiate a new repayment program than to pay the costly charges of collector agencies or the legal costs of a court case.
If you are not comfortable with the above task, you can hire a credit counseling agency. These agencies will negotiate with your creditors for you and they’ll put their expertise to work so as to get for you new repayment programs, lower interest rates and sometimes even cuts on your debt interests or principal. Some of these organizations are non-profit and charge little or no money but even those that are not, won’t charge you high fees and will save you a lot of money.
The FTC suggests, as another option, to consider a second mortgage or home equity line of credit. These two alternatives are financial products based on equity that provide a fair amount of money at very reasonable rates and with a flexible repayment program. However, the FTC also states that these options should be considered carefully because the loans and lines of credit based on equity are secured with your property and thus, you risk repossession if you fail to repay the money.
Costs And Other Considerations About Bankruptcy
If the above alternatives won’t do any good for you, then, bankruptcy may be the only choice. Bear in mind however, that bankruptcy is not a simple or inexpensive process. There are two types of bankruptcies: Chapter 13 and Chapter 7. The filing fees are around $300 dollars, chapter 13 being slightly cheaper. Chapter 13 provides you with some benefits like the possibility of keeping a mortgaged property and work out a repayment plan to cancel your debts with advantageous terms without having to surrender all of your assets.
Chapter 7, on the other side, is a straight bankruptcy where all your assets are sold in order to repay your debts and only after all your debts are canceled the remaining (if any) is handed over to you and your bankruptcy is discharged. Bear in mind also that not all debt is erased with a bankruptcy process and you won’t be able to keep all your assets; not even with Chapter 13.