With speculation rife that the US is heading for a double recession, many people are contemplating filing for bankruptcy protection. If you are burdened with debt and considering bankruptcy, it would do you well to consider what bankruptcy really holds for you. On one hand, bankruptcy protection is not the end of your financial life; on the contrary, it could be your financial life saver. But on the other hand, filing for bankruptcy can be a rough ride.
I’m going to be upfront and tell you the real deal behind bankruptcy and how to survive a bankruptcy filing.
They say the best remedy is prevention. Here’s a tip that can possibly help you avert a bankruptcy filing. Go for credit counseling classes (something you will eventually have to do after filing for bankruptcy anyway). If you go for such classes before filing for bankruptcy, you will learn useful debt management tips that might help you prevent bankruptcy.
Bankruptcy is the best way to clear your unsecured debts like credit card bills, medical expenses, phone bills and any loan that is not backed up with some collateral. But the downside to that is filing for bankruptcy will adversely affect your credit rating unless you do something about it. Here’s what you should do.
Completely pay up one or more of your credit cards before filing for bankruptcy. You may need to raise some cash to pay off your card by liquidating some assets that have fewer consequences. Do it, because by bringing your card balance down to zero, this card will not be listed as one of your creditors and hence, even after filing for bankruptcy, you can keep the card to build up credit at a lower interest rate than you could possibly get after bankruptcy.
Here’s another tip to help you protect your assets from creditors. Before filing for bankruptcy, do not deposit any money at the banks where you have credit card or loan accounts. They can seize your deposits if an account goes delinquent, as yours is about to.
However, bankruptcy is not the panacea for all your financial ills. Bankruptcy will not clear away secured debts like your house, car or anything that has a lien on it. But don’t worry, if you have been making your payments (at least partially), chances are you won’t lose these important assets when you file for bankruptcy. Also, even though you file for bankruptcy you will still need to pay alimony, child support, student loans, income taxes and the like as these are financial obligations given protection under the law.
If you like these tips and want to find out more about how to survive a bankruptcy, discuss your situation with an experienced bankruptcy attorney. The bankruptcy process is getting more complex so it is advisable to seek legal counsel. You should be wary of bankruptcy specialists who charge high fees. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Oct 7th, 2011. Comment. 
For some people, getting sick means going bankrupt. Here’s the true story of a couple who experienced just that.
The husband, a man without much education, worked for minimum wage at a foundry sweeping floors. The wife worked before coming down with cancer. They could not afford the medical bills and were not on any social or welfare program, neither did they have insurance. As a result, the hospital started garnishing 25% of the husband’s salary.
Eventually, they could not sustain their expenses and filed for Chapter 7 bankruptcy that allowed for complete liquidation of whatever little assets they had to pay for their debts and cancellation of the rest.
The wife’s condition improved but a few years later, she experienced a relapse of the cancer. This left them with another huge hospital bill and further garnishment of the husband’s salary. But this time, they could not apply for Chapter 7 again as it had not been 8 years since they had taken it the first time. This compelled them to apply for Chapter 13 bankruptcy instead that provided for gradual repayment of debts over time up to five years. But this left them very little to live on after paying for the medical costs in installments each month.
This went on for 2 years. Then the husband fell ill. Despite his sickness, he worked for 2 days more before going to the hospital. He died within a few hours of pneumonia. He was just 62 years old. Now his widow was left with no means of support and eventually lost her home, still straddled with about $30,000 in medical expenses she could not pay. Her attorney who had some documents for her to sign, tried to locate her but she had moved without leaving any forwarding address. Nobody really know where she is today.
There are those who feel that the new Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that took effect in 2005 contain lots of inequalities. For instance, where you live does make a difference. Judges in Tulsa in the Northern part of Oklahoma would interpret the law differently from those in the Eastern district. The new law states that only those whose income is below a certain threshold qualify for Chapter 7 while everyone else has to apply for Chapter 13 bankruptcy. But when you file Chapter 7, all your assets are to be liquidated to pay for your debts. If you choose to keep some of your assets, you have to take Chapter 13.
In Chapter 13, you have to reaffirm the unsecured debts (like medical expenses) that the judge determines you can repay. Then 100% of your income that is not required for basic living expenses is utilized to pay off your debts, usually over 5 years. But the problem is the amount allowed for living expenses does not always commensurate with what your actual expenses are. For some people, this becomes a very real problem that may be insurmountable.
If you are faced with insurmountable debts, consider filing for bankruptcy before things get worse. Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.
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Filed under Chapter 7 (Tampa) by on Sep 7th, 2010. Comment.
