In 2010, 1.5 million people are expected to file for bankruptcy and even more in 2011. If you are one of these people who are considering the process, there are some important things you need to know. In a bankruptcy filing, any money that is in your bank account, at the time of filing, technically is property of the bankruptcy estate. If you don’t have an exemption to protect it, the bankruptcy trustee can possibly take some or all of it. Legally, it belongs to the bankruptcy estate. Sometimes banks try to be helpful by freezing your account where you have no access to the money, even if you have an exemption to cover it. This can turn into a terrible situation for the debtor, when checks for bills start being bounced for insufficient funds. Knowing this in advance, it’s a good idea to pay your bills with cashier’s checks, so you don’t end up getting evicted from your apartment or home. Banks generally have the right to offset a debt with the bank account, but they seldomly do it. Many times when a bank is notified of a bankruptcy filing they immediately freeze the bank account and ask the court to access the funds owed to them.
When using a credit union, most consumers are oblivious to the fact that the credit union they keep their money in has a cross collateralization clause in their terms contract. A cross collateralization clause is the Dragnet clause to secure the money in your account against your debts. Many debtors use credit unions for automobile loans and don’t realize that the money they have in their account can be attached to their payments if they get behind. This becomes a problem for individuals that are filing for bankruptcy that want to walk away from their car and give it back. If there is a negative balance and the credit union member has money in their account, the credit union can take it as it was security for the loan along with the automobile itself. These time bombs planted in the fine print of a loan agreement also include credit card debt. Many people who belong to credit unions do all of their banking, credit union credit card, and car loan through the establishment. Where the situation gets very ugly is when a debtor gets themselves in financial trouble and has to file Chapter 7 bankruptcy. Say for instance, they decide they want to keep their car and continue paying for it, but they also owe a large balance on a credit card that they want to include in the bankruptcy to discharge it. When you reaffirm the debt for the automobile you will see that the credit union included the credit card and auto loan together making you owe a large amount if you want to keep the car. In this case, it would probably be the best to give the car back and include the entire amount in the Chapter 7. This is something that consumers should be aware of even if they’re not considering bankruptcy. Credit unions usually have attractive rates on car loans but they usually include one of these clauses. With so many landmines and a bankruptcy filing, it’s very important to consult with a local bankruptcy attorney to avoid any problems that might arise in your personal situation.
15 JunBankruptcy And The Credit Union’s Cross Collateralization Clause
13 JunThe 2005 Bankruptcy Abuse and Consumer Protection Act – Credit Counselling
Very few people have been left untouched by the financial upheavals of recent years. In the good times we tend to spend and not think about it too much. The social pressures to look as though you are “succeeding” are such that when the crunch comes, we find what were manageable debts have now become unmanageable.
People find themselves in a financial situation they never thought that they would be in – one that happens to other people, but never to them. That situation is called bankruptcy.
Bankruptcy no longer carries the social stigma it once did. It is often considered the mark of someone who had the guts to try and go it alone, but failed, through little of their own, (after all, it’s the banks we now all love to blame!)
However, this doesn’t make the actual process any less stressful, and in 2005 the government brought in the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it even more stressful to claim bankruptcy.
One of the main purposes of the Act was to make sure individuals weren’t using the bankruptcy laws simply to avoid debt. By hiding their true earnings and assets, it had been possible for people to claim chapter 7 bankruptcy, where all assets are liquidated but the debtor emerges free of debt, to rid themselves of unwanted debt, and at the same time retain a comfortable standard of living afterward, and with a head start in improving their credit rating after discharge.
Now, anyone wanting to file for bankruptcy has to attend government approved credit counselling.
Anyone attending counselling must bring with them details of their income and assets, and their financial outgoings. They must also supply details of their creditors and amounts owed. This way the court can decide if the more popular chapter 7 bankruptcy is an option, or if in fact the debtor, albeit with a rearrangement of their debts under a chapter 13 bankruptcy, can afford to repay their debts over a period of time, usually 3-5 years. In this way the debtor does not escape the bulk of debt, and creditors get their money.
It will also determine if there are perhaps other ways the debtor could avoid bankruptcy altogether.
One way is by using debt settlement companies, who charge a fee to the debtor, but take over the debt, usually at a reduced amount which they negotiate on your behalf.
The advantage with these companies is that your credit record is nowhere near as badly affected as it is should you become a bankrupt.
However, care must be taken when using one of these companies as many have turned out to be scams, taking the debtor’s cash, but not dealing with the debt itself, leaving the debtor worse off.
As with all things in life, it is research that pays dividends.
14 JanBankruptcy Help Needed When Debts Ovewhelm
Article by Mike Selvon
Filing for bankruptcy is a drastic measure that overwhelms most people because of the detailed paperwork that must be done. In addition, for most people it is an emotionally draining experience to go through. Because of the complexity of the matter, and the fact that emotions can cloud judgment, it is a good idea to get bankruptcy help to be sure that a chapter bankruptcy filing is done correctly.
One of the first places to go for help is to one of the credit counseling agencies. They are sometimes able to help people avoid going into that final step of filing for bankruptcy. Often, they can suggest ways to help debts collections situations or they can negotiate with the creditors and try to make arrangements, either reducing the monthly payments or reducing or even eliminating the interest charges and late fees. In some instances, they can get both the interest rate on a loan reduced and make arrangements for easier payments.
The reason that this kind of bankruptcy help is often effective, is because creditors know that if a person is in a financially bankrupt position, then the chances of ever collecting on any of the debt owed to them is nil. It makes sense for companies to cooperate when a debtor is having trouble making their payments and to work with them to make a new financial plan.
The credit counseling services offering help usually start by digging into the person’s or couple’s financial situation and then will help to determine if filing for it is going to be necessary in their case. Many times, when a person is in a panic mode because they have had numerous bill collectors constantly calling them, they move toward a chapter bankruptcy filing as a knee-jerk reaction before they have found out if they have other options.
Even though the credit counselors will sometimes determine that the best way to help debts incurred is to file for one, at least the consumers who receive the counseling feel more assured before taking such drastic measures. However, it should be noted that some of the credit counseling services do charge a substantial fee for their services.
Another avenue of help, or better said, another route which might help one to avoid declaring broke altogether, is by using a debt consolidation service. Sometimes, credit counseling services can arrange for debt consolidation as well.
The purpose of consolidating your debts is to give you one single payment to make per month and to secure financing with a lower interest rate. This can help make the current debts more manageable and bring the monthly payment down so that it can be worked into the family budget.
If credit counseling or debt consolidation are not enough and it is evident that filing for it will be necessary, then you should seek out a qualified lawyer for the legal help that you will need. Making sure that you get an experienced lawyer who specializes in the different chapter bankruptcy filing types, will help to assure that your case is handled professionally and that the required paperwork is properly filed in a timely manner.
This is not an area where one should attempt self bankruptcy or try to save a few dollars. Not properly filing the paperwork and adhering to the court timeline can result in your court record being thrown out, which will leave you vulnerable to the tactics of the creditors and collectors again.
If you find yourself in the situation of struggling to meet your monthly obligations or if you have experienced a life-changing event, then getting bankruptcy help to assist you on how to best proceed is probably a good idea. The worst thing you can do is to ignore a growing financial problem, as the condition will only get worse if positive action is not taken. Even though bankruptcy is a momentous decision, it is provided for through Federal law to allow people to have a new start financially when the situation arises.
07 DecDebt Settlement And Debt Negotiation: Are These Two Different?
Debt settlement and debt negotiation have a common phenomenon and that is reducing the amount of debt to be paid to the creditor considerably. This will reduce financial stress on your family thereby, helping you out with living your life normally.
Debt settlement means settling a debt. This process consists of a single debt. When a person nears bankruptcy and is unable to bear the burden of debt, it is possible to settle it. Here settlement happens between the debtor and the creditor. Creditor is ready to lower the amount of debt if he is convinced that it if the lowering of debt is not done, he may not be able to get any money back from the debtor. The amount can be lowered almost 50% at times by the creditor.
In case of debt settlement the creditor may enforce a lot many rules about payments with the debtor, however since the amount of checks is lowered substantially, the debtor will only be happy to get the loan off his head. This settlement can be done directly between the debtor and the creditor if the creditor agrees to, or the debtor can hire agencies which will help him negotiate and lower the amount considerably.
Debt negotiation is somewhat similar; however, here the debt in question is not a single debt. Rather there are numbers of debts which need to be paid each month. If the debtor is about to go bankrupt, he can easily go for financial counseling where the counselors will help them or else they can hire private agencies who can do the debt negotiation for the debtor.
In debt negotiation all debts are clubbed into one single debt. This happens after contacting every individual creditor and negotiating with him about the actual debt price. After negotiation there is only one single creditor and all loans have been settled for a lesser price which the debtor will have to pay off to this single creditor. This is a great method especially in case where it is difficult to keep track of payments. It is also great especially for those who want to avoid bankruptcy yet want to repay off all their debts like good Samaritans.
Debt settlement and debt negotiation both can be done discreetly so as not to affect your public image. Most agencies take enough care not to disclose any of the information about you in public. You will find many agencies online who have gained expertise in both types of debt reduction techniques. Not all provide services worldwide or countrywide, you will have to find one which suits your interests best.
Learn more about debt negotiation services here!
http://www.curadebt.com/about.asp
http://www.curadebt.com/
Debbie White is a contributing writer to http://www.curadebt.com and is currently writing some special articles to guide business on how to manage debt and avoid bankruptcy.
For Free Information on Debt Help Consultation, call toll-free 1-877-850-3328
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03 AprMore Rights for Debtors Means More Reasons to Hire Professional Collection Agencies
If you’re a business owner, you know how frustrating and potentially devastating it can be when a client doesn’t pay. While you’re not wearing your business owner hat, you probably hear the conversations between people sharing strategies about how to avoid paying outstanding debts.
Consumers today are much more demanding and knowledgeable than ever before. Additionally a great deal of legislation has come to pass that has increased consumer rights while reducing a company’s rights to collect on payment owed. Debt collection today requires adhering to specific laws and strategies which is why it more important than ever for businesses to hire collection agencies to collect on unpaid debts.
Why debtors are compelled to avoid debt:
Because there is usually no personal connection between a company and its debtors, there is little innate loyalty on the customer’s part to pay their debts. What holds debtors in check is the promise of a negative credit rating. However, even avoiding bad credit isn’t as much of a deterrent anymore. In today’s competitive marketplace, the desire to obtain customers is so fierce that there are now numerous ways for consumers with less than perfect credit to acquire loans for homes, cars, and products.
In order for customers to make good on overdue payments, the consequence for not paying must be greater than parting with the money, which is where representation by collection agencies come into play. collection agencies have an air of finality that tells a customer you mean business and won’t be put off for much longer before starting legal action.
How consumers avoid debts:
Most people don’t set out to avoid debts but rather find themselves in a financial crisis at some time or another that forces them to become late on payments. The first step in avoiding debts is simply not to pay. If there is no repercussion for not paying, there is very little reason for the debtor to make paying your debt a priority. Though this seems simple enough, many small businesses don’t have a solid process of dealing with past due accounts. Some full service collection agencies offer complete accounts receivable management to tackle the problem at the very onset, before it turns into a full-blown collection account.
Other tactics debtors use to avoid payment is to move without providing a forwarding address, filing bankruptcy, or by refusing to pay due to a claimed defect with the product or service. To counter these obstacles, collection agencies use a variety of tactics. Collection agencies use advanced skip tracing techniques to find missing debtors while handling the other defenses requires a more strategic plan.
If consumers feel backed into a corner by either the company or its collection agencies, they are likely to revert to the more drastic measures that can result in complete loss of payment. For this reason, it is essential that collection agencies are extremely professional, flexible, tactical, and yet firm about collecting. Aggressive collection agencies only make your company look unprofessional and can quickly cost you your debts.
How to make sure that your debt is one that is paid:
If a debtor ends up in financial straights, he or she will normally pay essential bills like the mortgage or car payment, followed by the non-essential bills that promise the highest consequence if not paid. One way to make sure your bill remains unpaid, is to take no action at all. When there’s not enough money to go around, even customers with the best intention can justify letting a bill go unpaid if there seems to be no serious repercussions. collection agencies take the urgency to a new level and give debtors a reason to pay. Some collection agencies offer a free 10-day demand letter service which is oftentimes enough to force payment.
Allowing customers to make payments on debts once contacted by collection agencies greatly increases the chances that your debtors will have the means to repay the debt. However, to truly ensure that your accounts are paid, having a system in place to prevent delinquent accounts is critical. Whether that means hiring collection agencies for accounts receivable management or implementing a dedicated in-house staff, getting ahead of the problem means far fewer losses and a much more profitable business.
The author is a freelance copywriter. For more information about what a collection agency can do for you, visit www.AABUSA.com.