The Federal Reserve Board reported that more than $713.8 billion dollars in debt is unpaid. This figure represents studies done the previous year by the government. The U.S. population is approximately 284 million people, so the current mountain of debt equates to about $2,848 of debt per person in the U.S. This figure is truly alarming, but we as a nation are addicted to credit. The U.S. is a nation of consumers. The recent troubles in the economy has simply shed light on how deep our addiction to credit has been.
Likewise, more families are being affected by the sour economy. Loss of jobs, underemployment, and sheer fraud within the financial sector are leaving people reeling from the carnage. Financial problems are the number two cause of divorce in our nation. Millions of people are stressed out because of financial pressure. There is help available. Many people shun the idea of getting bankruptcy help, but in many cases, it is necessary to gain the footing back financially.
The Stigma of Getting Help for Bankruptcy
Bankruptcy is practically a bad word in some circles. Many people equate it to personal failure, and there are those people that use it recklessly, but this does not apply to a vast majority of people. Many responsible citizens find themselves in financial crisis, and the crisis is not always self-inflicted. In life, there are factors that can not be controlled. A layoff is one of those things. The solution to the problem lies in finding the strength to move forward in spite of difficult circumstances. Getting bankruptcy help is the solution for many people that have lost their way.
Once the decision is made to file for bankruptcy, it is important to get some help. In most cases, it is advisable to find an experienced bankruptcy attorney to initiate the process. Many people go into the lawyers office feeling truly embarrassed and ashamed. This is not necessary. Getting help for a bankruptcy can be the start of a new life. In fact, it is a type of rebirth.
Getting Bankruptcy Help for Filing Chapter 7
Legislation has made the bankruptcy process more difficult than before, so your attorney will be able to navigate the waters more successfully. A chapter 7 filing is the one that will wipe the slate completely clean in most cases. The new legislation makes it harder to qualify for this type of bankruptcy. According to regulations, the judge will have to use a certain formula to determine if a person qualifies.
The Congress has stipulated that a person must pass the means test to qualify. The court will take the monthly average of your last six months of wages and compare this to the median income standards for the state. This is the first stage of the process. If this stage is not passed, the person will move on to the next stage.
The second stage of the process is for those with incomes slightly higher than the state median. The attorney will have to use calculate what allowable expenses can be used to reduce the income amount. If a person is able to pass this test, then, the bankruptcy can be filed. Another hoop is the mandate that a filer take Credit Counseling within the prior six months to filing. This stipulation is a new addition to bankruptcy law. Your attorney can set up the training for you, and it may be able to be taken over the internet. Also, an approved Financial Management Course must be taken before the bankruptcy will be discharged. This is also due to the legislative changes that took place in 2005.
Once the process for the Chapter 7 is complete, the process of rebuilding can begin. It is critical that you are cautious and do not make the same mistakes. Creditors will start sending you applications, and the temptation will be great to pursue these. Resist the temptation and try to stick to a cash only basis. When you do choose credit, it is important that it is a responsible credit choice. Look at the fine print closely.
Getting Bankruptcy Help for Filing Chapter 13
Chapter 7 bankruptcy can be the needed relief that many need; however, some people qualify for a Chapter 13 bankruptcy and this is the best method for them. Some people want to pay their creditors, but they need help to get back on track. People that are in jeopardy of losing their home or car can be good candidates for a Chapter 13 bankruptcy. In a Chapter 13, missed payments can be made over time for a home mortgage or car payment. After these are made, the original agreement can be reinstated.
Chapter 13 may be the best route to go for farmers with other large debts. These farmers are unable to qualify for a Chapter 12 bankruptcy. Also, if a person has valuable non-exempt property, the Chapter 13 is probably the way to go. In a chapter 7 bankruptcy, the person can only keep exempt property. Another reason can be if you already filed for Chapter 7, a person must wait eight years before being eligible to file a Chapter 7 bankruptcy again.
In conclusion, it is best to consult legal counsel before making a decision. Chapter 13 is debt repayment;Chapter 7 is debt cancellation. Your circumstance will need to be evaluated to determine what method will be most beneficial to your situation. A new life awaits you on the other side of the debt problems.
