Get Out Of Debt

Non-profit debt consolidation services are the type of services that each and every debtor should know about. They are services that help and serve people in need of help in maintaining their financial status. They are also services now given by organizations or ‘consolidations’ in counseling and educating their clients of their financial issues, namely their budgeting plans.

Debt consolidation services are meant for consumers who are in need of support and guidance due to their mismanagement of their financial situation. Such services provide personal assistance by giving professional budget planning and credit counseling. These services provide answers for financial questions and recommend steps to resolve the consumers’ financial difficulties that may be preventing them from making the most out of their money and credit. Advice and guidelines are given to help out their needs, so they can take control over their financial situation.

There are various companies that provide these non-profit debt consolidation services where the consumers are able to speak to the company’s certified consolidation specialists who will design a payment plan that is specific to their individual needs. As we know, these companies primary objective is to help consumer to solve their financial problems. They are basically designed to help people pay off bills and pay down debts. These services are meant for all those who are not able to meet their debt and expenses with their current income.

These services have another objective that, as the consumers repay their debts through the companies, they will become more educated about consumer debt and how it affects their lives. They could act as a guide to achieve success in their financial planning. These services have been known to help lower credit cards interest rates and their monthly payments by almost half. The main objective of such non-profit debt consolidation services is to help consumers gain control of their financial system and plan their budget well.

Turn to debt consolidation help to get an instant relief from debts; be it loans, credit card debts or any other form of debt. It enables you to evade insolvency by combining all your bills and payments into one and making monthly payment, a comfortable experience for you. Debt consolidation loan is a secured loan. To get credit help, you will need to take a loan against your home. Such loans are not only low on interest rates but also have lesser charges.

Understanding The Procedure

Let us understand what this is. As the name suggests, consolidation involves merging your various monthly dues, so that you do not have to make separate payments on various days of the month, by writing many checks. debt consolidation help allows you to simplify the whole process and thus you only write a single check, and the payment is distributed to your various creditors. This is beneficial in more than one way. Besides making the whole process comfortable, it allows you to plan your budget in terms of your income and expenditure. Debt consolidation credit help also drastically lowers the average interest rate on your loans and you end up paying lesser money than you would have, otherwise.

Indirect Advantages

The good experience that free help gives you leaves you very happy. But there is more to be pleased about. While clearing your overdue amount with, debt help, you also improve your credit score side by side. Let us understand how it happens. When you slowly pay off your pending amount by paying timely payments, your credit rating goes up. This places you in the good books of the lenders. So, they not only easily sanction you loans in future, but also charge lower rates of interest. The rate of interest charged to a debtor is inversely related to his credit rating. The higher the credit rating, the lower the interest rate and vice-versa.

Some More Rewards

This is not all. When you take consolidation help, the company also negotiates with your lenders on your behalf. They deal with such issues professionally and thus are able to bring down your total payable amount. Therefore, you save not only on the interest but also on the actual sum borrowed.

So, when you are dejected and do not see any way out of your financial situation, seek debit consolidation help. It will give you fresh lease of life, and you will once again be able to breathe easy. It will take the burden off your shoulders and give you a chance to think about some savings also.

The bankruptcy code is divided into individual chapters that cater for different circumstances of dealing with debt and bankruptcy. There are also different interpretations of these chapters for the individual or business. This article will list the various chapters and how they apply to the individual and for corporations.

For individuals there are three types of bankruptcies including Chapter 7, Chapter 11 and Chapter 13.

The most common bankruptcy for individuals is Chapter 7. It is often termed the straight bankruptcy or liquidation because it discharges the debt by liquidating the assets of the debtor (some assets like the home are exempt in individuals). Under new revisions in 2005 this chapter requires that the individual must qualify before filing. By qualification, they must earn an annual income that is below the state average. This was done to protect the financial institutions and the government that had secured much of the debt in the case of student loans.

In Chapter 7 bankruptcy, all debts, including secured and unsecured can be discharged. However, some assets owned by the individual may be confiscated and sold by the court in order to satisfy a portion of the secured debt. Of the types, Chapter 7 offers the most financial relief for the creditor.

Chapter 13 bankruptcy is the second most common form of bankruptcy for individuals. This is known as the reorganization. In this case the court appoints a trustee who will work out a repayment plan that is acceptable to the creditors and workable for the debtor. By workable, it should be a monthly repayment schedule that leaves the person with enough money for everyday living expenses like accommodation, food and other such things. The debtor is given a maximum of 5 years to complete these payments.

Corporations can file for Chapter 7 bankruptcy. This generally involves ceasing trading and selling off of all assets. Businesses can use a Chapter 11 to reorganize their debts until they are paid off or renegotiate the debt. This allows them to stay in business and possibly rectify their financial or organizational problems. An initial consultation with an attorney will help determine which of the types the individual qualifies to file. they will have to file for Chapter 13 bankruptcy.

It is important to engage a lawyer when considering potential bankruptcy. The lawyer can advise which chapter to file for based on your circumstances. They will also fill in all paper work and present it at the hearing.

A Chapter 7 bankruptcy petition is a liquidation (sale/disposition) of a debtor’s nonexempt property to generate cash for creditors in exchange for a discharge of all dischargeable debts.

A debtor has a “no asset” estate if the scheduled or recoverable assets, less encumbrances (balance of loan(s), judgment lien(s), etc.) and exemptions, equals no funds for creditors.

Such a debtor will be discharged from dischargeable debts, after filing of a “no asset” report by the trustee and issuance of a discharge order by the Bankruptcy Court. The case is subsequently closed as a matter of ministerial act.

Eligibility for Chapter 7 Petition:

Unlike a Chapter 13 petition which has limits on the amounts of unsecured and secured claims for eligibility, a Chapter 7 petition has no such limitations. But a Chapter 7 individual debtor must have a domicile (residence), a place of business, or property in the United States, under 11 USC § 109(a).

Moreover, U.S. citizenship and financial distress are not required for Chapter 7 eligibility. But a Chapter 7 debtor is not eligible to receive another discharge in a Chapter 7 bankruptcy case during the eight-year period after the filing date of the prior Chapter 7 petition, under 11 USC § 727(a)(8).

An individual debtor is required to receive credit counseling briefing from an approved credit counseling agency during the 180-day period before filing the Chapter 7 petition. The briefing may be delayed for 30-days, (and even up to 45-days, if approved by the Bankruptcy Court), after the Chapter 7 filing date, if there are “exigent circumstances” that merit waiver of the briefing and the debtor was unable to obtain a briefing within 5 days from request.

It has been held that emergency filing to stop foreclosure sale is not “exigent circumstance,” excusing compliance with the credit counseling requirement. After filing a Chapter 7 petition, the debtor is required to attend a financial management course, after the section 341(a) meeting of creditors.

The filing fee for a Chapter 7 petition is $299.00, payable to the U.S. Bankruptcy Court.

Means Test To Determine Abuse:

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) instituted the “means testing” for individual Chapter 7 debtors to determine dismissal for abuse, in 11 USC § 707(b)(2). It is also used to determine “disposable income” in Chapter 13 petition for repayment to creditors and the length of the period of the plan.

The basic “means test” formula triggers the presumption of abuse in a Chapter 7 individual debtor whose debts are primarily consumer debts, if the debtor’s current monthly income, reduced by allowable monthly expenses (IRS’ National and Standards: http://www.irs.gov ) and multiplied by 60, is not less than the lesser of: (a) the greater of (1) 25 percent of the debtor’s nonpriority unsecured claims in the case; or (2) $6,000.00; or (b) $10,000.00.

If the means test applies and the presumption of abuse arises, the Bankruptcy Court may dismiss or convert the Chapter 13, unless the debtor can rebut the presumption by establishing special circumstances, such as call to Armed Forces active duty or serious medical conditions, justifying additional expenses or adjustments of current monthly income.

But if the debtor’s and spouse’s current monthly income multiplied by 12 as of the Chapter 7 filing date is equal to or less than the state median family income ($46,814.00 for 1 earner, $61, 742.00 for 2 people, $66,611.00 for 3 people, $76,931 for 4 or more people in California) based on the debtor’s household size, then the means test does not apply. And there is no standing to bring a motion to dismiss/convert, under 11 USC § 707(b)(2).

California Exemption Law:

With the California Legislature opting out of the federal exemptions in 11 USC § 522(d), individual debtors residing in California may choose between the so-called “703-series” or the “704-series” exemptions, the amounts of which are adjusted effective April 1 every three (3) years by the Judicial Council.

Some of the amounts of exemptions under the “703-series” are: real or personal property homestead – $20,725.00, motor vehicle – $3,300.00, clothing/household goods/appliances – $525.00 per item, jewelry – $1,350.00, personal injury recovery – $20,725.00, tools/books of trade – $2,075.00, and unmatured life insurance – $11,075.00.

And some of the amounts of exemptions under the “704-series” are: real or personal property homestead – $50,000.00, if single, $75,000.00 for family, $150,000.00 if 65 or older, motor vehicle – $2,500.00, jewelry – $6,750.00, personal injury recovery – amount needed for support, tools/materials – $6,750.00, and matured life insurance – $10,775.00.

The series most advantageous to the debtor depending on his or her circumstances should be used in the Chapter 7 petition.

Automatic Stay And Relief Therefrom:

The filing of a Chapter 7 petition results in stopping all collection efforts, all harassment, and all repossession and foreclosure actions by creditors against the debtor and the debtor’s property, until: (1) the stay is lifted by a Bankruptcy Court order, (2) the stay terminates or is ineffective, and (3) the case is closed or dismissed.

Creditors may seek relief form automatic stay to: (1) foreclosure or real estate collateral/ security interest, (2) repossess personal property as security for delinquent loan(s), or (3) continue litigation in another case stayed by the filing of the Chapter 7 petition.

Common grounds for relief from automatic stay are: lack of adequate protection of an interest in property, debtor has no equity in the property, or the property is not necessary for an effective reorganization.

Thus, Chapter 7 petition cannot prevent the foreclosure of the principal residence of the debtor, which is the collateral/security interest for a purchase money loan, as stated in the recorded deed of trust.

Discharged And Undischarged Debts:

A Chapter 7 discharge order by the Bankruptcy Court eliminates a debtor’s legal obligation to pay a debt that is discharged.

Some debts are, however, not discharged in a Chapter 7 bankruptcy case, to wit: most taxes, domestic support obligations, most student loans, most fines, penalties, or criminal restitution obligations, debts for personal injuries, death caused by driving under the influence, debts not properly listed in the schedules, debts decided as not discharged by the Bankruptcy Court, debts that are properly reaffirmed, and debts owed to certain pension, profit sharing, other retirement plans.

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.