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In the year 1938, a federal law (which is still in effect!) was passed called the "Wage Earner Plan" It is controlled by the same branch of our courts that handle personal bankruptcy and corporation insolvency. You genuinely have be a wage-earner to make use of this law. It is the primary requirement under this law. The Wage Earner Plan doesn't eliminate debts, but it’s a little-known provision of your official filing, and it requires your creditors that they must appear to verify your indebtedness to them.
Statistics show that upwards of 47% of creditors fail to appear, in which case, incurred debts are in MOST cases automatically 'wiped out'. In some instances, almost 100% of the creditors fail to appear, which enables you to eliminate ALL your debts without filing for bankruptcy. But if some of the creditors do make an appearance, then the court allows you to spread your payments out over a three year period in less significant amounts so that you can afford to pay without any undue stress or anxiety. After you have filed in accord with the Wage Earner Plan, you can stop bill collectors, financial lawsuits, judgements, assignments, even seized bank accounts, and other actions brought against you.
And the best thing of all is your credit rating in many cases, actually improves because you made an honest effort to work with the lending authorities. Furthermore, if the seller used deceptive trade practices to induce your purchase. . . your debt may be wiped out in accord with the legal provisions of the Uniform Commercial Code. Also, in accord with the Homestead Act, your home could be exempted from any type of levy to the extent determined by local law. You can find out more about this at your local courthouse.
How to Remove a Bankruptcy From Your Credit Report
Once a lender spots a bankruptcy on your credit report they usually look no further; they simply see that note as a big red flag, and straight away reach for the DENIAL stamp.
If you were to ask around, you would find a large number of people will tell you that it's ALMOST impossible to remove a bankruptcy from your credit report. The truth of the matter is: it's not so clear-cut. In fact, what you need to know is that you can dispute a bankruptcy the same way you would dispute any other type of negative mark on your credit report.
It's vital to keep in mind that if the need ever arises where you do need to dispute a bankruptcy a main issue is whether or not the account is truly yours is beside the point: the credit bureau *MUST* be able to verify this fact on its own. If they cannot verify the account and its status, then they are obligated under the law to remove the bankruptcy from the report. The truth of the matter is. . .
Remember though, you should NEVER make up stories or stretch the truth when communicating with credit bureaus or reporting agencies. The bottom line is, you don't need to be dishonest. Disputing the bankruptcy is entirely possible without any fabrication of the truth or simply flat out lying.
It's MOST unlikely a credit bureau will bother to investigate public records when responding to a dispute. This is due to the fact that courts will often only verify those records in person. Credit bureaus can claim that they have a system in place to handle verification through other means, but it isn't true. Credit bureaus are well aware that if a disputer landed them in a court of law, seeking financial recompense for keeping that bankruptcy on-record (without verifying the account) would bring a great deal of extra expense and trouble.
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How Much Of My Property Can I Keep After Filing Bankruptcy?
Bankruptcy - Chapter 7: Exceptions are made under chapter 7 for personal clothing, tools of trade, retirement accounts, household items, and a motor vehicle with limited equity. These allowances are made under State law to ensure that debtors can file bankruptcy and maintain an acceptable standard of living. Furthermore, under federal law there exists exemptions that insure a debtor further protection regarding assets such as a house. Nevertheless, it's vital you understand that all non-exempt assets MUST be surrendered in the course of filing for bankruptcy. This allows the trustee to sell off the assets in order to pay the unsecured creditors.
Bankruptcy - Chapter 13: differs from that of a Chapter 7 because it allows you to retain ownership of any property you may own. Chapter 13 allows the debtor to repay his or her debts over a realistic period of time. Of course, the debtor must have the means to do so. . . OR. . . he or she may again have their non-exempt assets can be seized by the trustee.
The Truth About Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is often referred to as "a straight bankruptcy" because it is a liquidation proceeding. The debtor simply hands over ALL non-exempt property to the bankruptcy trustee who then puts it up for sale, and distributes the cash to the creditors. The debtor then gets discharged (of all dischargeable debts) usually within four to six months. In MOST cases the debtor usually has NO assets that he or she would lose, so Chapter 7 provides that person with a new beginning. A main reason for Bankruptcy is to allow a person, who is heavily burdened with debt a fresh start by wiping the slate clean of his or her debts. The most common reasons for filing chapter 7 bankruptcy are: (1) Unemployment (2) Overwhelming medical expenses (3) Dangerously overextended credit (4) Marital problems; and (5) Very large unexpected expenses.
What Are The Costs To File Chapter 7 Bankruptcy?
In most cases it costs between $300 to $500 to file a Chapter 7 bankruptcy. A bankruptcy lawyer's fees can vary somewhat depending on the circumstances and/or a particular case, but in MOST cases a lawyer's fees are about $1,000 to $2,000. Some bankruptcy lawyers offer an initial free consultation. A lawyer's fees can be kept low by being well prepared and well organized. In some cases, a lawyer's fees can be kept low by not requesting the lawyer to attend the meeting of creditors with you. You should always check this with your lawyer first. Some states like Massachusetts, bankruptcy lawyer's MUST (by law) attend the Section 341 meeting with the debtors otherwise the lawyer is deemed to have NOT represented the debtors.
The Truth About Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is commonly referred to as a "reorganization bankruptcy" and is filed by individuals who would like to pay off their debts over an extended period usually three to five years. This kind of bankruptcy often appeals to those who have non-exempt property that they want to retain. It is also ONLY an option for anybody who has a set income which is sufficient to pay their living expenses with enough left over to pay off their debts.
The Most Common Reasons For Filing Chapter 13 Bankruptcy Are:
(1) You truthfully desire to repay your personal debts but require the protection of bankruptcy to do so. After much thought, you consider filing Chapter 13 bankruptcy a better alternative than filing for Chapter 7 (2) You home mortgage or automobile loan payments are way behind, and your desire is to bring the missed payments up-to-date but you need more time to do so and to reinstate the loan agreement. This action cannot be done in Chapter 7 bankruptcy. You can ONLY make up missed payments in Chapter 13 bankruptcy (3) Your need for assistance in repaying your debts is at a critical stage. However, you still desire to have the option of filing for Chapter 7 bankruptcy in the near future. For example: right at the moment you can't stop accuring further debt (4) You own and run a farm and although you desire to pay off your debts you're not eligible for a Chapter 12 farming bankruptcy because you have incurred a huge debt which is unrelated to farming (5) You own nonexempt property and filing for Chapter 7 bankruptcy allows you certain property that you can keep, called exempt. But if you have a large number of nonexempt properties (which you'd have to relinquish if you filed a Chapter 7 bankruptcy), Chapter 13 bankruptcy is possibly a better alternative (6) You filed a Chapter 7 bankruptcy within the past 8 years and it's not possible for you to file for Chapter 7 a second time until the eight years have ended.
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Why An Car Loan After Bankruptcy Is Advantages
The security of an auto loan after bankruptcy can be a factor which significantly improves your credit rating. The car is used as collateral for the loan. In a situation of a loan default, the lender can legally recover his money by forcing the sale of the automobile.
Prerequisites for a loan approval are: (1) Proof of income. You must be able to show that you've got steady income by producing copies of paychecks and/or tax receipts if you are self-employed. This prerequisite is crucial. (2) Excellent past credit history. With a negative credit you'll need to show a past excellent credit history in order to get approved. When it comes time for your loan to be discharged your credit history must be flawless. Even a small delinquency could frighten lenders away and jeopardize your future chance of getting further credit. Here are a few tips for getting approved for an auto loan after bankruptcy. (a) plan your car purchase (b) review your credit report (c) use a car loan lender (d) explain your situation clearly and PUT it in writing (e) think about refinancing.
What Debts Are Wiped Away By Bankruptcy?
Most unsecured debt is wiped away in a bankruptcy with the exception of: (1) Child support and alimony (2) Debts for personal injury or death caused by drunk driving (3) Student Loans (4) Income taxation debt.
Will I Ever Get Credit Again? Absolutely! Many banks NOW offer secured credit cards where a debtor deposits a small amount of money (and, in some cases as little as $300) in a bank account to guarantee payment. Normally, "the credit limit is equal to the security given" and is increased as the debtor shows that he or she can pay off the debt.
Twenty four months. . . after a bankruptcy discharge, the debtor is eligible again for mortgage loans on specific terms, as the same as others financial profiles, who have not filed for bankruptcy. The size of your down payment (and the stability of your income) will be MORE crucial than the fact that you filed bankruptcy in the past. The fact that you filed bankruptcy stays on your credit report for up to ten years. However, it WILL become less important the further in the past the bankruptcy was filed. In most cases, the debtor is a better credit risk after bankruptcy than he or she was before they filed for bankruptcy.
Will The Law Stop Creditors From Harassing Me?
The answer is Yes! By law, all harassment towards a debtor by creditors MUST stop immediately once the appropriate documents are filed. Also by law creditors cannot instigate or continue any lawsuits, wage restraints or garnishees, and phone calls demanding you make payments. Secured creditors such as a bank holding a lien on a car, will oftentimes get a "stay" lifted, if you cannot (or, stop) making payments.
Who Will Know About The Bankruptcy?
Bankruptcy filings can be viewed by anyone, as they are public records. But it is MOST unlikely nobody will know that you went bankrupt. However, Credit Bureaus DO record bankruptcies, and it remains on records for up to 10 years.
Will My Partner Or Spouse Be Involved?
Your partner, husband or wife will NOT be affected by your bankruptcy. The ONLY time they will be affected is if they actually signed a legal agreement (or a loan contract) for any of your debt. Or, if they went guarantor on your behalf for the loan. If your partner or spouse has a supplemental credit card they might be responsible for the debt also. But in community property states, either spouse can contract for a debt without the other spouse's signature on anything. There are a few exceptions to that rule, such as the purchase or sale of real estate property; those exceptions do require both spouse's signatures on contracts. But everyday debts, such as your credit card(s), do NOT require both partners to have signed. Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. A bankruptcy lawyer can guide you in this matter.
New Bankruptcy Laws Now In Effect:
Chapter 13 cannot be filed unless:
The debtor received a discharge under Chapter 7, 11 or 12 more than four years ago; or the debtor received a discharge under Chapter 13 more than two years ago. When an automobile was bought within 2 1/2 years (910 days) of the original filing and a secured creditor has a lien on the car, the creditor will retain the lien until payment of the entire debt has been made. The following debt is NOT discharged: (a) debt for trust fund taxes (b) taxes for which returns were never filed or filed late (within 2 full years of the petition date) (c) taxes for which the debtor made a fraudulent return or evaded taxes (d) domestic support payments (e) Student loans (f) Drunk driving injuries (g) Criminal restitution (h) Civil restitutions or damages awarded for willful or malicious personal actions causing personal injury or death (i) All tax returns for the four years prior to filing Chapter 13 must be filed (j) Debtors must provide to the trustee, at least 7 days prior to the 341 meeting, a copy of a tax return or transcript of a tax return, for the period for which the return was due.
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