Sometimes in your lives you encounter a situation where you are no longer able to pay debt bills. At such times you do consider bankruptcy as a way out. Bankruptcy is a process when a person legally declares himself unable to pay outstanding debts.

This term has its origins in the sixteenth century during the time of Henry VIII in the United Kingdom.

Personal bankruptcy is considered the last resort in debt management. Bankruptcy has a long standing effect on your credit report. It becomes difficult for the next ten years to get a credit, house loan, insurance and sometimes even a job. This option works out for people who have no ability at all to repay the debts they owe. After this they can start a new life.

There are two major types of Bankruptcies – Chapter 7 and Chapter 13.

In both the above bankruptcies, you may get rid of unsecured debts such as credit card debts, utility shut offs, wage garnishments and repossession of vehicles. In both types of bankruptcies, you get to retain certain assets like taxes, child support money, alimony etc. If you have a plan to repay under Chapter 13, you are allowed to keep property on which your creditor has an unpaid mortgage. A valid payment plan and a capacity to repay ensure you keep the assets.

Bankruptcy for married people or couples and businesses is Chapter 7 bankruptcy. Businesses may file under chapter 13 bankruptcy.

Once either an individual or business file for bankruptcy, they expect a clean record henceforth. If a business opts for a Chapter 7 bankruptcy, it is expected to close down the business after this. Individual opting for Chapter 7 bankruptcy risk losing most of their assets except primary vehicle or home. If the debtor has a loan for vehicle or home and he cannot repay, he has to lose it also.

For individuals, Chapter 7 bankruptcy entails that the courts declare the individual unable to pay debts incurred, and almost all debts are declared void. Certain federal debts, like student loans, still exist even after declaring bankruptcy.

While filing for Chapter 7 bankruptcy, you must list all the assets you have. Barring the primary vehicle and home, all other assets like second house, vehicles and collectibles are liquidated to pay the creditors. In this kind of bankruptcy, the debtor loses only those assets that are not so much in use and he can afford to lose them. The advantage he gets out of this is all his unsecured debt like medical bills, credit cards bills etc get wiped out.

Chapter 13 bankruptcy is used by people who have large assets but their income was just not enough to cover their huge debts. In these cases the debtor gets to keep his assets but his payments are restructured by the court. Payments restructured by the court should be paid in time lest you lose the assets.

Bankruptcy though gives you debt relief, is a very costly proposition in that your credit report carries a black mark for ten years. The result would be, it will be extremely difficult to get approval for credit cards, home loans etc after this.

Posted on August 30th, 2010 by admin
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Zombie or Junk Debt Buyers sue people and when the lawsuit is not Answered, suddenly the old debt is now good again even though the statute of limitations was passed years ago.

We can protect you from Junk Debt buyers such as NCO, MCM and Asset Acceptance or and other debt collector that buys old debt.

Junk Debt Buyers buy old or “zombie” debt and sue people with minimal proof or sometimes outside the Statute of Limitations. Debt buyers like Asset sue people with the expectation that the lawsuit will be ignored. Then a default is entered and the debt becomes new again. See our News Stories on “Zombie Debt.”

In Michigan the Statute of Limitation is six years. In Florida, the SOL is four years. So, if you are being called or sued by Debt Buyers for an old or zombie debt, contact us and we will review the case, defend you for free and sue the Junk Debt Buyer under the Fair Debt Collection Practices Act and “make them pay you.”

Fill out our free case evaluation form. We’ll review your case and contact you, usually within 5 minutes to 1 hours time.

Posted on August 17th, 2010 by admin
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Debt negotiation or debt arbitration is one of the debt settlement methods in which both the creditor and debtor agree on a reduced balance or lower interest rate. You have to make payment following a new schedule or repay the reduced balance which is treated as “paid in full.” Debtor has to repay this reduced balance and be free of the debt.

A successful debt negotiation requires the debtor to convince the creditor to agree on a balance lesser than the actual one. The creditor has to forgive a part of the debt for this purpose. The paid in full settlement happens when the debtor pays a mutually agreed amount in lump sum. Usually this balance ranges between 25% and 65% of the total outstanding balance.

Financial hardships in the nineteen eighties and nineties in America post recession threw people off gear. Inability to cope up with repayment of debts made consumers opt for debt negotiation. It worked well for both creditors and debtors. For creditors because the money that was written off or could be lost should the debtor file for bankruptcy, could now be recovered at least in part. For debtors, the pressure of minimum monthly balances now could be avoided. Ever since then, debt negotiation has become a viable option for consumers who are unable to meet the demands of the repayments.

What debts can be settled in Debt negotiations?

Unsecured debts like credit card debts and medical bills can be negotiated with the credit card companies. Secured debts like auto loans or mortgages cannot be settled through negotiations. Certain federal student loans also cannot be settled through debt arbitrations.

How to pay the lump sum amount?

There are many debt settlement companies that offer loans for the amount required to pay off the outstanding balance. However, this method has certain disadvantages. The debt settlement companies charge heavy rate of interest and often are unreliable in service. This is a secured debt with collateral on assets and should you default on payment, the lender can seize your assets. The best way in this case is to use up savings or any other deposit that you have.

What happens to your credit report?

No matter what anybody says, the negative remark of debt settlement remains on your credit report. If you negotiate with debt collectors for a settlement, they may promise not to show it on the credit report. This is far from true because the negative comments from the original creditors would still be there in the report.

However, we regularly settle debts for clients as part of FDCPA settlements and the collection agency will remove their inquiry or trade line if you make it part of the deal.

Call us if you have any questions at (800) 737-2345.

Posted on August 16th, 2010 by admin
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