Should You Settle Your Debtor or File For Bankruptcy

As a Bankruptcy Attorney New Jersey, clients call my office on a weekly basis who have tried to settle their debts and ask me if they should have instead filed for bankruptcy. This is the ultimate question any potential client should ask before they either file for bankruptcy or choose to settle their debts. Let's go over the advantages and disadvantages for each of those two paths.

Settling Your Debts

For those with substantial credit card debts, settling those debts is a valid option. For many clients, the holder of the debt will be willing to settle that debt for a fraction of the principal amount. I have seen companies offer to settle the debt for 25% - 50% of the debt. The rule of thumb I tell clients is like this - the longer you have not paid that debt - the more times it has been sold off to another debt buyer - the more likely you can settle that debt for a fraction of the principal amount.

Clients often ask me though that up until now they have been paying the minimum payments and are not even late yet. In that case, I will advise them that the credit card company will not yet offer you a discounted rate because you are not late on your payments yet. Only when you become delinquent on your payments then will they be open to settling your debt. The longer you do not pay the debt the better discount you will receive. However, if you intentionally do not pay them, then the longer you are delinquent the more your credit score will decrease.

The Debt Settlement Catch

As a New Jersey bankruptcy attorney, I often have to advise clients about the catch the debt settlement programs do not tell you. Yes, you can settle your debts at a discount but you must have cash savings to afford the payoff. The debt holder will not accept a debt settlement from you unless you can payoff the entire discounted amount within a few days. I often find that clients think that they can get a debt discounted and then just pay monthly the discounted amount - this is not possible.

Therefore, unless you have savings to pay off each creditor one by one then debt settlement is not a realistic option. What a lot of the debt settlement companies do is have you pay them a monthly amount each month and they retain a certain percentage to build up savings for you to payoff the debt holders. However, this is something you can do yourself. Often, these debt settlement companies pay themselves first from these monthly amounts so if you cannot afford to make more payments they have already gotten paid and they keep all the money without settling your debts.

Another drawback to debt settlement is that you will be taxed on the debt the credit card company forgives. Let's say for example you settle a $50,000 credit card debt for $25,000. That means that you paid off the credit card company in a lump sum $25,000. Now you no longer owe them any debt, that's great! The IRS, however, will count the other $25,000 that the credit card company forgave as income to you for tax purposes. That means you'll be owing the IRS a percentage of that $25,000 that the credit card company forgave you on the debt depending on your income for that year.

Debt Settlement's Bottom Line

In summary, the advantages to settling your debts versus filing for bankruptcy are you can settle your debts for a fraction of what you owe and you do not need to file for bankruptcy and put your assets at risk, however, you will need to have a lump sum payment to settle your debts, you may have to wait months before you can settle your debts until the debts have aged or you have a lump sum to pay them off, and you will be taxed on the amount the credit card company forgives.

Bankruptcy as an Alternative to Debt Settlement So what can bankruptcy do for you that settling your debts cannot do for you?

Bankruptcy has many advantages over debt settlement. The first advantage is cost. As I mentioned above, if you are going to settle your debts you will need a lump sum payment to pay them off. For example, if you are going to settle a $20,000 debt then you may have to come up with a lump sum of $5,000-$10,000 to pay them off at once. For many clients they cannot come up with that kind of money. By contrast, a chapter 7 bankruptcy in New Jersey costs anywhere from $2,000 - $2,500. This is a one-time flat fee and it eliminates all of your debts in many cases.

When you settle your debts you have to pay off each one, one-by-one. When you file a chapter 7 bankruptcy, you literally wipe out all of your credit card debts. That means whether you have $10,000 of credit card, $50,000 or $100,000 you can wipe out all of that credit card debt for one flat-rate.

Eliminating Your Debts Quickly

When you file for a chapter 7 bankruptcy, you can expect to discharge your debts and get out of bankruptcy in 3-4 months. This is a lot faster than saving up a lump sum and paying off each creditor. This could take a year or more and there is no guarantee that you will even be able to settle your debts during that time period.

Erasing Your Debts Tax Free

When you file for a chapter 7 bankruptcy, all the debt you eliminate is tax-free. As I mentioned previously, when you settle your debts you have to pay income tax on the amount the credit card company forgave. By contrast, you pay no income tax at all on all the debt you eliminate in bankruptcy.

#1 Drawback to Filing for Bankruptcy: Your Assets

The biggest drawback to bankruptcy is that if you have assets they could be put at risk in bankruptcy. That is why you need to speak with a qualified Bankruptcy Attorney New Jersey and find out if any of your assets will be at risk before you file for bankruptcy. In New Jersey for example, you can keep up to $20,000 per person in the equity in your home according to the New Jersey bankruptcy exemptions. Therefore, if you are single and you have let's say $50,000 of equity in your home, then if you were to file for a chapter 7 bankruptcy you may lose your home (although you will receive the $20,000 of equity you can keep in your home). Therefore, before you file for bankruptcy you need to take an accounting of all of your assets such as any business you own, real estate, vehicles, or boats. Then figure out if any of these items have any equity in them. If they do, check your state's bankruptcy exemptions and see if your equity is within the allowed amount. If they are then you can freely file for bankruptcy without your assets being affected. If some of your assets are above the allowed equity amount then you need to speak with a bankruptcy lawyer to find out if there is anything you can do to keep the asset in bankruptcy. Sometimes when clients have assets that will be affected by bankruptcy, I ask them whether they are willing to trade that asset to get rid of all the debt. If the client will discharge let's say $75,000 worth of debt but will lose a car with $6,000 of equity in it - it is clear that the client is still coming out way ahead by filing for bankruptcy.

#2 Drawback to Filing for Bankruptcy: Payments to Insiders

Another drawback you have to check out before you file for bankruptcy is that any payments made to insiders family members or business partners within 1-year of filing for bankruptcy may be undone in bankruptcy. For example, let's say you paid your Mom back $5,000 within the year before you file for bankruptcy. If you file for bankruptcy, then the trustee of your case could sue your Mom to recover the $5,000. Of course, no one wants to involve someone else in their financial troubles so often times a client may delay their filing until after the 1-year period or may choose to file and just warn that family member of the possible result. At the end of the day though the client may still be way ahead even with this result

Conclusion

The answer to the question should you file for bankruptcy in New Jersey is really it depends on your situation. If you have a lump sum of money to pay off your creditors and have assets that you would lose in bankruptcy, then of course you should settle your debts instead of filing for bankruptcy. If your assets would not be touched in bankruptcy then it may make more sense to file a chapter 7 bankruptcy in New Jersey since that would be cheaper and faster than settling your debts. Either way, the most important thing for you to do is to speak with a qualified New Jersey bankruptcy attorney about your case before you either settle your debts or file for bankruptcy. I offer a free phone consultation to help clients with this so I encourage you to call.

Bankruptcy Information Part 1 How DMPs Work

In today's world, it's not hard to find yourself in a tough financial situation. As a matter of fact, the economy seems to be bad all over the world, and the UK is no different. This means that if you are having financial problems, there is nothing to be ashamed of. The answer to your problems, first of all, is to not run away from them. Many people think that the best answer is to simply wait until they are making more money or until the economy gets better. Here is why this is a bad idea. When you are waiting, your debt will continue to increase. You will be going further and further into the hole. In other words, you want to keep on top of the money that you owe your creditors since the interest will continue to increase. If you are ready to face facts, you are going to need to get some basic bankruptcy information.

The most important bankruptcy information for many people involves the DMP. If you are unfamiliar with this term, you should know that it stands for Debt Management Plan. This is a process in which you will hire a third party to take a look at two separate facets. On the one hand, the third party will look at the money you owe your various creditors. On the other hand, the third party will look at how much you can reasonable pay while still attaining a level of stability in your life and work. You will then pay the third party each month, and these payments will then be given to the creditors. This is not a loan. On the contrary, this is a way to consolidate the different debts you owe into one easy to pay loan.

You may be wondering now who most benefits from this bankruptcy information. It's important to know that the people who benefit most from DMP are those who are very far in debt. These are people who owe more money than they can possibly pay, yet who need very badly to make good on a number different debts that they owe to a variety of different creditors.

If you are considering bankruptcy information about a DMP, you will want to make sure that you are working with a great financial professional who will help you to make the decisions that will most benefit you. This means that you want to work with a professional who understands your current financial situation, as well as your long term goals.

Unsecured Loan And Bankruptcy

The hardest financial goal I can think of is an unsecured loan bankruptcy. There is hope though, you can work toward this, but you are going to need some time.

If you just got everything discharged I would strongly suggest pursuing another option as this will be nearly impossible. You really need to wait six months, and your best options will come after two years. During this time though there are some things you'll want to work on to improve your situation.

The first thing is to get a copy of your credit report and make sure everything that should be marked "included in bankruptcy" is. You don't want any of those accounts to be marked open or overdue. This is a common problem and one that you really need to take care of. Don't let the companies intimidate you, keep calling until it is handled appropriately.

Another thing you can really do to help your goal of an unsecured loan bankruptcy is get a secured credit card as soon as you can.

You can get these cards at most banks. You deposit a few hundred dollars into a savings account which will establish your credit limit for the card. If you fail to make your payments the bank will take hold of your savings account and use it to pay the money you owe them, but you don't want this to happen. You want to establish a history of on time payments with this card and use it lightly, never going over 30% of your available credit. You also want to be sure that after a year of on time payments you will have the option to switch to an unsecured card.

Once you've had this for a while your credit history will start to build again which will help with your application. You also want to have the best income you can, steady employment will really help with your application.

There are lots of things you can do to help with getting where you want to be. Search around and find five companies to compare rates, terms and offers to find the best unsecured loan bankruptcy you can.

Why Can’t Everyone Avail The Benefits of Chapter 13 Bankruptcy?

Any Tom, Dick and Harry who is not able to repay the debts cannot file for chapter 13 bankruptcy. Some of the eligibility criteria to file for chapter 13 are as follows :

* Any business even if it is sole proprietorship is not eligible for filing chapter 13 bankruptcy. Only the debts, that are linked to the business and that the owner is personally responsible for, can be included for filing chapter 13 bankruptcy.

* The personal bankruptcy of commodity brokers and stockbrokers cannot be included for filing chapter 13 bankruptcies.

* If the secured debts are more than $1,010,650, the debtor cannot file for chapter 13. Home loans and the filing of lien by the IRS are the examples of secured debts.

* If the unsecured debts are more than $336,900, the debtor cannot file for chapter 13. Some prominent examples of unsecured debts are medical bills, back utility bills, card debts, legal bills, and charges of the department store.

* To prove one's eligibility for filing chapter 13 bankruptcies, one has to exhibit sufficient income after deducting some expenses and payments to service the secured debts, to do the necessary repayments.

* One must submit the proof of filing the state and federal income tax returns for a minimum duration of 4 years before the date of filing the bankruptcy. The filing of chapter 13 can be rejected if the applicant is not current on Income Tax Filings or has not submitted any proof of being regular at tax payment.

Do you fit in the above mentioned eligibility criteria? If yes than file for chapter 13 bankruptcy. The chapter 13 bankruptcy plan can be funded through the following sources of income:

* Income through self employment

* Benefits through social security

* Freelance commissions

* Benefits on account of Worker's compensation

* Public benefits

* Alimony in case of divorce

* Royalties

* Regular salary or wages

* Pension payment

* Seasonal work wages

* Disability benefits

* Benefits due to unemployment and strike

* Child support benefits

* Rent

* Profits due to selling of property

* A working spouse could also be the source of funds

The best bankruptcy advice can be got from bankruptcy attorneys and bankruptcy lawyers. We take pride in having association with the top most experienced bankruptcy attorneys. The chapter 13 bankruptcy filing can include the personal bankruptcy. The credit card bankruptcy and the medical bankruptcy form the major part of the personal bankruptcy.

Protecting Your Business From Bankruptcy

No business run correctly wants to be faced with the prospect of going into bankruptcy, regardless of industry. In a worst case scenario, the business will simply be shut down and all that was worked for liquidated to the highest bidder.

Ideally, the best way to stay out of bankruptcy is to put a significant emphasis on revenue generation as well as cash flow. Simply landing sales is not enough; the business needs to make sure its monthly cash flow is coming in to offset the liabilities and payments going out. In this respect, the use of a property lawyer for debt recovery can be very handy, especially where clients or customers have outstanding accounts receivable balances owed.

The above said, where bankruptcy seems like an inevitability there are still options available under Australian law, including informal and formal agreements.

The informal arrangement is exactly what it sounds like, a contract between the business borrower and its commercial lenders to make a loan modification. This could include a temporary delay of payments due with interest added or an extension of the pay period to reduce the amount of the periodic payment per month. The informal agreement is a cooperative approach that has no legal binding. If one or both of the parties decide to go back to original terms, there's nothing the other party can do about the change to stop it.

The formal agreement involves an actual, legal change to the existing loan involved. It is a formal alternative provided for via Australia's Bankruptcy Act of 1966 and creates a binding change to the parties involved. Further, the formal agreement involves a debt agreement administrator make sure the formal agreement is followed by all involved. There are two types, Part IX and Part X, in terms of formal agreements. Only the Part IX debt agreement works for a business as the Part X version is intended for personal insolvency cases only. Fortunately, the Part X agreement is has a very low cost to implement, which makes it a viable option for businesses in trouble.

All the above said, a troubled business has to accept the fact that any kind of viable alternative to bankruptcy will require some kind of significant compromise. Any business assuming it can just demand an alternative agreement from a lender to avoid bankruptcy is simply going into related discussions with the wrong mentality. A business has to do their research and seek legal counsel if needed to become informed about the ins and outs of pursuing this type of venture.

Behavioral Signs of Bankruptcy

What in your views can be the possible reasons for filling bankruptcy in Atlanta? Think a bit, you will say that most common reason is infidelity, which is true but only to some extent. Surveys by NEFE (National Endowment for financial education) say that many people deceive their partners on monetary information. They lie to their partner about a purchase which involved lots of money or a high debt, to hide the true information.

Debt if not controlled at earlier stages or when remain unattended makes the thing complicated. Things get worsen not when you are living alone but when you are sharing the finance with someone else. At the time of crisis, Atlanta bankruptcy attorney is looked for help to reduce or put an end to the debt issue and save the marriage of couples related to the concern.

Atlanta bankruptcy lawyers have witnessed the cases where the couple splits because one of them was lying about the finance and kept a secret for the debt burden on the shoulders for years. These issues if kept hidden can make the matters unmanageable at one point of time. It also causes feeling of hatred and depression on the effected persons. People start thinking and reacting in a frustrated manner even with their other close acquaintances and a feeling of anger comes naturally to them.

Atlanta tax attorney and various other firms suggest the measures to avoid the situation of financial crunch. It is important for the couples to stay united and work together to accomplish the financial stability goal. It might take some time to achieve the goals and the time can test your patience level too but if you are determined to overcome the situation, your marriage will be safe.

Always take the necessary advice from Atlanta bankruptcy attorney on the various ways to adapt for healthy financial conditions and avoiding or eliminating debt if any.

Some signs of upcoming financial crunch for partners:

Noticing the frequent arrival of financial reminders and due payments to be clearedIrrational behavior of partner when money issues are brought forward to be discussed uponKeeping the credit card bills in a secret placeAvoiding activities which involve the outlay of cash or funds like shopping on weekends.Working day and night to earn few extra bucksAlways worrying about the financial resources in hand

There may be other reasons too which can relate to the change in normal physiological pattern. If you find yourself in any of the above situation, probably it is the time to talk to your partner about money. Filling Bankruptcy can serve as a huge relief in the problematic hours. Plan and try to work together to deal with the situation and clear the debts, keeping a check on the total expenditure, controlling it as much as possible by eliminating the unnecessary activities. Do periodic calculations to know the inflow and outflow of cash and other financial resources. But if all these activities fail to deliver the expected results, the talk to Atlanta bankruptcy lawyer and file a bankruptcy as per the law in place.

What The Basics Of Bankruptcy Are

Filing for bankruptcy doesn't have to be difficult. It's a good idea to have an attorney guide you through the process and to make sure you do things correctly. You will get all the answers to your major questions from a lawyer. Bankruptcy attorney Benjamin J. Ginter runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey. Here, he discusses what the basics of bankruptcy are and why you need an experienced lawyer.

Consumer bankruptcy allows people to either eliminate or wipe out most of their debt, in some circumstances, to repay their creditors under a court supervised repayment plan. The eventual goal of any type of bankruptcy filing is almost always to obtain a discharge from the court, which means that all the consumers' debts (with some exceptions) which exist before the filing are eliminated.

With few exceptions, any person or business owing money to a creditor can file for a bankruptcy petition.

Consumers typically file Chapter 13 bankruptcy, where repayment is made to creditors; or a Chapter 7, where most debts are eliminated. For the majority of consumers, a Chapter 7 would be filed; usually a Chapter 13 is filed by those who face losing their home in a foreclosure.

Some people do have a simple case that they could possibly do on their own. But it's a good idea to have an attorney guide you through the process and make sure you do things correctly. A lawyer can guide you through the intricacies of the process and help you avoid the pitfalls. Although you may think your case is easy, if you file incorrectly, it can significantly delay your discharge, and in some cases, your case could be dismissed. Moreover, if you file for the wrong bankruptcy chapter, you could put yourself in jeopardy of losing assets, including your home.

A Chapter 7 bankruptcy can be filed every 8 years from a previous chapter 7 filing or 6 years from a prior chapter 13 filing. Chapter 13 can be filed 4 years from a prior Chapter 7 filing or 2 years from a prior Chapter 13 filing. Filing bankruptcy can adversely affect your ability to obtain future credit, rent housing and even negatively impact a job application, so it's important to consider these things as you decide whether to file.

No. The debts that cannot be discharged vary slightly between the different chapters of bankruptcy. Generally, student loans, recent income taxes, child support and other marital obligations, and items having to do with fraud are not dischargeable.

It depends on different factors: where you live, how much equity you have in the property, how far you are behind in the mortgage payments, etc. If you have a home or own any kind of real estate, it's more important than ever that you hire a bankruptcy attorney. Filing the wrong bankruptcy could jeopardize your home.

Exemptions allow an individual to exempt or keep certain kinds of property. Most people who wish to file bankruptcy are unlikely to have a great deal of money or property stashed away. It is likely that unless you own a valuable car that's paid off, a house with a lot of equity, a valuable inheritance, or some other kind of unusually valuable property, you will be able to keep everything you own as "exempt."

No. Although at your option, you can file an explanation with the credit reporting agencies briefly describing the events resulting in your bankruptcy. If an account is reported inaccurately, you can request that the record be updated to reflect the actual situation.

10. Can you get credit cards after you file for bankruptcy?

Yes. You might even start receiving offers in the mail right after you file your case. However, these credit cards usually carry high interest rates and fees. They put money in your bank's pocket, not in yours. If you want the convenience of a credit card, you can have one with a small limit.

11. Is filing for bankruptcy immoral or bad?

No, the bankruptcy law is in place because our system of law recognizes that your life and future should not be ruined because of some financial mistakes you've made. You should never feel ashamed or feel like a failure if you decide to file for bankruptcy. Hold your head up high and remember that bankruptcy can give you a fresh start.

Florida Personal Bankruptcy- Free Helpful Fact For Personal Bankruptcy In Texas

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Finding a trusty debt settlement company isn't that simple however, it'sNot even a rocket science and with a tiny amount of effort, you can find a company that can help you out.

These settlement companies are sometimes very successful in obtaining settlements for clients at close to Fifty percent off what the original debt was. Any fees that are charged by these corporations may only be charged once a settlement has been reached that all parties can agree upon.

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Filing Bankruptcy as a Last Option

For those you have a lot of financial debt sometimes the end never seems near. At times like these filing for personal bankruptcy seems to be the only option. While in some cases it does make sense as the only solution, you have to understand that it can have devastating effects on your credit history as well as your stand in society. There are several reasons why you may feel that bankruptcy is the only solution. But each of them need to be evaluated as a third person would. Perhaps then you would understand that it is better to give alternate options a chance.

One of the most common takeaways from declaring bankruptcy is that it will help you start afresh. Remember that when you are filing under Chapter 7, all your non-exempt property will be handed over to the court to liquidate and pay of your creditors. Under Chapter 13, you will have a 3 to 5 year repayment plan in which all your disposable income will have to go. All this doesn't work towards a fresh start.

Bankruptcy under Chapter 13 may be opted for to prevent a foreclosure on your car or home. What it effectively does is take that debt and put it into the repayment plan. Should you miss even one of these installments, your repayment plan will no longer be in effect and you could end up with a bigger problem.

Nobody likes being harassed for money, whether it is from the creditors themselves or from agencies. This does not mean you file for bankruptcy to end the problem. Debt settlement companies will help you reduce your credit burden. But if you want to get rid of the annoying calls, then you will have to approach credit counseling organizations. They will get rid of the calls without you having to file for bankruptcy.

Filing for bankruptcy may prevent the utilities from being shut off, but rest assured that the cost will be included in the repayment plan. Keep in mind that most utility companies go a long period before actually cutting off utilities for non-payment. This should ideally give you enough of time to save up and make your payments.

Before you file for bankruptcy, you should sit back and assess what your reasons are. More often than not, you will save yourself from taking the escapist route.

Can You Still Qualify For Chapter 7 Bankruptcy?

A lot of people are under the misconception that they no longer qualify for bankruptcy because of the changed laws. Bankruptcy attorney Benjamin Ginter runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey. Here, he says bankruptcy is still a viable option for many individuals although the bankruptcy laws have changed.

Filing for bankruptcy should not be considered an end, but a new beginning. You will have the opportunity to rebuild your credit and can even apply for car loans or home mortgages soon after filing. The procedure of filing can be complicated, but it will be successful if it is done correctly. A qualified and experienced bankruptcy attorney can help you every step of the way.

Filing For Chapter 7 Bankruptcy

It is still possible to file for Chapter 7 bankruptcy, although some of the main areas have changed. For example, you can now file for Chapter 7 bankruptcy once every eight years instead of every six years. Under the bankruptcy law, certain property is exempt. Often when you file for Chapter 7 bankruptcy, you are able to keep your property because of the exemptions.

Now you will face a means test and need a medium-income level to file for bankruptcy. Each state has set its own rules of medium-income level for a family of a certain size. Here in New Jersey, for example, if you have a household of four people, including children, the medium-income level has been determined to be roughly $103,000.

If you and your spouse make more than $103,000, you could not file for Chapter 7 bankruptcy. As based on your combined income, you could afford to file for Chapter 13 bankruptcy, which means you can make regular payments. However, a lot of people do not make the kind of income that would exceed this level, so they can still file for a Chapter 7.

Making Deductions

If you are required to file for Chapter 13, you will have to show that you have expenses that prevent you from making the payments, and prove that you are correct in filing for Chapter 7.

Sometimes that is based on what you pay in mortgage payments or whether you have a car that you have to make regular payments on. You can make deductions from this and be able to file for Chapter 7, even though your income exceeds the medium-income level.

Understanding the complicated rules of filing for bankruptcy can be difficult, which is why many people seek the advice of a professional.