More and more people in the UK are finding that the best way to resolve their debt problems is to declare bankruptcy. Perhaps this is because the process is not as daunting as many might think.

With the number of bankruptcies up 15% in the second quarter of 2009 compared with the same period in 2008, it is clear that bankruptcy is becoming a more popular option for dealing with personal debt.

If they declare bankruptcy, tenants and homeowners with little or no home equity are extremely unlikely to lose their homes. Fewer and fewer people seem to be concerned with the publicity surrounding bankruptcy (your name and address are published in the local newspaper) and in reality, very few people’s jobs are at risk if they go through the process. Given this, declaring yourself bankrupt is not as daunting as some people might think. The following tips give a useful guide to the process. (more…)

The answer to the question of how long a bankruptcy will keep you from getting credit isn’t as straight-forward as you might think. Generally speaking, a bankruptcy filing remains on your credit report for 10 years. However, successfully discharged Chapter 13 bankruptcy proceedings will usually remain on your credit report for only seven years.

Chapter 7, 11 and 12

If you file for bankruptcy under Chapter 7, 11 or 12, the bankruptcy notation will be on your credit report for 10 years, without exception. Even so, there have been cases reported in which individuals were able to obtain credit in as little as two years after they filed for Chapter 7 bankruptcy. (more…)

Before you file for bankruptcy, there are a number of things that you should know.

1. Filing bankruptcy will destroy your credit score.

You’ll be unable to obtain a credit card or secure a loan for some time once you’ve filed bankruptcy. A bankruptcy listing can remain on your record for up to 10 years. It is, however, possible to rebuild your credit rating, although it will take time. Be sure to keep this in mind before you file for bankruptcy.

2. Some debts will not be discharged

Not all debts are discharged automatically. There are still debts that you are obliged to pay. Some of these include child support payments, student loans and income taxes. Don’t assume that you are automatically debt free once you are declared bankrupt. (more…)

Today I read an article by Katie Adams entitled, Financial Mistakes that Could Haunt You Forever and it got me thinking. In this unprecedented Economic Depression, we are faced with more difficult decisions about our finances than ever before. Who can we turn to? Who do we trust? I say that now more than ever before we need radical self reliance. Don’t wait for someone else to tell you what you need to do. Be informed and then decide the proper course of action for your own financial well being.

I hear it every day. “We cashed in our savings and retirement to try to stay afloat.” “We lived off our credit cards and now we can’t afford the payments.” These 4 financial mistakes can be fatal in the long run and you may land in bankruptcy:

* Living beyond your means is so yesterday.
* Cashing out retirement accounts to pay bills is fatal.
* Fear, Shame and Guilt will paralyze you financially.
* Never, Ever Co-Sign on a Loan, unless you intend to own it and can afford the payments! (more…)

If your debt has overwhelmed you to the point where you’re seriously considering filing for some form of bankruptcy, it may be worthwhile to investigate debt mediation.

Debt mediation is a process in which a mediator brings you and your creditors together to discuss a repayment plan that is satisfactory to all parties. If all parties involved can come to an agreement, and you are able to fulfill the terms, you can save yourself the hassle and stigma of having to file for bankruptcy.

Debt mediation is typically used when a debtor has incurred large amounts of business debt, but it has been used in cases of consumer debt as well. During this process, your debt may be reduced by up to 60%. The mediator does not have the power to make a binding judgment, but they will keep the conversation between you and your creditors on track and guide you towards a mutually equitable solution. This can help you a lot. (more…)

Many debtors considering bankruptcy are active members of their church, synagogue or mosque and committed to donating a certain amount of money to the organization. Filing for bankruptcy does not mean that a debtor’s charitable contributions must stop. Debtors, who file for bankruptcy, are allowed to give to a charitable organization (including religious organizations), and can even include it as an expense on their budget during a Chapter 7 bankruptcy or Chapter 13 bankruptcy filing.

How It Works

Debtors are allowed to donate to a charitable organization during bankruptcy; but that donation amount cannot be more than 15 percent of the debtor’s current yearly gross income. For example, if a debtor earned $30,000 a year, he/she would be allowed to donate a maximum of $4500 a year to the charity of his/her choice. Also, the debtor must let the bankruptcy trustee know how much that donation will be using the budget form. Oftentimes, for debtors who are just over the income limit allowed for Chapter 7 bankruptcy, including charitable donations as an expense can reduce their income just enough to qualify for Chapter 7 bankruptcy instead of Chapter 13 bankruptcy. (more…)

If you are struggling financially, it is likely that bankruptcy can be a wonderful opportunity for you to turn your finances around. The process is usually easier and smoother than most people expect, but you need to be honest and upfront with the court. If you are not honest, you could face serious consequences. Here are five reasons that you need to be honest during your case.

1. To avoid criminal prosecution. Individuals can be charged with perjury if they hide assets or lie to the court. Bankruptcy is not a scary process, so do not let this worry you. Just make sure that you aren’t trying to take advantage of the situation, and everything will be fine.
2. To protect your discharge. The trustee in your case can ask the court to deny your discharge, because you were not honest. This can become a terrible situation, because you just went through bankruptcy, but you won’t gain any of the benefits. None of your debts will be eliminated or restructured, and you could lose nonexempt property without gaining anything in return. (more…)

When we think of Middle Class America we think of stability, nice jobs, good neighbors and stellar careers; but middle class America is in crisis. Many are facing foreclosure and are filing bankruptcy despite their degrees, high salaries and symbols of stability. In this three part series we will explore how and why middle class Americans are getting hit worse by the recession than any other demographic in this country.

Part I – Swelling The Ranks Of Bankruptcy

Nearly 1.1 million Americans have filed bankruptcy in 2009. At least 58 percent of bankruptcy filers have some college education and many of those filers are homeowners facing foreclosure. What was once two markers of stability in America, have now become indicators of future bankruptcy in many cases. (more…)

In part one of our series about why the middle class is becoming more vulnerable to bankruptcy, we discussed the swelling numbers of Americans who have a college education and own homes filing bankruptcy. In part two of this series, we will explore how the massive numbers of job losses and rising unemployment rate is pushing more middle-class Americans into Chapter 7 and Chapter 13 bankruptcy.

Part II – Job Losses Become Permanent

Just one generation ago, the average middle-class American family could survive and thrive with only one spouse working. But in recent years, having one breadwinner in the family has not been enough to hold on to a middle-class lifestyle. Most Americans now depend on having both spouses working and even then the income they earn is just barely enough to maintain a home, cars and send the kids to private schools and college. This is why any hiccup in their lives could send them into financial crisis. Medical emergencies, a job loss, or even a reduction in salary could force them into a bankruptcy. (more…)

Bankruptcy confirmation is a prerequisite for individuals filing for Chapter 13 protection. Also referred to as ‘reorganization’, debtors are required to submit debt repayment plans through the court at the time of filing or within 15 days after submitting petitions.

Bankruptcy confirmation hearings are used to determine if debt reorganization plans adhere to U.S. Code regulations. Chapter 13 payment plans document the amount and payment schedule. Payments are typically established on a biweekly or monthly schedule and submitted to the court trustee. Trustees distribute payments to creditors according to the terms set forth in the reorganization plan.

Once petitions are filed, creditors are notified and a 341 creditors meeting is scheduled. 341 meetings allow debtors and creditors to meet face to face. Debtors are given the opportunity to explain their financial situation and ability to repay outstanding debts. Creditors might agree to accept less than is owed, reduce interest rates, or remove penalties and late fees. (more…)