Paying Bills During Bankruptcy

December 19th, 2010

If you are facing difficult financial times, you probably feel overwhelmed and stressed by all of the challenges you are facing. On top of having to pay regular bills, you may be getting phone calls from creditors asking you about past due debts. You may feel that there is nowhere to turn to get help with your finances. Thankfully, there is. Filing for bankruptcy is one way you can get a better handle on your finances and begin working towards a more stable future.

How to stay on top of bills during bankruptcy

When you file for bankruptcy and work to gain control over debts and other expenses, there are certain steps you can take to make it easier to become more financially stable and keep meeting your financial obligations. You can make your cost of living less expensive and your finances more manageable by:

  • Finding more affordable housing
  • Canceling unnecessary subscriptions for which you make monthly payments
  • Reducing the number of non-essential purchases you make every week
  • Cutting out other expenses or payments for non-necessary items

Making and sticking to a reasonable budget can really help you as you go through the bankruptcy process. Once your debts are back under control with the aid of bankruptcy, you will already have a working budget in place to prevent mountains of debt from accumulating again.

Bankruptcy may be able to provide you with a new financial start and a new financial future. An experienced attorney can help you begin the process of overcoming overwhelming debt.

Student Loan Bankruptcy Is Not Really an Option

December 10th, 2010

Several surveys that have been conducted across the nation show that student loan debt stands really high. There are several reasons for this and therefore there seems to be an increased tendency by students to look into student loan bankruptcy as a solution. Other options also include debt forgiveness programs and a vast range of ways of that will help bring down the financial burden of student loans.

The problem with student loan debts is that the bankruptcy law began to get misused. To prevent this from happening, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was put into place. What this means is that you are no longer able to legally write-off private or federal college based student debt. but you can approach the court in extreme cases to reduce the amount that you owe. In most cases, what the court will do is create repayment schedule for you, much like how its done in Chapter 13 bankruptcy filings.

The singular in which to overcome this rule is when the debtor or student is able to prove that they are no longer capable of working and earning the amount needed. This may be to due to a physical ailment or disability. You will need to prove that your earning potential has been significantly decreased and that there is nothing you can do about it. The assessment for this however is extremely stringent and applies to very few students.

If you manage to get a public sector job such as being a teacher or a nurse or a member of the armed forces, it is possible that you may be eligible for the debt forgiveness program. If you have a federal student loan, a fixed percentage of it will be eliminated. However, the figure forgiven depends on the current economic scenario and is subject to change. This is also not applicable to private bank loans.

Another means of repaying a student loan is if you have not been a defaulter till now, you could apply for a deferment of payment. This is capped off at a period of three years. The good thing about this is that there is no interest that will accumulate on the figure outstanding with the exception being Perkins loans as well the means tested Stafford loan

Life After Bankruptcy – Hope in the Aftermath

November 27th, 2010

Life after bankruptcy begins immediately after you leave the courtroom from having your debts discharged. No one wants to be in this position, but you must look at this event as a way to take control of your life again. Be assured that the lack of harassment from creditors alone will make the healing process progress faster.

Your credit score will be hit hard once the bankruptcy is listed. While this is bad, take advantage of this down time to regroup and restart your financial life. In about 18 – 24 months you will be able to qualify for credit again.

If you have filled Chapter 13, you will need to make payments to the court each month. Do this every month, and on time. The repayment of these debts will help boost your credit rating for the future. It will also keep you out of trouble with the court.

As you begin your life after bankruptcy, commit to tighter financial control for yourself to avoid problems in the future. While everyone realizes that not all bankruptcies are a result of poor financial planning, planning for financial stability is still a good practice for everyone.

Make sure that you pay all your bills on time each and every month. This includes your utilities. While utility companies do not report on time payments, they often report late ones. Utilize things such as auto-pay and AFT to guarantee that payments are made on time. Each month that your debt is listed as paid on time your credit score will raise.

People that have filled bankruptcy can qualify for home mortgages within two years of the debt dismissal. This time period is a great time to begin saving for a down payment as you improve your credit score. Many FHA programs will even consider a mortgage application after 18 months.