Filing Chapter 13

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In the past, if you got into trouble with debt, it was easy to contact your attorney and file the necessary paperwork, and you were off and running with a clean slate, ready to start over and free from the worry of debt. Well, today it is not so easy. There have been some new laws put into place that make it more difficult to eradicate your debt. Not only is it harder, but now your are required to get credit counseling and some sort of education if you plan on filing that petition in the bankruptcy court. These new activities have also caused the cost of filing to increase, not to mention the cases we are seeing are much more difficult. With the new laws in effect, chapter 7 and chapter 13 bankruptcies are still in season.

With a chapter 7 bankruptcy filing, a debtor is allowed to keep as determined by the court, certain exempt property. Now if there is any other property available it must be sold and then divided among the creditors who have an interest in this case. Now a chapter 13 works a little differently. The court puts together a plan for those that file and have an income to keep non exempt property, a home would fall under this category, and the consumer is able to pay back any debt over a period of 3 to 5 years. Even though these are still intact major changes have taken place designed to keep down abuse of the bankruptcy system and which causes those seeking to file to do as a last resort.

Here is how the new plan unfolds. First of all any debtor looking to file bankruptcy is enticed to file a chapter 13 rather than a chapter 7. If a debtor's income is less than the state median then he/she is able to file a petition for chapter 7. However if someone's income is higher than the state's median in which they reside, then the debtor may file a chapter 7 but only after a complex system, utilizing statistics, and comparing income to expenses and also taking a look at the amount of unsecured debt an individual has on his personal balance sheet. Unsecured debt is credit card debt or anything that is not backed up or secured with some type of collateral.

If a debtor files a chapter 13 bankruptcy petition, which is commonly referred to as the wage earners plan because a debtor needs some type of income, then the IRS will call upon some stringent guidelines and requirements to determine the amount a debtor can pay back.

As you probably have guessed, the fees for filing a Chapter 7 have increased, because there is more to do to get it done for everyone involved.

After everything is said and done there will be some creditors left out in the cold. In other words they are not slated to receive any type of payment through the plan whether it be chapter 7 or chapter 13. If that is the case the new laws have given creditors the right to contest the bankruptcy ruling. They can now try to have the plan reworked so that they are included in the settlement.

There used to be individuals that would strategically file bankruptcy every seven years which was the allowable time frame to wait between filings. Well now that period has increased to eight years.

A certain amount of equity in your home is protected from bankruptcy based on the homestead exemptions however the amount protected is different for each individual state.

What is you have been saving for retirement and you have a large nest egg saved up? How is that money affected? Well any retirement accounts, such as IRA's, and your 401K's cannot be touched by creditors but only up to one million dollars. The new law also allows for some education which will enable the debtor to steer clear of any future problems. Anyone looking to file for bankruptcy must take an approved financial counseling course which provides some other options in lieu of bankruptcy.

Also this course must be taken at least six months prior to filing. Now when everything is said and done and the bankruptcy has run it course and come to an end the individual as outlined by the new law has to take a financial management course which is designed to help them learn the skills of financial management which in essence keeps them from making the mistakes of the past as they pertain to financial matters.
So there are a lot of things to consider if you are thinking about filing bankruptcy.

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Money is tight. Tight is an understatement, money is non-existent. Every dollar that comes in goes out and you can't get your needs taken care of. The phone rings all the time. You are nervous and anxious and will do anything to avoid another phone call. It seems that nothing is right in your world. But there is! I have been there, in the bankruptcy path. It is a dark and lonely place. Mostly, you have become embarrassed and unsure of yourself and have no support system. The lack of a support system is something we do to ourselves to hide the fact that we are not making it. We feel like failures.

Looking back I would change so much. I would also take full responsibility for my actions and set out on a different path. Bankruptcy would have not been an option if I knew then what I know now. I hope if you are reading these words you heed my warning and at least give my ideas a try. After all what have you got to lose at this point?

1.The first thing is to own up to all your debts. Don't hide the envelopes when the bills come in. Put them all in one place.
Better yet, make files for each bill. Organization is your first step to control. 

2. Make a spreadsheet on Excel or Lotus or just on green ledger paper it doesn't matter where as long as it is in a place
where you can do the same thing each month and keep the prior months history. This is basically a list of all people or
businesses you owe money. The first section would be their name, address and phone number. The second sections
would be the total amount owed, the 3rd section would be the minimum payment and the 4th would be the interest rate. 

3. After the list is complete organize the list by interest rate – highest to lowest. 

4. Make a complete list of your income and household expenses – outside of debt, but including your home. Subtract these
expenses from your income. This is the amount you have available to pay down debt. For now there will not be any extras. 

5. Keep all your files with you and find a quiet room with a phone. You are now ready to call each and every creditor and
try to negotiate with them. You will need to go into your reserves and past your insecurities to where your true self is.
You will request an interest decrease, whether it be for the life of the debt or just a few months, take it. If they will not
work with you try to speak with their manager. This should not be a problem. If your credit is already shaky, which it
probably already is, you may not receive a interest decrease. In this case you need to explain to the creditor (not your
highest interest card) that you are experience financial difficulty and am unable to maintain the current minimum. You
would then request an amount that you can pay monthly. The credit company will try and talk you into a higher amount,
but your job is to convince them that you can not pay more and that this is what you can pay. You should also explain
that you are trying to stop bankruptcy and pay your way out of debt. As a general rule some money is better than
none. The trick is don't bargain more than you can pay.

Whether you negotiated a new interest rate or a decreased payment, even if only for a limited time. It will all help you to get a grip on your debt. Now, you should have the minimums you can afford. Your next step is to eliminate late fees and build your credit back slowly.

1. Open a separate no fee, no minimum account. In this account you will deposit, each pay period, a portion of the monthly
debt pay back. This amount was calculated in number 4 above. So if this amount is $100 and you get paid every 2 weeks
you will deposit into this account $50 each pay check. This will eliminate the chance of you spending it before the debt is
due.

2. Next you will set up each credit account to withdraw from your new account on the day it is due. May sure you select
minimum payment and not the full balance. Even though you may be moving more money than minimums you will still
set up all accounts to only take the minimum.

3. The amount that is left in the account less $1 to keep the account open will be paid by you separately at the end of each
month to the account with the highest interest rate. Note this amount will be changing because as you pay off your debts
the minimum payments decrease. Plus you may or may not be making interest on your account.

4. When the highest rate credit is paid you will apply the extra account money to the next highest interest rate card.

Things you should know and/or be aware of:

You can ask creditors not to call you. They can send all notices through the mail. But this shouldn't be important if you have initiated the above practice.

As long as you are paying $5.00 per month to medical bills they will not be able to obtain a judgment against you. When you go to court this will show the judge you are making an honest attempt to pay.

When your negotiated deals with creditors expire or you did not receive one, call back. Do this every month. As you are continuing to pay on time with the above system you are becoming more credit worthy. Don't worry what the person thinks of you on the other end. You will never meet them, so keep calling.

Talk to someone you trust. There is always someone out there who sees things that you are missing. Be brave tell them you are struggling. Most people will help you figure out a plan to succeed. Remember you are human, not perfect. None of us is perfect. 

The worse anyone can say to you is no.

And lastly, money will be tight for awhile. You did not acquire this kind of debt over night. You may feel at times that you are getting no where. This is normal. This is why you should record your current debts each month on a spreadsheet either on the computer or by hand. By doing this you will see your progress each month. The progress will begin to grow with each debt payment made, so be proud of your successes and acknowledge them.

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Whether you are buying a house, selling a house, or a home owner, you are probably worried about the current state of the housing market, which is hitting lows that the US hasn't seen in decades. The Boston Globe reported this Wednesday that foreclosures are up 68% from last year, and the problem is predicted to worsen.

According to a study conducted by Moody's Economy.com, housing prices will decline an average of 7.7 percent in the upcoming years – while some housing markets may decline by up to 25%. Current home sales aren't fairing too well either – sales on existing homes sank 8% in September, the steepest drop ever recorded.

Worse are the problems that the subprime lending market has encountered this past year. Subprime lenders lend money to people with bad credit and were responsible for pumping $640 billion into the economy through home purchases and refinances in 2006. Due to the recent delinquencies and housing foreclosures many subprime lenders are taking a big hit. Six major subprime lenders, including Netbank, Ameriquest, and New Century Financial, are currently filing for bankruptcy. Others may soon join them as they report tremendous losses. Among them is Citigroup, one of the nation's largest financial services, which recently reported losses of up to $17.5 Billion dollars due in part to the housing crisis (Wikipedia).

The biggest problem with the subprime lending market is that it can create a chain reaction. As lenders raise their borrowing standards, less people will be qualified to take out mortgages. Fewer qualified buyers can mean the housing market will fall even further. Many economists predict that this housing slump will continue into 2009.

To aid some of those affected by the subprime mortgage crisis, the Bush administration released a foreclosure relief plan this month which could help up to 1.2 million homeowners by freezing their interest rates. When announcing the plan Thursday, administration officials recognized that this plan is not a “silver bullet,” but said it is a significant step to addressing the credit crisis.

Time will tell if the administration's plan will help some of the many affected by this crisis, but at this moment, the problem remains and people are trying to find their own ways to cope with it. Many people can no longer tap into the equity on their homes and will have to cut back spending this holiday season. Others are giving up their plans to buy and sell new property.

Roxanne Withrow, a homeowner in New Jersey, was going to move with her family to Sarasota, Florida after the holiday season. But with the recent drop in housing prices, she may have to wait a few more years before the move.

“My house went up in value by $200,000 in the last ten years – but now it's starting to decline in value, and I want to get the most for my money,” Withrow said. She added, “buying a house in Florida might not be the best idea with the housing market the way it is down there.”

The Bush administration's plan to aid homeowners struck by the subprime crisis, while helpful, is only designed to help a small percentage of those affected. The remaining people hurt by this crisis will likely be struggling for the next few years. Thousands of homes have already been foreclosed, and the situation is expected to get worse.

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The Following Story is from Associated Content and sponsored by Miami Bankruptcy Lawyers

My mother always told me that life could be difficult. However, I never knew what difficult was until I entered the “squeeze years” of my life. I am a 54-year old divorced, working mother who lives with a teenager, has a 33-year old son in the middle of a divorce and bankruptcy, and tries to be a good daughter to my aging mother who was recently widowed.

My life gives new meaning to the term “being stretched in all directions.” Whenever I describe my life to friends, the response I receive is usually a shocked silence. I understand. My life sounds like a bad soap opera. The reality is that life rarely follows a discernible pattern. It simply happens and as it happens, you must decide how to react. I have decided to wade through it with as much humor and dignity as possible.

How I Came to This Place

Four years ago I moved back to my hometown for two reasons, to spend more time with my grandson and to help my parents cope with increasingly overwhelming yard and house responsibilities. The primary reason I wanted to be with my parents, however, was to be present for them with my love and support while my dad died slowly from bone cancer. During the next three years I did their yard work, helped my mother take care of my dad, and held my dad's hand.

Dealing with a Grieving Parent

My parents had lived in the same house in the country for 40 years. After my dad's death, my mother wanted to sell the house and move into town to be closer to me. Since my dad was the undisputed king of the pack-rats, there was a 40-year accumulation of “stuff” that had to be dealt with; a full basement, a full garage, a full barn and an acre of land covered with old building materials that had mostly rotted.

My mother, who was consumed by grief, was so overwhelmed she had no idea what to do. Because I am an only child, there was no one I could share the responsibility with. I had no idea what to do or where to start; but start I did, one box at a time, one carload at a time, for six months of evenings and weekends.

During those six months of dirty, mind-numbing work, I never allowed myself to get angry or bitter. Instead, I embraced the experience for what it was, a trip down memory lane. For in the midst of all that garbage, there were moments of pure joy when I would find some wonderful old toy or other object from my childhood. I would stop what I was doing and show my mother my prize and we would reminisce about another place and time. It was a time of healing and bonding for both of us.

Dealing with an Adult Child's Issues

Once everything was finished, my mother put the house on the market, sold it, and bought a lovely mobile home in town. While getting my mother ready to move, my son and daughter-in-law separated and declared bankruptcy. I was physically and emotionally spent from my experiences of the past months. However, I supported my son's decision and helped him make other living arrangements both physically and financially.

My son depends on me to fulfill certain needs. I understand this as I have some of those same needs with my mother. However, I have learned I have only so much energy, time and resources available. Some days I have more than others. I am always able to offer him love and laughter. Usually, that's enough.

One Day at a Time

I have a teenager who gives new meaning to the word “moody,” a son who fluctuates between sadness, anger, and a beer bottle, and a mother who fluctuates between grief, anger and depression. They are all struggling and need me to be present for them in whatever ways I am able.

Though I am constantly challenged by their needs, I have learned that I CAN be present for them if I first make time for myself. I have learned how to say no without feeling guilt. On Saturdays, I go browsing at the local Goodwill store and every evening I carve out an hour of time to read or take a walk. These “me-times” save my sanity, relieve my stress and keep my sense of humor intact. The “squeeze years” can be brutal, but I don't have to be.

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With the new bankruptcy law in effect, many people are wondering what the changes are. While there are plenty of new things to take into consideration, most of the people affected will be those who wish to apply for Chapter 7 or Chapter 13 bankruptcy. Here are some of the basic changes that are most likely to affect you, should you decide to file for bankruptcy protection.

Old eligibility: Previously, any debtor could choose between Chapter 7 or 13, according to what they perceived their circumstances. Chapter 7 is more lenient, but also has more stringent income requirements. However, if it looked as though the debtor might not be qualified, he or she could switch to Chapter 13 at any time, without any repercussions.

New eligibility: Things are different now. Chapter 7 cannot be considered without first passing a means test. Initiating bankruptcy filings are more difficult because of this. Additionally, rather than looking at current income, Chapter 7 looks at the previous six months' income. If you lost your job less than two months previous, you might be in trouble. Additionally, the means increased. If the debtor can possibly repay $6,000 or more to creditors over five years, Chapter 7 is not an option.

Old filing procedures and prices: Previously, anyone could file for bankruptcy. If there was not adequate cause, the case was dismissed and no penalties were paid. Many lawyers kept bankruptcy fees down to be competitive, allowing more people access to legal bankruptcy advice.

New procedures and their implications: Before you can even file for bankruptcy, you must visit a credit counselor (don't forget that the credit card industry helped found the credit counseling industry – and that it still heavily supports it). If you are allowed to file, you must get all of your tax returns in order within weeks of filing. Additionally, lawyers will be sanctioned with fines if their clients file, but are not eligible for, Chapter 7. If the case fails in the end, lawyers will also be sanctioned. Legal fees for bankruptcy proceedings are already on the rise, and it is likely that you will have to pay more to even seek legal advice in this matter, as lawyers will be more on their guard.

Old automatic stay: Immediate protection was extended to the filer once bankruptcy was sought. Creditors had to seek permission from the court to try to collect on debts while things were being sorted out. Additionally, there were provisions that made it difficult for landlords to evict tenants seeking bankruptcy protection.

New automatic stay: There is none. Before filing, make sure you understand that your creditors can keep trying to collect, even if your case is being heard. Additionally, even if you are currently paying rent, a landlord can evict you for back rent owed, since there is no automatic stay. The court must approve of a stay, and will do that only if it looks like your case is good (and in the case of Chapter 7, that you have already passed the means test).

Old discharging debts: Very few debts that were not dischargeable. Dishonest debts and student loans were not dischargeable. Chapter 13 acted to discharge nearly everything else, if you agreed to a payment plan that resulted in paying back some (but not all – usually a small fraction only) of the money owed. Additionally, the taxing authority had to file a timely claim in order to collect back taxes. If not, Chapter 13 discharged even these taxes.

New discharging debts: The list of debts that cannot be discharged has grown, along with the amount to be repaid to unsecured debtors. There is no way to discharge taxes. It does not matter whether the taxing authority's claim is timely or not. There is a complicated process of adding debts to the list of dischargeable debts as well.

With the new laws in effect, it is important that you carefully consider all of your options before declaring bankruptcy. You may find that the lessened protections are not worth it, and that it turns out to be even more expensive, should you be turned down.

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Chapters 27 & 28

In this paper I will discuss the topics and issues presented in chapters twenty seven and twenty eight of America, A Narrative History by Tindall and Shi. I will discuss Normalcy and the Great Depression while exploring the contradictions of the “Roaring Twenties and the Jazz Age” during the conservative Presidencies of Harding, Coolidge and Hoover. The decade of the twenties went from an economic boom defined by the Roaring Twenties to financial disaster of the Great Depression. Each of these Presidents was involved in the transitions found during the twenties. Wether or not they were personally responsible for what transpired during their individual tenure is open for debate with a few exceptions. My personal insight is, our Presidents of the time made some horrific mistakes and mishandled some policies both foreign and domestic that did not benefit the common citizen as they did big business.

In 1920, after World War l, Warren Gamaliel Harding was elected President of the United States. His promise was a “return to normalcy”. The American people needed to hear this approach after enduring WWl. To the public he was an old fashioned plain man, a son of an Ohio farmer, with conservative values. However, his personal life was quite the opposite; he drank bootleg liquor during the prohibition, smoked, played poker and was a womanizer. His design was to lower war time taxes and gets a better handle on government expenditures. The result was that Government expenditures fell as did national debt. Mellon, his Secretary of the Treasury, favored high tariffs. This ultimately had negative effects on agriculture. Regrettably, Harding surrounded himself with cronies referred to as the Ohio Gang. These members of his “gang” used White House connections to line their own pockets. Harding wanted to be remembered as the beloved president. Because of his poor judgment and bad habits he was remembered not so favorably. He did however; lay the foundation for the decade's economic boom. In 1923 he left on a Western speaking tour and died of food poisoning. Harding's hard charging, private lifestyle would be indicative of the Roaring Twenties attitude prevalent of the day exemplified by the wealthy of the time.

Harding's death found then Vice President, Calvin Coolidge, in line to assume the Presidency. Coolidge was a staunch conservative. He managed to distance himself from the scandals of the Harding administration. The Presidential campaign of 1924 found Coolidge a huge favorite and a landslide victory. Economic and social life was booming in the mid-twenties. Coolidge saw this as a confirmation of his promotion of big business. Technology was advancing rapidly as was consumer spending fueled by the advent of advertising. Radio made its debut during this era and served as a medium for sharing news bulletins and Coolidge was the first President to address the nation by radio. Other advances came in the form of the airplane and the automobile. The innovation of installment buying made creature comfort consumption a reality for many that would not have been able to purchase luxuries in the past. Efficiency was key to production as was modeled by Henry Ford in his production line auto assembly. The trade association movement helped business leaders share information on sales, pricing, costs and wages. This was supposed to be a good thing, but as is often the case, greed stepped in and price-fixing and other abuses raised their ugly heads. Farming was not so fortunate. As commodity prices dropped, crop prices from bumper crops dropped also. Many farms went into foreclosure and bankruptcy while the largest and most successful got larger. Urban workers did well during this period while union laborers suffered a twelve hour work day and six day week. The unions were attacked by business with yellow dog contracts that forced workers to stay out of the union. This was the foundation of what was to be the Great Depression. All in all, Coolidge did a lot of good during his term.

Once again, in 1928, a republican won the Presidential election. Herbert Hoover was elected in yet another landslide victory. Hoover is quoted as saying, “I have no fears for the future of this country. It is bright with hope”. Woops, he missed that one. Hoover's program to stabilize business and agriculture did nothing more than raise prices paid by consumers. Once again greed entered the picture and get rich quick scams prevailed and the Florida real estate boom began. In 1926 the bubble burst and many lost everything. Treasury Secretary Mellon's tax cuts had given people discretionary income they were able to invest in the stock market. Many speculated recklessly and were caught in the crash of October 29, 1929, the largest drop in history. The already shaky foundation of the nation's financial structure could not cope with the economic down turn associated with big business still charging high prices, paying low labor wages and plowing profits back into expansion that could not be supported by the present economy. This coupled with the collapse of the gold standard entered the United States into the Great Depression.

The Roaring Twenties and the Jazz Age were exemplified by the economic boom of the twenties caused by a return to normalcy and the New Deal in the 30's. The actions of the Republican Presidents of the time were; if not poorly timed, misguided, benefiting big business rather than the people who elected these men. The recovery efforts after WWI, some poor decisions in international trade and banking coupled with our own internal mishandling of our own affairs led to the ground work of the Great Depression. Shamefully, we did this to ourselves. We can not blame any one else. Have we learned from this? Only the next ten years will tell as we witness our own financial environment.

Tindall, George, and David Shi. America A Narrative History, Seventh Edition, Volume 2. New York: W. W. Norton, 2006.

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This is a time of year when many examine their finances. Whether it be New Year's resolutions; after-holiday bills arriving; or money gifts received for Christmas, Hanukkah and/or Kwanzaa, money is on the agenda this time of year.

Unfortunately, for quite a few, this may mean contemplating filing for bankruptcy. FYI, according to a press release on uscourts.gov, there were almost 1,100,000 non-business bankruptcy filings in the fiscal year ending September 30, 2006.

The “Real” Cost of Bankruptcy

1. Bankruptcy's emotional toll: The potentiality of bankruptcy leads to feelings of depression, anxiety and overall worthlessness.

According to the 2005 report by the Personal Finance Employee Education Foundation, Summary of Research Findings on Financial Distress and Satisfaction, some 25% of working adults are seriously financially distressed (source: ethomasgardan.net).

The report also found that many live paycheck-to-paycheck, with no money left over for emergencies (those things that can lead to bankruptcy).

2. Bankruptcy's cost to the economy. The above-mentioned report also found that 40-50% of distressed workers reported that their health was impacted by their financial worries.

Medical: When you consider that over half of bankruptcy filings in the United States are caused by medical bills, you have to wonder if there is a causal link.

Worker Productivity: Thirty to 80% of the distressed workers reported above, reported spending time at their place of working dealing with their financial situation. This could be in the form of talking with creditors; discussing the problems with friends, family and/or co-workers; or handling paperwork dealing with their debt.

3. Bankruptcy's family Toll: When a borrower is on the verge of bankruptcy, overall family life tends to suffer. According to financial advisor Floyd Henderson, author of Living Within Your Means, ” Financial problems are the leading causes of divorce in the United States, ahead of in-law problems and sex problems.”

As one rarely reaches the stage of bankruptcy overnight, it's likely that these causes have been building up over time. The stress of financial instability plays itself out in various ways — fights with a spouse, moodiness, depression and a host of other physical and emotional ways.

How to Avoid Bankruptcy

a) Create an Emergency Fund: In his book, The Total Money Makeover, author Dave Ramsey advises those trying to get out of debt to get an emergency fund of at least $1,000 BEFORE trying to dig out of debt.

Why before? Because, he argues, Murphy's law is always at work (particularly when you are teetering on the financial edge, eg, bankruptcy).

This simply means that whenever you are trying to accomplish a financial goal, something will always happen to throw you two steps back (your car's transmission goes out, the heat in your house stops working, the lawnmower breaks).

These are the types of things that keep us mired in a debt trap — and more likely to consider bankruptcy. Because, how do most of us handle these types of emergencies – we use the handy old credit card.

So, he argues, prepare for a visit from old man Murphy. With an emergency fund in place, you will be able to handle those small emergencies that pop up without incurring more debt – and possibly keep you out of bankruptcy court.

b) Recognize Debt Warning Signs: Is your paycheck spent before you get it? Do you withdraw cash from one credit card to pay another? Are you constantly running out of money before your next paycheck?

These are all signs that you are living beyond your means, which will eventually lead you into bankruptcy.

Another method Ramsey advises in The Total Money Makeover is to use cash only – for everything. His logic is it is much harder to spend hard, cold cash.

A friend of mine recommended this book to me after I told her that one of my New Year's Resolutions was to get completely out of debt so that I could focus on paying my house off in 10 years.

I have to say, this was one of the most effective tips I read in the book – although it has many more to offer. I started doing this, and do you know what, you question EVERY purchase you make when you are paying in cash.

I surmise that using this method, you will find that about 75% of your purchases (excluding food and gas) are things you can do without — really, 75%!

c) Make a Plan & Stick to It: This may sound simple, but it is effective. Just like any destination (in this case, financial freedom), you have to create a map of how you're going to get there. To stay out of bankruptcy court, stay diligent.

Good luck!

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The Following Story is sponsored by Miami Bankruptcy Attorneys

The all-round economic turmoil is causing untold hardships on millions of people, who are getting increasingly frustrated by the turn of events. Even people with good intentions of paying off their debts, are forced into the swirling waters of loan indebtedness due to sudden events like unemployment, prolonged illness or divorce proceedings. The bleak economic situation coupled with unexpected happenings in the personal life is taking a heavy toll on individuals, who are increasingly turning to filing bankruptcy petitions unable to cope up with the stress.

Even though most of the bankruptcy filings are due to mismanagement of personal finances and wasteful spending of money, some are drawn into it due to the economic condition. Initially, most will try to solve their problems by using the credit cards, which is only a temporary solution. Once the due dates for credit card payments come, the problems mount irrevocably.

One way to tackle bankruptcy problems is to consolidate all your loans which eliminate some of the expensive loans to an extent. This way you can have the benefit of paying lower monthly payments every month. If this is the case, you can safely come out of the financial mess without filing bankruptcy.

If the problems persist even after consolidation and you are mired in problems without solution in sight, then bankruptcy will be the only options. It provides some solace from the harassing debtors, be it the bankers or the mortgage lenders. It all boils down to your financial situation, before the filings. This should be your last option as the consequences of bankruptcy are many, which must not be overlooked for short term peace of mind.

The important point to note is Bankruptcy is not a panacea for all your ills and will not provide complete comfort from all loans. Surely, all your credit card and consumer loans would be waived, but still you have the responsibility to pay your student loans, alimony, child support, criminal fees and IRS bills. For a complete understanding of bankruptcy laws, you can take the services of a reputed lawyer, who can enlighten you on the pros and cons of bankrupt filing.

The social stigma attached to bankruptcy and the poor availability of credit thereafter should be given serious thought before filing a petition. The life after bankruptcy will not be the same at least for the first five to seven years. Moreover, you have to start your life all over again with little help coming from any source. You have to build your credit history again from scratch, which is difficult but not impossible to achieve. The suspicious eyes of the lenders have to be tolerated which may cause embarrassment time and again. This may cause some suffering that has to be endured in bankruptcy filings. If age is not on your side, these things are difficult to cope. All these factors must be kept in mind while filing any bankruptcy proceedings.

You can resort to bankruptcy after exhausting all other options only as a last step just to get some peace of mind.

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There are several different chapters to file for bankruptcy. Many are meant for corporations, businesses, and farms, but there are two that are designed for individuals. When most people think of bankruptcy they probably think of chapter 7 bankruptcy. Chapter 7 is liquidation, which means that debts are discharged.

The other chapter is bankruptcy chapter 13. This is the re-organization chapter. Unlike with chapter 7, bankruptcy chapter 13 does not discharge debts. Instead of eliminating the debts, they are reorganized to give you smaller payments that you can manage more easily. Whether or not the debts are exempt, you will still owe the money in the end, it will just be easier and you won't continue to collect high interest rates and absurd penalty fees.

There are several benefits to bankruptcy chapter 13. At first glance, it seems like a less desirable chapter because they cannot get rid of your debts. You still have to pay them. Chapter 7 is harder to qualify for than chapter 13. Most people have to file Chapter 13. Still, there are benefits to filing bankruptcy chapter 13. An often overlooked benefit is the fact that no more interest accrues so excessively as before.

When you file chapter 7, all of your nonexempt assets are liquidated to help pay off the debt. This means for example, if you have $1000 in a savings account, they will take it and use it to pay for the debt. If you have any kind of investments or expensive nonexempt belongings, they will liquidate those and use the money to pay for your loans. In bankruptcy chapter 13, you do not have to liquidate any of your assets. This is the biggest benefit to this chapter. You don't have to worry about losing your home or belongings. Also, while you do have to pay off the debt, it is now much easier to make the payments.

Just as with chapter 7, you can't reorganize all of your debts. Some debts are exempt including your mortgage, student loans, etc. Most people that are in a lot of debt and in a lot of trouble financially have most of their debt as consumer debt which is able to be dealt with using bankruptcy. Before you file any chapter of bankruptcy, they make sure you fully understand your situation and what you're getting into. Bankruptcy will damage your credit and stick with you for 10 years. Know all your options and try better ideas first.

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As an attorney, I can advise my client that filing for bankruptcy is the responsible decision, that bankruptcy is simply a legal solution to one of life's overwhelming problems. Yet, I can understand and appreciate that the act of filing for bankruptcy, no matter how reasonable an action it may be, can stir up many negative emotions. Here are some tips on how to handle the emotional effects of bankruptcy.

1. Realize that the bankruptcy laws have been put in place for a reason. To help debtors get out from under the enormous pressures of substantial debt and regain control of their lives. There is no shame in taking advantage of the protection that the bankruptcy laws provide to debtors. And the stigma that was once associated with bankruptcy filers is not nearly as present today.

2. Use your bankruptcy to better yourself and rid yourself of bad habits. Learn from your experience. Vow not to put yourself in a similar position years down the line, and take the steps necessary to ensure financial security in the future. Use your bankruptcy as an opportunity to learn new skills to protect your own finances in uncertain economic times.

3. Remember that material wealth has little to do with self worth. Filing for bankruptcy in no way means that you are a failure. Even businesses run by smart, hard-working individuals file for bankruptcy from time to time. To err is human.

4. Allow yourself to feel badly without letting these negative feelings overwhelm you. It is okay to feel sad, angry, even a bit ashamed. It's what you do with these feelings that is important. Don't resent or blame anyone for your circumstances, especially yourself. Feel badly, then allow yourself to move on.

5. Exercise some self-compassion. Don't beat yourself up over having to file for bankruptcy. Don't run the events that led to your bankruptcy replay over and over again in your mind. Treat it as a learning experience, a life experience, and formulate a set goals to avoid similar circumstances in the future. But don't let your fears and insecurities paralyze you and keep you from spending normally in the future.

6. Remember that filing for bankruptcy is your own personal business. There is no need to advertise it to friends and relatives, especially those you think might be critical of your decision. Likewise, the reasons for your bankruptcy are no one's business but your own and those directly affected by your bankruptcy.

7. Confide in your bankruptcy attorney. While your lawyer is not in the business of shrinking heads or even holding hands, he has experience with clients who have gone through the same emotional effects you will be going through. Do not fear asking your attorney questions, even questions of a non-legal nature associated with your bankruptcy.

Thank you for reading How to Handle the Emotional Effects of Bankruptcy. If anyone has gone through a bankruptcy and would like to share their experiences, feel free to do so in the Comments section below.

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