It is already tax time again. All of you know that April 15^th is the deadline for filing your 2011 income tax. What many of you facing bankruptcy should know is that there can be a different deadline for filing your tax if you have filed a Chapter 13 bankruptcy and have not yet attended your 341 meeting. To avoid unfavorable sanctions against you, you might want to file your tax before you go to your 341 bankruptcy meeting.

Image via Wikipedia

The First Creditor’s Meeting

The 341 meeting in bankruptcy, commonly called The First Creditor’s Meeting, is held by the bankruptcy trustee. It is a required meeting for you to attend. Held the third Wednesday of the month after you have filed a Chapter 13 and within 30 days of filing a Chapter 7, the meeting is used for gathering information from the debtor not covered in the application, a time of any questions from either the court or creditors, and a time of special instructions from the trustee. It is rarely attended by creditors unless they have special concerns.

A Different Tax Filing Date for Bankruptcy Filers

Many of you filers, if you have not yet attended the 341 meeting, may not realize that the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act changed the way bankruptcy courts can handle past income taxes and their refunds.

Under the changes in 2005, sections 1307 and 1308 of the Bankruptcy Code dictate how and when the changes effect your income tax filings in relation to your bankruptcy petition.

Section 1308(a) declares that the filer must provide the court a copy of all tax return periods for the previous four years ending on the date of the filing of the petition. This information must be available to the bankruptcy court the day before the scheduled 341 meeting.

Section 1308(b) declares that the trustee can keep the 341 meeting open until the filer brings a copy of the previous years income tax return to the meeting if the filer has failed to do so. So what if the trustee leaves the meeting open?

What Might Happen if You Do Not Meet the New Deadline

At the very least, the act might hold up the confirmation of your Chapter 13 plan. Worse, the trustee may proceed under section 1307(e) of the Bankruptcy Code which states: “ Upon the failure of the debtor to file a tax return under section 1308, on request of a party in interest or the United States trustee and after notice and a hearing, the court shall dismiss a case or convert a case under this chapter to a case under chapter 7 of this title, whichever is in the best interest of the creditors and the estate.”

What this means, in effect, is that anyone including creditors can file a motion for dismissal or conversion and it may actually come to pass because you did not file your income tax in a timely fashion under Bankruptcy Code.

Bankruptcy laws are complicated. Contact a bankruptcy attorney today or allow us to help you find a bankruptcy lawyer in your area.

Related articles

• When is the First Hearing Scheduled After You File Bankruptcy? (betterbankruptcy.com)
• 341 Meeting: What Should I Expect? (betterbankruptcy.com)
• In Debt, Filing Bankruptcy May Not Do These 4 Things For You (betterbankruptcy.com)
• What does it cost to file Chapter 7 Bankruptcy? (betterbankruptcy.com)

Image via Wikipedia

If Americans use bankruptcy filings as an indicator of how the economy is faring, then there is a brighter economical future for the United States in 2012. Bankruptcy filings steadily fell across the board in the United States in 2011 and may be effecting its economy. That might be an indicator for bankruptcies and a brighter future in 2012.

2011 National Bankruptcy Statistics

According to the American Bankruptcy Institute, bankruptcies fell 12 percent in 2011 compared to 2010. There were 1.38 million United States filers in 2011, including about 74,000 commercial filings. The rest of the filers were individual consumer filings.

A couple of the more notable states with declining bankruptcies for 2011 include Hawaii and Arizona.

Hawaii 2011 Bankruptcy Statistics

In Hawaii, bankruptcy filings fell for the first time in five years, coming from double digit increases every year since 2007. U.S. Bankruptcy Court statistics showed there were 3,325 cases filed in Hawaii during 2011, down 15.9 percent from 2010. According to the TransUnion Credit reporting agency, credit card debt also declined from a high of $6,000 per card holder in 2009 to $4,800 per card holder in 2011 economy. Credit card debt is an indicator for potential bankruptcy within the economy.

Arizona 2011 Bankruptcy Statistics

In the state of Arizona, bankruptcy filings also dramatically declined, especially in the heavily populated metropolis of Phoenix. According to an American Bankruptcy Institute news article, there were “1,577 new bankruptcy cases in December, down 33.1 percent from December 2010 and the smallest total since February of 2009. For the Year in Phoenix, bankruptcies eased to 26,252 bankruptcies, down 15.9 percent from 2010.”

All of Arizona filings were down in December by 30.6 percent from 2010, and the filings were down 15.6 for the full year of 2011 compared to 2010.

Possible Reasons for the Decline in Bankruptcies

Hawaii’s and Arizona’s state bankruptcy statistics are examples of what is happening in most places across the United States concerning bankruptcies. The given reasons for this decline are myriad.

The reasons for bankruptcy filings decline can range anywhere from most of the bankrupt have already gone through the bankruptcy system to debtors not being able to pay their lawyers. Some speculate that debtors are selecting to hold onto their credit ratings as long as they can by trying debt settlement, while others speculate that money has tightened, and it is harder to obtain credit. Some even suggest the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has added too much in cost for filing, thus deterring potential filers.

Bankruptcies and a Brighter Future

While all of these speculations have some merit, there is merit in the belief that things economically in the United States is slowly beginning to turn around. Bankruptcy’s brighter future for 2012 may include less bankruptcies because the economy is getting better. Jobs are slowly beginning to increase, the housing market is slowly beginning to get better. All of these are signs of potential better times economically for the United States.

There will still be a significant number of bankruptcies filed in 2012, but there will always be a significant number of bankruptcies filed as long as the United States remains a free market capitalistic system. Bankruptcy filings enable the continuation of a healthy market place. Under bankruptcy, poor financial transactions end, and new financial transactions begin fresh, just like the new year.

Related articles

• Is Bankruptcy Going to be the Furture of 2012? (betterbankruptcy.com)
• Bankruptcy Law Makes Filing More Costly but Is It Fair? (betterbankruptcy.com)
• Eleven Common Bankruptcy Definitions You May Want to Know (betterbankruptcy.com)
• Is There Any Defense Left After a Motion of Stay Has Been Granted? (betterbankruptcy.com)

How does a marriage separation affect your bankruptcy?

If you are separated and are considering bankruptcy, you should know that the separation definitely adds additional considerations to declaring Chapter 7 and Chapter 13 bankruptcy.

The first distinction that needs to be considered is whether your separation is legal.  People may claim that they are “separated” from their spouse just because they are no longer living together and are considering a divorce.  However, 45 states—all states except for Delaware, Florida, Georgia, Mississippi, and Pennsylvania—have a legal process by which they recognize separation of a couple in preparation for a divorce.  Separation can play a role as to whether you qualify for Chapter 7 bankruptcy.

Chapter 7 bankruptcy is often considered the most desirable form of bankruptcy, as it liquidates your assets that have value with the goal of repaying as many debts as is possible.  The remaining qualified debts that cannot be repaid through liquidation of your assets are forgiven entirely.  One debt that is not forgiven as a part of a Chapter 7 bankruptcy is a mortgage attached to a home, as this is considered a secured debt.  Therefore, in a Chapter 7 bankruptcy, the mortgage company will take your home to satisfy the mortgage, unless someone continues to make the mortgage payments.

For someone to file for Chapter 7 bankruptcy, they must pass what is known as the means test.  The means test is a measurement as to whether you have income available to pay for some of your debts (and therefore you should consider a Chapter 13 bankruptcy) or if you are in such a dire financial situation that you need the greater relief offered by Chapter 7 bankruptcy.  The means test uses your income, certain allowable expenses, and the average income for your family size in your state.  Therefore, since family size plays a role in qualifying for a Chapter 7 bankruptcy, it makes a difference as to whether you have a legal separation and are therefore an individual or are still considered part of a larger family.  Whether you have children or not and who is supporting the children also plays a role in calculating the means test.

Chapter 13 bankruptcy reorganizes many of your debts rather than simply eliminating them, allowing you to submit a payment plan based on your income to address your past due debts over up to a five-year period.  Some of your debt may be forgiven or re-valued in a Chapter 13 bankruptcy to allow you to make an affordable payment based on your income.  But as with Chapter 7, a Chapter 13 bankruptcy will not eliminate the mortgage on your home, since it is secured debt, and someone will need to continue to make the mortgage payment in order to keep the home.

Since a mortgage is still secured by your home under either a Chapter 7 or Chapter 13 bankruptcy, and regardless of whether you are legally separated from your spouse or not, if you want to keep your home, someone has to continue to make the mortgage payments.  That can be either you or your spouse (or both of you).

If you declare bankruptcy and the mortgage is in the name of both you and your spouse, then the mortgage company will still seek payment of the mortgage from your spouse; your bankruptcy will not protect your spouse from being pursued to make the mortgage payment.  If the mortgage payments are not made, then the mortgage company will foreclose on the home, which will appear on the credit report of all people who are on the mortgage.

Please remember that the information above is general in nature and may not consider all facets of your individual situation.  Therefore, you should speak with a bankruptcy attorney who is familiar with the bankruptcy laws of your state and legal separation to determine what options you have available.

Related articles

• Chapter 7 Bankruptcy and Preparing to File (betterbankruptcy.com)
• Are There Good Reasons Not to File a Chapter 7? (betterbankruptcy.com)
• Bankruptcy Spectrum and Protecting Individual’s Assets (betterbankruptcy.com)
• What Do You Do if your Ex Wants to Declare Bankruptcy? (betterbankruptcy.com)

Image via Wikipedia

No one ever expects they are going to go bankrupt, let alone know anything about the process of filing for bankruptcy protection when they do. So, for most, the process of bankruptcy is an ongoing learning experience. It begins with searching for a lawyer and gathering information.

A bankruptcy lawyer will normally provide you with a free information through consultation to explore how he may be of service to you, what possible options you may have in the bankruptcy process, and what the cost will be for providing those services.

Even though the first meeting with a lawyer is exploratory, providing some basic information about yourself and your financial condition is important in helping the lawyer know how to evaluate helping you. That means you need to bring certain information about yourself and your finances to the first meeting. So, what do you bring to the first consultation with a bankruptcy lawyer?

Here are some practical suggestions on what you might bring to a first time consultation with a lawyer:

A personal ID

Have something with you like a driver’s license to identify yourself and where you live. You will most likely need to know your telephone number or provide the bankruptcy lawyer a way to get in touch with you if you do not have one. Either have your social security card with you or know your social security number. None of these are required and may not even be asked for or used in the initial meeting, but sometimes, you may decide on retaining the lawyer right there, so, you will be prepared if you do.

Official copies of transactions that describe your current financial condition

These financial transactions should include:

1. Statements involving income which can include the latest of any income payment stubs if you work for someone; any retirement income statement; any stocks and bonds; savings bank accounts; and the previous year’s tax return, especially if you are self employed.

2. Statements involving expenses like the latest credit card statements; the latest mortgage statements; statements on utilities and other home related expenses; statements on student loans; statements concerning any outstanding taxes owed; statements about vehicle loans; and copies of loan contracts for any outstanding loans whether secured or unsecured.

A list of current assets owned

This list should include any household, vehicles, homes, rentals, burial plots, or any other asset in your possession whether you own the asset out right or not. Include an estimation as to what you think the current value of the asset is and how much you owe on it, if anything. Lump assets together on the list that are inside your home like clothes, furniture, and jewelry. This is just a generalized list that can be typed out on one page with the values and what is owed listed in columns.

Miscellaneous suggestions on what you might bring

Other statements you might bring concern insurance, both life and other; statements about any public benefits you receive like disability, social security, workman’s compensation, and unemployment; a list of your tools of trade; and any information on homesteading.

You might want to neatly put in an easy reading order any statement copies and paper clip them together. You also might want to have a copy for both you and the bankruptcy lawyer to follow along in case there are any questions.

Related articles

• Eleven Common Bankruptcy Definitions You May Want to Know (betterbankruptcy.com)
• The Seven Deadly Sins in Filing for Bankruptcy Protection (betterbankruptcy.com)
• How are Bankruptcy Attorneys’ Fees Paid? (betterbankruptcy.com)
• Why Bother to File Bankruptcy? (betterbankruptcy.com)

Image via Wikipedia

Definition of Compulsive Buying Disorder

Shopaholics is a slang term for Compulsive Buying Disorder (CBD). This addiction is characterized as an obsession with shopping and buying and is listed as a personality disorder under Axis II Disorders. This type of disorder can cause adverse consequences and becoming bankrupt is one of the primary results from the addiction.

CBD, a chronic addiction, is found in 5.8% of the United States population. Interestingly, approximately 80% of those affected by compulsive buying are female. The disease usually is accompanied by other disorders like mood shift, anxiety, substance abuse, and eating disorders. Compulsive buying is not limited to people who spend beyond their means, but it also includes people who spend an inordinate amount of time shopping or who chronically think about buying things but never purchase them. In the end, compulsive buying is a mood enhancing mechanism that ultimately can best be understood as a form of identity seeking.

Compulsive Buying Disorder and the Relationship with Bankruptcy

For the compulsive buyers who have a chronic addiction, the end result is often buying beyond their means and leading to bankruptcy. It is not uncommon for compulsive buyers to max out numerous credit card limits beyond their ability to pay. Job loss often accompanies such hardened buyers, and a cure from such addictions usually takes intervention and psychological counseling over a period of time. Some psychiatrists offer chemical relief from the symptoms with modest success.

Studies on Compulsive Buying and Bankruptcy

In the acclaimed book I Shop, Therefore I Am, Donald W. Black, M.D., writes in Chapter 9, entitled Assessment of Compulsive Buying, that there are wide disparities of compulsive buying which produce an abundance of opportunities for those afflicted with the disease to go bankrupt. The chapter highlights numerous real testimonies of patients who ultimately go broke because of this addiction.

In other studies, results ranged from “where compulsive buying addicts did not seek sales or use loans significantly more than others” to “compulsive buying in the U.S. has contributed to a record number of personal bankruptcy filings and credit card debt.” Overall, there have not been enough scientific studies made on the statistical subject to come up with any concrete conclusions about the relationship between bankruptcy and compulsive buying.

Where You Might Seek Help with Either

One thing is for certain, if you are bankrupt because you have a shopaholic addiction, you will eventually know it. If you have a compulsive buying disorder and you become bankrupt, you may not only need professional psychological counseling, you might need counseling from a bankruptcy attorney as well.

Bankruptcy laws are complicated, so are Axis II disorders. Most of you cannot overcome these deficiencies by yourself. Most of you will need professional help in order to determine what can be done for your particular situation.

Image via Wikipedia

If you live in the metropolitan area of Dallas, Texas, and you have a compulsive buying disorder that has left you bankrupt, let us help you find a bankruptcy lawyer in your area.

Related articles

• Holidays can fuel shopping addiction for some (seattletimes.nwsource.com)
• Shop ‘Til You Stop: How to Treat Compulsive Spending (online.wsj.com)
• Law and Answering Collection Agency Calls After Filing (betterbankruptcy.com)
• 7 Famous People with Obsessive-Compulsive Disorder – Anxiety (healthcentral.com)

Image via Wikipedia

The Exemption Process

When you file a Chapter 7 bankruptcy, you must fill out a schedule listing the exemptions you are claiming. Bankruptcy exemptions involve assets you own that receive immunity from the bankruptcy process through state or federal law, but you must list them for the bankruptcy court trustee to review.

If your asset listed by state or federal bankruptcy law is fully exempt, the asset cannot be taken from you and liquidated to satisfy a debt by giving the proceeds to a creditor. If the asset is only partially exempt, the asset might be liquidated, and you will get the exempt portion of the proceeds with the remaining proceeds going to creditors.

The Possibility of a Challenge on What is or is not Exempt

With an interest of what is and what is not exempt, the trustee might challenge exemptions in a Chapter 7 bankruptcy. The job of the trustee in a Chapter 7 bankruptcy is to liquidate all qualifying non-exempt assets in order to pay the unsecured debts owed to the creditors.

Two Ways a Trustee Can Challenge Exemptions

There are basically two ways a trustee might challenge exemptions in a Chapter 7 bankruptcy case. The first challenge a trustee can make is to make a motion for the presumption of abuse, the easiest way for a trustee to challenge. This motion must be made within 10 days after the Creditor’s Meeting. When this motion is filed into the bankruptcy court, it is then up to the filing debtor to rebut or contest the presumption and provide proof it has no validity. If the filing debtor fails to do so, the presumption will be determined to be correct by the court, and the bankruptcy can possibly be dismissed.

The second way a trustee might challenge exemptions in a Chapter 7 bankruptcy is to seek a dismissal under the totality of circumstances. This legal maneuver by a trustee in challenging exemptions will normally take place after the 10 days have expired to file a presumption of abuse. Here, the burden of proof has to be provided by the trustee that the exemption claimed is invalid to the Chapter 7 bankruptcy laws. This is done through the complaint process by an Adversary Proceeding. The matter is brought before the bankruptcy court judge who decides on the matter.

Consequences of a Challenge and Response by the Filing Debtor

The consequences of a successful challenge by a trustee over an asset that was claimed as exempt usually leads to a dismissal of the bankruptcy case. This result usually forces the filing debtor to have to refile the bankruptcy and change the claimed exemption on the schedule to a non-exempt status.

If the filing debtor wins the challenge, the Chapter 7 bankruptcy will continue on, and the status of the asset in question will be given exempt status. Normally, a debtor will find out at the Creditor’s Meeting from the trustee whether or not there will be a challenge to a particular exemption.

Presumptions of abuse and dismissals under the totality of circumstances can both be very complicated legal maneuvers best left of the professional experience of a bankruptcy lawyer.

Related articles

• What does it cost to file Chapter 7 Bankruptcy? (betterbankruptcy.com)
• When is the First Hearing Scheduled After You File Bankruptcy? (betterbankruptcy.com)
• Are There Good Reasons Not to File a Chapter 7? (betterbankruptcy.com)

Image via Wikipedia

Question Raised in Personal Bankruptcy Story

This personal bankruptcy story was shared in January 2012 by a blogger on a bankruptcy forum site: “I filed Chapter 13 in July 2011, confirmed November 2011. 1st mortgage and HELOC (interest only) are current and paying outside of bankruptcy. Will we ever be able to refinance our mortgages while in a Chapter 13?”

Definition of Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is commonly called the Wage Earners Plan because it requires you to have a steady income before you can file for this type of bankruptcy. When you file a Chapter 13, you will be required to make a plan designed to pay off your unsecured debt with disposable monthly income over 3 to 5 years, depending on where your income falls as compared to the median income for the same size family in your state.

Definition of a HELOC and Relationship to a Chapter 13

A HELOC, the acronym for a Home Equity Line of Credit, is an additional loan taken out on a mortgage and may involve attaching another lien on the property. In a Chapter 13, a HELOC can be stripped from the original mortgage at the conclusion of the bankruptcy unless the mortgage along with the HELOC have been reaffirmed or the value of the home exceeds the amount of the first mortgage principal and the amount of the HELOC.

Stripping a HELOC from the mortgage means the homeowner is no longer responsible for the additional loan or loans that represent more than the value of the home. Stripping the HELOC principal does not mean that all the loan principal or the lien is necessarily stripped. If the value of the home is more than first mortgage principal, the HELOC loan can be stripped up to the amount that is not valued in the home equity.

How to Refinance a Mortgaged Home with a HELOC while in Chapter 13

As long as you are in a Chapter 13, you have to keep all your payments current on a mortgage, including any HELOC, in order to prevent the company from foreclosing on your property. Any stripping of part or all of a HELOC will only take place when the Chapter 13 bankruptcy is discharged.

There is no law preventing you, at any time before or after discharge, from renegotiating a new mortgage payment or from being able to refinance a new loan if you can. That means you can renegotiate or refinance a new mortgage during a Chapter 13 or after a Chapter 13.

One option some of you may have to refinance your mortgage along with any HELOC is through the Home Affordable Modification Program (HAMP). These loans are available through the end of 2012. For those who qualify for a HAMP, you can include your HELOC in your loan amount under the following guidelines:

1. You have had your home equity account open for at least 9 months.

2. You have not received home equity account loan assistance once in the past 12 months or twice in the past 5 years.

3. You have been experiencing a financial hardship, such as job loss, divorce or medical emergency.

4. You have a willingness and ability to repay the loan.

Being able to refinance a home during a Chapter 13 is a very difficult quest and usually requires a bankruptcy lawyer to help you with the legal details.

Related articles

• Home Equity Line Of Credit – a cross between a loan and a credit card! (choiceofhomes.com)
• In Debt, Filing Bankruptcy May Not Do These 4 Things For You (betterbankruptcy.com)
• Should You Sell Your Home First or Buy a New One First? (choiceofhomes.com)
• Short Sale Problems and Filing a Bankruptcy (betterbankruptcy.com)
• Can You Refinance an Asset After Bankruptcy? (betterbankruptcy.com)

When you enter into bankruptcy, whether it is a Chapter 7 bankruptcy for the discharge of debt or a Chapter 13 bankruptcy  for debt reorganization, you are required as a part of the filing process to provide a list of all your assets and liabilities.

For Chapter 7 bankruptcy, the bankruptcy court uses the list of assets and liabilities to determine the correct way to distribute your assets to your various creditors.  For Chapter 13 bankruptcy, the bankruptcy court uses the list of assets and liabilities to determine the acceptability of your payment plan that will be overseen by the bankruptcy trustee.

The list you provide to the bankruptcy court MUST include all of your assets and liabilities.  Assets include your home, bank accounts, cash, cars, boats, rental property, furniture, clothing, computers—literally everything you own or partially own.  Liabilities include any money you owe to anyone for any reason.

Even if you are holding property in your name that belongs to other people, such as real estate, the property must be on your list of assets submitted to the bankruptcy court, and that property will be considered a part of the Chapter 13 bankruptcy or Chapter 7 bankruptcy proceeding.  In general, if a piece of property looks like it belongs to the person who is filing bankruptcy—and real estate in the name of that person is a strong indicator of ownership—the bankruptcy trustee will include the property in the bankruptcy.  Even if you file an affidavit stating the property is technically someone else’s property, the bankruptcy court will consider the property as your asset.

The above treatment of other people’s property held in the name of a person filing bankruptcy is used simply because it is common for people declaring bankruptcy to look for methods to shelter assets.  One such method is transferring property to other people just before declaring bankruptcy.  Generally this is done by people before they file Chapter 13 bankruptcy or Chapter 7 bankruptcy, but such transfers are considered fraudulent and bankruptcy trustees are particularly skilled at identifying them and have the power to undo the transfer.  Claiming that an asset you own is someone else’s property—even if it truly is—generally appears to be another attempt to hide an asset from the bankruptcy trustee’s perspective.

If the real estate has a mortgage attached to it, then it is possible that the property in question will be exempt from the bankruptcy proceeding simply because it has no value.  Property with no value is of no use in a bankruptcy to the bankruptcy trustee, because it cannot be sold to provide proceeds that can then be used to pay other creditors.  But this determination will depend on the fair market value of the property and the amount owed under the existing mortgage liability.  For real estate that does not have a mortgage, the real estate will likely be sold as a part of the bankruptcy proceeding, especially if you file Chapter 7 bankruptcy. Talk to your bankruptcy lawyer to see if filing Chapter 13 bankruptcy may offer other options.

Keep in mind that the information above is general in nature.  As each situation is different and bankruptcy laws vary from state to state, you should speak with a bankruptcy attorney to determine if you do have any viable options to save property that is in your name but belongs to someone from being captured in your bankruptcy.

Related articles

• Bankruptcy Spectrum and Protecting Individual’s Assets (betterbankruptcy.com)
• In Debt, Filing Bankruptcy May Not Do These 4 Things For You (betterbankruptcy.com)
• Can You Reaffirm Only One Home in a Bankruptcy if You Own Two? (betterbankruptcy.com)
• What Can You Do in Bankruptcy When You Have Multiple Mortgages? (betterbankruptcy.com)
• Chapter 7 Replacement Values in Listing Personal Property (betterbankruptcy.com)

Image via Wikipedia

Here are my 2012 predictions on what will happen to the economy that might affect bankruptcies for the New Year. With this list of predictions and about $4.00, you can buy a decent cup of coffee in a lot of the places near where you live in the United States.

Bankruptcy Prediction #1

Individual bankruptcies will continue to fall for the first six months of 2012, but when interest rates start to rise, individual bankruptcies will increase at an alarming fast pace near the end of 2012.

Bankruptcy Prediction #2

Business bankruptcies will start to rise after the New Year. Bankruptcy will increase even faster on businesses heavily leveraged once interest rates start to rise and the economy reels from it.

Bankruptcy Prediction #3

Because of the poor overall economy and tax collections, more local governments will consider filing for bankruptcy protection than any other time in history.

Bankruptcy Prediction #4

There will be a surge of new young farmers entering the farming industry for the first time. Farming bankruptcies will continue to drop, and farming overall will be very profitable for the first time in a long time. Most new farming opportunities will be provided in the organic and natural farming sectors as Americans return to basics to survive.

Bankruptcy Prediction #5

A hot issue affecting bankruptcy is the housing crisis. Foreclosures and their effects on the American economy will be the hottest subject to surface during the Presidential debates in 2012. The candidate coming up with a fresh new remedy to solve this potentially dangerous economic phenomenon to the American economy will have the inside edge to the White House.

Bankruptcy Prediction #6

The second hottest debate during the Presidential election will be over the National Debt and how to solve it. As the debt spirals out of control, the debates will make most Americans aware how close to bankruptcy the United States really is. The United States credit rating will continue to drastically drop.

Bankruptcy Prediction #7

One of the most important economic factors facing the United States are the interest rates paid for obtaining money. Superficially controlled by the Feds at present, the Feds will lose control in 2012 when the American citizens and the rest of the world realizes the United States cannot or will not meet its minimum interest payments for the first time in its history. Few will risk taking a chance to buy US bonds or other federal instruments without higher interest rates attached. As interest increases for these security instruments, all other lending sectors will follow suit.

Bankruptcy Prediction #8

China will wrench up its rhetoric about the United States inability to get a grasp on its finances, and the rhetoric will create new tensions for the two countries.

Bankruptcy Prediction #9

The three top industries most affected by bankruptcy in 2012 will be the Oil Services Industry, the Entertainment Industry, and the Gaming Industry, all heavily leveraged, will begin to file for bankruptcy in record numbers.

Bankruptcy Prediction #10

Despite all the bankruptcy bad news, the United States economy will still lead the world in Gross Domestic Product at the end of 2012.

While bankruptcy indicates economic problems, filing bankruptcy is a chance to start over. Starting over could actually be a good thing in 2012.

Related articles

• Sears is Closing 79 Stores, Where does the Spiral Stop? (betterbankruptcy.com)
• Is Bankruptcy Going to be the Furture of 2012? (betterbankruptcy.com)
• Car giant on the brink of bankruptcy (autonetinsurance.co.uk)

Chapter 13 bankruptcy is one of the two common types of bankruptcy used by individuals.  Unlike Chapter 7 bankruptcy that can eliminate an individual’s debt altogether, Chapter 13 bankruptcy is a debt reorganization and debt consolidation plan.

Debt consolidation as a part of a Chapter 13 bankruptcy means that you will submit to a bankruptcy court a payment plan for your debt based on what you can afford to pay.  The payment plan may run for as long as 60 months and would consolidate the various payments you owe into a single payment.

The debt consolidation works because the terms of the payment plan—the length, the interest rate, the total amount owed—are structured so the individual is paying less money each month—an affordable amount of money based on their income—than they were before filing for Chapter 13 bankruptcy.  If the bankruptcy court accepts your debt consolidation payment plan, you simply make the payments for the term of the plan.

What happens if your situation changes during the debt consolidation payment plan period of a Chapter 13 bankruptcy and you can no longer afford to make the payment amount agreed upon with the bankruptcy court in your debt consolidation payment plan?  This change could be because your income has decreased as the result of a job change or other factors, or your expenses could have increased as a result of unexpected medical bills or other issues outside of your control.

If you find that you can no longer meet the obligations as a part of your Chapter 13 debt consolidation payment plan, you have two primary options.

Modifying your Chapter13 Bankruptcy Payment Plan

If you are unable to make the payments under your payment plan for a good reason, such as a job loss or other change to your income, the bankruptcy court may modify your payment plan to match your new circumstances.

If your change is such that continuing to make the payments under the Chapter 13 bankruptcy creates an undue hardship, for instance, you are hospitalized, the bankruptcy court may discharge your debt altogether, which means you do not have to continue to make any further payments under your plan.

Filing for Chapter 7 Bankruptcy

If your income or expenses have changed and you can no longer make the minimum payments necessary as a part of a Chapter 13 bankruptcy, you may also be able to your bankruptcy into a Chapter 7 bankruptcy.  As noted above, Chapter 7 bankruptcy provides additional debt relief, not offered by filing Chapter 13 bankruptcy, because the Chapter 7 bankruptcy can immediately discharge many types of unsecured debts without a debt repayment schedule.

To change to a Chapter 7 bankruptcy, you simply need to qualify for the Chapter 7 bankruptcy by passing the means test and you cannot have declared Chapter 7 bankruptcy within the previous eight years.

Keep in mind that the information above is general in nature.  If you can no longer afford to make payments under your Chapter 13 payment plan, you need to take action by working with a bankruptcy attorney.  A bankruptcy attorney can help evaluate the best option for your specific situation and work with the bankruptcy court to implement your new plan.

Related articles

• Are There Good Reasons Not to File a Chapter 7? (betterbankruptcy.com)
• Bankruptcy Spectrum and Protecting Individual’s Assets (betterbankruptcy.com)
• In Debt, Filing Bankruptcy May Not Do These 4 Things For You (betterbankruptcy.com)
• Can a Bankruptcy Court Take Payments Out of Your Unemployment Checks? (betterbankruptcy.com)