Bankruptcy - Bankruptcy Questions

If you have come to the conclusion that bankruptcy may be the way to go, you probably already know that the process is more difficult after the new law went into effect in 2005. Bankruptcy questions begin with determining whether Chapter 7 or 13 would be the best option.

Chapter 7 requires that you earn less than the median income in your state over the six months before filing. Chapter 13, sometimes called the wage-earner bankruptcy, is more complicated. However, in both cases you must first complete financial counseling no more than 180 days before filing. This counseling takes a few hours, generally costs no more than $80, and can be done online. Filing forms are also available online together with locations of district offices.

Chapter 7 bankruptcy generally takes no longer than a half year. Chapter 13 is done when you are finished with the payment plan which usually takes three to five years.

The most-often asked bankruptcy questions are: Do I need a lawyer? Will I lose my house, my car, my possessions? What about my student loans or past-due taxes, and what about my retirement account(s)?

For Chapter 7 you can hire a bankruptcy petition preparer for a few hundred dollars, but for Chapter 13 you will need to consult an attorney to help you satisfy the trustee requirements. Part of the attorney’s fee can be paid over time.

You may lose your house if you are significantly behind on your mortgage under Chapter 7; you may also lose your car and other possessions depending on whether the trustee can turn them into cash. Under Chapter 13 a loan modification may be arranged, and as long as you make the payments you can keep your possessions.

Neither student loans, alimony, or child support can be discharged under both chapters. Nor can any back taxes you owe. However, your tax-deferred retirement accounts will be safe.

A bankruptcy stays on your financial record for ten years, which can severely hamper your future attempts to obtain any credit or find a job. However, under the law your present employer cannot fire you because of bankruptcy.

Chapter 7 works best for people who are mired in credit card debt since it allows them to get a fresh start. Chapter 13, which has some limits imposed on it with respect to the amount of debt secured by collateral, and also on unsecured debt, may not be possible for everyone. In that case, avoiding bankruptcy makes more sense, because if you have to make payments anyway, you can settle your debts with Fast Track’s Debt Settlement Program over the same number of years as Chapter 13, which might turn out much better for you.

The Fast Track program offers ethical and dedicated debt settlement service to assist you. Fast Track’s specialist will contact your creditors and negotiate with them. When we start your plan we establish an affordable monthly payment which is deposited in a settlement account in your name. Once you have the required funds in your settlement account, we will contact your creditors and make settlement offers. We will continue to work with them until all debts in the plan have been settled. FastTrack’s goal is to settle all debts in the plan for 40%-60% of what you owe.