Alternatives to Chapter 7 Bankruptcy
Credit Card Debt Settlement: The Bankruptcy Alternative
Find out how credit card debt settlement is helping millions of Americans avoid bankruptcy, start over, and regain control of their financial future.
With First Choice Debt Resolution you have access to:
Your own personal debt relief professional who will handle all collection communications
A professional debt settlement negotiator on your side that will reduce your debts by 40-60%.
A debt-free life within 12-36 months
eliminate your debt one at a time
Learn more about how debt settlement can provide credit card debt relief and save you from bankruptcy or so-called “non-profit debt consolidation” companies. First Choice Debt Resolution, LLC has been voted one of the best debt settlement companies in the country!
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor can seek debt adjustment, either by reducing the debt or extending the payment time, or they can seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under Chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek debt adjustment under Chapter 13 of the Bankruptcy Code. One particular advantage of Chapter 13 is that it gives individual debtors the opportunity to save their homes from foreclosure by allowing them to “catch up” on past-due payments through a payment plan. In addition, the court may dismiss a chapter 7 case brought by a person whose debts are primarily consumer rather than business debts if the court finds that granting relief would be an abuse of chapter 7. 11 USC § 707(b) .
If the debtor’s “current monthly income”(1) is greater than the state median, the Bankruptcy Code requires the application of a “means test” to determine whether the chapter 7 filing is allegedly abusive. Abuse is presumed if the debtor’s current aggregate monthly income for 5 years, net of certain expenses allowed by law, is more than (i) $10,000, or (ii) 25% of the debtor’s non-priority unsecured debt, provided that amount is at least $6,000. (2) The debtor can rebut a presumption of abuse only by demonstrating special circumstances that justify additional expenses or adjustments to current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally convert to chapter 13 (with the debtor’s consent) or be dismissed. 11 USC § 707(b)(1).
Debtors should also be aware that settlements with creditors or debt settlement services may provide an alternative to filing for bankruptcy.
What can bankruptcy do to my credit?
Both the Bankruptcy Code and the Fair Credit Reporting Act (which regulate what a consumer reporting agency can include in your credit report) are federal laws, so the same rules apply in all states.
A consumer credit report can include information about a Chapter 7 and Chapter 13 bankruptcy for 10 years from the start of the case. We have been told that at least one major consumer reporting agency deletes Chapter 13 information after only 7 years, although it is not legally required to do so.
Most of the remaining credit information can be reported for 7 years, with the exception of civil lawsuits, civil judgments, and arrest records can be reported for at least seven years, but can be reported for longer if the credit statute applicable limitations is longer. For example, in Arizona, a court judgment is valid for 5 years. However, it can be renewed at the end of that time for another 5-year period, and again after that period. Consequently, a renewed civil judgment could be reported for as long as it is in effect.
Bankruptcy is on the rise.
Total bankruptcy filings in the United States increased 31 percent in 2008 over calendar year 2007, according to data released today by the Administrative Office of the United States Courts (AOUSC). Bankruptcy filings totaled 1,117,771 during the 12-month period ending December 31, 2008, a significant increase from the prior year total of 850,912. The 2008 filing total marks the first year since the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) that bankruptcies have exceeded 1 million.
Bankruptcy filings will reach 1.4 million or even more this year, especially if Congress changes the law to allow homeowners to modify their home mortgages through Chapter 13.
The 1,074,225 consumer filings during calendar year 2008 represented a 31 percent increase over the 822,590 filed during the same period in 2007. The 714,389 consumer chapter 7 filings during the 12-month period ending December 31, 2008 , comprised 67 percent of total consumer filings for the 2008 calendar year, an increase from 61 percent a year earlier. The total consumer chapter 7 filings for 2008 represented a 43 percent increase over the 500,613 consumer chapter 7 filings during 2007.
Top states with bankruptcy filings
Tennessee: The total number of bankruptcy filings increased to 42,893, an increase of 18.6 percent compared to 2007. The Eastern District (Tri-Cities region) increased 30.8 percent over last year. Some experts argue that the methods used to tabulate the numbers could be part of the cause. To quote, “there is no clear reason why the state has persistently led the nation in bankruptcy filings… most of them were for Chapter 13, a court filing under which debts are restructured one person… Tennesseans pay about $160 million to creditors, out of about $6 billion paid annually in the US.
Nevada #2 in the nation. Foreclosures are high, casinos go bankrupt, and the state continues to lose people. As a consumer, you can file for bankruptcy in Nevada under any of the following:
– Chapter 7 (outright bankruptcy) to discharge all debts except those listed and start over immediately or
– Chapter 13 (Wage earners bankruptcy) to set up a payment plan to pay off your debts over several years.
Georgia The already busy bankruptcy courts in Georgia had even more filings as the mortgage collapse and job losses sent consumers to the courts seeking relief from the heavy debt burden. Bankruptcies increased 23 percent in the first quarter of 2008, compared to the second quarter of 2007. Georgia ranks third in the country in filing for bankruptcy, behind Nevada and Tennessee.
Alabama For Alabama, for cases filed after February 1, 2008, the median income for a single worker is $36,192; for a family of two, it’s $44,918; for three, $51,103; and for four, $62,015. Add $6,900 for each individual in excess of 4.
Indiana bankruptcy in India has continued to increase every year. Although the bankruptcy rate has decreased in subsequent years, we have now seen a steady upward movement in recent years.
Michigan If your monthly income and expenses are higher than the average for Michigan workers, you cannot file for Chapter 7 bankruptcy. Instead, you can file for Chapter 13.
In Chapter 13 Michigan bankruptcy law, it allows you to keep all of your assets and property. You can pay your creditors using the wages you have left from your monthly expenses.
Ohio Filing bankruptcy in Ohio does not cancel all your debts. You may have to pay the following: alimony and child support, taxes, student loans, purchases of luxury items within 90 days of filing, fines owed to federal or Ohio government agencies, debts accumulated as a result of activities fraudulent, recent cash advances .
Kentucky Kentucky Bankruptcy Exemptions This list of exemptions is current as of January 2009. All legal references are to the Kentucky Revised Statutes unless otherwise noted.
Federal bankruptcy exemptions are not available in Kentucky.
Homestead Real or personal property used as a family residence up to $5,000. Proceeds from the sale are also exempt. (427,060)
Insurance: Annuity contract earnings up to $350 per month (304.14-330)
Fraternal Benefit Society Benefits; accident insurance or cooperative life benefits (427,110)
Group life insurance proceeds. (304.14-320)
Arkansas Bankruptcy Laws – Arkansas WAGE GARNISH WAIVER $500 head of household; $200 if single. Since federal law offers a better exemption, it applies:
MAXIMUM INTEREST RATE
Legal: 6% or 5 points above the federal discount rate
Sentence: Contract rate or 10% per annum, whichever is greater
STATUTE OF PRESCRIPTION OF THE EXECUTION
Open account (credit card): 3 years
Written contract: 5 years
Sale of Goods: 4 years
Internal sentence: 10 years (the sentence is renewable)
Foreign sentence: 10 years
Illinois
Federal compensations:
Debts contracted with the federal government may be cancelable;
Income taxes may be dischargeable if a return has been filed and the tax liability is at least 3 years old. Example: Bankruptcy filed on July 27, 2002, taxes due for 1998 are dischargeable if no extensions to file were granted;
Non-tax debts are cancelable unless they are cancelable for generally applicable reasons, such as fraud or theft.
Don’t declare bankruptcy; we are your Alternative to Bankruptcy. We work with you and for you. With our debt settlement program, you will be on the PATH TO DEBT RELEASE. Contact one of our debt settlement specialists today.
