Consolidating Debt Through Bankruptcy Court

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					                                                  Presented by Daniel Toriola

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                                        Consolidating Debt Through Bankruptcy Court
                                                                By Legal Helpers

   There comes a time when many people have no choice but to seek bankruptcy protection from their
creditors. If going through a debt consolidation specialist does not result in payments low enough to
maintain a reasonable standard of living. When debts are overwhelming, bankruptcy through Chapter 7
may be their only alternative.

Many people may prefer to seek protection under Chapter 13 bankruptcy but before a court will
approve the plan, it will have to be shown the individual can meet the financial demands of the plan. If
a person is unemployed with no appreciable assets, going through a court repayment plan will not be
an option. Additionally, if the person's income is not sufficient to allow for living expenses while paying
off their debts, it will also be rejected.

As an example, a person with $30,000 in debt, wanting to enter a Chapter 13 repayment plan for five
years, the payments needed to satisfy the plan would be $500 per month. If their monthly income does
not account for that amount plus approved living expenses, then the plan will be rejected.

Additionally, some creditors may be reluctant to enter into a loan consolidation plan through a private
specialist, but have little choice in bankruptcy courts. However, they do not always agree to erase all
charges unless specifically ordered by the court to do so. A person in a Chapter 13 bankruptcy
proceeding can also, if they are unable to meet the payment obligations, petition the court for relief
through Chapter 7 and liquidating assets to pay part of their debts.

New Bankruptcy laws have been enacted that make the process more labor-intensive and require a
more thorough reporting of income and expenses by the debtor. While the basic process remains the
same, getting into the court now takes a longer and more circuitous route. In the past, debtors could
consult with an attorney and make their own decision on the type of bankruptcy they want to file.

Under the new laws, within six months of filing for bankruptcy the debtor must go through a qualified
debt counseling service that provides alternatives to bankruptcy to insure the debtor is making
informed decisions of filing for bankruptcy. Additionally, the decision to file Chapter 7 or Chapter 13
bankruptcy is now based on mathematical formulas, to determine if they can make the cut for Chapter

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                                               Presented by Daniel Toriola

This means test makes the determination based on income, family size and allowable expenses and
through a complicated formula determines if the person has to means to pay their debt through
Chapter 13 bankruptcy. While the means test may look fair on the surface, there are special
circumstances and exceptions to the requirements that each client may be subjected to prior to filing
for bankruptcy.

The new laws were designed to steer more people away from Chapter 7 bankruptcy and to Chapter 13
in which their debts will be paid through a court plan. Unfortunately, the new law does not take into
consideration many factors that can affect individuals' finances and does not offer safeguards against
potential errors by counseling services. Before considering bankruptcy, consulting with an attorney can
help a person make their best decision.

Legal Helpers ( is a debt relief agency helping people to file for
bankruptcy relief under the bankruptcy code. We're one of the largest consumer bankruptcy firms in
America offering great service and free consultations. Bankruptcy attorneys answer the phones six
days a week.

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                                             Presented by Daniel Toriola

                                             Bankruptcy Alternatives Explained
                                                          By Tim Renolds

 There are many steps you can take in efforts to improve your credit, eliminate your debt, and avoid
bankruptcy. Which should be the ultimate goal of all people, while bankruptcy is an excellent method of
helping you clear up your debt, it should only be used as a last resort. Bankruptcy remains on your
credit for up to ten years and it could result in the inability to retain any other type of credit until it has
been removed or several years has passed.

On thing that a debtor can do, this is especially true if they have no income or assets, is to do nothing.
Yes that is right nothing, if you have no assets or income that can be garnished bankruptcy would not
benefit you in any way, your financial situation would not change as a result. It is likely that without
anything of high value, credits would not attempt to take any court action against you because there
would be nothing they could collect.

Another step you could take is to undergo credit counseling, you would learn how to manage your
money to reduce the debt. You could create a budget that contains your monthly income and
expenses, thus reducing expenses. By doing this, any extra money you have could go towards
reducing the debt you owe to creditors.

You could also begin negotiation with your creditors, most of them realize that bankruptcy is a viable
option for those who have more debt than they can handle. For this reason, most will be willing to “take
what they can get” rather than get nothing if the debtor files bankruptcy. This option requires that the
debtor has income or assets that can be used in efforts to raise money to apply towards the debt you
owe. Additionally, this can allow you to rebuild your credit instead of applying a negative bankruptcy on

Debt consolidation is another bankruptcy alternative that many could consider, by consolidating your
debts into one low monthly payment you could easily reduce the amount of your debt, get the creditors
off your back and avoid bankruptcy.

Finally, another option of avoiding bankruptcy is to make a formal proposal directly to your creditors.
This proposal or also knows as a deal, will allow you to create a payment plan. It is all dependent upon
what area of the world you live in and the laws surrounding the area of debt compromise.

Tim Renolds is the owner of a website providing Uk homeowners with a
free loan quote service. Visit us today for a free no obligation quote.

How To Slash Your Debt!
Become Debt Free, One Step at a Time! Debt Free Living!
                                                                                                             Page 3
                                               Presented by Daniel Toriola

Related eBooks:

Bankruptcy Alternatives Explained
Bankruptcy vs. Credit Card Debt Counseling
How To Use Debt And Bill Consolidation Services
Why To Avoid Debt Consolidation
Debt Consolidation And Types Of Bankruptcy

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