BankruptcyZone.com

Bankruptcy is one option to consider in order giving yourself a “fresh start,” when you have more debts than you have assets. There are in fact many types of bankruptcy provided under the law but the most common is Chapter 7 bankruptcy, which is also known as liquidation.

When filing under Chapter 7 bankruptcy, all your assets, excluding those that are exempt under the law of your state, are dissolved and liquidated. Generally, the person tasked to do this is the court-appointed official, called a trustee.

All in all, the vital task of the trustee is selling your properties and using the proceeds to pay your creditors. After doing such, the court will then cancel many of your remaining debts, thus affording you a “fresh start” to life.

Here is a step-by-step guide to filing a bankruptcy under Chapter 7 bankruptcy:

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On October 17, 2005 President Bush’s sweeping bankruptcy reform law goes into effect forever changing the rules of debt collection in this natiion. Consumer advocates and the public appear to be completely unaware of the total and complete victory of the creditors under the new legislation. This article opens the door to the Trogan Horse so that consumers can prepare themselves for the worse.

The most important aspect of the bankruptcy code was the “automatic stay” provision. This allowed consumers to file for bankruptcy at anytime during the creditor’s collection process putting an immediate stop to all contact and collection activities from the creditor. The new law requires that a debtor receive credit counseling from an approved non-profit credit counseling agency for 180 days prior to filing Chapter 7 or Chapter 13 bankruptcy.

While this may sound benevolent, a much closer look at the practical effect of this provision reveals the crafty peeling of the debtor’s rights. The 180 day requirement is to provide the credit counseling agency the opportunity to work out payment plans with creditors. However, during this same period of time the creditor is not restrained from collection efforts. For example, Margaret is a homeowner in Jacksonville, Florida and is six months behind on her mortgage. As a rule, credit counseling agencies only work with credit card companies and have little or no training with dealing with mortgage companies.

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Financial literacy is the means of empowering consumers to make informed financial decisions through exposure to accurate and timely information. In no other area is the void of accurate information more evident that in the area of foreclosure.

The national foreclosure rate is at the highest level since the Great Depression. Families fall behind on the mortgage payments because of illness, job layoffs, business failure, divorce and marital problems, and bad money management decisions. Foreclosure and the loss of the home is the usual result. Foreclosure is financially and psychologically devastating to the stability of the household.

This article provides information to expose homeowners to the financial principles of loss mitigation. Loss mitigation is essential to asset protection because it provides the borrower with information necessary to make good decisions. Learning the programs or “tools” available as an alternative to foreclosure is the key to preserving home ownership.

For example, If I told you that the mortgage servicing industry reports average loss of $20,000 to $30,000 per foreclosure, then you may be inclined to believe that foreclosure is not an efficient and cost effective means of collections for the lender. According to Vic Draper, President of Universal Default Services, “33% of all mortgage defaults that go to REO never made contact with the borrower!” The lender does not want your home and will work out a financial alternative if you speak their language.

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