Credit Repair By Better Credit Reports Consulting

Is bankruptcy your best option?


Here is a list of questions that will help you to determine if filing bankruptcy will be on your best interest.


1- How much money you made in the past six months?

This also include your spouse's income and any other money made by people living on the household, it doesn’t matter if they are filing or not.

If your total household income falls below the state's median income, you should be okay to file a chapter 7.
If your income is above the state median for your household size, depending on other factors you might not qualify for a chapter 7, you would have to file a chapter 13 .
Chapter 13 requires a payment plan of 3-5 years, the total amount to pay will be based on your income, this is much harder than a chapter 7 bankruptcy.

2 - How much property do you have under your name?

Property including real estate and personal property. Under federal and state law you have a certain amount of exemptions that you can claim to protect your real and personal property, it depends on the state you live in, before filing you need to consider the amounts of debt to discharge and the amounts of property that is not exempt.

3 - How much money do you own?

Are your creditors suing you?
Will you be able to pay your debt in the future?

If you only have a few thousand dollars in debt, probably bankruptcy is not your best option. In addition student loans, taxes, and child support can’t be discharged on bankruptcy

4. Did you pay any debts to family members over the past year?

Bankruptcy trustees have the ability to look back at your finances for the last 12 months in order to see how much money you've paid to family members. If you paid a substantial amount to a family member, they can askr that family member to give the money back to pay creditors. If you have paid them money, you need to consider if now is the right time for you to file or it would be best to wait a few months. Some times if you are risking a law suit or garnishment will be best to file as soon as possible regardless of payments made to family members, but if you can , do not pay family members money before filing. It will cause problems during bankruptcy.

5. Did you donate or transfer property out of your name under market value.

They can look back to all your property on your name during at least the last 2 years ( Based on state laws). Some people would believe that putting the house or cars on their spouse or child names will solve problems, The truth is that it will create more problems than it solves. In addition something like this could cause your mortgage to be accelerated, the trustee could go after the house to get it back and sell it.

6. Do you contemplate bankruptcy only to stop foreclosure?

Chapter 7 is only temporal solution to stop the foreclosure sale, it buy you time. The lender can obtain a lift of the automatic stay and proceed with foreclosure. After filing a Chapter 7, if you want to keep your house, you need to continue to trying modify your mortgage. A chapter 13, allow you to catch up on your mortgage. However, catching up is often very difficult for the average person to afford.

The "cram down" legislation that was rejected by the Senate a couple months ago, is now looking to be resurrected by Senator Durbin of Illinois. What this legislation would do is allow for a residential mortgage, in a chapter 13 case, to be "crammed down" or in other words, the principal would be reduced to the fair market value of the house. You might want to wait until it passes. Presently, this cannot be done for primary residences in Chapter 13


The information contained on this site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
This web site is made available by BCR Consulting for educational purposes only as well as to give information and a general understanding of the law, not to provide specific legal advice.

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