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Ideas/Section-8
Sometimes, the formal
and legal declaration of personal bankruptcy is the best way to
go when you're "snowed under" with bills, and you just
can't see your way clear to survive.
Actually, bankruptcy allows you to make a fresh start. Generally,
it takes only a small amount of monxey, a careful evaluation of
your assets and your liabilities. In many cases, a lawyer is not
necessary.
If you have very few assets, mountains of debt, and not enough income
to meet your obligations, then your best bet is almost always the
filing of straight bankruptcy. What you'll need is the proper forms
"S3010 Bankruptcy forms, for an Individual Not Engaged In Business."
These can be purchased from any full-line office supply store, especially
in an area serving attorneys' offices.
You'll need to know which district you love in for Federal Court
purposes - so look in the white pages of your telephone book under
U.S. Government - Courts - and take down the address of the nearest
U.S. District Court. Check it out to be sure that your residence
is in this court's jurisdiction.
You then fill out the forms you purchased, listing all of your creditors
- those with priority being listed first - meaning those who have
extended credit to you against some sort of security or collateral,
followed by those who have extended credit to you on just your signature
or reputation. You must be sure to list all of your creditors because
any that you fail to list, will be able to sue you and collect even
after the bankruptcy has been adjudicated. At the same time, be
sure to include the names of anyone and everyone you may have co-signed
a note or a loan for, as well as anyone who may have co-signed for
you.
The laws governing personal bankruptcy vary in all states, but generally,
a bankruptcy judgement will not take away the house you live in,
basic home furnishings, a car that's necessary towards your gainful
employment, nor the tools of your trade. Check these things out
to be sure against the list of items regarded as the necessities
of life by your state.
When you've got all the forms filled out, and notarized, you take
them to the Clerk of the U.S. District Court in your jurisdiction.
You pay the clerk $50, and from there, you're home free. The clerk
notifies your creditors, and reminds them that being as you've filed
bankruptcy papers, they cannot bother you about your debts anymore.
However, they are invited to your hearing. Usually they don't show
up, because by that time, you have very few, if any, nonexempt assets
left that they are really interested in.
But, whatever assets you do have that are nonexempt, will be sold
by the Court to appease your creditors. Any money realized from
these sales is then added to the total amount of money you may have
turned over to the court at the time of your filing, and divided
equally amongst your creditors according to priorities.
After all of this has taken place, and usually about 3 months after
you've been adjudged bankrupt, you can start all over again to incur
debt, pay bills and establish a new credit rating. However , you
should be especially careful about talking with your old creditors
because they may attempt to maneuver you into signing a "reaffirmation"
of your old debt. The thing to do is to be sure that you carefully
read anything you affix your signature to, and don't agree to pay
on any debt that has already been discharged through your bankruptcy!
In some bankruptcy filings, it is definitely advantageous to hire
an attorney to represent you. This is especially try for people
who have assets such as real estate they want to protect, and/or
people who has been operating home-based businesses or been accused
of fraud. Remember this, if you decide to process your bankruptcy
without a lawyer, then it is your responsibility to fill out all
the necessary forms accurately and completely, and every bit as
precisely as if you had paid an attorney to do it for you. Leaving
out a creditor's name or address or forgetting a loan that you co-signed
for, will surely bring on litigation against you even after your
bankruptcy has been adjudicated. Be sure you understand all the
papers, ask the Court Clerk for advice, and if you run into problems,
then take it in to an attorney.
Besides the regular bankruptcy laws, there's also a little-known
and little-used method of getting reorganized with your debt, particularly
when you've got a steady job and just need more time to straighten
your indebtedness out. This is the wage-earner's provisions of Chapter
XIII of the Federal Bankruptcy laws.
Basically, these provisions allow you to make new arrangements with
your creditors and pay off all your debts over a new 3-year period
of time. When you filed for indebtedness relief under the provisions
of this law, nothing is recorded permanently on your credit record.
You get to keep all your assets, but you must pay off all your debts.
But, so long as the Court grants you relief under these provisions,
and you pay your creditors according to the repayment schedule agreed
upon by the Court, your creditors cannot bother you. Even if they
have begun a suit against you, once the Court has given you relief,
they cannot touch you! Once you've filed under these provisions,
your creditors are immediately restricted from even contacting you,
and get only what the referee or trustee doles out to them.
Often-times, if a creditor threatens to sue you, the most effective
thing you can do is to tell him frankly that if he sues you, you'll
have no other alternative except to file bankruptcy papers. In many
instances, this will cause him to take a second look and to do whatever
he can to assist you in paying him the money you owe, but over a
longer period of time, and at smaller monthly payments. The absolute
bottom line is that your creditors know only too well that if you
do file for bankruptcy, their chances of receiving even half of
what you owe is practically nil. Thus, it's in their best interest
to do everything they can to help you to continue making payments
on the amount you owe, regardless of how small those payments may
be.
When a creditor does sue you, and gets a judgement against you,
he can then get a court order directing the sheriff to seize your
personal property and sell it, with all monies realized going to
the creditor to satisfy your debt. When they see this about to happen,
many people connive to make themselves "judgement proof."
In other words, they hide their assets or move them out-of-state
before the sheriff or marshall arrives. This is illegal, but is
done as often as not.
Many creditors will attempt to "garnishee" your wages.
This is done by getting a court order directing your employer to
set aside part of your wages or salary every pay period and turn
it over to him. First, of course, he has to find out where you work;
and even then, in most states, there are limits set relative to
how much a creditor can garnishee for your wages.
If you have no job, and no visible assets, or you live in a state
where your wages cannot be garnisheed, your creditors actually have
very few ways of ever collecting from you.
Many techniques used by creditors and collection agencies are illegal.
A creditor or agency can write letters to you; call you once a day
in quest of a payment; and even knock on your door to ask about
a payment. but he is forbidden by law to harass you or invade your
privacy, or use deceptive means to get you to pay your bills. He
cannot use foul and abusive language over the telephone, tell anyone
besides you the reason for his phone call, inconvenience you or
in any way threaten your job or your reputation in the neighborhood
where you live.
Still, the best idea for reorganization and settlement of your debts
when you find yourself in an untenable position, is in-person visits
and explanations of your situation with your creditors, and a desire
to explore other possible ways of mutual satisfaction without involving
collection agencies or bankruptcy. Give it a try - it's a lot easier
than most people realize.
