Monthly Archives: December 2017

Personal Bankruptcy – The Last Resort to Debt-Free Life

The process of filing for personal bankruptcy, always requires comprehensive personal financial information of a person. The step of filing may involve collecting the list of all the unsecured as well as the secured debts, any relevant loan documents, car titles, any owned real estate deeds and the last two years of tax returning proof documentation.

The bankruptcy filing may be done with or without the help of an attorney. In case of filing without the attorney, the person has to fill the required bankruptcy form directly, which requires details of last two years’ financial transactions as well as the financial status to be revealed.

In case of filing the Chapter 13 bankruptcy, the repayment plan should be submitted along with the petition as well. After completion of the bankruptcy petition, the person must file the petition with the United States bankruptcy courts.

As far as the pricing is concerned, the Chapter 13 bankruptcy filing fee is about $185 whereas that of the Chapter 7 is about $200. The person may file a personal bankruptcy under the two main chapters, namely the chapter 7 or Chapter 13.

The Chapter 13 bankruptcy helps the debtor to make a payment plan within three to five years. But the Chapter 7 is nothing but the liquidation of the assets, in which the assets are converted in to the money. There are certain primary reasons such as loss of employment, child care, divorce, excess medical expenses and excessive credit card debt, for which an individual goes for the personal bankruptcy filing.

Such events may cause the financial dilemma as well as the distress to the life of individual and hence, an individual must consider all the available options along with the bankruptcy. Moreover, the person must learn perfectly about the federal bankruptcy law, before filing for personal bankruptcy.

Bankruptcy Personal Pros and Cons

There are facts to consider before deciding to file bankruptcy personal. One of the most frequent reasons why people are afraid of bankruptcy personal is the fear of spending too much time in the court at hearings. Another reason is the unpleasant feeling that your financial matters are discussed as if under the microscope. On the other hand, bankruptcy personal can be the only way of eliminating debts and of having a chance to start a new financial life.

People tend to think that there are more bankruptcy personal cons than pros and this fact can be true especially in case of people with pessimistic life perspective. However, there are true facts that are considered cons and can be serious arguments for doing whatever it takes to avoid bankruptcy personal. One of these cons is that the debtor can loose all his properties or assets of value, equity in a home.

Bankruptcy personal is considered an expensive process, as trustee, courts and fees are to be paid from debtor’s assets. In case the debtor is a business owner, the employees can be dismissed and the commercial enterprise sold in order to pay the creditors. Hardy can a debtor obtain a so-called alternative to bankruptcy personal, as there are some requirements stated in the bankruptcy law. This type of bankruptcy personal allows the debtor to keep his valuable assets and pay the debts over a period of time if there is reliable reorganization plan presenting anticipated income.

Wise financial consultants sustain the idea that once experiencing bankruptcy personal the debtor starts taking seriously financial responsibilities, becoming organized and balanced concerning extravagant expenses. The debtor can be motivated to do everything in order not to suffer the same financial troubles. In a way, bankruptcy personal makes you wiser and more responsible regarding bills and expenses. On the other hand, bankruptcy personal is the only solution to escape headaches and nightmares of dealing with lots of creditors, debts and financial troubles of other nature. Bankruptcy personal removes the uncertainty, the worries and in some cases more expenses.

After bankruptcy personal getting a loan is a real adventure, as lenders tend to accept bankruptcy personal loans at least after two years have passed since the event. In some cases a down payment is necessary in order to obtain a bankruptcy personal home loan. In most of the cases when a post-bankruptcy personal loan is accepted the proof of a flawless payment history is necessary. In case the bankrupt is found dishonest or culpable some bankruptcy restrictions are imposed.

The fact that the debtor should pay on time his bills after bankruptcy personal can be a good fact, giving the opportunity of starting fresh and of becoming organized and responsible. One of the pros of bankruptcy personal is that creditors are forced to accept less money than the debtor owes.

Post Bankruptcy Personal Loans: Fast Approval Despite Bad Credit Histories

There is a school of thought that bankruptcy is effectively the end of any kind of credit deal. Traditional lenders certainly are reluctant to lend money to anyone who has been declared bankrupt at least 2 years prior to an application. But it is possible to get post bankruptcy personal loans.

The logical behind the thinking is fair, with lenders entitled to be cautious about approving applicants seeking approval with poor credit histories, but it is worth noting that bankruptcy does not mean an end to income and financial responsibility.

What this means is that receiving personal loan repayments is still possible, especially when the specific hardship which prompted bankruptcy proceedings has been overcome. And if this is the case, the lenders can still feel confident in granting loan approval.

The Truth of Your Situation

But how can someone that has been declared bankrupt not find themselves avoided by a lender, whether they are traditional lenders or online lenders? Knowing the truth of the bankruptcy situation is the key. Once this is understood, the route to a post bankruptcy personal loan is clearer.

The lending world has a vast variety of lenders in it, and there are some lending firms that specialize in post bankruptcy loans. In fact, given that such applicants have no existing debt to figure into the equation the chances of default are extremely low. For that reason, approval with poor credit histories is plausible.

Also, lenders are willing to accept that bankruptcy was likely the only way out of an impossible financial situation.

Recent years have seen the number seeking bankruptcy increase, so it no longer reflects terribly on a personal loan applicant.

The Significance of the Debt-To-Income Ratio

So, what is the fuss about not having existing debts anymore? That question might seem strange, but the explanation is pretty straightforward. Like any other loan, a post bankruptcy personal loan needs to fit within the debt-to-income ratio set by the lending industry.

The ratio states that a maximum 40% of available income can be used to repay debts. But since there is no existing debt, that means the repayment sum each month can be quite high. This automatically means that, even with a large loan, getting approval with poor credit histories is easier.

For example, if an applicant earns $4,000 per month, then the maximum to commit to repaying loans is $1,000. With no other debts, it means the repayment on the personal loan can be $1,000, thereby making a 3-year loan of around $30,000 affordable.

How To Qualify

It is worth noting that post bankruptcy personal loans are staggered according to the period of time that has elapsed since the ruling was made. So, it is extremely difficult to get a loan 3 months after being declared bankruptcy, but not so difficult after 2 years.

However, loans of perhaps no more than $3,000 are available for the first 12 months, and after that $5,000 up to $10,000 can be secured. Of course, getting approval with poor credit histories is never guaranteed, but collateral can make a huge difference.

However, it is advisable to take out small personal loans as soon as possible because repaying them allows the borrower to begin to rebuild their credit rating.

Also, getting approval is easier when a clean break is made. So, close your bank account and open another, switch credit card companies and do not forget to look closely at what your mistakes were in the past to avoid committing them again.