Personal Finance Care

The recent global economic collapse has left thousands of people jobless and scurrying for cover from the clutches of debt. The huge reliance of Americans on their credit cards has left them facing overwhelming debt. In such a scenario, most of them have taken the refuge of bankruptcy. If you feel that your mounting debts have left you with no option other than filing for bankruptcy, think again.

There are many ways that you can opt for to settle credit card debt. After all, bankruptcy stays on your credit report for seven to ten years. Therefore, take note of the following points if you want your blemished credit report repaired as soon as possible.

1) Do a thorough financial assessment of yourself: What is your current financial position? How much is your outstanding debt? Take into account everything, your liquid assets and anything that you can convert into cash. This would be a great time to sell off all the unnecessary items so that you can garner as much cash as possible for the negotiation process.

2) Decide if you are your best negotiator: You need to decide honestly if you yourself are the best person who can put an end to the debt woes. Do you have the adequate skills to be a skilful negotiator or prefer a mediator? Such a critical assessment would greatly help you to determine who your mediator should be.

3) Choose your mediator carefully: You have to consider many factors when deciding whom to opt for. Check the reputation of the company that you are considering and also the fees that they charge. Are they offering any guarantee for their services? Does the company have an honest refund policy? Are there strong testimonials reflecting the success rate of the company? Google out all the information for taking the best informed decision.

4) Start the negotiation process: Keeping in mind where you would like the final settlement to be, an experienced mediator would begin the negotiation process much like bartering. He would start by offering as low as 25% of the outstanding balance to the credit card company. This actually leaves room for further negotiation. A skilled mediator can strike the deal at 35%, while most settlement cases would be close to 50% of the total debt.

5) Take down everything in writing: Once the deal is finalized, make sure that the agreement is done in writing. Start making your payments only if you have all the necessary paperwork with you. This makes sure that nothing is left to chance and prevents you from being cheated upon later.

6) Keep every record with you: Meticulously maintain all the records of the payments that you make and keep a track of your dues. This will prove to be helpful while you are filing your taxes. Such records would also help you as proofs and avoid discrepancies and disputes, if any, in the future.

You are your best judge. Gauge your individual financial situation carefully before jumping into any decision. An informed decision will help you to settle your debt successfully without getting into the hassles of filing bankruptcy!

Due to unforeseen financial conditions, you may have been forced to file for bankruptcy and now you need to get a mortgage for your dream home, it’s obvious that you will have fewer options than before. However, you need not to get disappointed as there are still various sources of credit available if you know where to look for it.

Sub prime loans: If you have recently filed for bankruptcy, you may apply for sub prime loans. You

may get approved by a loan provider because they will not look into your past credit history and you will get the chance to own a home. The rates of interests on these kinds of loans will be quite higher but when you have limited options, this may be the way to go and get into the real estate market. You may be ready to pay higher interest rates for some time until your credit scores have recovered and then you can refinance on to a regular home loan with improved credit.

FHA mortgage loans: The FHA has recently become stricter after the crunch in the credit market and there are lots of criteria before the loans are approved. To get your finance from the FHA, you need to have a credit score of at least 600, but some lenders can be quite lenient regarding your credit ratings. The major advantage of getting a FHA loan is that they are much cheaper than a sub prime home loan. You can save a lot of money just in interests if you look at overall time period of the home loan.

The federal bankruptcy laws are implemented to decide the fate of a corporation whether it will go out of business or it can be reorganized to recover from crippling debt. The bankruptcy corporation can use the chapter 7 bankruptcy code to liquidate the assets or chapter 11 to reorganize the business with the hopes that it will be able to do business again and make profits.

When a corporation has filed for chapter 7 bankruptcy, it must stop conducting all operations. The court will appoint a trustee to liquidate all the company’s assets and use the money to pay off the existing debts. In this case, the company will go completely out of business.

If the bankruptcy corporation implements chapter 11 bankruptcy, the management continues to run the daily business operations but all the significant business decisions are taken by the bankruptcy court. Public limited companies opt to file for chapter 11 bankruptcy because it allows them to run their business as well as well have some control over the bankruptcy process. The US trustee will appoint one or more committees to represent the creditors and stockholders to work with the corporation. A reorganization plan is implemented to get the company out of debt. The court will approve the plan and has to be accepted by all creditors, bond holders and stock holders.

Once the plan is implemented, the court will relieve the corporation from paying a portion of its debt so that it can make some progress. There is a committee formed to represent the unsecured creditors, including bond holders and stock holders.

Once the committee has developed the plan with the corporation, the bankruptcy court will determine whether it is complying with the bankruptcy code before implementing the plan. Businesses that are too much in trouble and have no options to exist anymore will usually file for chapter 7 bankruptcy. The trustee will sell off the assets to pay off the administrative and legal expenses first. The balance left is paid to the creditors. If there are any secured collaterals, they are returned back to the secured creditor. If there are any unsecured creditor or bond holder that are left to be paid, they will be notified of the chapter 7 filing by the corporation so that they can get back their portion of money if left. The last to be paid are the owners if the company fails.

When the corporation has filed for bankruptcy, bond holders will stop receiving any interests and principal payments. Stockholders will stop receiving any dividends. The IRS will usually go after unpaid federal taxes, and they can seize the owner’s personal assets to recover the money. The officer or the managing director of the corporation will not be personally held liable for the corporate income taxes. But if the employment taxes are due, the IRS can seize the company cars, bank accounts, or any other types of assets.