Archive for February 2010
Debt warning signs
A credit counseling expert discusses signs that might indicate you’re in trouble with debt.
Duration : 0:2:40
Rep. Thaddeus McCotter
Credit Card Companies Raise Interest, Debt, Bankruptcy
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Resorce: http://www.entrepreneur.com
Duration : 0:5:45
Role of the Chapter 7 Bankruptcy Trustee
When a chapter 7 petition is filed, the U.S. trustee appoints a “disinterested” (that is, impartial) case trustee to administer the case and liquidate the debtor’s nonexempt assets. Specifically, the trustee has the duty, under 11 U.S.C. §704(a)(1), to take possession of and sell all of the debtor’s property that is not exempt and use the sale proceeds to pay the unsecured creditors (that is, creditors who extended credit based only on an evaluation by the creditor of the debtor’s ability to pay, as opposed to secured creditors, whose extension of credit was based additionally on the creditor’s right to seize collateral on default).
In most cases, however, the debtor has no assets above the statutory exemption limits (for example, the exemption limit for jewelry is $1,350; for household goods, furnishings, and appliances it’s $10,775), meaning that the debtor may “exempt”, and therefore keep, all of his assets. If all the debtor’s assets are exempt or subject to valid liens, the trustee will normally file a “no asset” report with the court, and there will be no distribution to unsecured creditors.
Most chapter 7 cases involving individual debtors are in fact “no asset” cases. But if the case appears to be an “asset” case at the outset, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has 180 days from the date the case is filed to file a claim.
In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim. Although a secured creditor does not need to file a proof of claim in a chapter 7 case to preserve its security interest or lien, there may be other reasons to file a claim.
The filing of a bankruptcy case creates a “bankruptcy estate.” This bankruptcy estate technically becomes the temporary legal owner of all of the debtor’s property. It consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. It is the trustee’s function to “administer” the estate by taking the debtor’s nonexempt property, if there is any, and liquidating it, and then using the funds to make payments to all creditors who have properly filed their proof of claim.
The primary role of a chapter 7 trustee in an “asset” case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s nonexempt property (along with any property having a value that exceeds the exemption claimed by the debtor on it) if it is free and clear of liens (or if it has a value that exceeds any security interest or lien attached to it).
The trustee may also attempt to recover money or property under the trustee’s “avoiding powers.” The trustee’s avoiding powers include the power to “avoid” (that is, set aside) “preference” payments (that is, payments to creditors within 90 days before the petition or to “insiders” made within 1 year prior to filing), to undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition, and to pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will benefit creditors and enhance the liquidation of the estate.
Understanding the role of the trustee, as well as the extent of his or her powers under bankruptcy law, is key to a successful Chapter 7 filing (that is, one that results in a discharge and with the debtor keeping all or as many of his assets as possible). It is vitally important to anticipate potential actions by the trustee and, wherever possible, to avoid the trouble those actions can precipitate for the debtor by proper planning before the Chapter 7 petition is filed.
David Romito
http://www.articlesbase.com/bankruptcy-articles/role-of-the-chapter-7-bankruptcy-trustee-734412.html
Types of Credit Card Debt Relief
Credit card debt relief takes several forms. No one solution is best for everyone. Instead you have to find the solution to your specific financial situation.
Credit Card Balance Transfer
A balance transfer is the simplest way to consolidate debts so you can find relief from numerous minimum payments that get you nowhere. If you decide to use a balance transfer, you must commit to paying more than the minimum on the new combined balance. To do this, total up all of the minimum payments on your previous debts. Now add an additional amount, whatever you can free up from your budget. Pay that entire amount to the new balance every month. With determination, you can probably pay off the entire balance before the interest rate offer expires.
When looking for a balance transfer card, opt for an offer with a 0% interest rate and zero transfer fees. If you can’t find an offer that doesn’t charge fees or interest, look for a low balance transfer fee with a cap of $50-$75. You should also consider the applicable rate after the offer period ends. Look for a rate below 10% just in case you have a small amount of debt remaining.
Credit Card Debt Consolidation
If you owe more debt than you can reasonably pay during the balance transfer offer period, you should consider a debt consolidation loan. These come in two forms: personal and home equity. If you don’t own a home or your home doesn’t have equity, then you should apply for a personal debt consolidation loan. Interest rates are higher than home loans, but lower than credit card rates.
If you qualify for a home equity loan, this is a great way to pay down debt. In addition to having a lower interest rate, the interest may be tax deductible. You can use the additional tax savings to pay down debt.
Many people are able to pay down debt more quickly when they consolidate it; however some create new credit card debt at the same time. Transferring the debt is not an excuse to run up more credit card debt. Instead, apply your old credit card payments to the new loan and commit to reducing your expenses until it’s paid off.
Credit Counseling
If you need help paying off your credit card debts, contact a local credit counseling service. The service will review your debts, income, and expenses, and work with you to create a payment plan. They may suggest a debt management plan. The service negotiates with your creditors to reduce your interest rates and set a fixed monthly payment. Once your debts are enrolled in the program, you no longer have access to the cards, which prevents you from creating new debt. In addition, you make a single monthly payment to the service, which then distributes it to your creditors as agreed.
Credit Card Debt Settlement
If you owe significantly more than you can pay, and can’t reduce expenses or increase your income any further, a credit counseling service may recommend debt settlement. Also called debt negotiation, debt settlement actually reduces your total balance due. The service contacts your creditors to negotiate a new lower balance and a new payment plan. You may either be required to make a lump sum payment or
monthly payments. In most cases, debts can be reduced by 40%. Before choosing this option, remember that debt settlement will seriously damage your credit and you may owe taxes on the unpaid amount.
Bankruptcy
Bankruptcy should be your last resort. Due to 2005 revisions in bankruptcy law, it’s now more difficult to eliminate credit card debts in bankruptcy. You’re more likely to be placed into a court-mandated payment plan. However, if you have other debts like high medical bills that prevent you from paying your credit card bills, bankruptcy may be an option.
Before choosing any one credit card debt relief option, consider the impact of all of the options on your budget and financial future. The best solution is to reduce expenses and commit to paying off the full debt via a balance transfer or consolidation loan. You should only consider the other options if paying your debts is simply impossible.
For more information please refer: http://www.bills.com/credit-card-debt-relief/
justin narin
http://www.articlesbase.com/credit-articles/types-of-credit-card-debt-relief-698154.html
