Total Financial Network

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Bankruptcy
(Financial Restructuring)

Bankruptcy is a federal court proceeding that will help eliminate or payback debt. It is a legally declared or recognized condition of insolvency. Bankruptcy can be utilized by individuals, married couples or businesses that are unable to pay their debts. Bankruptcy is for people that are drowning in debt and see no relief in sight. Bankruptcy is the solution and legal method designed to forgive debt.

Filing for bankruptcy usually requires the following...

• Undergoing a "means" test.
• Receiving debt counseling from an approved organization.
• Submitting a repayment plan.
• Attending a meeting with creditors.

There are 4 forms of bankruptcy but the two most commonly used forms are Chapter 7 and Chapter 13.

Chapter 7

Chapter 7 bankruptcy is designed to payback the creditors with what you currently have and give you a new start. This will stop the harassment of creditor’s calls and put you on the track to a new financial future.

To qualify for Chapter 7 a person must make less than the median income for their area of residence. If they make more than this they can still qualify but they will have to take the means test. The means test is to assess if you are able to pay back the creditors in five years or less.

Chapter 7 allows the client the ability to keep some possessions called "Exempt Items." An exempt item is an item that is not accounted for in the bankruptcy proceedings. While exempt items vary from state to state, generally in Chapter 7 exempt items are the same regardless of the residing state. These items typically include: the primary residence, one vehicle, personal items, retirement savings in pension funds, 401Ks and IRAs. Individuals will only be allowed to keep their home and vehicle if they can afford those payments after bankruptcy.

Chapter 13

Chapter 13 is commonly for "high" income earners with "less" debt and is called the wageearners bankruptcy. For Chapter 13, you will repay what you owe the creditors, although generally not the full amount. The repayment amount will be carefully calculated. You will be responsible for gathering documents and collecting financial information for all your bills and debts. This information will determine how much you can afford to pay to the creditors without going back into debt.

The plan payments will be based on your disposable income. This means the payments to the creditors will be made on the money you have left over after paying rent, car loans, utilities and other necessities. Once the plan payments have been calculated a trustee will be appointed to oversee the payments and ensure they are being made. This repayment will take place over a few years, generally three to five years.

Chapter 13 will also allow you to eliminate some debt which varies from state to state. Typically, debts owed to the government, such as taxes, will not be eliminated. However, Chapter 13 will stop penalties and freeze interest rates on the money owed.

Emergency Bankruptcy Filings

Sometimes a person needs to file bankruptcy right away to stop a foreclosure, repossession, eviction, execution sale, tax levy, or utility shut-off. The bankruptcy rules allow the debtor to initiate a bankruptcy case by filing only the three page petition.

Do not be lured into paying bankruptcy firms that charge very high fees. Chapter 7 bankruptcy should cost between $1600 and $1900 and Chapter 13 should be between $3000 and $3600 depending on the complexity of the case. Contact TFN for a no cost analysis to see if you qualify for bankruptcy. If bankruptcy is your best option we will recommend a highly accredited firm in your area that will provide service at a reasonable cost.

Contact TFN for more information...