A Note About Personal Bankruptcy
...... 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
Applying For A Home LoanApplying for a home loan may not be the most exciting way to spend your time, but if you are like many potential homeowners, ..... 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 "garnish" 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 garnish your wages.
If you have no job, and no visible assets, or you live in a state
where your wages cannot be garnished, 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 other
than 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.
About the Author For a wide range of personal finance articles, loans, credit cards, and
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